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Technology Stocks : IDT *(idtc) following this new issue?* -- Ignore unavailable to you. Want to Upgrade?

To: Patrese who wrote (7193)	5/5/1999 4:59:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 30916

Patricia, FWIW... AOL May Have To Focus On Phone Companies As Cable Deal Vanishes Dow Jones Online News, Wednesday, May 05, 1999 at 16:33 NEW YORK -(Dow Jones)- With AT&T Corp. poised to become the nation's largest cable operator, America Online Inc.'s vision of providing high-speed Internet access over cable lines is dimming. AT&T (T) is poised to acquire cable operator MediaOne Group Inc. (UMG), after persuading rival biddder Comcast Corp. (CMCSA, CMCSK) to drop out. Some observers had thought America Online (AOL) might join Comcast to outbid AT&T. Now, AOL will probably look more closely at the digital subscriber lines being rolled out by the Baby Bell phone companies as a means of advancing its high-speed Internet strategy. AOL officials weren't available for comment. Both cable and DSL are so-called broadband lines which can be used for the high-speed transmission of data, plus phone and television service. While most Internet and telecommunications companies are jockeying to secure a lead in the emerging broadband world, it is still unclear whether cable or DSL will be more widely used. AOL, which already has DSL agreements with Bell Atlantic Corp. (BEL) and SBC Communications Inc. (SBC), would like to have a foothold in both areas and has been lobbying the Federal Communications Commission to mandate that cable operators provide access to their cable lines. AT&T, which already had a sizable position in the cable business from its recent acquisition of Tele-Communications Inc., has been reluctant to open its cable lines. And if the MediaOne deal goes through, cable lines reaching 60% of U.S. households would be under AT&T's control and off limits to AOL. But that might not be the case for long. Because cable lines are being used for telephone service, they may qualify as a utility, meaning operators couldn't bar access. The FCC and Washington lawmakers are sorting through that issue and are expected to reach a determination soon, said Jeff Sadler, an analyst with FAC Equity, a division of First Albany. Absent a decision from Washington that manadates open access, AOL still could find a way to stake a claim to some cable lines. Time Warner Inc. (TWX), cable and software magnate Paul Allen and other players have cable lines and AOL could craft an alliance or some arrangement that would provide access to those lines. "They haven't lost the battle for cable access," said Youssef Squali, an analyst with Ladenburg Thalmann. "This will make them more aggressive in the pursuit of cable." AT&T may also prove to be far less proprietary with its cable lines than some expect. Sadler, for one, says AT&T will probably give AOL access to its lines eventually because it doesn't want to close itself off from all the subscribers that AOL represents. "There's no way AT&T is going to ignore half the market," Sadler said. The implications of the AT&T/MediaOne deal stretch beyond just AOL. Other Internet service providers, like Mindspring Enterprises Inc. (MSPG), want access to cable lines as well. Squali said the other service providers, which serve a far smaller portion of the market than AOL, will likely follow AOL's lead in the pursuit of a broadband strategy. At least one observer said that the AT&T deal could prompt a merger between At Home Corp. (ATHM) and RoadRunner, the biggest cable-Internet providers. Road Runner is jointly owned by Time Warner and MediaOne. AT&T is the largest single shareholder of At Home and if it successfully acquires MediaOne, it would become a joint owner of RoadRunner, making a consolidation of the two Internet cable companies likely, said Merrill Lynch analyst Henry Blodget. But that combination would almost certainly prompt regulators to require the cable-Internet provider to open its network. Copyright (c) 1999 Dow Jones & Company, Inc. All Rights Reserved. Companies or Securities