SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: October 18, 1999
SBC COMMUNICATIONS INC.
A Delaware Corporation
Commission File No. 1-8610
IRS Employer No. 43-1301883
175 E. Houston, San Antonio, Texas 78205
Telephone Number (210) 821-4105
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Item 5. Other Events
Attached as an exhibit is a press release issued by SBC Communications Inc. on
October 18, 1999 announcing SBC's broadband initiative.
Item 7. Financial Statements and Exhibits
99 October 18, 1999 Press Release - SBC Launches $6 Billion Initiative to
Transform it into America's Largest Single Broadband Provider
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EXHIBIT INDEX
Exhibit Number
99 October 18, 1999 Press Release - SBC Launches $6 Billion Initiative to
Transform it into America's Largest Single Broadband Provider
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SBC Communications Inc.
/s/ Roger Wohlert
-------------------------
Roger Wohlert
Assistant Treasurer
October 19, 1999
EXHIBIT 99
SBC LAUNCHES $6 BILLION INITIATIVE TO TRANSFORM IT
INTO AMERICA'S LARGEST SINGLE BROADBAND PROVIDER
'Pronto' to Provide 'e-Tone' - Dialtone for the Internet - to 77 Million
Americans, Accelerate Company's Move to Advanced Voice, Data, Video
Converged Network
Pronto First of Many Benefits of Ameritech Merger
SAN ANTONIO, TX, Oct. 18, 1999 - SBC Communications Inc. today announced an
unprecedented, $6 billion initiative designed to transform the company over the
next three years into the largest single provider of advanced broadband services
in America, making super-fast, always-on Internet access available to nearly all
of its customers and creating a platform to deliver next-generation,
broadband-powered services.
The initiative - called Project Pronto - is the first of many SBC will
undertake to secure the benefits of its recent acquisition of Ameritech for
customers and shareholders. Specifically, SBC intends to:
o Provide an estimated 77 million Americans - about 80 percent of its
Ameritech, Nevada Bell, Pacific Bell, SNET and Southwestern Bell customers -
with always-on, high-speed voice, data and video services via faster Digital
Subscriber Line (DSL) services than it currently offers by the end of 2002.
Ultimately, the company intends to make broadband services available to all
of its customers.
o Rearchitect its network to push fiber deeper into the neighborhoods it
serves and accelerate the convergence of its voice and data backbone
systems into a next-generation, packet-switched, designed-for-the-Internet
network. Together with the advanced, long-haul network of Williams
Communications Inc., with which SBC has a strategic alliance, SBC will be
able to provide end-to-end advanced voice, data and video services on one
of the most sophisticated, efficient, flexible and scalable networks in
the industry.
o Dramatically reduce its network cost structure. Expense and capital savings
alone are expected to offset the cost of the entire initiative.
o Create a platform to deliver next-generation services including, potentially,
entertainment quality video, and expand development and marketing to more
quickly bring customers such emerging products as Voice-over-ADSL, personal
videoconferencing, interactive online games and home networking.
"This initiative is about the future - about building a new company around
how all of our residential and business customers use, and will use, the
Internet while providing them with dialtone-like reliability," said Edward E.
Whitacre, Jr., chairman and chief executive officer of SBC. "It is also about
giving SBC the opportunity to continue to capitalize on incredible growth in
data and broadband services and achieve significantly more operating and cost
efficiencies well into the next millennium.
"We see a rapidly changing marketplace where traditional dialtone is still a
staple service, but where millions of our customers will demand the convenience,
productivity, availability and reliability of our broadband service - service
which we call 'e-tone,'" said Whitacre. "With Project Pronto, SBC will lead the
nation in speeding the widespread availability and meeting the demand for
broadband and emerging broadband-powered services."
With the completion of its recent acquisition of Ameritech, SBC is one of the
largest telecommunications providers, serving approximately 100 million people
or about one-third of the nation's access lines.
"By converting the 'last mile' into a high-speed 'first mile' on-ramp to
the Internet, we are making nearly all of our approximately 60 million access
lines more powerful for customers and more valuable to shareowners," Whitacre
said. "Project Pronto, together with our expanding service footprint and plans
to provide long-distance service, is an integral part of our plan to be a
full-service, global provider and the only communications company our customers
need."
"e-Tone" Unlocks Promise of the Internet
Today, SBC's DSL broadband service features Internet connectivity speeds that
are up to 200 times faster than traditional access, allowing for near
instantaneous downloads of files and graphics, and effectively ending the "World
Wide Wait." It also provides "always-on" connectivity that eliminates
frustrating and time-consuming dial-up connections to Internet Service Providers
(ISPs) or corporate Local Area Networks (LANs) and makes the computer a true,
real-time information appliance.
In the near future, mass availability of broadband service will spur demand
by consumers for broadband-dependent applications, such as video messaging, home
networking and in-home cordless web devices. It will become a catalyst for small
businesses to become e-businesses by providing them with affordable technology.
For schools and libraries, readily available broadband service will help bridge
the "Digital Divide" and ensure youth of today are prepared for the Internet
world of tomorrow. And, it will revolutionize the way Americans work by making
telecommuting an even more attractive, productive and common work alternative.
New Broadband Network Increases Reach, Speed of SBC's DSL Service Project
Pronto is creating a vast, sophisticated broadband platform to
enable SBC to make DSL service available to the vast majority of its customers
in cities large and small over the next three years, and offer new and more
powerful broadband-powered services in years to come. The new platform will
evolve via a multi-pronged approach:
o In the major metropolitan markets where SBC has begun deploying DSL,
the company plans to equip its additional central offices with DSL
equipment.
o In these markets, SBC also plans to push fiber deeper into its
neighborhoods and install or upgrade "neighborhood broadband gateways"
containing digital electronics - essentially pushing network
capabilities now housed in central offices closer to customers. The
redesign of the local network will eliminate distance constraints that
currently limit service reach and enable SBC to provide nearly all
customers with DSL service, traditional phone service and
next-generation services, all from a single, integrated platform.
o In additional towns and cities outside of major metropolitan areas, SBC
plans to deploy DSL services by 2002; however, it will name these markets
at a later date.
Earlier this year, SBC announced its plans to deploy DSL in more than 500
central offices. The company will meet this commitment in early November, making
DSL service available to nearly 10 million customer locations in Texas,
California, Nevada, Missouri and Arkansas. At the completion of Project Pronto,
SBC's goal is to quadruple its DSL deployment - equipping approximately 1,400
central offices with DSL technology, laying more than 12,000 miles of fiber
sheath, installing or upgrading 25,000 neighborhood broadband gateways - and
reach an estimated 77 million Americans in nearly 35 million customer locations
in 13 states.
As a result of expanded deployment, SBC customers will be able to receive
minimum downstream connection speeds of 1.5 megabits per second (Mbps), with
more than 60 percent eligible to receive guaranteed speeds of 6.0 Mbps. The
higher speeds will give SBC the capacity to offer numerous personal computer
(PC) based video products including video streaming and videoconferencing; in
fact, at 6.0 Mbps speeds, users can receive the highest quality video available
over a PC. Today, the company's basic DSL service guarantees minimum downstream
connections of 384 Kbps or 1.5 Mbps, depending on the package purchased.
Next year, SBC intends to offer advanced broadband-powered services such
as:
o Voice-over-ADSL, which will provide four additional voice lines, in
addition to a DSL line and a primary voice line - all over a single line.
SBC is looking at technologies that will allow it to offer, in the future,
a similar product that will provide up to 16 additional voice lines over a
symmetrical DSL line.
o Switched Virtual Circuit, which will allow telecommuters to easily switch
between their Internet Service Provider (ISP) and their corporate Local
Area Network (LAN) without rebooting their computer.
o HDSL, which will feature minimum 1.5 Mbps upstream and downstream
connections, allowing teleworkers to send and receive data-intensive
files.
For many of its business customers, SBC intends to transition its existing
copper connections to their premises with state-of-the art fiber optics,
enhancing their ability to receive advanced data services and giving them
virtually unlimited bandwidth that they can dynamically control.
Business customers will benefit from SBC's line-up of broadband-powered
services including Online Office, a suite of services that helps small
businesses easily and affordably become e-businesses, and Enterprise Virtual
Private Network, a suite of equipment and services that allows large businesses
to securely connect multiple locations without expensive, dedicated lines.
"With e-tone, we have a powerful way to retain and attract customers in an
increasingly competitive market," said James D. Gallemore, executive vice
president of strategic marketing and planning for SBC. "It will enable customers
to easily access hundreds of emerging, broadband-dependent products and
services, and it makes our current integrated packages of services even more
compelling. e-Tone also will change the way America goes to work."
In related announcements (see separate releases for details), SBC today
said it will:
o Provide as many as 15,000 IBM telecommuting employees remote access to
IBM's corporate network via DSL service in select areas. According to
industry analysts, this agreement is the largest announced high-speed
remote network application of its kind anywhere.
o Provide high-speed DSL Internet access to thousands of E*TRADE's most
active investors, enabling them to react more quickly and effectively
to breaking financial market news and benefit from E*TRADE's rich
content offerings.
SBC recently announced a similar agreement for thousands of PeopleSoft's
telecommuting employees.
Gallemore added that in addition to offering the services and integrated
packages business and residential customers want, SBC will be first to market,
ahead of competitors.
"All we need is long distance, which is just around the corner," said
Gallemore, "to provide consumers and businesses with their total communications
needs."
Company Aggressively Migrates to Converged Voice, Data, Video Network
In addition, Pronto is an important step in the company's migration to a
converged voice, data and video network, which will be predominantly
packet-switched and utilize an Asynchronous Transfer Mode (ATM) distributed
network system (ADNS) architecture.
As part of the ADNS architecture, the company plans to deploy the
most-advanced, voice-switching technology available today, voice trunking over
ATM (VTOA), which will allow the company to efficiently transport voice as it
does data communications - via packets - without degradation in call quality or
reliability. SBC, working in conjunction with leading equipment manufacturers,
has spearheaded the development and testing of VTOA technology and intends to
begin field trials next year in Houston and Los Angeles. Upon the successful
completion of these trials, SBC plans to complete its VTOA deployment in its
largest markets by 2004.
The VTOA technology will result in significantly increased network
productivity and scalability, allowing the company to keep pace with
skyrocketing volumes of data traffic, offer a full range of voice and data
services such as private lines and virtual private networks, and in the future,
incorporate a full range of even more advanced technologies.
Importantly, the VTOA technology results in significant cost savings by
greatly reducing any future investment in traditional tandem circuit-switched
equipment and improving trunking efficiency by 50 percent.
"We are taking aggressive steps to ensure that SBC's network remains among
the most-advanced and cost-efficient in the industry and that we can serve our
customers' needs well into the millennium with the same quality and reliability
they receive today," said Whitacre.
"Also, while other service providers tout their next-generation networks,
only SBC will have all the pieces to provide end-to-end service," said Whitacre.
"Our network combined with the long-haul network of Williams, which has one of
the newest and highest-quality networks in the world, will allow SBC to offer
both a first-class network and the breadth of reliable and advanced products and
services that customers want."
Pronto Increases Shareowner Value
SBC's more than $6 billion Project Pronto investment is targeted to decrease
future capital requirements, reduce network operating expenses, and generate
$3.5 billion in new revenues by 2004.
"With our Project Pronto broadband deployment and the accelerated pace of our
national markets rollout, SBC is targeting double-digit annual revenue growth by
2001 with strong 8 percent to 9 percent growth in 2000. This is at least a
100-basis-point improvement over SBC's previous plans," said Donald E. Kiernan,
chief financial officer for SBC. "Even as we make these value-creating
investments in broadband capability and the national expansion into 30
additional major markets, SBC's goal is to achieve mid-single-digit earnings
growth in 2000 before one-time items. Driven by the strong top-line revenue
growth from our broadband and national markets growth initiatives, we are
targeting 15 percent earnings growth in 2001 and beyond."
Kiernan added that, "Pronto cements our industry leadership by essentially
reconfiguring SBC into a broadband-services company, and creates a rock-solid
platform from which we can launch new revenue-generating services while
dramatically reducing our cost structure. Importantly, the network efficiencies
and reduction in capital needs we expect to gain as a result of Project Pronto
will mean that this project will pay for itself, while enabling SBC to compete
even more effectively in the future and enhance long-term shareowner value. In
fact, we expect it will create in excess of $10 billion in value."
SBC Communications Inc. (www.sbc.com) is a global communications leader. Through
its trusted brands - Southwestern Bell, Ameritech, Pacific Bell, SBC Telecom,
Nevada Bell, SNET and Cellular One - and world-class network, SBC provides local
and long-distance phone service, wireless and data communications, paging,
high-speed Internet access and messaging, cable and satellite television,
security services and telecommunications equipment, as well as directory
advertising and publishing. In the United States, the company currently has 59
million access lines, 10.1 million wireless customers and is undertaking a
national expansion program that will bring SBC service to an additional 30
markets. Internationally, SBC has telecommunications investments in 22
countries. With more than 200,000 employees, SBC is the 14th largest employer in
the U.S., with annual revenues that rank it among the largest Fortune 500
companies.
Information set forth in this news release contains financial estimates and
other forward-looking statements that are subject to risks and uncertainties. A
discussion of factors that may affect future results is contained in SBC's
filings with the Securities and Exchange Commission. SBC disclaims any
obligation to update or revise statements contained in this news release based
on new information or otherwise.
