Originally created 02/18/99

AT&T-TCI merger wins approval of FCC



WASHINGTON -- AT&T Corp.'s plan to take over cable giant TCI was approved by federal regulators Wednesday, clearing the way for a deal that could provide consumers a new choice for local phone service.

The deal was valued at nearly $32 billion when it was announced in June.

Details weren't available, but the Federal Communications Commission officials said no major conditions were imposed on the merger. AT&T had no immediate comment.

The FCC did not force AT&T and Tele-Communications Inc. to provide other companies with access to TCI's high-speed cable TV lines, said FCC sources, who spoke on condition of anonymity. Consumer groups, America Online and others had pressed the agency to require AT&T to give other companies access to those lines to offer competing services.

Shareholders of AT&T and TCI also approved the deal in separate meetings Wednesday.

The merger plan must also be approved by local cable franchising authorities. Some local authorities want to provide rivals access to TCI's high-speed lines, but it's unclear if they would have the authority to force changes.

For consumers, the merger holds the promise of providing a new choice for local phone service -- a prospect appealing to regulators, who want to crack open local phone monopolies to competition. And it offers one-stop shopping for local calling, Internet access and long-distance service.

AT&T is the nation's largest telecommunications company and biggest provider of mobile phone services. TCI is the nation's second-largest cable TV company, with lines that reach one-third of U.S. homes.

Many of TCI's lines have been upgraded to permit cable TV customers to connect their computers to the Internet and gain access to online data at speeds up to 100 times faster than conventional telephone lines.

Eventually, AT&T intends to make TCI's lines capable of providing customers with local phone service, too. AT&T has a separate agreement with cable company Time Warner to provide local phone service over its high-speed cable TV lines. More cable agreements are expected.

The cable agreements would give AT&T a way to get into homes without having to rely on phone lines controlled by the regional Bell companies, which dominate the local phone market.

Through the merger, AT&T also will control TCI's stake in AtHome Corp., a leading provider of high-speed Internet access. Consumer groups have said AT&T could charge extra if customers got Internet service over the merged companies' lines and wanted another Internet service provider, such as AOL. But federal regulators are not expected to set any conditions on that part of the deal.

The Justice Department approved the merger in December on condition that TCI sell its interest in a rival mobile phone company, Sprint PCS.