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Archive for Thursday, May 6, 1999

T BUYS MEDIAONE FOR $54 BILLION

May 6, 1999

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New York (ap) -- Now that AT&T Corp. has won a takeover fight to become the nation's largest cable TV company, a debate has begun over whether consumers also win.

AT&T plans to offer its 16 million cable TV customers a broad array of telephone, Internet and TV services. Customers will only need one cable into their homes, and will receive just a single, lower-priced bill, the company says.

The ambitious strategy, however, is being criticized by consumer groups, lawmakers and competitors. AT&T, already the largest long-distance phone company, will stifle competition with its dominance of cable TV and high-speed, "broadband" Internet access, they say.

At the heart of the debate is AT&T's plan to spend $54 billion to acquire MediaOne Group Inc., the nation's fourth-largest cable company.

After weeks of high-stakes jousting, AT&T struck a truce late Tuesday with Comcast Corp., the No. 3 cable company, which had also sought to buy Denver-based MediaOne. Under terms of the pact, AT&T and Philadelphia-based Comcast will divvy up the cable TV customers of MediaOne.

Mark Cooper, research director for the Consumer Federation of America, said the costs of the deal for consumers outweigh any benefits.

"The costs are humongous in terms of the anti-competitive effects on cable and broadband services, and the benefits of local phone competition are minuscule," he said.

AT&T's competitors aren't mincing words either.

Keep America Connected, a coalition backed by regional phone monopolies, took out a three-quarter page advertisement Wednesday in The New York Times calling AT&T's acquisition of MediaOne a "dangerous and aggressive plan to dominate the way Americans communicate to an extent no force, institution, company or person has ever been allowed."

AT&T, for its part, claims it can save consumers 20 percent to 25 percent off their cable and telephone bills.

The New York-based company plans to offer MediaOne customers combined cable, phone and Internet service early next year. The expanded service will include local, intrastate and long-distance phone calls, cable, and Internet access for a flat monthly fee. Extra services, like call waiting and caller identification, may also be included.

AT&T said it may only charge customers between $4 to $6 for an extra line for a fax or computer, compared with the $17 charged by some phone companies.

"The more you buy from AT&T, the less it's going to cost you," said C. Michael Armstrong, chairman and chief executive of AT&T.

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