Bay Networks Forms Alliance With NetSpeak

Bay Networks Inc. has formed an alliance with NetSpeak Corp. to develop and sell technology that allows voice, fax and video transmissions to be carried over the Internet.

As part of the agreement, computer-networking equipment maker Bay Networks will pay about $37.6 million for a 9% stake in NetSpeak, which makes software for the Internet phone technology.

The partnership is the first stage of Bay Networks’ strategy to offer complete Internet phone technology as a feature of its networking equipment. The technology will allow businesses to use one network for voice, data and video communications while saving costs on traditional long-distance calls.

“Converting phone calls into computer data means that 32 phone calls can be carried on the same circuit that today carries only one,” said Jeff Ferry, Bay Network’s director of public relations.

Transmitting voice as data over the Internet reduces long-distance fees since only a local call is necessary to reach the Internet.

For NetSpeak, the new partnership gives the company access to a major marketing and customer support organization.

“All our partners are in the telecommunications industry. Bay Networks is a world-class leader in networking with worldwide sales and service,” said Robert Kennedy, president and chief executive of NetSpeak. The alliance presents “an opportunity for us to accelerate our product development and, because of Bay Network’s stature, it’s an opportunity to further advance the standards in the industry.”

In Nasdaq trading, Bay shares slipped 13 cents to close at $26.56, while NetSpeak shares fell $2.88 to $24.25.