Tuesday, May 31, 2005

SBC Sees DSL as Foundation for Next Gen Services

"Broadband is much more than just another add-on service... broadband is the foundation for the newxt generation of wireline services," said Rick Lindner, CFO of SBC Communications, speaking at the Lehman Brothers conference in New York. "That's why we/ve made broadband a high priority and why you can expect us to remain aggressive with DSL. Speaking to investors, Lindner outlined a roadmap for SBC based on five strategic initiatives: broadband, wireless, service integration, business markets, and cost savings.

In broadband, SBC added more than 504,000 DSL lines in Q1, ahead of its industry peers, giving the company more than 5.6 million broadband customers. Lindner said SBC is now winning more than 50% of new broadband customers in its territory. He noted that penetration has increased from 13% a year ago to 20% overall. In California and Nevada, consumer penetration is now at 25%. Lindner also said the alliance with Yahoo! has been a plus. One third of new DSL customers are also buying a home networking solution from SBC. Meanwhile DSL churn rate is down over the last year. DSL is also the stickiest product in the SBC consumer service portfolio.

Project Lightspeed lab testing is "progressing very well," said Lindner. In its trials, SBC has seen seen data rates of up to 25 Mbps over 4,000 ft. of copper, which he considers to be very good considering that most Project Lightspeed end customers are expected to be at under 3,000 ft. Lindner is also optimistic that the new "U-Verse" brnaded services enabled by Project Lightspeed will be warmly received by consumers as well as regulatory policy makers.

Regarding the recent regulatory fight in Texas, Lindner expressed disappointment that the IPTV bill it support did not come up for a vote before the legistative session ended because SBC believes the bill would have passed. Even so, SBC will not change its Project Lightspeed plans. Lindner contends that Project Lightspeed does not fall under traditional broadcast television regulation because it will use an advanced two-way network.

In wireless, the new Cingular has tremendous scale, extensive spectrum, and is preparing to launch 3G UMTS with HSDPA in its first 15 major markets by the end of this year. Other markets will be added in 2006. Cingular's migration to GSM is going well, said Lindner, with 84% of minutes now riding the GSM network.

As for integrated services, SBC has been very successful with its consumer bundles to date. The new challenge, said Lindner, is to transition from product bundles to integrated networks. Architectures such as IMS will improve interoperability across wireless and wireline networks. Lindner believes this integration will be an important key for differentiation for SBC.

In enterprise services, SBC is looking to its pending acquisition of AT&T to significantly boost its industry presence. The AT&T acquisition will add a global network and strength in enterprise services, especially IP VPNs for large companies.

A final opportunite for SBC is to reduce its overall cost structure. To this end, SBC is enhancing its online capabilities and streamlining and standardizing all its operating procedures across all its services. The new announced $14.95 DSL promotion is an example of a new offering that is available only online and for self-install customers.

See also