AT&T hopes to use the cable lines as a springboard to enter the local phone market, as well as a broadband pipe that can carry voice, data and video services.

As with AT&T's merger with Tele-Communications Inc., an acquisition of MediaOne "is in the spirit" of the Telecommunications Act, said Brian Adamik, an analyst with the consulting firm Yankee Group.

"The basic issue is going to be whether this improves AT&T's ability to get into local phone service," said Charles Biggio, an antitrust attorney with Akin, Gump, Strauss Hauer & Feld LLP, of Washington, D.C. The U.S. Justice Department will view the dealfavorably, Biggio predicted, noting that the agency has viewed cable operators in the past as conduits for bringing more competition to the local-phone market.

Several local phone companies have lined up against the deal, which isn't surprising given the risk that they could lose local-phone market share to AT&T, analysts said.

"If there are a lot of regulatory blips that appear on the horizon, I image it's the regional bell operating companies that will be putting them out," said Mike Paxton, an industry analyst with research firm Cahners In-Stat. U S West accused AT&T of "attempting to lock in a monopoly over the Internet by combining a stranglehold on local cable lines with a dominant control of the national Internet backbone," while Bell Atlantic Corp President James Cullen criticized AT&T for trying to create Ma Cable. In contrast, Bellsouth Corp. said AT&T's proposed deal creates more local competition and tried to use it as an argument to allow Bellsouth to enter the long-distance phone market.Local phone companies are prohibited by regulators from entering the long-distance market until they open competition in their local markets.

"When the AT&T brand becomes available to all these cable households, surely there is no reason to burden our business with outdated and burdensome long-distance and other regulations," Robert Blau, vice-president of federal regulatory affairs, said in a statement.

If MediaOne agrees to be acquired by AT&T, the New York telecommunications giant will get access to important markets, including Atlanta, Boston and Los Angeles. AT&T needs a pipe directly into as many homes as it can get at, and ownership of that pipe is the strategic goal that has driven AT&T to become a cable player.