SBC Will Plug Into Wireless Net Market

With the public’s reliance on conventional phone lines dwindling, SBC Communications Inc. has decided to get into the fast-growing broadband wireless market by creating 20,000 “hot spots” over the next three years in California and the rest of its 13-state territory.

California’s dominant local telephone company is expected to announce today that it will have 1,000 wireless fidelity -- or Wi-Fi -- sites operating by year’s end.

Wi-Fi provides short-range, wireless high-speed Internet connections, often in places like coffee shops and airport rest areas. SBC will target frequent business travelers first, creating Wi-Fi hot spots, as they’re called, at airports, hotels, convention centers and restaurants in Los Angeles, San Francisco, San Diego and other major cities.

The project is the first step in SBC’s plan to blend Wi-Fi service with the next generation of cellular phones to provide greater coverage for mobile computer users -- or for people who don’t like a lot of wires in their homes.

“This is not a test,” said Lauren McCadney, SBC’s assistant vice president of Wi-Fi marketing. “We’re publicly saying we’re getting into it fully.”

Industry analysts don’t expect SBC’s hot spots to light a fire under the company, which has seen revenue and earnings drop this year.

SBC is losing an average of 1.1 million regular telephone lines a year because wireless, cable and other phone companies are stealing customers and because demand for multiple lines in homes is dropping, said F. Drake Johnstone, an analyst with Davenport & Co.

The Wi-Fi effort could help SBC maintain high-value customers, he said, “but it’s not going to turn the ship around in mid-course.... Having access to Wi-Fi for people who are business-oriented or maybe for the younger generation may make sense.”

Companies and municipalities around the world are deploying Wi-Fi. Two weeks ago, Sprint Corp. said it would open 2,100 hot spots throughout the country by year’s end, and introduce a card that will detect hot spots and software that will manage connections to those spots and to Sprint’s own wireless Internet service.

Community Wi-Fi networks, such as those operated by municipalities, typically offer Wi-Fi service for free. Companies usually charge a monthly fee, though daily-use fees also are available.

Most Starbucks Corp. coffee shops offer Wi-Fi, and major companies such as AT&T; Wireless Services Inc., Intel Corp. and IBM Corp. have joined forces to set up a nationwide Wi-Fi network.

AT&T; Wireless alone has about 1,300 hot spots in hotels, partly in conjunction with Wayport Inc., one of the largest providers of Wi-Fi hardware and sites.

Sprint has a small investment in Wayport and in Boingo Wireless Inc. of Santa Monica, which offers Wi-Fi access in 300 cities for $24.95 a month. Wayport has teamed up with numerous companies -- including SBC -- to launch Wi-Fi networks and sites.

Verizon Communications Inc. is testing Wi-Fi in New York, where it has 305 sites up and plans a total of 1,000.

SBC believes that its network will be different because of the wide scope of the project and its flexible pricing. Customers who subscribe to most or all of the company’s other communication services may get Wi-Fi free as a promotion, McCadney said.

After rolling out 1,000 hot spots this year in several hundred locations, it plans to have 9,000 Wi-Fi sites in 2,000 locations by the end of next year and 20,000 sites in 6,000 locations by the end of 2006.

The company expects to soon offer a Cingular Wireless-Wi-Fi compatible service, spokesman Michael Coe said. That would become part of its bundle of services -- sold on the premise that the more SBC products you buy, the less you pay for each.

“Adding Wi-Fi to the SBC service portfolio will make our bundling strategy even more powerful,” said Ray Wilkins, president of SBC’s marketing and sales.