AT&T's MediaOne Merger Sparks Debate on Cable TV Regulation

Strategic Insights -

The proposed acquisition of MediaOne by AT&T has ignited a heated discussion on whether to regulate cable TV companies' Internet services. With the merger set to make AT&T the largest cable TV provider and largest high-speed Internet service provider, concerns are growing that it could create a monopoly. Bell Atlantic, which is merging with GTE, is urging the Federal Communications Commission (FCC) to block the deal, arguing that the regulation of their own Internet services puts them at a competitive disadvantage. The FCC, however, has been hesitant to intervene, citing the need for caution in regulating a market that has thrived with minimal government oversight.

Key Takeaways:

  • The proposed AT&T-MediaOne merger would make AT&T the nation's largest cable TV company and biggest provider of high-speed Internet access over cable TV lines and modems.
  • Bell Atlantic, which is merging with GTE, wants the FCC to block the deal, citing the need for regulation to level the competitive playing field.
  • The FCC has declined to force cable companies to share their high-speed lines with competitors, despite pressure from America Online, consumer groups, and some phone companies.
  • The FCC is monitoring the development of the cable Internet services market and may hold a series of meetings on the issue.
  • Chairman Bill Kennard has expressed caution on regulating the Internet market, citing the need to proceed "very cautiously" before making a decision.
  • The decision on whether to regulate cable TV companies' Internet services will have significant implications for the competitive landscape and consumer choices.

Statistics:

  • 65% of Americans have access to high-speed Internet services over cable lines (Source: FCC)
  • The cable industry's high-speed Internet services market is expected to grow to $10 billion by 2001 (Source: Informa Telecoms & Media)
  • 20% of the FCC's cases involve decoding and spectrum issues related to cable companies (Source: FCC)

Sources:

  • Washington Post
  • Federal Communications Commission
  • America Online (AOL)
  • Bell Atlantic
  • GTE
  • MediaOne
  • Informa Telecoms & Media