AT&T-TCI deal promises consumer cornucopia -- someday, that is
The $48 billion acquisition of cable-company Tele-Communications Inc. (Nasdaq:TCOMA) will allow this, thanks to the melding of cable and phone lines, executive said today.
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The multibillion dollar deal combines just about every communications service a consumer could use -- local and long distance telephony and Internet access from AT&T (NYSE:T), plus cable and broadband from TCI.
As an example, TCI Chairman John Malone said that his company was a year to 18 months away from offering services that include using cable lines to provide digital telephone service like multi-user lines and caller ID.
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| Michael Armstrong and John Malone talk about their new deal.
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For those who can't wait, cable modems will be available for retail sale by the end the year, he said.
"While we're in your home we'll say to you - would you like us to install an in-home network? Would you like high-speed data service on your PC? Would you like high-speed data service on your TV set?" he said.
And as soon as the deal closes, the company will be able to bundle together packages combining cable service, Internet access and local and long distance phone service.
'Terrific deal'
Those combinations are something companies have been trying to put together through partnerships and alliances, but this is the first time it's all been under one roof.
"It's a terrific deal, finally giving one company the ability to do a fully packaged offering to consumers," said Jill Frankle, an analyst at IDC/Link in New York.
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While AT&T's WorldNet Internet access service is one of the largest in the country, the company had already expressed interest in grabbing a bigger share of the Internet, offering $19 billion for America Online Inc. (NYSE:AOL).
The deal today doesn't give AT&T that many new members for its Internet service, but it gives the company a new way to get onto the Internet -- through cable.
AT&T will get controlling interest in TCI's @Home Network, which offers high-speed Internet access through cable lines. Between TCI's networks and deals with other cable companies, @home has access to 50 million homes.
AT&T's been searching
Even before this deal AT&T was looking for ways to combines its Internet and telephone offerings, such as allowing consumers to pay their phone bills through WorldNet and readying "click-to-chat" service that would let you conduct an anonymous phone conversation with someone over the Internet.
The new deal gives AT&T some fat pipes that could also be used to update telephone service, including voice over IP. AT&T said today that consumers can expect to see some new offerings including digital telephony and data services by the end of 1999. Digital video services are also planned.
"An @Home-AT&T alliance checks the (Baby Bells) on two fronts. It lets AT&T offer local telephone service over cable networks and gives cable companies an opportunity to offer access to households not connected to two-way HFC (hybrid fiber coax) networks," said Abhi Chaki, analyst at Jupiter Communications in New York.
But all that great service will take a while to trickle down to the consumers. If you live in a an area not covered by TCI's cable offerings it may be some time before you see any new offers from AT&T.
No overnight changes
Even consumers who do live in TCI coverage areas may have to wait for the brave new world of interconnected everything. Cable lines need to be upgraded and overhauled, and that takes both time and money.
"What this is doing is giving some money to TCI to accelerate the upgrading of their cable plans so these services could be deployed more quickly but it won't make a huge change in what the average consumers will be experiencing," Chaki said.