Cisco, BellSouth: Let's talk data

Cisco Systems has teamed with local telephone provider BellSouth to jointly sell advanced phone and data services to businesses.

The two companies will initially focus their efforts on the health care, finance, education and government markets in BellSouth's nine-state region, Cisco said in a statement Monday. Under terms of the deal, Cisco will provide the gear BellSouth needs to sell more advanced versions of features such as Internet telephony and secure virtual private networks. Research firm Gartner expects secure virtual private networks to be a $6.2 billion market by 2005.

The deal, announced at the start of Supercomm 2003, a telephone network equipment conference, is unusual for Cisco because it focuses on the data side of a telephone network. Cisco, the No. 1 seller of routers and switches, has become so by focusing mainly on the portions of a carrier's telephone network for voice dialing.

"Data services are critical for the communications and operations needs of businesses in today's global economy," Fred Shaftman, president of BellSouth Business, said in a statement.

The agreement is a sign of how traditional telephone equipment suppliers have branched out into new areas to survive the three-year slowdown in telecommunications equipment spending. The deal calls for Cisco to provide Wi-Fi equipment to BellSouth. Wi-Fi, which creates 300-foot zones of wireless connectivity to an office computer or the Web, is growing in popularity with businesses.

Cisco has similar relationships with BellSouth competitors SBC Communications, AT&T and Sprint Communications.

In a separate announcement, BellSouth said it forged a partnership with telephone network equipment provider Lucent Technologies. Lucent will provide advanced fiber-optical technology for part of BellSouth's network. Terms of the deal were not disclosed.