C&W to Move Voice Customers to IP Network

Cable & Wireless PLC is dumping its circuit-switched voice network for a new IP network that Nortel Networks Corp. is building and will maintain.

The companies struck a $1.4 billion deal last week to migrate Cable & Wireless voice customers in the U.K., Europe, Japan and the U.S. to a new IP network that Nortel will build over the next three years. Customers should expect enhanced voice services such as unified messaging and videoconferencing, says Mike McTighe, CEO at Cable & Wireless.

Yet, the service provider has set a migration schedule that is so aggressive it's not realistic, says Lisa Pierce, an analyst at Giga Information Group Inc., a Cambridge, Mass., consulting firm.

"It makes sense that Cable & Wireless will migrate particular types of traffic such as international and all new traffic," she says. But there will not be a 100% cutover to packet-based voice networks by any large carrier before 2007, she says.

In an unusual move for a large carrier, Cable & Wireless is handing over the task of building and maintaining the network, and even migrating its customers, to Nortel Networks' Global Professional Services division. Management of the network will account for about two-thirds of the $1.4 billion, 10-year deal, with $450 million going toward the purchase of Nortel Succession, Passport 15000 equipment and network management software.

McTighe denies this amounts to outsourcing a major part of his business.

"We certainly are intent on being a facility-based IP provider to the business-to-business community in the U.S., Europe and Japan," he says. "In order to do that in a timely manner, we've had to partner with others.

"We will continue to provide very high-quality voice services for our customers, but now voice will run as an application over our IP network," McTighe adds.

Voice over IP is expected to reduce overall support costs by 25% compared to circuit-switched network, he says.

Cable & Wireless hopes to offer its business customers additional data and multimedia services over the new network almost immediately, McTighe says, citing enhanced call-center services as one example. A customer could be sitting at a PC conducting an online transaction, and through a mouse click, request a voice conversation with a customer service representative. The customer's voice and data would run over the same network.

"It's the bundling of those kinds of services into a single package that we see as a very powerful offer," McTighe says.

Rick Perera, a correspondent with IDG News Service's Berlin bureau, contributed to this story.