--OT--
@HOME/ROAD RUNNER... it appears there are some internal blocks to a merger as well. This would leave TWX without a major portal partner.
"Time Warner's partner in the Road Runner national data operation, MediaOne Group, is resisting any combining of Road Runner with rival @Home Network in the interest of accommodating integration."
the full article is below...
AT&T Searches For Right Connection
By Fred Dawson
Contributing Editor INTER@ACTIVE WEEK 2/1/99
AT&T remains far short of fulfilling its vision to make cable TV companies its local service path to consumers, leaving all sides to contemplate what could turn out to be the most rancorous state of industry affairs since the cable franchise wars of the early 1980s.
AT&T and its presumptive merger partner TeleCommunications Inc. have
signed telephony partnership agreements with a handful of smaller companies closely affiliated with TCI; however, the two have not been able to deliver on their promise to offer local voice services over cable networks reaching at least one-third of the nation's households. Instead, with deals involving Bresnan Communications,Falcon Cable, Insight Communications, Intermedia Partners and Peak Cablevision - together with the 16 million households passed by TCI - AT&T has secured only about 20 percent of the market base.
Despite publicity surrounding talks with Time Warner Cable, the largest multiple system operator (MSO) with 12 million customers and 19 million homes passed, sources say the two sides remain far apart on issues of control and technology. Other affiliations appear to be eluding AT&T as well, including a voice services agreement with No. 4 MSO Comcast and the sixth largest MSO, Cablevision Systems, which is 37 percent owned by TCI.
"It's not the money part per se; it's the control, which, of course, affects the financial aspects of the deal," says a senior executive from the TCI/AT&T camp. "There's some real poker playing going on".
Cablevision, for example, with a phone-service-friendly clustering of
three-quarters of its 3 million customers in the New York-metro region, already has a commercial telecommunications business running throughout Long Island and in some other markets. In addition, it has launched residential voice service in a small area of Long Island.
"So why do we need to turn all that over to AT&T to run?" asks a
Cablevision executive.
With AT&T threatening to use new wideband wireless technology to compete with cable companies that don't get on board, some observers anticipate that larger cable operators who balk at a deal will explore alternative long-distance carrier affiliations of their own. This would secure the economies of local and long-distance call bundling, and provide national marketing presence and network integration to help balance the market power of the AT&T alliance.
"It could still go in so many different directions," says Lauren Fine,an analyst at Merrill Lynch. "MSOs are really trying not to lock themselves into anything yet, although it looks like the lines are being drawn".
Sources name Sprint and Denver-based Qwest Communications International as strong candidates for cable affiliations. A Sprint spokesman says no negotiations are under way, but the company intends to talk to cable operators later this year.
Qwest, several MSO sources note, has established the carrying capacity
and technological know-how to exploit connections to local cable company networks, and it has "bandwidth to bum," as one executive puts it. Qwest (wwwqwest.com) representatives refuse to talk about any interest they might have in cable affiliafions.
Time Warner Cable Chief Technical Officer Jim Chiddix says his company likely will partner with a phone company if it wants to expand into the voice business beyond its current operating base in Rochester, N.Y.
But Chiddix makes it clear that, should Time Warner strike a deal with AT&T, it would want to "wall off" the voice of the business from the high-speed data side. This is in contrast to the integrated voice-over-Intemet Protocol(IP) approach that AT&T has embraced in its plans for TCI, where the high-speed data channels carrying @Home Network services could carry voice as well.
TCI Chief Executive Officer John Malone says that while he'd prefer an integrated, all-IP approach, ultimately the issue is "sort of irrelevant," as long as all systems are "integrated technologically." But, with a nationally integrated data network, "telephony could be very cheap", Malone adds.
Sources say Time Warner executives are not convinced it makes sense to bet on IP telephony coming together as a first-line-quality technology when they and other players are demonstrating the viability of circuit-based, proprietary, voice-over-cable systems right now. Further complicating matters, they say, Time Warner's partner in the Road Runner national data operation, MediaOne Group, is resisting any combining of Road Runner with rival @Home Network in the interest of accommodating integration.
One sign of how fractious things might become is @Home CEO Tom Jermoluk's assertion that his company intends to begin competing with non-affiliated cable companies using telephone company Asymmetric Digital Subscriber Line technology and wireless links to deliver high-speed data. |
