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Cable Industry Consolidation: AT&T and TCI Merger Set to Transform US Communications Market

Strategic Insights

— 1 min read

The impending merger of AT&T Corp. and Tele-Communications Inc. is poised to revolutionize the US cable television industry, offering consumers one-stop shopping for a range of services including cable, Internet access, and phone. Other companies, such as Charter Communications, are also investing heavily in upgrading their systems to keep pace with the industry's transformation. The Telecommunications Act of 1996, which significantly deregulated the industry, has set in motion a wave of consolidation and technological advancements.

Key Takeaways:

  • The AT&T-TCI merger will create a massive cable system with over 13 million subscribers, giving it significant market dominance.
  • TCI's Internet service currently has fewer than 50,000 subscribers, despite serving over 260,000 customers in the St. Louis area.
  • Charter Communications has 170,000 subscribers in St. Louis County and 50,000 in Illinois, with plans to expand its operations and introduce high-speed Internet services.
  • The FCC has ruled that cable operators do not have to open their systems to competing Internet service providers, limiting consumer choice.
  • Analysts predict that the US will have over 120 million Internet users and 1.3 million commercial Web sites by 2001.
  • The lifting of federal price restraints on cable rates at the end of March 1999 is expected to lead to increased prices and reduced access for consumers.
  • The Consumer Federation of America and other groups are advocating for open access to cable networks to give consumers greater choice and competition.

Statistics:

  • Over 13 million subscribers for the combined AT&T-TCI cable system.
  • Fewer than 50,000 subscribers for TCI's Internet service.
  • 260,000 customers in the St. Louis area for TCI.
  • 170,000 subscribers in St. Louis County for Charter Communications.
  • 50,000 subscribers in Illinois for Charter Communications.
  • $100 million spent by Charter Communications to upgrade its cable system in the St. Louis area.
  • $2 billion invested by AT&T and TCI over two years to upgrade their cable systems.
  • Over 120 million Internet users predicted in the US by 2001.
  • 1.3 million commercial Web sites predicted in the US by 2001.

Sources:

  • The Wall Street Journal
  • Des Peres, Missouri-based Digital Broadcast Network

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