Nortel to replace Qwest's network

Telecommunications equipment maker Nortel Networks announced Thursday that it will build Qwest Communications a new network.

Nortel will supply Qwest with gear that helps transport Internet, voice and data traffic using IP packet technology, which will be used to build a replacement network for Qwest's current circuit-switched network that operates in 14 states.

The new network will pave the way for Qwest to use gear that operates on voice-over-IP (VoIP) technology and comes during a year when Qwest and others have cut equipment spending, showing that telecommunications carriers see the need to innovate their networks so they can offer new services for which they can charge their customers.

VoIP technology runs on IP (Internet protocol) as opposed to older switch technology. Switch technology delivers voice data in its entirety, while IP gear breaks up the data into smaller packets then transmits them where they are reassembled at their destination. Other VoIP equipment makers include Sonus, Lucent Technologies and Cisco Systems.

Nortel says VoIP gear could allow Qwest to bring new data services to its business customers at a lower operating cost for the carrier.

Examples of services include video caller ID, which will alert customers of incoming phone calls by displaying an alert on their computer or TV screens, and desktop video conferencing.

Sources close to the deal told CNET News.com that the transaction is worth at least $100 million for Nortel.

The equipment Qwest will buy includes Nortel's Succession Communication Server 2000 and trunking gateway gear, which basically acts as a kind of funnel that collects and organizes incoming and outgoing traffic.

Nortel's packet-based equipment is already carrying live traffic for Qwest in Boise, Idaho.