From...

June 23, 1999
Web posted at: 1:50 p.m. EDT (1750 GMT)

by Jason K. Kraus

(IDG) -- One year ago this month, Sprint Corp. announced ION, an aggressive plan to build a new high-speed data network from scratch. Today, aiming to get a jump on AT&T's promised high-speed cable service, Sprint announced that it was ready to introduce ION's first consumer offerings. But is Sprint getting ahead of itself?

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Sprint is hoping consumers are ready for a new class of home device. Along with phone service, ION will offer high-speed DSL or wireless Internet-access and data services through a VCR-sized box that plugs into a standard phone line. "What AT&T is offering is just high-speed data over cable," says Joan Jarret, Sprint's director of consumer emerging markets. "Ours is not just high-speed data. It has an interface that lets you control basically all the communications in your house."

The new product is aimed at technically savvy consumers who have a lot of communications devices. So far, the trial has been limited to 30 Sprint employees in Gartner, Kan., with another 30-person trial set to begin. Sprint is confident that it can begin a large-scale rollout in Denver, Seattle and Kansas City by fall, with Los Angeles, Chicago, San Francisco and others by 2000.

In most of these cities, Sprint will be going head to head with AT&T's future cable offerings. "AT&T has the integration message down pat," says Bruce Kasrel, a senior analyst with Forrester Research. "Sprint may be early to market here, but they really don't have a focused message."

The biggest hurdle will be consumer acceptance. It's hard to imagine consumers clamoring to have yet another home appliance unless there is a compelling reason to buy it. Sprint believes the price, which will be a flat rate for unlimited phone and high-speed data access, will be its selling point. The company plans to charge $100 to $150 monthly, depending on the market. "The price is based on the premise that you're spending $150 or more a month already for high-speed data and phone service," says Jarret.

Some say that price is too high. "You've got to be kidding," scoffs Kasrel. "This might be a good deal for small businesses, but it'll be hard to sell to consumers."

In the beginning, Sprint itself will handle the installation of the box, but hopes to sell do-it-yourself kits in the near future. Though Sprint has little experience providing on-site service to residences, Jarret is confident that it can handle the new business, pointing out that the company has a local phone division with 8 million customers in 19 states.

In January, Sprint began offering ION to businesses. The first phase integrates Internet and data services, such as frame relay and ATM, thereby cutting costs. Later in the year, traditional long-distance services will be rolled out along with local phone service and network management services. Sprint will also help companies use ION's services to manage supply chains and plan resources. The new applications will be provided largely by third parties, to be named early next year.