Although already loaded with debt from its acquisition last year of the TCI cable system, AT&T was able to outbid Comcast largely because it can make more off MediaOne's cable customers, using the cable lines to sell phone service and, in conjunction with At Home, high-speed Internet access. That last piece apparently scares both AOL and Microsoft. And so the biggest software company and the biggest online service emerge to contest the biggest phone carrier. MORE >>
Now America Online and Microsoft have entered the fray over the Colorado-based MediaOne cable service. A bid in March for MediaOne by another another cable system called Comcast seemed like run-of-the-mill consolidation in the cable business. But last week AT&T came in with a much bigger offer, turning MediaOne into a reminder of telecom's future. Interest from Microsoft and AOL only extends these emerging battle lines even deeper into cyberspace.