AT&T, Time Warner to Market Calls

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AT&T Corp. and Time Warner Inc. have cut a co-marketing
agreement that could be a first step toward finally concluding their broader telephony
partnership.

AT&T and Time Warner reached a preliminary agreement
about one year ago to allow the long-distance giant to provide local telephone service
over Time Warner Cable's plant. That deal was put on hold after AT&T agreed to
purchase MediaOne Group Inc.

This is the second co-marketing agreement AT&T has
landed with a New York cable company in less than one month. In February, AT&T forged
a similar pact with Cablevision Systems Corp. for its cable subscribers in New York, New
Jersey and Connecticut.

As part of the most recent co-marketing agreement,
beginning next month, Time Warner will market AT&T's "One Rate New
York" local and long-distance telephone package to its 600,000 subscribers in the
Albany and Syracuse, N.Y., areas.

AT&T will insert prepaid calling cards good for 30 free
minutes of long distance in cable customers' bills. When customers call to activate
the cards -- there is no obligation to buy the service -- AT&T representatives will
talk to them about the benefits of the plan.

Once they sign up, those customers will receive coupons for
two free pay-per-view movies from Time Warner.

"This is a first step toward what we hope will be a
broader relationship," Time Warner Cable spokesman Michael Luftman said. "That
is something that could happen later on."

AT&T has about 200,000 One Rate customers in New York.
It resells local telephone service from the incumbent carrier, Bell Atlantic Corp.

AT&T has issued a special calling card for the
marketing effort, depicting Clark Gable and Vivian Leigh in a scene from Gone with the
Wind
.

Time Warner and AT&T said they could expand the
promotion to additional markets in the future.

Time Warner said the free giveaway will serve as a
customer-retention tool, and it could even boost subscribers in those areas. Time Warner
executive vice president Ann Burr said AT&T will market telephony and cable service to
all of Time Warner's homes passed in the two areas.

Burr said Time Warner passes about 900,000 homes in the
Albany and Syracuse areas. She added that incentives such as free cable installation or a
free first month of cable service could be offered to new subscribers in addition to the
calling card.

She said both Albany and Syracuse are stable markets, but
the threat from satellite and SMATV (satellite-master-antenna TV) services, while small,
cannot be ignored.

"In all of our cities, customers have choices,"
Burr added. "To be competitive, you have to give customers opportunities they may not
find elsewhere."

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