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SBC plans billions on high-speed fiber

Microsoft's Internet TV technology is part of what's coming as the carrier races to keep its customers.

CHICAGO--Hoping to better compete against cable and cell phone service providers, SBC Communications has begun a five-year, multibillion construction project to deploy high-speed fiber into much more of its network.

The $4 billion to $6 billion project will enable SBC to sell broadband that's more than five times faster than the service the company currently offers, SBC Chairman Ed Whitacre said here Tuesday during a keynote address at the telephone trade show Supercomm 2004. Over that higher-speed connection, SBC now has tentative plans to sell television programming using Microsoft's Internet-based TV technology, which it will begin testing later this year, along with less expensive Net phone dialing.

SBC had always planned to overhaul its copper network with higher-speed fiber--but at a later time. Construction was pushed forward after it became clear in the last few weeks that a court order striking down telephone network-sharing rules was going to stand, Whitacre said. As a result of the ruling, SBC, Verizon Communications and the two other regional Bell companies no longer have to share their networks with competitors at low government-set rates.

"In short order, our network will be faster and more capable than any other in the United States," he said. "We are set to enter a new era of explosive growth."

The accelerated timetable will put more pressure on Verizon, which has already begun injecting high-speed fiber into its network. Verizon said recently that it plans to connect a million of its customers with new high-speed fiber by year's end. On Tuesday, the company announced that it is deploying advanced packet-switching technology to serve local business and consumer lines in California and Washington state.

SBC also plans to extend fiber into new customers' homes. Older copper connections will remain for existing customers but will be souped up by changes at the "nodes" that serve hundreds of homes at a time, the carrier said.

"While well-suited for new construction, the cost, deployment time and customer inconvenience in existing neighborhoods makes widespread deployment impractical," the company said in a statement Tuesday.

SBC and Verizon are adding fiber as a way to fend off competition from cable providers, which use a fiber-optic network to sell bundles of TV, broadband and less expensive Net phone services. The Bells have matched that bundle with their own collection of heavily discounted broadband, phone and satellite TV services.

Cellular companies, which are beginning to sell wireless broadband, are providing pressure as well, Whitacre said.

In 2002, Verizon, SBC and BellSouth announced plans to deploy the high-speed, high-capacity systems to homes and businesses. In June 2003, they adopted technical standards and issued a joint request for proposals to equipment suppliers. But the slow pace of testing and vendor selection prompted some analysts and investors to question the telephone companies' commitment to deploying the technology.