It was a whirlwind courtship that turned into a hurricane of rumored counter-offers and side deals, but when the dust settled last week, AT&T and MediaOne got what they wanted: the right to unite. Jilted suitor Comcast was left with nothing-except $1.5 billion in cash, a stronger market position, new subscribers and the promise of optimum cable telephony rates from AT&T.

"It's a very elegant win-win," Comcast CEO Brian Roberts said at a press conference announcing the deal.

The result should be clear sailing for AT&T's winning bid of $58 billion in stock and cash for MediaOne-an offer that MediaOne's board of directors accepted one week ago over Comcast's $53 billion March bid. If it goes through, the deal will make AT&T the nation's largest cable operator with 14 million cable customers-about 18% of the United States total-and an additional 10 million homes passed.

Terms of the Comcast deal include giving AT&T the chance to sell local cable telephone service in Comcast's markets. That access could bring an additional 8 million subscribers into AT&T's local phone fold, making the service available to more than 60% of U.S. households.

Comcast will gain a breakup fee of $1.5 billion and 750,000 new subscribers through territory swaps, for which it will pay AT&T $4550 a head, or between $3 million and $3.5 billion. Subscriber increases will come in Florida, Michigan, New Jersey, New Mexico, Pennsylvania and the Baltimore-Washington metro area. Comcast will relinquish systems in Atlanta; Broward County, Fla.; Chicago; Colorado; Pittsburgh; Richmond, Va.; and Sacramento, Calif.

The result will be an East Coast cluster of Comcast networks from Union, N.J., through Washington that will be "the most contiguous corridor in the industry," said Roberts.

Comcast will also get the option to purchase 1.25 million more subscribers from AT&T over the next three years at an expected cost of $5.7 billion. Many subscribers will be new, said Leo Hindery, president of AT&T Broadband and Internet.

AT&T also bought the half interest it did not own in Lensfest Communications, a multiple systems operator (MSO) with about 1.4 million subscribers in Pennsylvania and New Jersey. Comcast will participate in management of this system and may ultimately acquire its customers.

The Comcast agreement and the expected MediaOne purchase will put AT&T's negotiations with Time Warner back on track, said C. Michael Armstrong, AT&T's chairman and CEO. Talks to hammer out a 20-year contract to carry AT&T cable telephony to Time Warner's 12 million customers have already missed the April 30 deadline announced last February. But MediaOne is a stakeholder in Time Warner Entertainment-a fact that should speed negotiations up considerably.

"If we're lucky enough to acquire MediaOne, we will immediately open those discussions [with Time Warner] again from a different vantage point," Armstrong said.

Assuming the Time Warner deal goes through, and AT&T can win an agreement to offer cable telephony to one other non-affiliated MSO, a "most favored nation" clause in the Comcast pact will guarantee that system the lowest cable telephony rates AT&T offers.

In a final flourish, two days after the Comcast deal, Armstrong announced a $5 billion investment in AT&T by Microsoft. Microsoft will extend an existing deal to supply AT&T with 5 million cable set-top boxes-built on its Windows CE client/server platform-by another 2.5 million to 5 million boxes. More important, the software giant will ensure that its boxes will be included in two of the showcase tests the new No. 1 cable operator will conduct this year.

"AT&T already had strong relations with Microsoft," said Armstrong. "But MediaOne was catalytic. Now, with this agreement with Microsoft, we've agreed to do something real."