SBC Selling Internet-Based Calling

From Bloomberg News

SBC Communications Inc., the second-largest U.S. local-telephone company, said Thursday that it had begun selling Internet-based calling and data services to businesses in a bid to stem declines in revenue.

The services, which use voice-over-Internet-protocol technology, are available in 18 cities in its 13-state region and let users make calls from personal computers, SBC said.

Such calling is unregulated and can be less expensive for carriers and customers.

The services include local and long-distance calling and will be available in the markets of other regional-phone companies by year's end, according to the San Antonio-based company. SBC is expanding beyond the Midwest states where it is the dominant local provider as customers defect to wireless carriers and new competitors. Sales have fallen in 12 straight quarters as the company loses local lines.

"A lot of the growth the Bells are going to see over the next 24 months is going to come from the business markets," said John Hodulik, an analyst at UBS Securities who has a "neutral 1" rating on SBC shares and doesn't own them. "It's a $35-billion opportunity and SBC expects to get 10% of that over the next three years" he said of the business-phone market.

The company, the dominant carrier in 13 Midwest and Western states including California, is testing voice-over-Internet services for consumers, and may offer the products to residences over the next year, SBC spokesman Jason Hillery said.

SBC, like other regional phone providers such as Verizon Communications Inc., is promoting a wider range of products to contend with the three-year slump in its main business. So-called VoIP calling, which breaks transmissions into data packets that are reassembled at their destination, can be more efficient than calls over conventional copper phone wires.

Shares of SBC slipped 9 cents to $22.93 in New York Stock Exchange composite trading. They have fallen 15% this year.

SBC's new services allow users to put voice and e-mail in the same inbox, forward calls to mobile phones and conference through a Web browser.

The services will extend to Los Angeles and New York by year's end, SBC said.

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