Archive for Monday, December 6, 1999

T CHARTS NEW COURSE FOR THE HIGH-SPEED FUTURE

December 6, 1999

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The company's moves were cheered by cable companies, but rival ISPs weren't so happy.

J-W Wire Reports

New York -- AT&T; on Monday moved to bolster its sagging reputation on Wall Street, announcing a new strategy for giving rivals access to its high-speed cable network and sweeping changes to its management structure.

The company also announced the creation of a special tracking stock for its wireless unit and $1 billion construction of a fiber-optic network linking 30 metropolitan areas.

Cable television companies welcomed news of AT&T;'s agreement to share its high-speed Internet lines in a few years, arguing the deal proved that additional government regulation was not needed.

But operating from the same set of facts, Internet service providers (ISPs) and consumer groups said the deal showed a desperate need for new federal rules imposing the shared access principles sooner, more broadly and on all cable companies.

Earlier Monday, the No. 2 cable operator announced an agreement in principle with No. 2 ISP MindSpring Enterprises Inc. to give cable high-speed Internet customers more choices.

AT&T;'s current cable Internet service requires that customers buy Internet service from Excite AtHome Corp., which is owned largely by AT&T; and cable partners Comcast Corp. and Cox Communications Inc.

The exclusive Excite AtHome deal has drawn sharp criticism from other ISPs, who have said it thwarted competition, and public interest and consumer groups, who have feared potential harm to the Internet's open and democratic nature.

AT&T;'s agreement in principle with MindSpring deferred sharing of the cable wires until AT&T;'s contract with Excite AtHome expires in mid-2002. AT&T; and MindSpring, or any other ISP interested in using AT&T;'s cable wires, also must still negotiate a contract with exact terms and conditions, including pricing, for shared access.

Jupiter Communications analyst Dylan Brooks said AT&T; and other cable firms were the big winners, because the agreement was likely to keep the Federal Communications Commission and Congress from intervening in the debate.

"The biggest impact is helping stave off any federal regulation," Brooks said. "The FCC has been leaning against getting involved and this provides a good excuse."

America Online Inc., by far the largest ISP, was a loser, because the terms agreed to by MindSpring were unlikely to satisfy AOL, Brooks said. Excite AtHome was also a loser, because it was losing its exclusive franchise, he said.

Shares of AT&T; declined 3/16 to close at 56-13/16 on the New York Stock Exchange. AOL shares rose 2-9/16 to 80-7/8. Cox shares fell 1 to 47.

On the Nasdaq, shares of MindSpring rose 3-11/16 to 36. Shares of Excite AtHome fell 3-1/16 to 49. Shares of Comcast fell 3/4 to 42-5/8.

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