Flap May Delay AT&T; Cable Deal

WASHINGTON -- Government approval for the pending merger of AT&T; Corp.’s cable business and Comcast Corp. has been caught up in a flap over whether the Federal Communications Commission should review a contract between AT&T; and AOL Time Warner Inc. that spells out the terms under which AOL can offer high-speed Internet service on AT&T; Comcast wires.

Brian Roberts, chief executive of Comcast, visited the FCC this week and told FCC Chairman Michael K. Powell and other commissioners that the confidential contract is irrelevant to the proposed merger.

But consumer groups and Atlanta-based EarthLink Inc., a rival Internet service provider, are eager to see the terms of the contract, which reportedly heavily favor AT&T; Comcast.

The groups say the contract could offer proof of AT&T; Comcast’s potential market power. If AT&T; Comcast is able to extract such attractive terms from a media company as large as AOL Time Warner, it would be able to exert undue influence on countless smaller players, according to Media Access Project, one of the watchdog groups asking the FCC to review the contract.

If the FCC refuses, merger opponents are hinting that they may ask an appellate court in Washington to compel the agency to look at the terms. An FCC spokeswoman said the agency has not decided whether to review the contract.

FCC commissioners are still expected to approve the AT&T-Comcast; cable deal shortly, sources said. The Justice Department also is expected to approve the deal.

But the latest maneuvering may delay action beyond the FCC’s self-imposed deadline of Nov. 5.