SBC Communications Announces Advances in Initiative to Develop IP-Based Residential Network for Integrated Video, Internet, VoIP Services

SAN ANTONIO--(BUSINESS WIRE)--June 22, 2004--

SBC Companies and Microsoft Begin Testing IP-Based, Digital TV Services over Fiber; Regulatory Clarity Advances Multi-Billion Dollar Network Investment

“We are now more optimistic that we may be headed toward rational, market-oriented regulations that will promote investment and deployment of new capabilities.”

SBC Communications Inc. (NYSE:SBC) today announced key advances in developing a network capable of delivering a new generation of integrated digital TV, super-high-speed broadband and voice over IP (Internet Protocol) services to residential and small business customers.

SBC companies have defined a strategy to drive fiber deeper into its networks to power high-speed, IP-based local connections. Pending final clarity on applicable regulatory requirements and successful completion of neighborhood-level trials, which begin this summer, the SBC strategy could result in an incremental investment of $4 billion to $6 billion over five years to deploy the network and make advanced services available to millions of customers in the SBC service territory.

"Fiber technologies and IP-based services will enable a communications revolution, allowing consumers and businesses to experience integrated video, data and voice services beyond what can be provided over any network today," said Edward E. Whitacre Jr., SBC chairman and CEO. "This next generation of services will require us to revolutionize our local networks as well, which we will do as economic and regulatory conditions make practical.

"The recent decision by the Bush Administration to allow unlawful telephone wholesale rules to lapse and let stand the FCC's decision not to unbundle broadband is a positive step," said Whitacre. "We are now more optimistic that we may be headed toward rational, market-oriented regulations that will promote investment and deployment of new capabilities."

An IP network can provide a highly flexible infrastructure for fast delivery of advanced services, while also reducing maintenance and upgrade costs when compared with traditional networks. SBC companies would create the new network by deploying fiber deeper into neighborhoods and using IP technology to deliver video, voice, data and other advanced services and applications over a single network connection. The services could be accessed and shared via any number of IP-enabled household devices, such as TVs, set-top boxes, PCs, PDAs or phones.

SBC companies also are pursuing development of new services that can take advantage of the network's bandwidth. For example, SBC companies and Microsoft have begun testing an IP-based switched television service based on the Microsoft TV IPTV platform. This infrastructure would enable a new type of next-generation digital video entertainment experience, offering features like standard and high-definition programming, customizable channel lineups, video-on-demand, digital video recording, multimedia interactive program guides, event notifications and more. IP-based television services also will enable household TV devices to participate in connected home experiences with other devices in the home.

SBC companies and Microsoft plan to begin field trials for the IP-based television platform later this year. The SBC trial is the first planned trial of the Microsoft TV IPTV platform with a U.S.-based telecommunications provider.

The SBC Fiber Roadmap

SBC companies are focusing on a strategy that would drive fiber much deeper into local neighborhoods. First, the company would shift new network investments toward IP-based services over fiber. In most cases, SBC companies would deploy Fiber to the Premises (FTTP) for new network builds, such as developing subdivisions. While well-suited for new construction, the cost, deployment time and customer inconvenience required for FTTP deployment in existing neighborhoods makes widespread deployment impractical for SBC companies and potentially undesirable for some customers.

In existing neighborhoods, SBC companies would use Fiber to the Node (FTTN) technology to run fiber much deeper in its network to nodes that serve 300 to 500 homes. From the nodes to each home or small business, SBC companies would continue to use their existing network connections. FTTN enables significantly higher broadband speeds than any residential service offered by a major carrier in the U.S. today, with download speeds of 15 to 25 megabits per second (Mbps) and upload speeds of 1 to 3 Mbps dedicated to each customer. The Microsoft TV IPTV platform would make it possible to deliver standard-and high-definition TV programming to multiple TV sets in the home over an FTTN network while leaving ample bandwidth available for super high-speed broadband and Voice over IP (VoIP) services.

The FTTN/FTTP strategy would deliver an optimal balance of network capability, cost, speed of deployment, and convenience for customers. FTTN provides a highly efficient means of delivering next-generation services over a relatively short deployment timeframe, while also providing a framework for eventual replacement of copper connections directly to homes and businesses, if and when the technology, economics and customer demand are ripe.

"After evaluating a full range of technologies and deployment scenarios, we're confident that our FTTN/FTTP strategy is an ideal solution to deliver the next generation of IP services, and to evolve our network to meet customers' communications needs for decades to come," said Chris Rice, SBC chief technology officer and executive vice president - services. "The strategy would allow us to deliver advanced integrated services to our customers, while at the same time maintaining the highest levels of discipline and responsibility with our capital investments."

Fiber Strategy Expands SBC Commitment to Broadband Leadership

These milestones in the SBC next-generation network strategy come five years after the company launched Project Pronto, a major initiative to deploy high-speed DSL Internet access service across its service territory. Today, the SBC family of companies is the nation's largest DSL provider, with nearly 4 million DSL lines in service, and the second-largest and fastest-growing broadband provider overall.

Additional fiber deployment would build on the Project Pronto network enhancements by pushing fiber even closer to customers. A key element of Project Pronto was to push fiber to remote terminals to bring fiber-optic bandwidth within 12,000 feet of tens of millions of homes and businesses. With FTTN, SBC companies would deploy fiber from these remote terminals to nodes within 5,000 feet of homes and businesses.

"This strategy would be a substantial shift in the structure of the SBC network, but it is also the next step in a transformation process that we have invested in for years," Rice said. "From our backbone networks to the 'last mile' connections to homes and businesses, we have been bringing the power of fiber-optic connections closer and closer to customers to 'future-proof' our network and meet their bandwidth needs for decades to come."

SBC companies for years have been leaders in the development and deployment of fiber-optic and IP technologies. SBC companies maintain a powerful national IP backbone network to carry business and residential traffic, and the companies today provide one of the industry's most comprehensive IP service portfolios for business, including VoIP and VPN solutions.

SBC companies began developing one of the nation's first "green field" FTTP deployments in 2001 in the Mission Bay community in San Francisco, and earlier this year announced FTTP trials in the Pabst Farms development in the Milwaukee area, as well as in Canton, Mich.

SBC Communications Inc. (NYSE: SBC) is a Fortune 50 company whose subsidiaries, operating under the SBC brand, provide a full range of voice, data, networking, e-business, directory publishing and advertising, and related services to businesses, consumers and other telecommunications providers. SBC holds a 60 percent ownership interest in Cingular Wireless, which serves more than 24 million wireless customers. SBC companies provide high-speed DSL Internet access lines to more American consumers than any other provider and are among the nation's leading providers of Internet services. SBC companies also now offer satellite TV service. Additional information about SBC and SBC products and services is available at www.sbc.com.