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Ameritech goes slow on high-speed lines

The telco breaks from its Baby Bell brethren with $3 billion in investments for the next year without committing to high-speed Net access.

Ameritech broke from its Baby Bell brethren today, announcing $3 billion in investments for the next year without committing to high-speed Internet access for consumers in its territory.

The last week has seen a stampede of local telephone companies toward investments in DSL, or digital subscriber lines, a high-speed Net access technology that uses existing phone lines and competes with cable services such as @Home.

SBC Communications said yesterday that it would triple its investments in California this year, along with introducing the technology in its five-state territory and cutting starting prices to $39.95 for the service. Bell Atlantic countered today with its own accelerated plans and an agreement to sell the service with America Online.

But an Ameritech spokesman said the company would not develop its own plans for a broad consumer high-speed Internet strategy until federal regulators make a critical decision on new rules for the service, expected by the end of this month.

"We're looking at it on a case-by-case, customer-by-customer basis," spokesman Frank Mitchell said. The company does offer DSL service in three communities in its Midwestern territory but will not move toward a broad rollout until the Federal Communications Commission has decided how the service will be regulated, he said.

Ameritech and other Baby Bells have criticized a pending FCC proposal that would force them to offer their high-speed Internet lines to competitors at discounted wholesale rates, or else offer the service through a financially separate subsidiary.

A coalition of local phone companies recently joined with computer companies led by Compaq and Intel to petition the FCC to allow them to offer the high-speed Internet service directly, without distributing it for resale by their competitors. Ameritech was the only major local phone company not included in this group.

The FCC is expected to rule on the proposal at its January 28 meeting.

Merger means more uncertainty
Ameritech's pending merger with SBC, which itself must be approved by the FCC, throws the company's investment plans into further uncertainty.

Most of the $3 billion in network infrastructure upgrades announced today are likely to occur even after ownership of the company changes hands, Mitchell said. Much of that total will be used to improve the company's data networks, improving data transmission and rolling out new high-speed access service for businesses.

But the two companies have taken different tacks on some services such as Internet and cable TV.

SBC has emerged as one of the most aggressive DSL players and has said it wants to roll out its strategy to Ameritech territory.

"We want to offer customers in all our territories--which we hope will one day include Ameritech--the kinds of high-speed products and services they need and want at competitive prices," SBC chief executive Edward Whitacre said in a statement yesterday.

Ameritech, meanwhile, has focused heavily on providing cable TV service, with franchises that serve 1.6 million customers in the Midwest. SBC originally was a part of this venture but dropped out early on.

SBC has not yet said whether it wants to continue investing in cable TV franchises. "It's hard to speculate on what a new set of owners will do," Mitchell said. "We haven't gotten to the point where we're jointly planning with them."

Ameritech's cable franchises do not offer high-speed Internet access, so they would not yet provide competition for an SBC move to offer DSL service in this territory.

The company's stock closed up 1.06 to 62.56 in trading today.