While AT&T Corp. and MCI Communications Corp. fret over how to connect residential neighborhoods to local phone service, Sprint Corp. doesn’t see it as a big problem, its chairman said Wednesday.
Indeed, the No. 3 long-distance firm is hoping to offer some Chicago consumers local service by the end of next year.
“The other guys pay too much attention to the `last mile’ problem of connecting their networks to customers,” said William T. Esrey, chairman of Sprint. “But they haven’t thought enough about what happens on their network. That’s where we’re focused.”
Last month, Sprint announced that it would soon activate an all-digital, national network that can carry voice, video and data on a single line. The new system, called ION for Integrated On-demand Network, won’t use traditional circuit switches and will operate at far greater speeds and lower costs than networks designed primarily to carry voice traffic.
In Esrey’s keynote address Wednesday to Internet World 98 at McCormick Place and in an interview afterward, he fleshed out Sprint’s strategy, which is to target customers who need high-capacity telecommunications connections to their homes and businesses.
The service will become available to large businesses in Chicago, New York and five other cities by the end of 1998 and to smaller businesses and some residences in the same cities by the end of 1999, Esrey said.
Besides providing high-speed Internet connections, Sprint’s network will provide unprecedented versatility to customers, he said.
“Suppose a family of five comes home from a day at the beach,” Esrey said, “and everybody wants to use the phone to call someone. ION enables all five to make calls at the same time, provided they have five phones.”
By processing voice calls as if they were data, Sprint’s new network reduces network costs for handling calls by 90 percent, Esrey said, so all calls can be billed as local calls.
It is relatively easy to connect large businesses to ION through high-capacity optical fiber lines that are plentiful in Chicago’s Loop and suburban business corridors, but reaching smaller businesses and residences is far more difficult because they are served mostly by low-capacity copper phone lines and cable television systems that don’t have two-way capabilities.
Esrey said the connectivity problem is less important to him because of Sprint’s marketing strategy.
“Not everyone is an ION candidate,” he said. “We’re looking for people who have two phone lines into their homes, who use the Internet, who make a lot of long-distance calls.”
He estimates that of more than 100 million households in the United States that have telephone service, only 30 million or so could use high-capacity phone-video-data connections. By targeting only high-use communications households, Sprint greatly reduces its “last mile” problem, Esrey said.
While there are 26,000 telephone central offices serving the country, only 2,000 offices service about half of Sprint’s target customers, Esrey said.
Eventually, Esrey said, other phone companies will imitate Sprint’s move to convert its voice-oriented network into a data-oriented one, but by being first, Sprint expects to reap huge benefits.
