The agreement between telecommunications company SBC and Internet service provider Prodigy calls for using both companies' marketing and distribution resources to make high-speed DSL, or digital subscriber line, available to all customers in their combined service areas.
San Antonio, Texas-based SBC and White Plains, N.Y.-based Prodigy will also work together to deliver broadband content and emerging services, such as home networking and video-on-demand, to their customers, both companies said in a statement.
Under the terms of the deal, which is expected to close in three to six months, SBC said it will make Prodigy its exclusive retail consumer and small business Internet service provider for the estimated 100 million U.S. customers in SBC's service area. In turn, Prodigy said it will run SBC's current 650,000 dial-up and basic DSL Internet customer base, increasing the company's total subscriber base to more than 2 million.
In addition, SBC said it will exclusively market Prodigy services through its marketing channels with the commitment of delivering a minimum of 1.2 million new customers over the next three years to the Prodigy subscriber base. The deal provides SBC with a 43 percent ownership stake in Prodigy, the two companies said.
With the demand for high-speed Internet access, Prodigy said it will take advantage of SBC's Project Pronto, a $6 billion plan announced last month to provide faster online access to about 77 million customers. SBC said the three-year initiative will help make the company the single largest broadband provider in the country, going head-to-head with giants AT&T and MCI WorldCom.
For current customers and future ones, the Prodigy Internet access service--including instant messaging, chat and email--will be co-branded with SBC's regional telephone service brands, including Ameritech, Pacific Bell, Nevada Bell, SNET and Southwestern Bell. The service will also be co-branded with SBC's new telecom brand in the 30 markets the company said it will enter in the next 30 months.
The boards of each company said it has approved the deal but it is still subject to customary regulatory approval, closing conditions and approval from Prodigy stockholders.