Qwest Communications International is moving beyond the 20th-century technology of circuit switching, and is starting to replace gear in its 14-state region with the packet switching technology of the Internet.
Qwest becomes the first regional Bell to start the transition toward Voice-over-IP (VoIP) technology, which paves the way for services such as video caller ID and conference calling over the Internet. The move will likely fundamentally change the economics of telecommunications.
"This is a smoke signal to the industry that recovery in the telecom sector is beginning," said Jeff Kagan, a telecommunications analyst.
The Denver carrier said on Oct. 10 its Boise, Idaho, customers phone calls are being routed via a data network that uses VoIP technology. The next cities to get VoIP circuits will be Albuquerque, N.M.; Denver; Minneapolis; Phoenix; Salt Lake City; and Seattle. Under a deal with Nortel Networks reportedly worth more than $100 million, Qwest will swap out all the equipment in its 14-state region.
"I have been saying for a long time that all voice will be on the Internet by 2010," said Tom Evslin, CEO of ITXC, a wholesale VoIP provider and a Qwest partner. "The last mile is now beginning to turn into an IP last mile."
Other Bells will likely follow. "Qwest is the first to do it, but I expect to see in their wake the other Bells following suit," said Robert Saunders, an analyst of research firm The Eastern Management Group.
Nortel offers a seamless upgrade to enhance services to users on the new platform, said Hilary Mine, executive vice president of Probe Research.
VoIP can voice-enable a raft of new devices, and that could translate into more revenue. Microsoft, for example, has added a VoIP component to the Windows XP operating system.