TCI, AT&T in Talks Again


Tele-Communications Inc. has renewed conversations with
AT&T Corp. on a possible linking of their networks.

The carrot this time is telephone services.

Senior TCI executives, including president and chief
operating officer Leo J. Hindery Jr., met with AT&T executives last week, sources

The two companies had been in serious talks last year, when
the possibility of a nationwide data backbone seemed to AT&T to be an appealing way to
get into the business of local-loop telephony without having to pass phone traffic onto
wires owned by telephone companies.

At the time, TCI's pitch was a cable-owned, nationwide
data backbone that could give the long-distance giant a way to move phone traffic into and
out of consumer homes. The idea brought with it a flurry of reports about the potential
linking of high-speed-data backbones owned by @Home Network, Time Warner Cable's Road
Runner and MediaOne Express.

Road Runner is still mired in what has become a laborious
merger with MediaOne Express, and executives on all sides are also hopeful for an
announcement, soon, that will bring Microsoft Corp. into the fold.

Earlier this year, Hindery confirmed that the merger talks
between @Home and Road Runner/MediaOne Express were off. But since then, he and other
senior cable executives have repeatedly mused that a nationwide merger makes too much
sense to be permanently tabled.

However, last week's talks between TCI and AT&T
were confined to their own respective networks, sources familiar with the talks said.

Hindery wasn't available for comment at press time,
and a TCI spokeswoman said the MSO did not want to comment about what it would take to
make a nationwide data backbone possible.

TCI was very close to a deal with AT&T last year under
which AT&T would have "infused" revenues into TCI that the MSO would have
then used to upgrade its cable networks in major metropolitan areas.

Those talks were snagged by an overload of details and by
AT&T's desire for what one cable executive called "gold-plated plant"
with "triple redundancy" that "just isn't the way that the cable
industry goes about its business."

So far, though, the only official arrangement between
AT&T and the cable industry was AT&T's purchase of Teleport Communications
Group earlier this year in an all-stock transaction valued at $11.3 billion.