The plan could transform the economics of the entire phone industry and is the result of a secret, five-year, $2bn development programme code-named Project FastBreak.

William T Esrey, Sprint's chairman, called it "truly ... the Big Bang ... of what telecommunications can do in our homes and businesses."

With this project, Sprint is effectively abandoning the traditional voice-transmission networks and replacing it with a new Integrated On-Demand Network, or ION. The company says the new phone system could be available to customers in late 1999.

Telephone goes Internet

The new network is based on the same technology as the Internet, but will allow phone companies to carry virtually unlimited amounts of voice, video and data communication.

ION phones could drastically change the phone habits of consumers:

• Sprint predicts that the new system will cut phone costs by more than 70%.
• Modems will be 100-times faster than today.
• Callers would not be charged for the number of minutes spent on the phone or on the Internet, but on the amount of data delivered.
• Video conferencing could make a breakthrough. As ION networks can carry huge amounts of data, the days of jerky pictures at video conferences would be gone. Full-motion video and perfect sound could come through the phone line. And as prices drop, not only businesses, but families and friends as well could afford a video phone.
• Video phone call charges are expected to drop below the cost of a current long-distance call.

How to get online

However, before customers can go online in late 1999, they will have to make one big investment. Before they can connect their home to Sprint's integrated network, they will have to invest in a new metering equipment, which is expected to cost about $200.

The old networks of local phone companies would have to connect the customer to Sprint's phone network, which will rely heavily on new fiber optic data lines fast enough to transport the huge amounts of multi-call data pouring out of homes and companies integrated into the network.

Christine Heckart, a vice president with the consultancy TeleChoice, said that "if they do what they say they are going to do, this is a big deal. It's a completely new way to run a phone company."

And Jeffrey Kagan of Kagan Telecom Associates, predicts a revolutionary change in how phone companies operate. Today's phone network, he says "is the product of 100 years of incremental improvements."

But to survive the "data marketplace," says Kagan, phone companies will have to re-invent their networks.

Sprint is first - but not alone

Sprint is the first company to offer an ION network, but its plans are not unique.

Rivals like AT&T, WorldCom and other major players have all declared their intentions to build such integrated networks. They discounted Sprint's announcement, saying that the company was only going down the same path they had already chosen.

Nonetheless, the stock market liked the news. Share prices of Sprint and several companies associated with the phone carrier were on the way up.