WJPBR Email News List [EMAIL PROTECTED] Peace at any cost is a Prelude to War! Open-Access, A Key Issue in AOL Merger Deal _____Special Report_____ • AOL-TimeWarner Merger _____Industry Report_____ • Internet What's Your Opinion? E-Mail This Article Printer-Friendly Version By James V. Grimaldi and Alec Klein Washington Post Staff Writers Monday, September 4, 2000; Page A01 Federal antitrust attorneys, fearful of a media juggernaut that could control the Internet, are prepared to block the America Online Inc.-Time Warner Inc. merger unless the companies agree to keep open their high-speed cable lines to competing entertainment and online companies, The Washington Post has learned. Federal Trade Commission staff attorneys are concerned that in certain markets where Time Warner operates cable systems there is no viable competition to provide high-speed access to the Internet through cable TV lines. As a result, consumers could be forced to accept AOL-Time Warner TV programming and Internet content exclusively, according to sources close to the matter. The staff decision by no means is a death blow for the merger deal, which was announced Jan. 10. Intensive discussions now are expected to continue until some compromise is worked out that satisfies staff concerns about consumer choice and meets the companies' goal of preserving their options. Commission officials declined to comment on the specifics of the negotiations. "This is an early point of the process and the decision is up to the commission and obviously these discussions are part of the process that could lead eventually to action by the commission," FTC spokesman Eric London said. Time Warner recently stuck a deal to open its cable TV lines to Juno Online Services Inc. AOL has pointed to this agreement with an independent online service provider as an example that the combined companies are committed to a policy of open access. "As we've said from day one, AOL and Time Warner are fully committed to open access and just recently announced the first ever open-access agreement with independent ISP Juno," AOL spokeswoman Kathy McKiernan said. "Our ongoing conversations with the regulatory agencies are proceeding well and we are on track to close in the fall." But the antitrust lawyers are seeking, at the least, assurances that such deals will continue to be made after the merger is approved. FTC lawyers are concerned about the power of the combined companies. Together, Dulles-based AOL, the world's largest Internet provider, and New York-based Time Warner, the nation's No. 2 cable company, would control 40 percent of the Internet access market and reach 20 percent of cable-equipped homes. The lawyers for the FTC's Bureau of Competition have not forwarded a recommendation to the commission and are in discussions with the companies, sources said. The FTC staff lawyers, who can be expected to be the most aggressive of the officials involved in the merger review, believe they have sufficient evidence to persuade courts that without concessions the merger would violate antitrust laws meant to prevent mergers that lead to monopolies. Negotiations are expected to continue during the next two months and are to include Richard G. Parker, director of the competition bureau, before the matter is referred to the five-member commission. The staff attorneys' conclusion is not binding and Parker could overrule it. Commission staff members have briefed members of Congress on the status of the discussions and last week Rep. W.J. "Billy" Tauzin (R-La.) announced he would hold a House telecommunications subcommittee hearing later this month. AOL chief executive Steve Case and his counterpart at Time Warner, Gerald Levin, are to testify at the hearing. Case, in previous congressional testimony, has insisted that AOL-Time Warner will not discriminate against the content of competitors or give its own entertainment properties preferential treatment. Nationwide there are thousands of Internet service providers, but antitrust enforcers are concerned that consumers will lose choice in the face of AOL's marketing power and Time Warner's high-speed Internet access technology. Time Warner and AOL have promised that the merged company would not require subscribers to sign up with AOL as a condition of receiving turbo-charged World Wide Web access from Time Warner cable lines, but the competition officials want to ensure that this promise is kept. The key to that promise is what kind of language, which could be included in a consent decree, would be crafted to require AOL-Time Warner to guarantee open access to the cable lines. The companies are likely to oppose tough, compulsory language that seeks guaranteed access to any company at a set price. Even without the marketing power of AOL, Time Warner and other cable companies are signing up hundreds of thousands of high-speed Internet access customers each month. The fiber-optic cable lines laid by the cable industry during the past five years are proving to be a relatively economical way for residential high-speed access. The total number of U.S. homes that can access the Internet over lines controlled by cable TV companies is expected to double to 3.6 million by the end of this year, compared with last year. In public statements and testimony, company officials have made the case repeatedly that they believe the merger would be pro-competitive. They also challenge the FTC enforcers' theory that there is little competition to cable's high-speed access lines; they cite the growing use of DSL service, which is high-speed access over phone lines, and satellite TV dish providers, who also have begun offering Internet access. The proposed merger would create a media conglomerate so big that some of the world's largest entertainment companies, such as Walt Disney Co., NBC and USA Networks Inc., have taken the unusual step of publicly criticizing the merger. That's because they are worried that AOL's 26 million subscriber base, when combined with Time Warner's content portfolio, would create a company with the ability to steer customers toward Time Warner's CNN.com and away from Disney's ESPN.com. Disney, which owns the ABC television network, is particularly concerned about AOL's new AOLTV, which would allow users to search through TV programming in the same way that they can now surf for Web sites on the Net. The fears of Disney and other entertainment companies were crystallized last May when Time Warner blocked ABC programming for 3.5 million of its subscribers because of a contract dispute with Disney. Staff writer Christopher Stern contributed to this report. *COPYRIGHT NOTICE** In accordance with Title 17 U. S. C. Section 107, any copyrighted work in this message is distributed under fair use without profit or payment to those who have expressed a prior interest in receiving the included information for nonprofit research and educational purposes only.[Ref. http://www.law.cornell.edu/uscode/17/107.shtml ] Want to be on our lists? Write at [EMAIL PROTECTED] for a menu of our lists! ****************************************************************************** ******************* A vote for Bush or Gore is a vote to continue Clinton policies! A vote for Buchanan is a vote to continue America! Therefore a vote for Gore or Bush is a wasted vote for America! Don't waste your vote! 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