Lucent Technologies Inc. and Bell Atlantic yesterday announced a $1 billion deal for Lucent to sell the phone company hardware and software to upgrade its call switching system.
The purchase is expected to help Bell Atlantic improve call audio quality and make the system process calls faster.
Switches are the computers that steer phone calls and data transmissions on their way. They read the information -- including the phone number -- that tells the system where to send the call and then execute the instructions.
The five-year deal means an average of $200 million a year for Lucent, which has $23 billion in annual sales.
A Bell Atlantic spokesman said the package is part of about $2.5 billion the company spends annually on upgrading its network.
The key: continuing Bell Atlantic's gradual upgrade to digital systems from analog, in order to let Bell Atlantic prepare for competition from companies with newer networks.
"All the stuff we call advanced services requires digital," Lucent spokeswoman Jane Moulton said. She said a digital network will eventually bring services like video-conferencing reliably into the home.
Bell Atlantic spokesman Harry Mitchell said the digital equipment is also considerably more reliable than analog systems. "It's higher quality with less downtime, and the signal is clearer as well," he said.
Lucent was part of AT&T; Corp. until AT&T; split into three companies last year. The network-equipment company has already had Bell Atlantic contracts worth several hundred million dollars a year, Moulton said.
The two companies were also fighting in court, however. Yesterday's order grew out of a March deal to settle a lawsuit in which Bell Atlantic charged that Lucent impeded competition by refusing to build equipment that Bell Atlantic could make work easily with other vendors' products.
Since the contract was part of a settlement, Bell Atlantic said no other equipment makers bid on the deal. In addition to Lucent equipment, Bell Atlantic's network has switches from Siemens AG and Northern Telecom Ltd.
Pub Date: 4/11/97