AOL Time Warner Inc. has made a bid to acquire a major part of AT&T cables system. The first talks between the two companies started in July of 2001. At the present time AOL Time Warner handles close to half of the Internet-access market in America. Adding AT&T's assets to it would allow AOL Time Warner to reach a broader audience. It is in the best interest of the phone company to create as much interest in the company as possible to achieve the highest bid. So far AT&T is not commenting on any of its bids it has received. But we do know that there are at least four other companies interested in AT&T. The four companies are Cox Communications, Charter Communications, Walt Disney Co., and Microsoft Corp. But if this merger were to happen it would have control of a third of the U.S. cable market. That may cause smaller cable companies to merge.
If AOL Time Warner gets a part of AT&T it could possibly pose problems to their customers. They would have 27 million customers and one third of the cable market. With AOL Time Warner owning that amount of the business it could knock the smaller companies out of the loop. When you have competition between many businesses it forces you to keep your prices at a reasonable level. When there is a lack of competition you can charge as much as you want for the good or service that you offer. If there is a lack of competition because of barriers to entry into the market or for a number of other reasons, that is a monopoly. A monopoly is not legal in the United States without express governmental approval.
On the other hand AT&T has found a good way to try to sell part of its company. It did not jump at the first offer handed to it. Instead it is holding out for the highest bidder. They have also kept all the bids they have received confidential. This way they can hear what all the companies have to offer and make their decision from that.