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Alcatel wins $1.7 billion SBC contract

SBC Communications taps the French telecom equipment maker to upgrade its network with fiber-optic technology.

SBC Communications has awarded telecom equipment maker Alcatel a $1.7 billion contract to upgrade its network with fiber-optic technology.

Alcatel will provide SBC with network access, aggregation and switching equipment to allow the Baby Bell to offer more Internet-based services to its customers, the companies said Wednesday. The French equipment maker also will help SBC develop its fiber infrastructure to carry video streams delivered on an IP-based network.

The contract is part of SBC's Project Lightspeed initiative to upgrade its copper-wire network to faster fiber-optic lines. SBC is laying the groundwork to begin offering TV programming over the Internet by the end of 2005 as a product of its network upgrade.

"We're moving at light speed to bring IP-enhanced services to customers," Edward Whitacre, chief executive of SBC, said in a statement.

SBC has said it plans to bring its fiber extensions to neighborhood "nodes," but will stop short of installing the lines into homes. Instead, the company is testing other technologies, such as VDSL (very high-speed digital subscriber line) or ADSL 2+ (asymmetric DSL), to boost the copper wires that stretch from the node into the home.

The Baby Bells, which also include Verizon Communications, BellSouth and Qwest Communications, have all publicly stated their support for fiber, which can serve up to 100mbps (megabits per second) of bandwidth into each home. Verizon plans to spend $100 million building fiber into homes by the end of this year and will launch a video service next year.

BellSouth and Qwest, on the other hand, have said they will not build out fiber into homes, but rather upgrade their existing copper lines with VDSL or ADSL 2+.

The Baby Bells are trying to get into video as a way to compete against cable companies. Facing declining wire line subscribers, the Bells are trying to match the cable "triple threat" bundle of voice, video and high-speed Internet access.