November 24, 1999 Ms. To-Quyen Truong Associate Chief, Cable Services Bureau Federal Communications Commission The Portals 445 12th Street, S.W., Room 3-C488 Washington, D.C. 20554 Re: Ex Parte, Application for Consent to the Transfer of Control of Licenses from MediaOne Group, Inc. to AT&T Corp. (CS Docket No. 99-251) Dear Ms. Truong: This letter and the attachment to it are in response to your October 26, 1999 letter to Joan Marsh requesting that AT&T document that, after its proposed merger with MediaOne, AT&T will be attributed with no more than 30% of all MVPD subscribers nationwide. As shown in the attachment, AT&T will be attributed with approximately 27% of MVPD subscribers after its merger with MediaOne is completed. In arriving at this percentage, AT&T did not count the subscribers in cable systems currently held by Time Warner Entertainment Company, L.P. ("TWE"), in which MediaOne currently has a 25.51% limited partnership interest. The TWE cable systems will not be attributable to AT&T post-merger because AT&T's interest in TWE will be insulated under the Commission's recently adopted cable attribution rules. As you know, these rules permit a limited partner to maintain insulation in a limited partnership if it is not "materially involved in the video-programming activities" of the limited partnership.1 For the following reasons, which are described fully in the attachment to this letter, AT&T will not be "materially involved" in the video programming activities of TWE post-merger: * Once the merger is completed, AT&T will inherit the rights in TWE currently held by MediaOne. All MediaOne's rights to participate in the management and operation of TWE's video programming businesses, already have been terminated. * AT&T post-merger will retain rights to vote on a limited list of Participant Matters, which are described in the attachment. However, these rights are the type the Commission routinely allows investors to have without triggering attribution. * AT&T's insulation in TWE will not be affected by the fact that certain entities in which AT&T has minority, non-managing (and, in most cases, indirect) interests sell programming to TWE. Because all of AT&T's interests in these programming entities are attenuated, the sale of programming by such entities to TWE cannot reasonably be found to "materially involve" AT&T in the video programming activities of TWE. Nonetheless, in order to allay all possible concerns about the merger's impact on video programming, AT&T proposes several additional safeguards to ensure that it will not be "materially involved" in TWE's video programming activities. * AT&T also describes in the attachment the steps it will take to ensure that the duties and responsibilities of any representatives that it appoints to the TWE Board of Representatives will be "wholly unrelated to the video-programming activities" of both AT&T and TWE. Thus, AT&T's appointment of representatives to the TWE Board will comply with the Commission's rules and will not affect the insulated nature of AT&T's interest in TWE. The conclusion that AT&T's interest in TWE post-merger will be insulated -- and, therefore, not attributable -- is particularly compelling in light of the enormous benefits the merger will bring to consumers, including the more rapid development of effective facilities-based competition to the ILECs for millions of the nation's homes and businesses. Indeed, the very reason why the Commission last month revised its cable attribution rules was to permit "investments between companies whose combination may bring benefits to the public, such as cable broadband and telephony services and competition," so long as those investments do not threaten the video programming marketplace.2 The nature of AT&T's post-merger interest in TWE alone -- and certainty when combined with the additional safeguards proposed in the attachment to this letter -- amply protect video programming and, therefore, AT&T's interest in TWE should properly be treated as insulated under the Commission's new attribution rules. Please do not hesitate to contact me if I can be of any further assistance. Sincerely, 1 In the Matter of Implementation of Section 11(c) of the Cable Television Consumer Protection and Competition Act of 1992, Review of Commission's Cable Attribution Rules, CS Docket Nos. 98-82, 96-85, FCC 99-288 (rel. Oct. 20, 1999), at  63. 2 Id. Ms. To-Quyen Truong November 24, 1999 Page 3 attown1 attown1