• MarketWatch, Tuesday, March 7, 2006 11:15 AM

After years of spending heavily on a national deployment of fiber-optic lines, the country's big cable companies are bound to be aggressive in defending their turf against a newly invigorated AT&T, reports MarketWatch. The proposed merger of AT&T and BellSouth, which observers expect will lead to a far more aggressive AT&T--one that will try to market video content as well as telephone and Internet service--could close by year-end. For Thomas Eagan of Oppenheimer, the merger is ultimately a negative for industry giant Comcast, which has systems in many of the large metropolitan areas served by BellSouth. "Cable operators would be ill-advised to get into a prolonged price war with the phone companies, says Insight Research's David Rosenberg, citing phone companies' superior cash flows. "If they got into a cost-cutting war, the phone companies could last a whole lot longer than the cable operator could." In any event, cable companies are expected to spend heavily on advertising and promotion to assure that AT&T does not gain too secure a foothold in their market.

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