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Atlanta -- Local-exchange carriers, speaking in a unified
voice not heard in years, made it clear last week that they have given vendors marching
orders to quickly create a transition path from their current foundation in
circuit-switched telephony to the all-data network of the future.

That path -- based on ever-tighter integration between the
service development and provisioning flexibility of IP (Internet-protocol) technology and
the trafficking and network-management power of ATM (asynchronous transfer mode) -- has
also begun drawing support from next-generation competitive LECs such as Level 3
Communications Inc. and Qwest Communications International Inc., sources said.

"For the first time, fully one-half of the traffic
that Ameritech will carry on our network will be between computers, instead of
people," said Ameritech Corp. CEO Richard Notebaert, in a keynote speech at the
Supercomm convention here that set the tone for the industry's new thinking.

"And if data traffic continues to grow at its present
rate, the percentage will grow to something like 99 percent of all network-traffic minutes
by the year 2010," he added.

Sounding like his competitors, Notebaert readily
acknowledged that the advanced-digital circuit-switching systems that the telcos have
invested billions of dollars in over the last 10 years or so are "a limiting
factor." And packet-switched technology, as currently deployed, "does a fairly
poor job with voice."

But, he said, there's a solution, making it clear to
some 45,000 attendees at Supercomm that Sprint Corp. is not alone in the
local-broadband-entry strategy that it outlined two weeks ago.

The circuit-versus-packet switching dilemma "is not an
insurmountable problem, as Sprint's recent announcement of its 'Integrated
On-Demand Network' [ION] clearly indicates," Notebaert said.

"Packet switching with a high-quality voice overlay
soon will become a reality. And when it does -- that is, when the quality is at least
equivalent to that of current voice technology -- we'll incorporate it into the 1,480
central offices in our network," he added.

Evidence of vendor support for this transition was
pervasive at Supercomm. Players from telecommunications and data joined in several
initiatives aimed at linking the IN (intelligent-network) capabilities of the SS7
digital-switched-circuit world with the IP-voice environment.

At the same time, many vendors announced new types of
integrated IP/ATM switches, following the lead of Cisco Systems Inc., the supplier of new
integrated-edge switches for Sprint's ION.

The SS7/IP alliances included one led by Microsoft Corp.
and Compaq Computer Corp.; another spearheaded by Sun Microsystems Inc.; and a third
behind Stratus Computer Inc.

All of the alliances are taking various approaches to
easing the implementation of features that are common to the IN domain. Those features
include 800 numbers, caller ID and other advanced services, in addition to network
monitoring and management, over IP-voice connections that interface with the
public-switched-telephone network via H.323 standard IP-voice gateway and gatekeeper
(directory record-keeping) servers.

Those alliances largely involve key computer companies,
with smaller innovators on the telecommunications side.

But a much more telco-centric move in this direction was
under way in an unannounced initiative at Bell Communications Research (Bellcore), which
is tuned to its role as the supplier of network-management software in Sprint's ION

"You will see a very major product announcement in
this area from Bellcore in the near future," Bellcore president and chief operating
officer Sanjiv Ahuja said.

As described by another Bellcore executive, speaking on
background, the company -- which is now a subsidiary of Science Applications International
Corp. -- will introduce a telco-oriented IP-gateway-server system in September. That
equipment will go well beyond any system that is currently on the market in supporting
carrier-class services over IP.

"We believe that we're in an extremely good
position to deliver what the market needs because of our long history of developing the IN
and network-management tools for the local-exchange industry," the source said,
adding, "We believe that quality of service over IP will reach toll quality sometime
in 2000."

Initially, the importation of IN features into the IP
domain will allow traditional and new local-market entrants like Sprint to add value to
IP-voice services.

That would happen during the time frame in which such
services are expected to remain significantly cheaper than circuit-switched voice, but
somewhat lower in quality.

When voice quality, call latency and ease of use are
finally on a par with toll quality, the price difference between the two types of service
is expected to go away.

That would leave the advantage to IP on the basis of the
feature-rich potential of applications like IP-video telecommunications and its
integration into data-networking backbones. This, in turn, would eliminate the need for
networks devoted separately to voice and data.

Nothing better illustrates the direction in which the PSTN
is headed than the work under way at Lucent Technologies' "elemedia"

Lucent's elemedia is a software group devoted to
parlaying the company's research and development in voice compression and software
coding into an IP-centric suite of products.

"Everything that we do is focused on carrier-class
IP-voice systems that will be able to support thousands and, eventually, hundreds of
thousands of simultaneous calls through a single gateway," elemedia president Joseph
Mele Jr. said.

Mele added that elemedia's strategy entails building
tool kits that allow applications developers to create carrier-class IP-telephony products
that can handle all of the billing, SS7, OSS (operations-support system) and other tasks
required by telephone companies.

All of that would be possible while using software to
eliminate the need for any hardware other than the computer servers that are used in the
H.323 architecture to perform various protocol conversions.

In fact, Mele noted, the software performing all of these
functions, as well as the basic H.323 functions, will be able to work on Class 5 switches,
thereby turning the embedded computerized-switching systems into high-end IP gateways.

"We currently support voice and fax and, by the end of
the year, we'll build in a soft modem for data [at 56 kilobits per second],"
Mele said. "And we'll have soft-modem support for ADSL.Lite in the first half of
next year."

Those soft-modem capabilities mean that signals coming into
the IP-gateway server over ADSL (asymmetrical digital subscriber line) at the
1.5-megabit-per-second rate of the emerging ADSL.Lite standard will be converted by
software on the gateway server.

This would eliminate the need for use of an ADSL modem at
the server, Mele explained.

Eventually, he added, elemedia will introduce a
software-conversion component for ATM packets coming in over ADSL or other lines, making
it possible to perform an ATM-to-IP conversion at the gateway server without the use of an
ATM module.

Mele said elemedia is in discussions with Bellcore about
the possibility of partnering to bring Bellcore's expertise in OSS and IN into the

Such capabilities will lead to complete transparency
between the circuit- and packet-switched domains on the voice side, while bringing all of
the advantages of feature flexibility that come with IP technology, he noted.

Notebaert made it clear that this is precisely what the
carriers are looking for. "When [this level of transparency] happens, the
public-switched-voice network will become the public-switched-data network, and the
Internet, as we know it today, will cease to exist," Notebaert said.

"With such a robust and ubiquitous network," he
added, "we'll never have to go to the time and trouble of dialing into a private
network when we want to surf the Web. In essence, we'll always be online. And that
capability will enable us to develop applications that we can't even dream of