Cable Players Engage in Giant Tug-of-War

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NEW YORK: Cinderella cable company MediaOne is suddenly the belle of the telecom ball. Set to merge with Philadelphia cable giant Comcast until AT&T upped the ante on April 22 with a $56 billion bid to become the nation's largest cable company, MediaOne now is in the middle of the biggest Wall Street wooing war since those barbarians at the gate fought over RJR Nabisco. But AOL and Microsoft -- and now AT&T nemesis MCI Worldcom, according to the New York Times -- don't want MediaOne for themselves so much as they don't want AT&T to take another step on its way to Internet and local-phone domination.

Behind the battle is the prospect that the cable modem, with its sprawling, web-friendly bandwith and on-all-the-time convenience, is coming to the mainstream in a few years, and that a one-stop port for Internet, cable and phone service will soon be as ubiquitous in American homes as the traditional telephone jack. In the race for cable lines, AT&T is out front, and MCI Worldcom is understandably worried. They're now mulling joining forces with jilted Comcast to win back MediaOne's hand. Other interested parties include AOL, Microsoft and current No. 1 cable company Time Warner (behemoth parent to TIME Daily). But Time Warner would just as soon see AT&T go home with the bride, which would extricate it from a sticky partnership deal with MediaOne that Comcast planned to make Time Warner honor. As for AOL and Microsoft, both Net companies have the cash to make a move. But they're starting from scratch in the cable game and may want to simply wait this war out, then cut a partnership deal with the winner. So far the favorite's AT&T. But by Thursday, the deadline for Comcast's right of first refusal, someone might decide to play spoiler.