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To: Lin who wrote (9241)	5/7/1999 3:46:00 PM
From: Sleeper	Read Replies (2) \| Respond to of 29970

Friday May 7, 3:26 pm Eastern Time U.S. FCC head wants careful scrutiny of AT&T deal (adds details throughout) By Aaron Pressman WASHINGTON, May 7 (Reuters) - U.S. Federal Communications Commission Chairman William Kennard on Friday warned that AT&T Corp.'s (T - news) complex acquisition of MediaOne Group Inc. (UMG - news) would require extensive review by his agency. ''This is a complex transaction,'' Kennard said in a statement. ''Because of its size and reach and the many novel legal and policy issues involved, this proposed merger warrants very careful scrutiny.'' Kennard's comments were in stark contrast to his reaction last year when AT&T made its first foray into the cable business, buying Tele-Communications Inc. for $48 billion. That deal, which the FCC approved in February, was ''eminently thinkable,'' Kennard said in June 1998. The short statement also contrasted with remarks by AT&T Chairman Michael Armstrong, who has predicted few regulatory difficulties for the megadeal and approval by the end of the first quarter of next year. The FCC, which took less than 10 months to approve the AT&T-TCI deal, has the ability to block mergers or impose conditions if it concludes that a transaction is not in the public interest because of harm to consumers or other market players. AT&T agreed earlier this week to buy MediaOne, the third-largest U.S. cable company, in a $58-billion deal that would make the long-distance phone giant the largest U.S. cable operator. It also struck side agreements to sell up to two million cable subscribers to Comcast Corp. (CMCSA - news) and accept a $5 billion investment from Microsoft Corp. (MSFT - news) AT&T officials have repeatedly tried to reassure investors that the company would take whatever steps necessary to comply with U.S. laws and FCC rules to allow the deal to go ahead. Among the issues likely to be considered by the FCC and possibly by regulators at the Department of Justice or Federal Trade Commission is the deal's affect on the nascent market for high-speed Internet connections. AT&T controls AtHome Corp. (ATHM - news), the leading high-speed cable Internet service provider, while MediaOne has a sizable stake in the No. 2 provider, RoadRunner. The deal would also put AT&T well above the FCC's ownership limits for cable systems nationwide, although those rules are not in effect pending the outcome of a court challenge.