ISPs to feel AT&T effects
Deal with TCI means AT&T will push for cable modem standards
AT&T and TCI make $48B deal
June 24, 1998: 10:43 a.m. ET
NEW YORK (CNNfn) - AT&T Corp.'s $48 billion deal to buy cable giant Tele-Communications Inc. will have far-reaching ramifications for Internet service providers.
AT&T (T) has struggled to become a big player in the Internet space. Its 1.1 million customer base pales in comparison with America Online (AOL), which leads the pack with 11 million subscribers.
With one $48 billion swoop, however, things have changed, as AT&T will gain access to TCI's (TCOMA) 21 million cable subscribers. The 800-pound gorilla has entered the room.
Analysts say the small- to mid-size Internet service providers (ISPs) probably will suffer, while the bigger companies (read: AOL) and the industry in general likely will benefit from the alliance.
This is partly because the deal means AT&T will make a big push for cable-modem standards, while many Internet providers are pushing digital subscriber line (DSL) standards.
DSL technology uses traditional copper phone lines for faster transmission of data. Cable modems, however, provide much greater bandwidth than telephone lines.
"This may be bad news for dial-up Internet providers," said Matt Janiga, telecommunications analyst at Lazard Freres. "[The AT&T deal] is basically an endorsement of cable modems. Most of the dial-up providers are moving to DSL."
But whereas such providers as Earthlink Network Inc. (ELNK) and Minspring Enterprises Inc. (MSPG) may be the first to feel a squeeze, analysts say the industry in general will stand to benefit from an expected AT&T-backed cable modem push.
"It will increase usage and speed up new technology development," said Aydin Tuncer, Internet and telecommunications analyst at S&P Equity Group. "You'll have AT&T involved in cable modem development and getting involved in standards bodies."
Tuncer added Internet giants like AOL also will benefit from a push for cable modem standards, because the faster access probably will lure new subscribers to its already substantial customer base.
"They already have a tremendous brand name out there. They're not going to lose any customers," Tuncer said. "AT&T put its brand name behind WorldNet and that has never taken off. It shows how difficult it is to go against AOL."
---------------------------------------------------
Will asks:
"Question: Isn't DSC's ADSL integration with Aware very dated? And wasn't it with HFC, not copper?"
You may be missing the point of that news release Will, as for your question...it appears you have an answer to offer in that regard.
Please keep in mind that I don't write those press releases...just post them for the benefit of the thread.
--------------------------------
I post this because it addresses David's "BIG" news post.
|
