TELEPHONE SERVICES Companies announce network upgrades
Phone companies invest to try to stay relevant.
DALLAS MORNING NEWS
DALLAS -- Faced with the prospect of losing customers in a battle of speed and cost, several phone companies announced ambitious upgrades to their networks Tuesday.
Local-phone giant SBC Communications Inc. said it would test a fiber-optic system and may spend as much as $6 billion in the next five years to bring TV, faster data and Internet-based phone services to consumers. Sprint Corp. said it would offer speeds half as fast as digital subscriber lines on its wireless network starting later this year. And Cingular Wireless announced plans to do the same beginning next year.
Experts said the actions are some of the firmest signs yet that phone companies are again investing in a significant way after they started scaling back in 2001. The main thrust is selling consumers bigger pipes at a reasonable cost.
"We are really entering the era of pervasive broadband," said Mark Lowenstein, an industry consultant. "It's already become very clear ... that folks not only expect broadband at work but also broadband at home, and mobile has been the missing link."
The new investment, if it does come to pass, would finally deliver on the vision of anytime, anywhere communications long offered by industry soothsayers. It would also strengthen equipment and software makers.
Response to cable
San Antonio-based SBC's plans were seen as a long-awaited response to cable companies, which are moving into the telephone business. It's also meant to keep the traditional phone company relevant in an increasingly wireless world.
SBC said it would bring fiber lines deep into neighborhoods beginning next year if trials go well and regulators rule favorably on a couple of key decisions. Executives said they were encouraged by a Bush administration decision earlier this month to end the company's obligation to wholesale its service to rivals.
But at least one critic said the company has a track record of promising large investments if policy-makers free it from certain rules only to renege. "They are playing this game too long to put too much faith in them," said Mark Cooper, a research director at the Consumer Federation of America.
Industry analysts said SBC had no choice but to act. The company and its sibling Baby Bell phone companies are already behind cable companies, which have two-thirds of the nation's broadband lines and are now offering phone service.
Earlier this week, Cablevision Systems Corp. shocked the industry by offering local and long-distance phone service to consumers buying its video and data service for little or no additional cost.