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US West begins national expansion

The smallest of the local phone giants moves into SBC Communications' territory, kicking off a high-speed Net service in Sacramento.

The smallest of the local phone giants today announced a move into SBC Communications' territory, kicking off a business-focused high-speed Net service in Sacramento, Calif.

That's the first step in a dance that will bring it to San Diego, San Francisco and San Jose later this year, and 21 other cities by the end of next year, executives say.

As previously reported, the move is an early sign of the blurring of the once-sharp lines between the "Baby Bell" phone companies, which have existed as monopolies or near-monopolies in their own geographic territories for more than 15 years.

"This is a very strategic effort on the part of US West and the combined company, as part of an effort to establish a beachhead across the country," said Steve Starliper, vice president of US West's national integration division.

US West, which is the primary communications provider in a 14-state region across the Mid- and Northwest, is facing steep competition in its national ambitions, however.

The other, larger local phone companies also are looking for national footprints. SBC Communications has committed to entering 30 new cities in 30 months as it delivers on promises to regulators made in the course of its merger with Ameritech.

Bell Atlantic, which is trying to merge with giant GTE, also has national dreams. Already the company has garnered a coast-to-coast wireless footprint by merging operations with Vodafone under the new Verizon Wireless brand name.

US West's initial services will be geared for small and medium-sized businesses seeking either a relatively low-cost high-speed Net service, or a full package of services ranging from Web design and hosting to the Net access itself.

The company will also pursue individual buildings as customers, using Qwest's network to help wire them with high-speed connections accessible to multiple tenants.

That's just the first stage of the plan, however. Starliper said the company plans to offer services for work-at-home businesses and consumers in the new markets within a year or 18 months of beginning service.

The company hopes its expansion will generate "hundreds of millions" in revenues over the next five to seven years, Starliper said. During the first quarter US West generated $3.4 billion in revenues, and its pending merger partner Qwest recorded $1.22 billion in revenues.

He noted the expansion is valued more for its strategic position than the size of its contribution to the overall revenue pie.

SBC, which will be the first major company with which US West competes, downplayed the effect of its new rivals.

"We welcome competition," said John Britton, a spokesman for Pacific Bell, SBC's California division. "When new companies come in and start cherry-picking business customers, there's already dozens and dozens of companies doing that. They're not offering anything new for most customers."

US West's merger with Qwest has already been approved by federal regulators, but still faces scrutiny by some states.

News.com's Dawn Kawamoto contributed to this report.