updated 8/25/2004 2:37:15 PM ET 2004-08-25T18:37:15

Sprint Corp. and cable television provider Mediacom Communications Corp. announced an agreement Wednesday that will allow Sprint to offer Internet telephone service to Mediacom's 2.7 million household subscribers.

Middletown, N.Y.-based Mediacom, the nation's eighth-largest cable provider, said it hopes to begin offering the service to its customers in 23 states early next year.

Terms of the deal were not disclosed.

This is the third agreement Overland Park, Kan.-based Sprint has announced in the last eight months in which it will help a cable provider offer telephone services using a technology called voice-over-Internet protocol, or VoIP.

Earlier this month, Sprint said it was teaming up with USA Companies of Kearney, Neb., to provide services to that company's 63,000 subscribers. In December, the company agreed to provide VoIP services to cable giant Time Warner Cable, with 11 million customers.

With VoIP, customers make calls with their regular phones, but the calls travel as packets of data over the cable going into their home or business as opposed to the traditional telephone line.

Once the data reaches a switching station, the call is transferred to Sprint's phone network and into the format that reaches most phone users.

The technology helps cable companies include telephone service in their package deals to customers, allowing them to compete with local telephone companies that are increasingly providing video and high-speed Internet services of their own.

"We were looking for somebody with a quality brand name and reputation in the industry, someone who had a strong presence in wireless and who would allow us to develop new services as the market evolves," said John Pascarelli, executive vice president of operations for Mediacom.

Mike Smith, Sprint's director of business development, said the two companies are also negotiating for Mediacom to offer Sprint's wireless telephone service in the near future.

"It's the next logical step in the business relationship," Smith said.

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