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Bell Canada hears VoIP calling

The phone company says it will buy $146 million worth of Nortel Networks equipment to begin converting its old-fashioned telephone network to one based on the Internet Protocol.

Bell Canada, one of Canada's largest phone companies, is converting its telephone network into one based on the Internet Protocol, the company announced Monday.

The changes will let Bell Canada sell new commercial services such as video calling or sharing documents over a telephone line, to begin mid-2004, according to a statement from the carrier.

Bell Canada is among the first Canadian carriers to commit to changing its old-fashioned analog network into one using IP, which is the world's most popular method for digital devices to communicate with one another. It joins U.S. carriers, including Verizon Communications and MCI, which began the conversion a few years earlier.

Most carriers are shifting to Internet telephony to make networks more efficient at a time when corporate spending and overall revenue are down. By converting to IP, bandwidth usually wasted during a call on an old-fashioned network, for example, during dialing or the pauses in a conversation, can be used to route other calls.

Because it uses IP, the networks can also shuttle different kinds of media over one network. Carriers usually build separate networks to deliver voice, data and video to customers. As a result, new services such as videoconferencing are the result.

"IP telephony will fundamentally alter the way people communicate with one another over our network, with the same impact that the Internet itself has had," said Bell Canada Chief Executive Michael Sabia.

One of the biggest winners in Bell Canada's decision to convert to IP is its longtime gear supplier Nortel Networks. Bell Canada said in the next three years it will buy about $146 million of Nortel's switches that are based on voice over IP software .