Sprint has become the first major long distance carrier to announce its migration to a packet-switched data network, which will enable voice calls to travel like data over its telecommunications network.
On Tuesday, Sprint said it has begun the process of converting its existing local switching network to the packet system in Gardner, Kansas.
Sprint said the migration to a packet-based network would be gradual. The plan is to convert half of its eight million local phone lines within the next six years. The entire conversion of the network to packet-based technology could take more than twelve years.
Sprint's announcement marks it as the first major telecommunications carrier to publicly commit to packet-based technology. It comes at a time when voice over IP services, which offer voice services over Internet networks, are gaining traction with businesses and consumers, a trend that threatens Sprint's and other carriers' traditional revenues.
Now, the Kansas-based company is making a push into the emerging market for IP-based voice and data services by staking out its own territory in the increasing trend of merging voice and data into one pipe.
Packet-switched technology allows telecommunications carriers to break voice, data and video transmissions into digital packets for easier transport.
According to technology experts, packet-switched networks do not establish physical communication channels between communicating devices like circuit-switched networks do. Instead, signals are formed into fixed-length packets that are affixed with a source and destination address and packet ordering details.
Whether other carriers follow Sprint's move remains to be seen. But the announcement by the fourth largest U.S.-based long distance phone company illustrates the threat that VoIP presents to carriers' traditional voice service revenues -- and Sprint's decision to respond by upgrading its network in order to bundle a range of voice and data services on one network.
The migration could bode well for network hardware and router providers too. In November of 2001, for example, Sprint signed a $1.1 billion deal with Nortel Networks for its switching equipment and installation services for the first phase of Sprint's packet-switched migration project.
With its migration project, Sprint said it hopes to offer integrated telecommunications services, which would allow business and consumer customers to access a range of telecommunications services, including business and home phone numbers, Internet and wireless accounts.
Sprint said the conversion would consist of an entire network evolution to packet networks. It said it would leverage its Asynchronous Transfer Mode (ATM) network protocol in order to combine three separate "overlay" networks into a single, converged network for voice, data and private-line services.
It will start the conversion in Kansas, then move to Virginia, Pennsylvania, Nevada, Florida and Ohio.
Technology research firm Frost and Sullivan is predicting that the retail VoIP market will grow to $78 billion by 2007 from $1.2 billion in 2000.
IDC, meanwhile, is tracking a range of new IP-based services about to hit the market, including PC-to-phone calling, unified communications, voice-enabled e-commerce, and Web-based conference calling. IDC expects IP telephony will account for more than 47 percent of total U.S. long distance and international voice traffic by 2005.
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