The following text is copyright 1998 by Network World, permission is hearby given for reproduction, as long as attribution is given and this notice is included.

Is Sprint doing it again?

By Scott Bradner

Network World, 6/22/98

Sprint has not always been the first carrier to market with new
services, but a number of times the company has been the first to
exploit new technology or marketing ideas.

Ten years ago, Sprint was the first major carrier to advertise an
all-fiber phone network, and later the company was the first major
carrier to offer distance-insensitive, long-distance pricing. Now Sprint
has announced Integrated On-demand Network (ION), which, if it
comes to pass, will revolutionize the ISP business and, once again,
the phone service business.

ION is an integrated voice-data service that will involve a wide range
of network technologies from wave-division multiplexing and ATM in
the backbone to digital subscriber lines in the local loop. ION will
permit the simultaneous use of a phone and a Web browser on the
same phone line.

Sprint does face some significant challenges on the path to deploying
ION. For example, Sprint will have to persuade local phone
companies to lease the wire between their offices and their customers,
while at the same time getting space in the same offices for Sprint's
equipment.

It is far from clear if Sprint actually will be able to make a go of ION,
and that may be why the company's well-orchestrated announcement
received a tepid reaction from the stock market.

But the most important part of the announcement was not the
technology. ION will for the first time move away from the model of
charging for voice traffic by the minute.

Instead, Sprint could charge for all communications services by the
quantity of data exchanged, not by time or distance. The more data
you send, the more you pay. This is what I suggested a few weeks
ago as the logical way to charge for services on the Internet.

It will not be easy for Sprint to figure out how much to charge for
transferring a specific amount of data. It would be very easy to come
up with a price that's attractive for voice and fax, and Sprint is
predicting a 70% reduction in the cost of long-distance phone calls
under ION.

But charging that same rate for Web traffic might produce quite a
shock for Web surfers at the end of a month, particularly if they are
checking out the latest photo spreads.

Sprint may also face regulatory barriers to any plan to move away from per-minute pricing of voice calls. For example, how are the regulators going to be able to raise money for the universal service fund under this new pricing model?

And what happens if a call is made to someone served by an old-style phone company, one that still charges by the minute?

Sprint has been able to shake up the often stodgy telephone business before and it is great to see the carrier at it again, even if there may be reasons to question some of the underlying technical and business assumptions.

Disclaimer: We don't do stodgy at Harvard. In any case, the above glee is my own.