The new service, code-named Project FastBreak and now called Integrated On-Demand Network, or ION, is a radical network redesign intended to make the company's telecommunications equipment and services more cost-efficient, particularly for Internet traffic.
That service will be based on a high-speed technology known as asynchronous transfer mode. ATM technology is becoming widely adopted by telecommunications firms and service provider networks as the convergence of multiple types of traffic over a single pipe continues. (See related story)
"Sprint's ION integrates voice, video, and data over one line," said Charles Flackenstine, a manager of technology services at Sprint. "For small and medium businesses it leverages the playing field, giving them the capability to become a virtual corporation."
The company has spent $2 billion in the past few years quietly pursuing the FastBreak project, building the network, and working with businesses and home consumers. An initial rollout to large businesses will begin later this year, with general availability for small to midsize businesses in mid-1999 and consumer availability later this year, the company said.
The system would measure and bill for telephone service based not on the number of minutes a person spends on the phone but on the number of digital bits the customer transmits in a given month. Usage would be measured by a little box, placed in a home or office, that acts like an electric meter.
According to Sprint, households and businesses will be able to conduct multiple phone calls, receive faxes, run applications, and use the Internet at speeds as many as 100 times faster than today's conventional modems, through a single connection.
The new network also creates a new cost structure for the industry. Using cell-based network technology, the network cost to deliver a typical voice call will drop by more than 70 percent, the company said. For example, Sprint's costs to provide a full-motion video call or conference call between consumers, businesses, and homes will be less than it costs to make a typical domestic long distance phone call today.
While many telecommunications companies promote themselves as a one-stop shop, few have been able to offer customers a seamless way to get all services through one customer service contact and on one bill. Sprint may gain an edge over its rivals since its sophisticated billing system could better coordinate customer bills for a wide variety of services, offered by it and any potential partners.
Sprint has a small presence in the local phone business, serving mostly rural and suburban markets. The new strategy could move the company into larger markets and intensify its competition against the Baby Bells, analysts said.
Last week Sprint finalized plans to take management and ownership control of Sprint PCS, its wireless joint venture with three cable companies.
Sprint's long distance network covers the United States, but its reach will be extended through metropolitan broadband networks available in 36 major markets nationwide in 1998 and in a total of 60 markets by next year. The company said these networks will allow Sprint ION to pass through 70 percent of large businesses without having to use DSL, or digital subscriber lines.
Cisco Systems will provide customers equipment, the capability of voice-over-ATM for ION, and the ability to connect to other carriers' legacy circuit-switched networks. In addition, Sprint will be one of the first in the industry to use Directory Enable Networks (DEN) standard. Networks with DEN place information about users and their services on ION to provide security and better performance for a variety of networked applications.
Bellcore will provide the central software framework that is the core intelligence of ION, in addition to the telephone functions commonly used today.
Finally, Radio Shack will provide customer service support for the new network, building on an already established relationship with Sprint. With 6,900 locations across the country, Radio Shack said it has a store within a five-minute drive of 94 percent of the population.
Reuters contributed to this report.