Verizon has announced it will replace its traditional central office switches with packet switches."Construction of this next-generation wireline network will drive new revenue growth for us as we expand the services we can offer to customers nationwide, as well as make our existing network more efficient while maintaining our high level of network reliability," said Lawrence Babbio, Verizon vice chairman and telecom president, in a statement. "This move is as significant as when the industry began moving from analog to digital technology in the 1980s."Paul Lacouture, president of Verizon\u2019s Network Services Group, also said in a statement, "We are literally taking what is known in the industry as the Public Switched Telephone Network and transforming it. The time is right for this move."Verizon has selected Nortel as the exclusive provider of Verizon's local and long distance Class 4 (tandem) and Class 5 (local) VoIP switches in new offices and multimedia services infrastructure over the next 18 months.Nortel has already begun shipping softswitch equipment for Verizon's long distance, tandem, and end-office networks - equipment that includes Succession Communication Server (CS) 2000 Superclass softswitches and local and long distance access gateways. Other Nortel equipment expected to be deployed by Verizon includes the Passport Packet Voice Gateway, the Succession Multiservice Gateway 4000, the Succession Media Gateway 9000, and the Multimedia Communication Server 5200.In addition to major changes in its core central office infrastructure, Verizon will collaborate with Nortel to upgrade Verizon's enterprise PBX customers to VoIP by interconnecting these PBXs via Verizon's converged network. Together, Nortel and Verizon will target the 13,000 Nortel Meridian PBX systems and 150,000 Norstar key systems used by Verizon's enterprise customers in Verizon's territory. Verizon also plans to deploy and distribute numerous enterprise IP telephony products from Nortel.For residential customers, Verizon will be able to offer a complete suite of bundled services, including local and long distance VoIP service, as well as Internet access, all over a single broadband connection. Residential and enterprise customer traffic will share Verizon's common packet network.Looks to us like a win-win-win for Verizon, for Nortel, and - most importantly - for Verizon\u2019s customers.