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AT&T Announces Deal for Joint Venture with Time Warner Cable

By Mike Mills
The Washington Post

AT&T Corp. Monday announced a deal to provide telephone and Internet service over Time Warner Inc. cable TV wires reaching 20 million U.S. households, advancing AT&T's strategy of bypassing local telephone companies.

Through the Time Warner alliance, and a proposed $50.4-billion purchase of cable giant Tele-Communications Inc., AT&T would get direct access to 43 percent of the nation's homes. AT&T lost such links to consumers when the regional Bell companies were split off from the company in 1984.

In an interview, AT&T Chairman Michael Armstrong cited benefits similar to those he predicted with the TCI purchase: Consumers would be able to buy local and long-distance phone service, high-speed Internet access and cable TV programming from a single source and have the charge appear on one monthly bill at rates 20 percent lower, he said, than what they otherwise would pay.

Becoming a one-stop shopping point for all communications services is a key part of the strategies of most every large communications company. Last week AT&T unveiled a one-stop service called Personal Network that combines wireless and conventional phone calling onto a single bill with simplified pricing.

Under the Time Warner-AT&T service, which would begin on a test basis in two cities this year, customers would connect their telephones and computers to jacks connecting to the Time Warner cable system. AT&T is planning to absorb the cost of the new TV set-top boxes that would be required.

Armstrong said he hoped that alliances with other cable systems will boost AT&T's access to 60 percent to 65 percent of the nation's households. Sources said AT&T has talked with Comcast Corp., Cablevision Systems Corp. and MediOne Group Inc. Armstrong also said he hopes to use wireless technologies to reach another 20 percent of homes.

"That leaves me needing (the Bells for) 20 percent of all access lines," Armstrong said. "Right now the game plan is to not have a high dependency" on local phone companies.

At present, AT&T pays local phone companies roughly $10 billion a year to carry the beginning and end legs of its long-distance calls.