Sprint Is Latest Firm to Do Deal With East Bloc : Phones: Antiquated communications systems represent a growing market for U.S. companies.
A growing number of American telecommunications companies, seeking lucrative opportunities to modernize the East Bloc’s antiquated phone networks, have managed to thrust their feet behind the newly parted Iron Curtain.
US Sprint has become the latest to do so. On Wednesday, the nation’s third-largest long-distance carrier said it signed a preliminary agreement to form a pioneering joint venture with two Soviet agencies. The new company, Telenet U.S.S.R., will provide high-speed data and other telecommunications services within the Soviet Union, perhaps by year end.
“As the perestroika process unfolds and economic bridges between East and West are built, modern telecommunications will become even more important,” Paolo Guidi, president of Sprint International, said in announcing the agreement in Washington. Sprint International, formed in January from US Sprint’s international and data network operations, now provides international voice, data and video-conferencing services and products for US Sprint, based in Kansas City.
US Sprint also announced Wednesday that it will take part in a new fiber-optic cable project linking Japan, China, Hong Kong and Singapore.
US Sprint will not be alone among American firms in the Soviet Union. US West, one of the seven Baby Bell regional phone firms, already has signed on to play a leading role in an international consortium that will build a $500-million fiber-optic cable across the Soviet Union. That venture, the Trans-Soviet Line Development Corp., will provide a new high-speed link between Europe and Asia via Moscow and Vladivostok.
Moreover, American Telephone & Telegraph has proposed tripling existing calling capacity between the United States and the Soviet Union by using channels on the Soviet Intersputnik satellite system. AT&T; also recently acquired Istel, a British information company, as part of an announced goal to generate 20% of its revenue overseas within five years. Among its targets for equipment sales are the East Bloc and the Soviet Union.
Meanwhile US West and several other Baby Bells have been “very aggressive” in penetrating East Bloc nations, said Mark Lowenstein, telecommunications analyst for Yankee Group in Boston. US West expects to start work this spring on a cellular phone system for Hungary. Chicago-based Ameritech, another Baby Bell, is discussing a similar cellular project with Polish authorities, Lowenstein said.
Pacific Telesis of San Francisco and a consortium of British, French and German organizations in December won the right to provide mobile telephone service in West Germany, which is about to begin unification talks with East Germany, where only 16% of households have telephones and more than 1 million applications for service are awaiting resolution.
“The potential (market) is practically limitless,” Lowenstein said.
Among the obstacles these ventures must overcome, however, are restrictions on sales of electronic and telecommunications equipment to the Soviet Union and East Bloc countries. But the Bush Administration and NATO countries already are considering easing these restrictions, prodded by requests from the new governments of Hungary, Poland and Czechoslovakia.
In announcing its new venture on Wednesday, US Sprint said its partners are Central Telegraph, an agency of the Soviet Ministry of Posts and Telecommunications that provides international and intercity public telex, telegram and low-speed data communications services within the Soviet Union, and the Institute of Electronics and Computer Science of the Latvian Academy of Sciences. The institute specializes in computer networking technology.
Sprint International’s Guidi also announced that the company will participate in planning construction of a 4,500-mile undersea cable linking Japan, China, Hong Kong and Singapore. The fiber-optic link will tie in with a new transpacific cable that Sprint owns with Britain’s Cable & Wireless.
Another cable covering the same area is expected to begin service this year, but current estimates indicate that it will reach capacity by 1993, when the second cable is expected to be ready, Sprint said.
