BellSouth, the Atlanta-based regional telecoms group, reached a networking agreement with Sprint Nextel that will enable to two partners to offer advanced data services to business customers across the US.

The deal is viewed as an important strategic move that will enable BellSouth to compete more effectively with its rivals, SBC Communications and Verizon Communications, in the expanding advanced business communications market.

The agreement with Sprint Nextel comes as SBC and Verizon wait for regulatory approval for their proposed purchases of AT&T and MCI respectively. Both AT&T and MCI were prized because of their nationwide business customer portfolios.

Under the terms of the agreement with Sprint Nextel, BellSouth’s IP (Internet Protocol) network across nine states in the southeast US will be linked to Sprint’s existing network in other regions using MPLS technology, or multi-protocol label switching.

BellSouth said it would begin to offer services using the Sprint Nextel agreement in the first quarter of 2006.

Terms of the deal were not disclosed. However, it could pose a threat to Qwest Communications, the smallest of the four regional telecoms groups, which had been a large supplier of network access to BellSouth.

Gary Forsee, Sprint Nextel’s chief executive, previously served as vice-chairman of BellSouth and the two companies are sometimes mentioned by industry consultants and analysts as potential merger partners.

In another move, BellSouth said it would launch wireless broadband service based on WiMAX technology in Palatka, Florida. The service will use Navini Networks’ Ripwave pre-Wimax technology.

Although the full WiMAX standard has only just been approved, BellSouth has been testing the technology since 2000 when it launched a test network in Houma, Louisiana. It has also launched services in Athens, Georgia.

Customers in Palatka, a rural community in Florida, will be offered the high speed wireless data service at prices starting at $30 per month - similar in price to the cable and DSL broadband services that are now available in most urban areas.

Several other telecommunications groups also have announced so-called pre-WiMAX deployments, including Craig McCaw’s Clearwire in parts of Texas, Florida, Oregon and Minnesota, Speakeasy in Seattle and NextWeb covering parts of Las Vegas.

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