The deal comes a week after Yahoo's similar partnership with MCI Communications' Internet access division was dissolved after the ISP was acquired by Cable and Wireless for $1.75 billion.
With the addition of Yahoo, WorldNet has partnered with some of the most popular properties on the Web to boost subscriber growth. This strategy now is markedly different from the telco giant's original plans for offering Net access services.
WorldNet first rolled out in March 1996 as AT&T's competition to successful online services such as America Online that package content and Internet access.
However, after two and a half years, the telco has chalked up modest gains in subscriber numbers, and has been dwarfed by AOL's staggering membership growth over the same period. WorldNet now has roughly 1.2 million subscribers, according to Jupiter Communications, compared to AOL's 13 million.
The stagnation in subscriber growth "is largely the function of the larger chaos at the company with the new CEO and many transitions in positions," said Kate Delhagen, an analyst at Forrester Research.
WorldNet seems to have shelved its content strategy and instead has chosen to try and lure users with portal brands known for their content aggregation.
"They're agnostic," said Abhi Chaki, a senior analyst at Jupiter, referring to AT&T's search for valuable partners. "They don't really care where they go."
Chaki noted that AT&T could go back to creating or aggregating content on its own once it reaches more desirable subscriber numbers. Other access providers--notably cable access firm @Home--have begun to focus some efforts on content.
The idea behind AT&T's deals is two-pronged. Portals stand to gain traffic from a major ISP. WorldNet, for its part, can increasingly bring Netizens to its access service by appealing to them with the interfaces and content from popular portal brands.
AT&T also has its hand in high-speed services, anticipating the impending widespread availablility of broadband access. For example, the telco inherited a stake in @Home, through its buyout of Tele-Communications Incorporated.
"If you look at AT&T, they have a [controlling] stake in @Home," said Chaki. "One can think that the broadband pieces would have a similar content offering to make the migration from dial-up to broadband easier.
"Their main mandate from [chief executive C. Michael] Armstrong right now is 'grow the business,'" Chaki added.
The deal also extends on a previous relationship between the two companies for AT&T to offer its telecommunications services on Yahoo, including long distance, wireless, and prepaid calling cards.
The service, which will be called Yahoo Online powered by AT&T WorldNet Service, will become available in 30 days for $14.95 per month for the first six months. AT&T long distance service customers will retain the discounted rate for an additional six months, the firms said. They declined to disclose what the rate will be after the introductory period runs out.
AT&T spokesman Jonathan Varman said the price could be subject to change as "the industry evolves, but that's not to say it would change in any specific direction."