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SBC Looks to Change California’s Communications

SBC Communications Inc., the company running California’s legacy telephone network, says it intends to offer a new menu of services that will make the carrier look less like the Pacific Bell of old and more like a cable company.

SBC’s new services will range from home entertainment to Internet-based telephone service.

“They want to control the pipe” bringing voice, video and data into homes, observed Ken Kalb, a San Diego telecom executive.

In recent years, wireless carriers, cable providers and specialized voice-over-Internet companies have been taking voice traffic away from the traditional telephone companies.

“The price of voice over wireline is dropping precipitously,” said Kalb, the chairman and chief executive of Continuous Computing Corp., a San Diego telecom equipment maker. With that in mind, Kalb said, it looks as if SBC will offer a menu of services, letting customers pick and choose, and increasing revenue.

In three announcements last week, San Antonio-based SBC said:

– It will offer voice-over-Internet telephone service to residential neighborhoods in San Diego and to other places in its service territory, beginning in early 2005.

– It had inked a $400 million, 10-year agreement with Microsoft Corp. to offer TV service over the Internet, possibly by this time next year.

– Customers who want to get to home television, home audio and other services using the Internet will do so through a link provided by Sunnyvale-based Yahoo Inc.

This month, SBC announced a $4 billion plan to lay more high-speed, fiber-optic telecommunications lines closer to homes. Specifically, it will upgrade its network to 18 million households in its 13-state service area by the end of 2007. It was unclear whether San Diego was slated for such work.

Voice-over-Internet-protocol telephone service, abbreviated as VoIP, requires a high-bandwidth Internet connection. The service is increasingly common in corporate and institutional settings. The service sends calls over the Internet instead of via the traditional, circuit-switched telephone network.

SBC rival AT & T; began offering residential VoIP service in San Diego in April.

SBC will sell VoIP service to people using its high-capacity digital subscriber line service. The company has been testing the residential service in Los Angeles, Chicago and Texas.

SBC did not give a firm date for the start of its residential Internet-protocol telephone service, saying only it would begin in early 2005. The company has not yet released pricing.

The Federal Communications Commission made an important ruling on Internet-protocol telephone service Nov. 9, saying VoIP was an interstate service and exempting it from state-by-state regulation. The federal agency’s ruling “encouraged” SBC to bring Internet telephone service to market, SBC said in a press release.

Field trials on the Microsoft TV software are set to begin in mid-2005. SBC plans to make the service commercially available late in the same year. The company says it plans to offer services such as video on demand and digital video recording.

SBC and Yahoo already collaborate on dial-up and DSL service for Web surfers. Going forward, the partners will offer the portal to home television and audio systems, Wi-Fi hot spots such as those found in coffeehouses and libraries, and wireless phones on the Cingular network. SBC holds a 60 percent interest in Cingular.

SBC Communications trades on the New York Stock Exchange under the symbol SBC. Its stock closed Nov. 18 at $26.11.

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