They say there's silver lining around every cloud.

Perhaps the silver lining around the cloud of Hurricane Katrina, the most destructive natural disaster ever in the U.S., is the upgrade the storm forced for the Gulf Region's telecommunications networks, especially in and around New Orleans. Infrastructure damaged or destroyed during the storm is being rebuilt and replaced with state of the art equipment and technologies that could portend the emergence of new, cutting edge services for businesses and consumers.

Indeed, the advent of advanced, next-generation services in the storm-ravaged city could be the phoenix that rises from the ashes of the reconstruction of the New Orleans network. At the very least, the services are a positive side-effect of the effort to rebuild communications one year after Katrina.

Nobody knows this better than BellSouth, the incumbent local exchange carrier in New Orleans. Since the third quarter of 2005, BellSouth has incurred approximately $730 million for Katrina-related network restoration expense and capital spending, not including costs expected to be covered by insurance, which BellSouth estimates to be about $250 million.

BellSouth's initial cost expectations were $400 million to $600 million to recover from Katrina. But Smith mentioned in the interview for this story that that estimate is now $600 million to $900 million, and he believes the total cost of Katrina to BellSouth will be close to the $900 million figure.

None of BellSouth's primary switching equipment was flooded during Katrina - but emergency generators and transmission equipment like fiber optic multiplexers were, according to BellSouth CTO Bill Smith.

Read how other carriers rebuilt their networks in our Katrina anniversary package:

* Rewiring New Orleans

* Hell or high water