September 21, 2005
Sprint Corp. (NYSE: FON) calls it "data simplification," but that's underselling it a bit.
Earlier this year, the carrier began quietly moving its business customers from its existing frame relay and ATM networks to a new IP network built primarily with gear from Cisco Systems Inc. (Nasdaq: CSCO). (See Cisco Certifies Sprint and Cisco, Sprint Renew Vows.) Get this: Sprint plans to finish this changeover sometime in 2009, at which point it will start turning off its old networks.
This will affect "more than 2,000 and less than 10,000 business customers" according to Michael Buttrey, director of product management for Sprint's wireline data services.
As big a feat as this is, details are hard to come by. For example, Buttrey doesn't want to talk about specifically how many business customers Sprint has. Nor will he go into detail about what Sprint spent on its next-generation network. And Sprint supplier Cisco declined the opportunity to detail all the gear it has in the new network, though we know there's a CRS-1 taking up some space (see Carriers Weigh Savings With Cisco CRS-1, Sprint Throttles Up Cisco's CRS-1, and Cisco Stumps for CRS-1).
Whatever is making it tick, the move to an advanced IP network is an idea whose time has come.
Other carriers have had the idea on the tips of their tongues. Earlier this year, BellSouth Corp.'s (NYSE: BLS) Mark Kaish mentioned he believed enterprises would cap their investment in legacy ATM and frame relay services so they could migrate toward three major services: Layer 2 VPNs (Ethernet), Layer 3 VPNs, and VOIP.
In Sprint's view, getting wireless and wireline data and voice on the same network backbone opens up a whole new world for enterprise customers. Business workers could, for instance, use their mobile phone or their desk phone interchangeably as one number would reach both. And a customer could have one voicemail and one email account, each accessible via a variety of devices. Finally, they could have remote access to desktop applications, getting all the same functions and features as they would at their desks.
The key to moving customers from one network to the other is to make the transition as smooth as possible. [Ed. note: Is that why a guy named Buttrey is involved?]
"The new network pricing is based on bandwidth and not protocol," says Buttrey. "A T1 of frame relay is the same price as a T1 worth of MPLS. So that gives them the flexibility to move over their frame network today, if that's what they want to do, and transition to an MPLS VPN tomorrow."
Another gambit is to include features that used to be considered premium and add-on services as part of the standard package. Buttrey says that Sprint's MPLS VPN product now has "class of service" included, meaning that Sprint no longer charges business customers for the ability to, say, give the packets that comprise a video conference conversation priority in the network over some less time-sensitive email messages.
Customers will also benefit from the new network because they'll get more bandwidth for the same price, and they'll see a single, simplified bill, Buttrey says. Likewise, one network allows Sprint to consolidate its billing systems, cut down the number of data services offered, and enjoy lower backhaul costs by putting multiple services on the same network.
But how will Sprint compete against AT&T Corp. (NYSE: T) and MCI Inc. (Nasdaq: MCIP), two carriers that are about to balloon in size due to multibillion-dollar mergers? Buttrey says the key is to show up to the fight with more than just wireline data.
"We want to compete as an integrated telecommunications provider," he says. "When SBC absorbs AT&T they're going to be a huge entity with very good wireline resources. However, there is no integration with wireless. To be able to walk in with one solution and one bill for an entire enterprise that spans wireless, wireline, voice, and data -- they're years from that. It's gonna take them a year to swallow AT&T, and they're not even talking about wireless yet. Meanwhile, we'll be talking about 3G wireless and 4G wireless and how to integrate those services with core WAN technologies."
SBC says it'll be equally as formidable as an integrated service provider. "Wireless and wireline integration is one of the key strategic imperatives of the company," says SBC spokesman Wes Warnock. "With the acquisition of AT&T Wireless, the new Cingular has the strongest spectrum position in the country, and that's what enables these new services."
Of course, Sprint's doing all this for a more obvious reason: a converged IP network -- and the services it makes possible -- is where the money's at.
"Sprint has been reporting year-over-year declines in legacy data services revenues, and is working hard to transition customers to more popular next-generation IP and Ethernet services that can be delivered over a more efficient infrastructure," says Heavy Reading analyst Stan Hubbard. "Sprint has reported year-over-year growth in its dedicated IP services. It hasn’t been heavily marketing Ethernet service, but it is investing in new equipment to deliver Ethernet to more locations, so I would expect to hear more on that front over time as the market continues to heat up."
In the meantime, Sprint's got a big challenge ahead. Its plan is to complete the migration in four years.
— Phil Harvey, News Editor, Light Reading
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