It seems an unlikely spot for the headquarters of a global high-technology powerhouse, and an unlikely character to run it.
The 13-story tower of SBC Communications Inc. rises across the street from a clapboard grocery that shares space with a row of padlocked shop fronts. The sidewalks are empty, as if siesta lasted all day. The chief executive, a product of rural Texas, was the first in his family to attend college. He doesn't even have a computer in his office.
But the SBC lobby tells the real story: The walls are a corporate trophy case, adorned with the logos of recent acquisitions--Pacific Bell, Southern New England Telephone, Ameritech. Those purchases have made SBC the largest local telephone company in the nation, while giving it the broadest European holdings of any foreign firm.
Now, the company has its sights on 30 new domestic markets from Seattle to Miami, as it takes on existing local telephone companies in those cities. SBC is also betting huge on high-speed Internet access, gearing up to spend about $6 billion over the next three years to wire up customers throughout its service area. And it is gunning to get into the long-distance business.
As chief executive Edward E. Whitacre Jr. settles his 6-foot-4 lineman's frame on his couch and plops his size-14 loafers atop the coffee table in his cavernous office, he seems to relish his perch. "We have the opportunity to grow faster than any company in the industry," Whitacre said in his trademark ambling drawl. "I wouldn't trade places with anybody."
The telecommunications industry has been refashioned by technology, deregulation and a wave of mergers. But SBC's last few months have been momentous by any measure.
Last month, the company completed its $72 billion purchase of Ameritech, the local company that dominates the Midwest. It now controls roughly a third of the nation's local telephone lines. Days later, the company announced plans to become a high-speed Internet leader. Two weeks ago, in an unmistakable sign of arrival, SBC was made a component of the Dow Jones industrial average.
On Nov. 3, the company announced plans to purchase Radiofone Inc., a New Orleans-based cellular and paging firm. In an interview last week, Whitacre indicated the buying spree may not be over. "We'd still opportunistically acquire wireless," he said.
"They're positioning themselves to be one of the powerhouses," said Brian Adamic, an analyst with the Yankee Group in Boston. "When the dust settles . . . they'll be able to sell the full assortment of voice and data services."
Whitacre, at the helm since 1990, is well skilled at employing his Texas roots to disarming effect. "I don't know anything about furniture," he informs, dismissing the intricately carved chairs across his mesquite floors, the cabinets full of Chinese porcelain. More than one profile has noted that his first job with the firm entailed hammering in fence posts.
But no one mistakes his folksy demeanor for lack of savvy. At a convention of regulators here last week, MCI WorldCom Inc. chief executive Bernard J. Ebbers--himself a crafty wielder of the cowboy badge--was asked to assess SBC's place in the world. "Are you out of your mind?" Ebbers responded. "Do you know Ed Whitacre? He's tough. I don't want to get on his bad side."
Central to SBC's plans is gaining permission to expand into long-distance. Under the Telecommunications Act of 1996, local phone companies are allowed in only after federal regulators are persuaded that they have opened their markets to competition. SBC claims it has, pointing to the hundreds of competitors in Texas. Its rivals say the company is slow to process orders from customers wanting to switch.
Any day now, SBC is expected to formally apply to the Federal Communications Commission for permission to sell long-distance service in Texas. The company has worked with the Texas Public Service Commission to try to persuade the body to support its application. In an odd turn this month, the three-member commission completed its work with one commissioner declaring opposition, one lending support and the third expressing ambivalence. "I'm pretty confused," Whitacre said with a sigh.
The stakes are considerable. SBC owns a 9 percent stake in Telefonos de Mexico SA de CV, the Mexican national carrier. In buying Ameritech, it inherited significant holdings in Canada and across Europe. Planning now focuses on how best to connect those global pieces so SBC can offer itself as a full-service conduit for voice calls and computer data. Without long-distance, that vision is on hold.
"They've got to get past that barrier," said Rex G. Mitchell, an analyst with Banc of America Securities LLC in San Francisco.
Meanwhile, the company is obligated to launch competitive local service in 30 major markets outside its territory over the next 30 months, under conditions it accepted to gain permission to buy Ameritech. The first three: Boston, Miami and Seattle.
SBC has deployed teams of "corporate snoops" to gather intelligence in the new markets, said Stan Sigman, group president for national operations. So far, they have found more competition than anticipated. "We're going to be the 51st company in Atlanta," Sigman said.
If there is a single subject dominating the SBC conversation, it is high-speed Internet access. In betting $6 billion on "broadband," the company has made clear it buys into the dominant theory ruling the industry: Data is where the money is. The new network will be capable of handling videoconferencing and the next generation of computer entertainment.
AT&T Corp. has gained the most attention in this sphere, spending more than $100 billion to buy cable TV franchises across the country.
SBC is relying on technology known as DSL, or digital subscriber line, which allows huge amounts of data to pass quickly over standard copper phone lines. To work, homes must sit within a few miles of the local telephone office. SBC plans to shorten such distances by deploying miles of new fiber-optic cable, effectively extending the reach of DSL and bringing 80 percent of its existing customers into its orbit. SBC expects to reap $3.5 billion in new revenue a year from DSL by 2004.
As SBC executives portray it, rolling out new fiber was a no-brainer: It cuts costs for the old-fashioned telephone business, since the new equipment facilitating DSL allows the company to add extra phone lines over a single wire. When a customer wants an additional line, SBC can simply reprogram its equipment at its main office.
But $6 billion is a hefty sum. The initiative raised eyebrows.
"You always say, 'Jesus Christ, that's a lot of money,' " Whitacre said. "I'm sure I said that somewhere along the way."
Then he plunged in.
"We've got a window of opportunity," Whitacre said. "You've got to seize it."
Edward E. Whitacre Jr.
Chairman and chief executive, SBC
Born: In Ennis, Tex.
Education: Bachelor's degree in industrial engineering, Texas Tech University, 1964.
Work highlights: Starting in 1963, had a variety of positions with Southwestern Bell Telephone, becoming an officer in 1982 and chief operating officer in 1988. Named chairman and chief executive in 1990.
Other: Is the national president of the Boy Scouts of America; also serves on the boards of Anheuser-Busch Cos., Burlington Northern Santa Fe, Emerson Electric Co. and May Department Stores.
Business: Largest local-service phone company in the country, including service in Arkansas, California, Connecticut, Kansas, Missouri, Nevada, Oklahoma and Texas; also has more than 10 million wireless customers.
Its international business includes service in Canada, France, Switzerland, Taiwan, Mexico, South Africa, Israel and much of Europe.
Based: San Antonio
Established: In 1917, when a merger created Southwestern Bell.
Brands: Southwestern Bell, Pacific Bell, Nevada Bell, SNET, Cellular One.
Recent acquisitions: Bought Pacific Telesis (PacTel) in 1997; SNET in 1998; Ameritech this year.
1998 revenue: $28.8 billion
1998 earnings: $4.0 billion
Web address: www.sbc.com
SOURCES: SBC Commincations, Bloomberg News
CAPTION: SBC's Edward E. Whitacre Jr., Ameritech's Richard C. Notebaert.