The telecommunications industry is changing rapidly in its quest to converge voice and data on high-performance multiservice networks that are designed to meet virtually any business and consumer need. These nextgeneration networks are being driven as much by the revenue-generating potential of new integrated applications as they are by the promise of more efficient, low-cost, easier-to-manage networks that will provide operators and users significant competitive advantage in the global economy.

The focus of the telecommunications industry is on packet-switching networks—the kind that make the Internet possible—whose performance doubles every year. By contrast, conventional circuit-switching networks—the kind that carry ordinary phone calls—take at least four years to achieve the same improvement. With traffic doubling on the Internet every six months, only packet switches have a chance of keeping pace. In fact, several major regional and long-distance telephone companies have announced that they are beefing up their investments in packet-switching technologies and cutting back on spending for circuit-switching technology. An emerging generation of routing switches handles massive amounts of IP packets—for voice as well as data—at a performance and cost dramatically different from that of the past. In 1998 alone, prices for data network equipment have dropped by a factor of 10, while performance has gone up by about the same amount. Packetized voice allows many conversations to take place over the same bandwidth pipe simultaneously.

And what takes 64 Kbps on a traditional voice network can fit into 8 Kbps and less on a packet-switched network without a perceptible loss of quality. Carriers can offer multiple services more efficiently and cheaply by moving them onto a single, improved packet-based infrastructure.