SBC Communications Selects Microsoft TV For Advanced IP Television Service

Targeted For 2005, Service Will Change Entertainment For Millions

San Antonio, Texas, Redmond, Washington, November 17, 2004

SBC Communications Inc. (NYSE:SBC) today announced an agreement with Microsoft Corp. (Nasdaq: MSFT) to provide next-generation television services using the new Microsoft® TV Internet Protocol Television (IPTV) Edition software platform.

The SBC IPTV deal with Microsoft, valued in excess of $400 million over 10 years, is the first of its kind for any U.S.-based telecommunications provider.

"Our service will change the way people experience TV. Finally, customers will watch what they want, when they want — from a virtually unlimited and interactive content selection," said Edward E. Whitacre Jr., SBC Communications Inc. chairman and CEO. "We will deliver integrated communications and entertainment services to enhance the digital lifestyle of our customers."

SBC Labs has been testing an IP-based television service built on the Microsoft TV IPTV Edition platform since June 2004. SBC companies and Microsoft will begin field trials in mid 2005 and plan commercial availability of the IP-based television platform in late 2005.

In the first quarter of 2005, construction is expected to begin on the SBC Project Lightspeed, the company's initiative to deploy fiber closer to customer locations to provide new, feature-rich, IP-based services, including IP television, voice over IP (VoIP), and ultra-fast Internet access. Project Lightspeed is expected to reach 18 million households by year end 2007.

"Project Lightspeed and the Microsoft and SBC relationship underscore what the future holds for consumers: a virtually unlimited opportunity for innovative, cross-device services and entertainment experiences enabled by the marriage of powerful broadband networks with the magic of software," said Steve Ballmer, CEO of Microsoft. "The selection of Microsoft TV as the IPTV services platform provider for SBC recognizes Microsoft's leadership position in the rapidly emerging IPTV industry and the benefits it will bring to customers."

Microsoft TV IPTV Edition also provides strong security features and efficiency in delivering standard and high-definition TV programming to multiple TV sets in the home over the SBC fiber-enhanced network, while leaving ample bandwidth available for ultra-fast Internet access and VoIP services.

IPTV Potential Offerings

The new service will enable a next-generation digital video entertainment experience not previously realized in the mass market. The solution will take full advantage of the SBC expanding two-way broadband network to offer new, innovative services beyond today's existing broadcast-oriented digital TV networks.

Additionally, by using IP technology to deliver video, voice, data and other advanced services and applications over a single network connection, the services may be accessed and shared via any number of IP-enabled household devices, such as TVs, set-top boxes, PCs, PDAs or phones. Microsoft TV IPTV Edition also provides a comprehensive security system including subscriber and end-to-end digital rights management technology to protect the content across multiple devices.

The IP-based TV service is planned to include instant channel changing, customizable channel lineups, video on demand, digital video recording, multimedia interactive program guides, event notifications, content protection features and more.

"We will have a rich multimedia program guide that makes it easy to find the programs you want to watch, and provides full control over when and how you want to watch them," said Whitacre. "Channel surfing becomes easier because you can continue to watch your program while viewing live previews of other shows using innovative picture-in-picture (PIP) technology."

Some additional potential applications include:

  • Using two-way broadband networks, SBC companies could be able to send alerts and notifications to customers watching TV in new ways. Some examples include the ability to alert a customer of upcoming favorite shows, or Caller ID and instant messaging right on their TV screen.

  • The Microsoft TV IPTV Edition platform could enable new services and applications such as tuner-less picture-in-picture functionality. The PIP feature enables users to preview other shows and channels while the primary channel runs in the background.

  • Photos could be easily shared from a networked computer and played back through the TV.

To enable optimal use of bandwidth, SBC companies plan to use a switched video distribution system, which streams only the content the customer requests instead of broadcasting all channels to everybody at once. This cutting-edge technology frees up large amounts of bandwidth for other applications.

"Our video on demand will come with a substantial content library," said Whitacre. "The customer gains additional control over the content they want versus what is delivered to them. We get the flexibility of not being constrained by bandwidth."

To view a demo of potential services made possible by IPTV, please visit www.sbc.com/lightspeed.

Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. A discussion of factors that may affect future results is contained in SBC's filings with the Securities and Exchange Commission. SBC disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise

About SBC
SBC Communications Inc. is a Fortune 50 company whose subsidiaries, operating under the SBC brand, provide a full range of voice, data, networking, e-business, directory publishing and advertising, and related services to businesses, consumers and other telecommunications providers. SBC holds a 60 percent ownership interest in Cingular Wireless, which serves more than 46 million wireless customers. SBC companies provide high-speed DSL Internet access lines to more American consumers than any other provider and are among the nation's leading providers of Internet services. SBC companies also now offer satellite TV service. Additional information about SBC and SBC products and services is available at www.sbc.com.

About the Microsoft TV Platform
The Microsoft TV division provides software solutions that help digital TV operators create new services that delight consumers. Designed to help cable providers and telecommunications companies derive more value from digital video and network infrastructure investments, the Microsoft TV product family supports a range of digital video services including interactive program guides, digital video recording, high-definition TV and on-demand programming. The Microsoft TV platform works across a full range of set-top boxes and TV devices. More information about Microsoft TV can be found at http://www.microsoft.com/tv.

About Microsoft
Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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