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The Milwaukee Journal Sentinel

By Rick Romell, Milwaukee Journal Sentinel

Sep. 13--Opening a new front in its battle with cable companies for the country's Internet, telephone and television customers, AT&T Inc. on Tuesday started selling Web-based TV service.

For $19.99 a month, the telecommunications firm is offering about 20 channels over the Internet, with the promise of more soon. The service is available to anyone with a high-speed, or broadband, Internet connection -- wired or wireless.

The rollout is "an example of how we're trying to evolve into an entertainment company," said Sarah Silva, Milwaukee-area spokeswoman for AT&T.

San Antonio-based AT&T is the area's legacy provider of local phone service. It competes fiercely with Time Warner Cable here in the growing market for broadband Internet connections.

AT&T is offering television over the Internet through an agreement with another company, MobiTV Inc. The service increases AT&T's ability "to provide compelling content to consumers who are seeking information when, where and on the device they desire," AT&T executive Scott Helbing said in a statement.

But Barry Orton, professor of telecommunications at the University of Wisconsin-Madison, questioned the immediate payoff of AT&T's latest move.

"I'm not sure who the customers are other than people stuck in airports," he said.

Orton pointed to AT&T's channel lineup, which the company said includes Fox News, the Weather Channel, Bloomberg, Oxygen, the History Channel, Comedy Time, ToonWorld and Maxx Sports. Also being offered is content made specifically for broadband.

"No ESPN, no NFL, no CNN, none of the classic cable channels," Orton said. "These are all fringe channels. . . . Who's the market? I don't get it."

AT&T may be preparing the way for a more fully developed business offering cable-like television service over its high-speed Internet lines. Running a relatively small start-up operation will give AT&T executives experience in selling television, Orton said.

"They're commandos being sent (to) the other side of enemy lines to see if they can figure out what's going on and report back," he said.

Maureen Huff, a spokeswoman at Time Warner Cable headquarters in Stamford, Conn., acknowledged the "competitive environment" for TV, Internet and telephone service, but said Time Warner is well-equipped to meet the latest AT&T challenge.

In Milwaukee, Time Warner's basic service provides 27 channels for $16.50 a month, Huff said. While the company expands its interactive features, she said, "We believe that many customers still want to view TV programming through a television screen."

Many observers, however, believe televisions and computers eventually will converge.

Meanwhile, the number of high-speed Internet lines -- the kind capable of effectively carrying video -- continues to grow strongly.

A July 26 report from the Federal Communications Commission showed there were 50 million high-speed lines last Dec. 31. A year earlier, there were 42 million, and in 2000, just 7 million.

About 51% of the service was through cable systems, while 39% came over telephone wires. Telephone-based service has been gaining, adding 5.7 million lines during 2005, compared with 4.2 million for cable.

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Copyright (c) 2006, Milwaukee Journal Sentinel

Distributed by McClatchy-Tribune Business News.

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