Charter Communications Inc. may gain a lock on the St. Louis area
cable market with its planned purchase of cable systems from
AT&T Corp., but antitrust experts don't expect major challenges
to the $1.79 billion deal.
For one thing, no existing
competitors are offering cable service to compete with Charter and
AT&T systems here. And neither AT&T nor Charter had shown
any interest in building a system in the other company's back
"These systems were monopolies to start with," said
Nicholas Economides, a professor at the Stern School of Business at
New York University. A change of ownership doesn't limit the choices
available to individual consumers.
"The situation would have
been different if the same customer had two different providers and
now he just has one," Economides said.
In the deal announced
Wednesday, Charter would more than double its customer base in the
St. Louis area to 512,000.
The addition to Charter's empire
of the 62 communities in Missouri and 36 in Illinois that have
franchise agreements with AT&T would give Charter control of
virtually all cable TV in the St. Louis area. As part of the deal,
Charter also would get AT&T systems in Nevada and Alabama and
AT&T would get two of Charter's cable systems in
Charter, based in Des Peres, is the nation's
fourth-largest cable company. AT&T, which is in the process of
separating its AT&T Broadband cable operations and three other
business units, is the largest cable company in the
AT&T and Charter "always did have all of the
market" for cable service in most of the individual cities in the
St. Louis area where they held the franchise, said Robert Crandall,
a telecommunications expert at the Brookings
"Unless you really think that one of them might
have overbuilt into adjacent areas," the combination is not likely
to raise antitrust regulators' hackles, he said.
The fear of
future price increases is not a likely obstacle, either. Crandall
said customers already have seen their cable bills go up even before
deals like Charter's purchase of the AT&T systems. But the
number of channels and array of choices for customers also have
Customers who don't like to pay the higher bills
can switch to satellite television -- a competitor of cable
companies, he said.
Yet another argument in the deal's favor
is the competition Charter may provide in telecommunications.
Charter's Pipeline cable-modem service competes with Southwestern
Bell's high-speed Internet service in the areas where both are
Charter also is testing telephone service in some
of its St. Louis County systems. If it can offer telephone service
across the entire metropolitan area, it could conceivably provide
significant competition to Southwestern Bell.
provides telephone service to as many as 11,000 customers in the St.
Charles area, Charter officials said Wednesday. The future of that
service hasn't been determined. A Charter spokesman said it was
unclear whether AT&T is selling the telephone system in St.
Charles along with the cable franchises there.
television faces competition from satellite-television services like
Direct TV and Dish Network, said Michael Kupinski, an analyst with
A.G. Edwards & Sons.
"I don't think we're in a situation
where a cable company can rest on its laurels," Kupinski
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