The corporate telecoms company said it signed a 950 million pound deal with Nortel Networks of Canada to change its global network to voice-over-Internet protocol (VoIP), which routes telecoms traffic at a quarter of the cost of electronic switches.
The move is a further step in C&W's strategy to focus on global Internet business, which has seen it dispose of its UK cable and C&W Hong Kong Telecom interests and minority stakes in several other companies.
Both say it will be the most aggressive move by any company into VoIP, which is forecast to handle 900 billion minutes of phone calls by 2006 compared with 675 million minutes last year.
VoIP allows telecoms companies to replace much of their bulky switching equipment with Internet servers, using software for work currently done by hardware. The standard is also better at integrating voice and data.
NORTEL FORECASTS MASSIVE VOIP GROWTH Clarence Chandran, Nortel's chief operating officer, told Reuters he expected telecoms companies to spend US$15 billion moving to VoIP over the next four years. The company was also providing the technology to British Telecommunications and France Telecom.
"This is a landmark agreement, not just for ourselves and Cable & Wireless, but for the industry as a whole," he said in a statement.
Nortel, the world's number two network equipment supplier, will manage C&W's VoIP network for 10 years under the contract.
C&W said it was developing new products to take advantage of VoIP, including desktop video conferencing and advanced call redirection services.
It is already investing US$3.5 billion in an Internet network that it says will be more international and reliable than any other.
Corporate Internet business now lies at the heart of C&W after the sale earlier this year of its stake in C&W HKT to Hong Kong's Pacific Century CyberWorks and its UK consumer cable business to NTL .
Earlier it shed holdings in several other firms, including in UK mobile phone operator One2One - now owned by Deutsche Telekom - and in the French operator Bouygues Telecom.
