SBC to expand DSL in Illinois

SBC Communications announced yesterday that it would invest more than $90 million to bring broadband services and lower-priced bundles to an additional 815,000 in Illinois, bringing to 4.4 million the total number of residential and business customers in the state capable of accessing digital subscriber line services over its lines.

SBC’s DSL-enabled lines in the state will rise to 77%, up from the current 62%, as a result of the initiative. In a recent interview with Telephony, SBC Chairman and CEO Edward Whitacre said the carrier’s goal was to achieve 80% line penetration across its footprint.

The initiative is in response to the law passed by the Illinois General Assembly two weeks ago that will result in a near doubling of UNE-P rates in the state, which currently are at an average of $12. The law directs the Illinois Commerce Commission to revise the fill factor and depreciation formulas used to set wholesale rates, and takes effect June 9.

SBC believes the business climate has changed enough due to the law to justify an increased investment in broadband. Whitacre recently said SBC would be challenged to build out DSL without regulatory relief because its capital expenditures are funded by free cash flow, and revenues in its core voice business have been in sharp decline. The Illinois law, in effect, grants that regulatory relief.

However, the initiative is not a quid-pro-quo response to the union backing the law received, said SBC spokeswoman Andrea Brands. That backing was considered crucial to the law’s fast-track passage – it was signed into law by Governor Rod Blagojevich just four days after it was introduced into the general assembly – and to SBC’s successful positioning of the measure as a jobs bill, as opposed to a price-increase bill.

“We made no promises to anybody. Until the past few days, we didn’t even know crunching the numbers if we were going to be able to do this,” said Brands.

The Association for Local Telecommunications Services, AT&T and MCI are challenging the law in district court on the grounds that it preempts the Telecom Act and the FCC’s TELRIC policies. Brands said SBC is confident the law will stand, but that nothing would change regarding its DSL plans in Illinois should the law be overturned. “That wouldn’t change our commitment to Illinois,” she said.