News

Sprints ION Launches Hit Cable, Telcos

11/28/1999 7:00 PM Eastern

Sprint Corp. made good on its promise to take on local
telcos and cable operators by launching an integrated package of voice and high-speed-data
services in Denver, Kansas City and Seattle.

Via ads in major newspapers, e-mail and other means, the
carrier is promoting a uniquely priced service under the "ION" (Integrated
On-Demand Network) label, targeted to high-end residential users and small businesses.

The basic package consists of four lines of
"distance-free" voice and fax delivered in the Internet-protocol mode, together
with high-speed Internet access over a single digital-subscriber-line link, for $159.99
per month.

The price includes up to 2,200 minutes of total domestic
calling time per month, regardless of where the calls terminate, and unlimited Internet
access at speeds in excess of 1 megabit per second, Sprint spokesman Steve Lunceford said.

"Calling costs 10 cents per minute beyond that volume,
but very few customers are going to hit that limit," he added.

The service-package price includes advanced calling
features, but it does not include the customer-premises terminal, which sells for $249.99.
Installation -- including adding phone lines -- costs $149.99, Lunceford said.

Rather than offering a package with lower service grades,
Sprint determined that its strongest opportunity was the relatively limited population
that wants more multiple phone lines and high-speed access.

The package represents a discount of up to $40 per month
from what such customers typically pay incumbent providers, and it offers the convenience
of one bill, officials said.

Among small businesses, only current Sprint customers are
being offered the service. Sprint plans to expand that marketing to additional businesses
next year, Lunceford said.

The premises terminal is being sold through CompUSA and
Sprint PCS outlets in the three markets, with sales staff manning dedicated booths at each
location.

While customers can learn about the service online and
determine whether they are in one of the 100 to 140 ZIP codes covered in each market, they
cannot perform installation themselves, Lunceford said. "This service requires a
truck roll," he added. "We anticipate moving to testing of a do-it-yourself
model by the end of next year."

Cisco Systems Inc. is the lead vendor for ION nationwide,
but it is not supplying the DSLAMs (DSL-access multiplexers) or residential service
terminals in these markets, Sprint director of advanced-technology development Ed Thurman
said. "We designed the [subscriber] hub ourselves, and we are having it built by a
small, pre-eminent design firm, which I'd rather not name."

He declined to name the supplier of the DSLAMs, as well,
although another company source indicated that it's Lucent Technologies' Ascend
Communications Inc. unit.

Data rates downstream over DSL range from a minimum of 1.5
mbps to a maximum of 8 mbps, depending on distance from the central office. Upstream rates
range from 684 kilobits per second to 1.5 mbps. Those minimums are at least double what
most carriers offer to residential DSL customers.

So when the typical costs for four lines of voice service
and a high volume of long-distance use are factored in, Sprint ION customers appear to be
getting a higher-speed Internet service than customers of other DSL providers at
comparable or lower prices.

The customer-premises hub is designed to accommodate
packetized voice feeds in both IP and ATM (asynchronous transfer mode) formats, Thurman
said. Sprint can handle voice in whichever mode it deems appropriate without having to
reconfigure terminals.

The terminal is even more multimodal on the customer side,
he noted. "We've designed the terminal so that it accepts whatever native
formats customers are accustomed to using in their premises networks, whether it's
analog voice, ATM, Ethernet, T-1 or something else," he said.

Sprint's multiple-line packet-voice service is
currently offered in IP mode over ATM transport layer 5, but it will be delivered using
the ATM-adaption layer-2 quality-of-service domain in other markets starting around
midyear, Thurman said. This will do away with IP packetization of the voice signals over
the ION network until Sprint determines that IP is ready for scaling of services to the
mass market, he noted.

ATM also offers an advantage right now insofar as the ATM
equipment supplied by Nortel Networks performs a function called "subcell
multiplexing," Thurman said. This technique fills up empty spaces in the ATM cell
with fragments from IP-voice packets, thereby conserving bandwidth, he added.

Sprint intends to increase the market base for ION to more
than 30 cities, most of them as-yet-unidentified, during the next year. It has also slated
about 30 markets for rollout of its broadband-wireless service over MMDS (multichannel
multipoint distribution service) networks.

Sprint and its merger partner, MCI WorldCom Inc., went on
an MMDS-buying binge this year, cutting deals to buy such operators as CAI Wireless
Systems Inc., People's Choice TV Corp., American Telecasting Inc. and Videotron USA.

For the most part, MCI and Sprint have emphasized offering
data service over that wireless spectrum.

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