AT&T is my long-distance phone company. MediaOne Group provides my cable TV and Internet services. Now it seems that I'll be getting all three services from AT&T as a result of the company buying MediaOne.
That in itself is not a reason to worry, but there are aspects of this acquisition that have me wondering. AT&T is paying about $US4700 per subscriber for MediaOne. The deal is the latest by AT&T in a year in which the company will spend almost $110 billion - just about twice its $53 billion revenue for 1998 - for cable TV companies. I sure hope AT&T will not try to recover all its $4700 out of my cable bill next month.
AT&T wants to use the newly acquired last-mile connectivity to offer local and long-distance phone and Internet services without having to deal with the local Baby Bell telephone companies. I can easily see why any organisation with half a clue would want to avoid depending on the Baby Bells to deploy any technology more sophisticated than a Princess phone.
Take a look at the mind-numbing slowness with which the Bells deployed ISDN service and the equivalent (at best) deployment strategy for digital subscriber line.
AT&T will face some significant regulatory issues. FCC chief William Kennard says the MediaOne deal "warrants very careful scrutiny". And according to the Federal Communications Commission, AT&T cable ownership will far exceed the maximum amount permitted by current regulations. But pundits seem to think AT&T will get past the hurdles after some pain.
AT&T may face other issues. For example, a bill was recently introduced in the US House of Representatives that would require cable companies to open their infrastructures to competitive ISPs, as companies have already had to do in Canada. This would destroy much of the economic advantage of owning the cable infrastructure. There are also one or two killer technical hurdles that must be overcome to get reliable and reasonable quality telephone service over the cable TV infrastructure.
I have two additional concerns. AT&T has been planning to offer Internet service only through its relationship with @Home. I do not know how that will affect my, up to now, excellent MediaOne Internet service. I'm also considerably worried about the implications of the deal that AT&T has made with Microsoft to use Windows CE-based set-top boxes in 2.5 million homes. I want to have uninterrupted IP access to the Internet from my own computers, and I am far from sure that I can get that with Microsoft's "the PC is the home controller" philosophy.
If AT&T manages to get past the regulators and remembers to actually offer Internet service (rather than some other service through which the company defines the applications I can run) and telephone service, this could be a very good deal for us all.
Disclaimer: Harvard trains regulators in some areas and disdains them in others, but the above are my musings.
Scott Bradner is a consultant with Harvard University's University Information Systems. He can be reached at firstname.lastname@example.org.