The bidding war over AT&T Broadband heated up this week when Microsoft announced that it would financially support two of the bidders, Cox Communications and Comcast, in an attempt to thwart rival AOL Time Warner, which is also seeking to buy AT&T's cable unit. Microsoft spokespeople say that they are concerned that if AOL won the bid, it would be able to expand its cable empire by another 14 million users, bringing AOL's customer base to more than 25 million users and making AOL the overwhelming number-one cable TV business in America. Microsoft and AOL have never hidden their ire for each other; AOL has been petitioning European regulators, for example, to require Microsoft to reveal its Windows source code.
AT&T's board of directors will meet this weekend to review bids from AOL, Comcast, and Cox. But AT&T might elect to keep its cable business independent and not sell the unit to an outside company. AT&T expects to make a final decision by the end of the year. Originally, AT&T planned to spin off AT&T Broadband in early 2002, but an unexpected $40 billion bid from Comcast in July started talks with several companies interested in the unit. Microsoft had previously offered AT&T a $4 billion investment to keep the unit inhouse.
Cable, of course, is considered the key technology growth area of the future. In addition to supplying high-speed Internet access, companies can use cable pipes to deliver high-quality interactive TV content, such as video on demand.