SBC Orders From High-Fiber Menu

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SBC Communications Inc.'s three-year, $6 billion
broadband-upgrade plan breaks new ground for telcos using digital technology to deliver
video and voice over copper phone lines.

Confronting multiservice competitors head-on, SBC said it
would push fiber deep enough so that by the end of 2002, 80 percent of its customers will
be within reach of asymmetrical-digital-subscriber-line platforms delivering full-screen
video and multiple lines of packetized voice service.

This translates into service at operating speeds of 1.5
megabits per second or better to 80 million people, including 48 million able to tap into
6-mbps service, officials said.

"We see a rapidly changing marketplace where
traditional dialtone is still a staple service, but where millions of our customers will
demand the convenience, productivity, availability and reliability of our broadband
service," SBC CEO Edward Whitacre Jr. said in a prepared statement.

SBC intends to extend its new service strategy
out-of-territory, as well, with plans to become a competitive local-exchange carrier
offering voice and data over ADSL links in 30 major markets, managing director for
technology and product planning Ed Reisner said.

"We'll start in mid-2000 with Boston, Miami and
Seattle, and proceed at a pace of one or two additional cities per month from then
on," he added.

SBC will install the same ADSL gear everywhere and link
markets through a broadband backbone supplied by Williams Communications Inc. But outside
of its territory, service data rates will depend on existing copper-line deployments.
"We don't have any hard plans to start laying any fiber or copper out of
territory," Reisner said.

Along with being the first incumbent LEC to break the
unspoken noncompete pact among major telcos, SBC will be the first to use ADSL technology
to deliver multiple lines of voice. The company is willing to cannibalize its second-line
business with a cheaper multiple-line product in order to phase out copper installation
and to exploit the power of packet-based communications, Reisner said.

Delivering ADSL services at data rates of 1.5 mbps or
higher requires using fiber to reduce the length of copper line carrying data into homes
and businesses.

SBC currently offers ADSL services over as much as 17,500
feet of copper. In those cases, the data rate falls to as low as 384 kilobits per second.

The company also offers a higher-priced ADSL service at 1.5
mbps to customers within 12,000 feet of certain central offices. But at 9,000 feet, the
data rate rises to 6 mbps, Reisner said.

In SBC's Pacific Bell territory, the company is
extending the reach of high-speed-data service beyond the 17,500-foot mark by hiring a
CLEC to provide so-called IDSL service. IDSL is a packet-based system that operates at 144
kbps in both directions over more copper than ADSL's 17,500-foot limit. PacBell hired
NorthPoint Communications Inc. to supply IDSL facilities.

SBC plans to emphasize video services as part of its ADSL
offerings as the new fiber-termination points are installed, starting next year in
undisclosed locations, Reisner said. "We haven't decided whether we'll
offer the video package through our ISP [Internet-service provider] or another
entity," he added.

These video services will be Web-based content, rather than
traditional cable fare, allowing SBC to capitalize on growing broadband-enhanced content.

SBC's new video-friendly platform will benefit other
service providers, as well, allowing ISPs to highlight entertainment, along with the
always-on and high-speed aspects of broadband.

For example, America Online Inc. -- which has deals with
several telcos to use ADSL for a broadband service -- is working on a TV service under its
"AOL TV" initiative. Version 5.0 of its operating software has modifications
that support access to its services via new ADSL-configured set-top boxes.

SBC is also using new line cards designed to help transmit
ADSL service from remote terminals at the ends of digital-loop carriers. DLCs are
high-speed lines that extend the reach of central-office switches into subdevelopments
that would otherwise require new switches.

Those DLC remote terminals could put SBC in a position to
move to a higher-speed platform, known as VDSL (very high-speed DSL), when that technology
becomes standardized, Reisner said. VDSL is designed to deliver data over copper fast
enough to support multiple streams of cable-TV-quality digital video.

"That will not be a difficult transition for us, but
we're not going to do anything that isn't standards-based," he added.

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