AOL working out cable access pact with AT&T, Excite@Home

After spending $10 billion to acquire Netscape, AOL is in negotiations with Internet portal Excite@Home. AT&T, the largest shareholder of Excite@Home is reportedly involved in the deal that could include provisions to let AOL offer its services over AT&T cable television network.

AOL and many other Internet service providers are currently locked out of the market of high-speed cable access to the Internet. AOL may be forced to make a deal lucrative enough for AT&T to open its digital doors to AOL. Analysts said there may be more going on behind the scenes than talks involving AOL. Microsoft, Yahoo! and Walt Disney/Infoseek are also seeking access through the AT&T cable channel. "We fully expect AOL to announce a broadband initiative in the near term, mostly likely in conjunction with @Home and AT&T,'' said CIBC World Markets analyst John Segrich. "We believe that a deal between AT&T and America Online is highly likely since it would allow AT&T to turn its broadband assets into a profit center.''

AT&T acquired its current stake in Excite@Home in March when it completed the $59.4 billion purchase of Tele-Communications Inc., which had a controlling ownership interest in @Home. At Home paid $8.26 billion for Excite. The Excite@Home combination is currently the second most popular Internet portal behind Yahoo.