@Home to Combine With Road Runner?

The Internet industry is still sorting through the impact of Monday’s
proposed $48 billion megamerger of cable giants Comcast and MediaOne.

One of the key questions is how the two firms will reconcile their
different Internet allegiances. Comcast has endorsed @Home, the Internet
access company that’s now controlled by AT&T Corp.

But MediaOne is a big player in RoadRunner, the access service it operates
with TimeWarner, the nation’s biggest cable company.

Top executives of the two companies said Monday they weren’t able to
resolve the conflict during merger talks, and they’ll put it off until the
deal closes later this year.

But industry watchers said Tuesday the merger could help catalyze a deal
in which the @Home and RoadRunner services combine forces.

“I don’t think these two businesses are best off separate in the long run,”
said Bruce Leichtman, an analyst with the Yankee Group. “They need a
unified marketing force, especially in urban areas where they overlap.
Having several companies in this market isn’t good for anybody.”

Leicthman said it’s likely that the two Internet services will consolidate
under the @Home name, but working out such a deal will be tricky, given all
the contractual stipulations and the confusing mix of partners.

Either way, the merger will make Comcast a much bigger player in the @Home
joint venture. Yankee estimates that owners TCI and AT&T together had
29,000 cable access subscribers at the end of the fourth quarter, whereas
Comcast and MediaOne will jointly boast upwards of 140,000.

“Comcast will
be the biggest player in the ownership group, so they may demand more of a
leadership role,” he said.

Look for Comcast to nudge MediaOne to be more aggressive in upgrading its
broadband plant, said Lisa Mann of the Strategis Group. She estimates that
nearly 70 percent of Comcast’s infrastructure will be capable of two-way
broadband traffic by the end of 1999, while MediaOne has been less

“You’re going to see massive deployment and serious marketing,” Mann said.

If the merger goes through, Comcast will amass about 11 million cable
subscribers, a close second to the 12 million customer claimed by leaders
Time Warner Inc. and AT&T Corp., which recently completed its acquisition
of Tele-Communications Inc.

Get the Free Newsletter!

Subscribe to our newsletter.

Subscribe to Daily Tech Insider for top news, trends & analysis

News Around the Web