Qwest rival, BellSouth ink network deal
Sprint Nextel's data network will be used to link business offices across the country. Qwest says it's not affected.
By Timothy W. Doyle, Bloomberg News
Denver Post
Wednesday, October 12, 2005

BellSouth Corp., the largest local-telephone provider in nine southeastern U.S. states, has signed an agreement to use a Sprint Nextel Corp. national data network to serve businesses nationwide.

The contract will allow BellSouth to use Sprint Nextel's multiprotocol switching, or MPLS, data network beginning in the first quarter of 2006, Atlanta-based BellSouth said in a statement Monday. Terms of the agreement weren't disclosed.

MPLS networks can be used to quickly connect offices nationwide. In the past, businesses that bought services from BellSouth had to interconnect offices on their own, BellSouth said.

The agreement won't affect BellSouth's agreement with Denver-based Qwest for other data services, BellSouth spokesman Todd Smith said. Qwest provides BellSouth with non- MPLS services, and the contract with Sprint Nextel is the first agreement for BellSouth to use a nationwide MPLS network, he said.

"This does not impact our business with BellSouth. It appears that this is a different agreement they signed with Sprint Nextel," Qwest spokeswoman Claire Mylott said.

But Jeffrey Halpern, a Sanford C. Bernstein & Co. vice president and senior analyst, said Qwest could lose "several hundred million annually."

"We believe this could be a significant negative for Qwest, which is currently a large provider of wholesale transport services to BellSouth," Halpern said in the report. "Qwest also has an MPLS backbone network, suggesting technology alone was not the deciding factor."

Shares of Qwest closed down three cents Monday at $4.19.

Staff writer Kimberly S. Johnson contributed to this report.