Carrier to Build Packet Network Around Lucent Gear

SBC Telecom has taken steps to establish itself as the formidable local competitor in cities outside its traditional sales area.

The company is set to build networks in 30 cities outside its home territory by the end of next year that will support a range of voice and data services. Combined with the economic might of its parent SBC Communications Inc., this sets up SBC Telecom to be a true competitor to the regional Bell operating companies surrounding SBC's home turf.

Other competitive local exchange carriers lack the money to take on RBOCs in all areas, so they chip away at the edges, says Robert Rosenberg, president of Insight Research, a telecom analysis firm in Parsippany, N.J. "Because of its size, only SBC is a real competitor," he says.

In addition to wielding its cash reserves, SBC Telecom is installing a packet-based network that can support voice, video and data services at a lower cost than traditional local carriers. That is because SBC Telecom is building a network that supports all types of traffic whereas the incumbent carriers do so with multiple networks.

SBC Telecom has chosen Lucent Technologies Inc. to supply $1 billion in access and switching equipment that will enable it to support traditional phone services, plus new offerings such as VPNs, at prices that will rival those of the RBOCs. This follows the lead of other major carriers, most recently Cable & Wireless PLC.

The fact that SBC Communications is building toward a nationwide local and long-distance network also puts it on par with AT&T Corp., Sprint Corp. and WorldCom Inc., which have long-distance networks and are building local ones, says Tim Harden, SBC Telecom's vice president and general manager of network operations.

With the equipment SBC is installing, it will be able to support regular phone service, ISDN, DSL, frame relay and ATM as well as Internet access.

"We will have a full suite of products. We're not going after a niche. Very few others have that," Harden says.

The choice of packet-based technology out of its territory goes along with SBC's upgrade of the network inside its home territory. That $6 billion project will push fiber closer to customers and give 80% of home users access to voice and data services over broadband DSL.

The SBC Telecom national foray is the first instance of an established local carrier making a significant push into the territories of the other RBOCs. The SBC push into other territories is driven by an agreement it made with the U.S. Federal Communications Commission. In return for permission to buy the RBOC Ameritech Corp., SBC had to promise it would compete against the RBOCs in 30 cities.

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