RealTime IT News

SBC Spends $5 Million, Picks Up $1.3 Billion

SBC Communications Inc. Tuesday broadened its product portfolio to include streaming media services from audio and video delivery tech firm burst.com Inc. for $5 million.

But the deal is a drop in the bucket compared to the $1.3 billion in cash and stock that SBC picked up when it agreed to grant long-term leasing rights of 3,900 communications towers to SpectraSite, Inc.

Burstware, burst.com's flagship product, provides high quality delivery of full motion video and CD-quality audio over IP-based networks. The company has built an international patent portfolio covering bursting, video delivery scheduling, and rapid casting.

In addition to gaining Burstware Internet video and audio delivery technology for deployment over its expansive digital subscriber line network, SBC picked up a seat on burst.com's board of directors.

Richard Lang, burst.com chairman and chief executive, said the firm looks forward to expanding its relationship with SBC as they continue to roll out their broadband initiatives.

"We are very pleased to announce the $5 million investment from SBC, a company which has made a powerful commitment to delivering state-of-the-art multimedia services over its broadband infrastructure," Lang said.

Tom Kuckelman, SBC vice president of strategic planning said its investment is part of SBC's drive to become the largest single provider of advanced broadband services in the U.S.

"We are making this investment in burst.com because we believe its cutting-edge solution could be a key step toward delivering the highest quality video and audio over DSL," Kuckelman said. "We believe that our investment in burst.com is consistent with our goals."

SBC currently operates more than 61.2 million access lines in the U.S., its "Project Pronto" national DSL expansion program is on target to land the Texas-based telecom into an to an additional 30 markets by the end of next year. Its DSL platform is the ideal vehicle for delivering advanced audio and video services.

But the means to stream media over revved up copper is just part of SBC's plans for bandwidth hungry wired line customers in the U.S.

SBC already provides wireless services to more than 12.2 million customers. Its massive deal with SpectraSite allows the wireless communications firm to expand services to the top 50 metropolitan markets in the nation and marks a major milestone for both SpectraSite and the industry.

In order to gain the exclusive rights to almost 4,000 SBC communications towers over the next five years SpectraSite, a division of SpectraSite Holdings Inc. is shelling out $983 million in cash and $325 million in common stock to seal the deal.

Under the terms of the transaction, SpectraSite will have exclusive lease rights to 3,900 SBC towers, and will be able to sublease space on the towers to third party tenants. Additionally, SpectraSite has the option to purchase the 3,900 SBC towers at the end of the lease terms.

SBC Wireless has agreed to sublease space from SpectraSite on the towers for approximately $65.5 million per year. The transaction is expected to close in increments beginning in the fourth quarter of this year, and is subject to customary closing conditions.

SBC's towers are located in major metropolitan markets throughout the nation with significant tower concentrations in Los Angeles, San Diego, San Francisco, Boston, Washington D.C., Baltimore, Philadelphia, Dallas, St. Louis, Las Vegas, Chicago, and Cleveland.

When the deal is done, SpectraSite will control over approximately 9,000 towers in the U.S., clustered in metropolitan markets. It may cement SpectraSite's position as the leading tower provider for wireless service