What’s Ahead for Teleconsumers?
AT&T; Corp.’s plan to buy Tele-Communications Inc. for $46.5 billion in stock and debt indicates that telephones and televisions have more in common than just their first four letters.
What can customers expect? Here are some answers:
Question: Why does the largest long-distance telephone company want to buy a cable television giant?
Answer: AT&T; is longing to move into your home, from which it was evicted by court order in 1984 in the breakup of the old AT&T; telephone monopoly. AT&T; currently must pay a fee to local phone companies, which own the wires to everyone’s houses, every time a customer places a long-distance call via AT&T.; These access charges amount to billions of dollars each year. TCI provides cable service to 10.5 million households outright and another 10 million households through affiliations with other cable systems. When technology permits, AT&T; will be able to use that cable to bypass conventional telephone lines and offer phone, telecommunications services and television directly to consumers. The proposed deal would allow AT&T; to crack the $110-billion market for local telephone service. AT&T; also faces competition from the Baby Bells, which are eager to break into the long-distance market.
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Q: How soon will consumers notice an impact?
A: If the deal is approved, new equipment and services could begin appearing as early as next year, AT&T; Chairman C. Michael Armstrong and TCI Chairman John Malone said Wednesday. A broader roll-out of these products would take longer, however.
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Q: What will it mean for my phone and cable service?
A: The proposed company, to be called AT&T; Consumer Services, would offer all-in-one shopping for cable television, high-speed Internet access, online banking and local, long-distance and cellular telephone calls.
Malone spun tales at a Wednesday news conference of multiple new channels and of ordering telephone services over your television by pointing with the remote and clicking. Telephone calls might be placed over the television set, complete with picture. Your kitchen phone might have a screen attached for Internet surfing.
In Southern California, about 835,000 cable customers would be served by a partnership between TCI and Century Communications, which is expected to be finalized in the next several months.
“We are thrilled,” said Bill Rosendahl, spokesman for Century Communications of Southern California. “We are going to have the resources to provide . . . all the whistles and bells of the future.”
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Q: Aren’t these services available now?
A: Many are, but in limited areas. The combined company has the potential to deliver all of these services over the same wires to a wide audience.
TCI has plans to spend $1.8 billion during the next three years to upgrade its cable network to handle two-way voice and data signals. But only a tiny fraction of TCI’s cable customers can use the system today for telephone calls.
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Q: Will I have to buy all my services from the same company?
A: No. But AT&T; is betting that the convenience and potential price breaks will be too much to resist. TCI expects the AT&T; brand name will attract new cable customers, while AT&T; expects that customers will become more loyal if they are buying bundled services from one company.
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Q: What does this mean for TCI customers who aren’t AT&T; customers?
A: No one would be forced to buy telecommunications services from AT&T.; But the combined company might offer discounts to those who opt for multiple services to attract new customers.
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Q: If I want all these services, will I have to buy special equipment?
A: These services will require fancy new digital converter boxes to hook to your television. The boxes are very expensive now, and Armstrong and Malone said Wednesday that they will wait for the devices to be available at a retail level before rolling out the new services widely. That implies that customers will be allowed to buy the boxes rather than lease them forever, as they usually do with cable television now.
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Q: What will happen to prices?
A: The companies said they haven’t decided yet how much they will charge for hookups and monthly service, but Armstrong emphasized that the combination would create rather than reduce competition in local markets.
But consumer activist Sylvia M. Siegel, president of San Francisco-based Consumers’ Cable Cop, said she is “troubled” by the proposed merger.
“They’ll be king of the hill,” she said. “They can dictate price and they can dictate programming.”
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Q: If something goes wrong, would my cable service and my phone service both go out?
A: Probably, because all would enter your house through the same wires.
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Q: If I can’t pay my bill, does that mean I would lose both my TV service and my phone?
A: That remains to be seen. Telephone service is considered a necessity and by law companies must make it affordable for everyone, even if that means subsidizing some users. Customers would be faced with one larger consolidated bill rather than several smaller ones. Consumer advocates doubt that AT&T; would allow customers to pay only parts of their bills if they come up short.
“It makes me nervous because the telephone is something that everyone depends on,” Siegel said.
