AT & T must sell its stake in cable Internet provider Road Runner as one condition of government approval for the telecom giant's $70 billion merger with MediaOne Group.
The Justice Department's order, which must be approved by a federal court, allows AT & T's deal to clear one of two hurdles for winning federal clearance. AT & T praised the conditions, which are much milder than the order contemplated by the FCC, which should come in a few days.
Justice was concerned about the merger's effects on the broadband market, because AT & T already controls Excite@Home, the country's largest cable broadband provider.
Acquiring MediaOne's 35% stake in No. 2 Road Runner would give the merged company 75% of the country's cable modem subscribers and the major portion of all residential broadband services, which also include telephone digital subscriber lines. AT & T has until the end of 2001 to jettison its stake in Road Runner.
The antitrust agency's action last week was aimed at preventing harmful concentration in the market for residential cable Internet service-a welcome sign to consumer groups and critics of the cable industry's rollout of Internet service.
The order for the first time indicates that the government believes broadband Internet to be distinct from the much larger dial-up telephone Internet access.
Public advocates say they will use the Justice Department's ruling in their fight for open-access rules that would prevent cable companies from discriminating against unaffiliated Internet access providers.
A second condition of the decision, to which AT & T agreed in a consent decree, would, until June 2002, require AT & T to obtain Justice Dept. approval before entering any agreements with AOL-Time Warner for cable modem or residential broadband service.