November 17, 2004 10:30 PM PST

Yahoo, SBC expand alliance

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Yahoo and SBC Communications are expected to announce on Thursday that they will extend their three-year relationship and develop online services that will reach televisions, cell phones and home broadband networks.

The deal expands an existing agreement for Yahoo to power SBC's broadband Internet service with a customized home page. The partnership has helped SBC add more subscribers while boosting Yahoo's paid customer base to impress Wall Street.

The new arrangement enables Yahoo to piggyback on SBC's ambitious attempt to upgrade its network to support a slew of new services. SBC will use Yahoo's services when it begins offering its faster broadband product, Project Lightspeed. SBC will use Yahoo to provide online radio broadcasts, online photos and remote access for programming digital video recorders.

SBC will use Yahoo to provide e-mail and other online content on Cingular Wireless phones. SBC customers will find Yahoo applications with their home networking gateways and will be able to access Yahoo content throughout SBC's wireless broadband network. The companies will also integrate e-mail with common voice mail and faxes.

"The new services that will be developed out of this expanded relationship represent the next step in Yahoo's strategy to further deepen consumer relationships by extending our products and services beyond the desktop," Yahoo CEO Terry Semel said in a statement.

No deal terms were disclosed.

SBC is embarking on an aggressive plan to upgrade its copper network infrastructure to fiber-optic lines, which can handle more bandwidth to offer paid TV programming. SBC will spend $4 billion upgrading its network by stretching fiber-optic lines to neighborhood "nodes," and from there will upgrade its legacy copper network with VDSL technology to offer more bandwidth into homes.

The timing is critical for SBC and other Baby Bell phone companies. Cable companies such as Comcast and Time Warner Cable continue to dominate market share for household broadband access and are signing up more voice customers as well. Cable's success has hurt the Bells, causing these phone companies to step into cable's territory by offering their own video services.

 

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