Excerpts from the ATT story today:
This bodes very well for CF, IMHO (certainly doesn't hurt them a bit).
This is a colossal deal, if ATT can pull it off...Rome wasn't built in a day, but, by golly, even it needed PLUMBING...
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NEW YORK (CBS.MW) -- AT&T agreed Monday to offer local phone
service over Time Warner's cable systems, yet another strike at the heart of regional Bell operators' monopoly.
Under the agreement, AT&T will own 77.5 percent of the cable-phone joint venture and Time Warner the rest. Ma Bell will pay the expenses for the venture as well as a large portion of the upgrading costs for Time Warner's cable lines, "expected to total about $300 million," the
companies say.
Within three years, they expect the venture to achieve positive cash flow and reap $4 billion in annual revenue.
In addition to its pending takeover of No. 2 cable TV operator Tele-Communications Inc. (TCOMA), AT&T has agreements to offer local phone service with five affiliates of TCI.
Combined with the systems of Time Warner, the No. 1 U.S. cable
operator, AT&T would gain access to more than 40 percent of all U.S.
homes within four to five years, the company said.
Shares of AT&T (T) rose 2 5/8 to 93 3/8 while Time Warner (TWX)
shares gained 1 1/4 to 63 3/4. TCI's stock rose 1 9/16 to 70 1/8. The
local Bells, meanwhile, stumbled.
Moving fast
Under CEO C. Michael Armstrong, AT&T is quickly broadening its
business beyond its traditional long-distance phone service. The goal: to become a one-stop provider of all of a customer's telecom needs: local and long distance, data, Internet, wireless and cable TV.
"Today's announcement with Time Warner will significantly advance
AT&T's ability to offer end-to-end 'any distance' communications services to American consumers and businesses," Armstrong said in a press release.
A big obstacle has been the monopoly the local Bells hold over phone
lines from the switching office to the home. AT&T has to pay large sums to the Bells each year to connect its long-distance callers. Its cable strategy, however, would give the company a way to bypass the Bells and eliminate or reduce connection fees.
In the case of Time Warner's systems, AT&T would still pay fees to use its broadband cable lines, but at a much lower price than what the Bells charge. Initially, AT&T will pay a monthly fee of $1.50 per telephone subscriber, rising to $6 a month over a six-year period.
Time Warner is upgrading its cable systems -- now in 33 states -- to offer high-speed Internet access and other two-way broadband communication services. It expects the work to be 85 percent
complete by the end of 1999 and finished by 2000.
The two companies plan to offer services on a widespread basis starting next year. Plans for video telephony are also in the works. |
