AT&T's Advertising Pipe Dream (T)(BLS)(SIRI)

Perhaps the revenue that AT&T gave up in backing off charging large websites for their traffic to get the FCC to approve its BellSouth merger will be made up by it plan to charge for advertising in cell phones and internet service.

Not likely.

AT&T believes that growth from its big wireless unit, Cingular, and its new advertising placement model will help the big telecom to keep growing. The Cingular part of the argument makes sense and more and more customers add service, upgrade service and upgrade calling plans.

AT&T will let customers sign up for a bundle of internet service and wirelss service.

Putting ads on broadband service and cell phones is a dicey business. These are products that consumers already pay for, so their could be a backlash much as there might be if Sirius added marketing messages to paid satellite radio or its HBO added commercials to its programming. Customer do not want to, in essence, pay twice for their service. But, AT&T believes that advertising could drive several billion dollars over the next few years.

Dream on.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.