San Antonio-based SBC Communications plans to invest up to $6 billion building a fiber-optic network that offers digital television service. The move comes in an effort to better compete with cable television providers.
Microsoft will supply Internet Protocol TV software for the network, which will be rolled out over five years. The telco will use the connections to sell high-speed Internet service and IP telephony to consumers and small businesses.
Edward Whitacre, SBC's CEO, said offering digital television is part of a strategy to retain clients as cable providers start offering telephone services.
Craig Nedbalski, managing director at Cleveland-based Victory Capital Management, which owns 6.7 million SBC shares, said that the move is a response by SBC to the competitive threat of Internet voice systems from cable companies.
Microsoft, with partners Lucent Technologies and Juniper Networks, said its IPTV service acquires on-demand content using its software tools, encodes the programming, and distributes it to customers in both SD and HDTV. Microsoft will sell the service to cable TV operators and telecom companies.
