News

Time Warner Warns of SBC Growth

9/06/1998 8:00 PM Eastern

Two Time Warner Inc. divisions have joined a chorus of
telecommunications-service providers that want Ohio regulators to scrutinize SBC
Communications Inc.'s proposed $62 billion acquisition of Ameritech Corp.

Time Warner Telecom, which offers competitive phone service
to businesses in Columbus and Cincinnati, recently joined AT&T Corp., Sprint Corp. and
CoreComm in asking the Public Utilities Commission of Ohio to hold public hearings on the
proposed deal.

The competitive local-exchange carriers made their request
during a heated forum before the PUCO last month.

"There were a lot of angry people in that room that
day," one of the attendees said.

Meanwhile, Time Warner Cable -- the state's dominant
cable operator, with some 900,000 customers -- asked to intervene in the case, and it said
last week that it believes that Ameritech is continuing to engage in uncompetitive
practices.

On the phone side, Time Warner wants assurances that the
merger between the two regional Bell operating companies won't affect an
interconnection agreement with Ameritech. That deal allows Time Warner to offer local
phone service to businesses in Ohio's two largest markets, said Marsha Schermer, vice
president of regulatory affairs with Time Warner Telecom.

"That interconnection agreement is critical,"
Schermer said. "It's a technical issue, it's a billing issue and it's
an administrative issue. Our ability to serve customers is based on what Ameritech
provides to us."

Moreover, Schermer said, the two regional Bell operating
companies have provided few details about how their proposed merger will proceed.

In fact, subtracting annual reports from its request for
approval of the merger, the two companies' official filing with the PUCO amounted to
just 20 pages "for one of the biggest telecom mergers ever."

"There isn't enough there to justify granting
approval," she said.

Officials at SBC headquarters in San Antonio had no
response to the request for hearings on the merger with Ameritech except to say that the
requests had been "expected."

Meanwhile, Time Warner Cable is raising concerns about
Ameritech using monopoly assets to subsidize unregulated businesses.

For example, Ameritech no longer sells Time Warner its list
of new telephone customers in Ohio, which the MSO had used to market its cable service,
vice president of public affairs Mary Jo Green said.

"We have reason to believe that they're steering
those customers to Ameritech New Media [the RBOC's cable arm]," Green said.

If this is true, Green said, it would be reminiscent of the
controversial "AmeriChecks" marketing program, which offered vouchers for
discounted local phone service to consumers who signed up for ANM's service; or of
the RBOC's former practice of offering its cable subsidiary the most favorable
position on its telephone poles.

"These are the kinds of practices that would have an
impact on captive ratepayers," Green said. "At the very least, we think that it
would be in the public's best interest for the PUCO to put conditions on this
merger."

Calls to Ameritech's corporate headquarters were not
returned.

In a prepared statement, the Coalition for Customer Choice
said the PUCO should hold hearings on the merger based on a history by both companies of
putting "roadblocks in the path to providing the benefits of choice in local phone
service to customers."

"The burden of proof is on SBC and Ameritech to
conclusively demonstrate that this proposed deal would serve the public interest, and not
just strengthen their existing lock on the local telephone market," CCC executive
director Wayne Hill said.

PUCO spokesman Dick Kimmins said initial comments on the
proposed hearings were due last Thursday, with reply comments due by Sept. 14. The
commission has not decided whether it will agree to hold hearings on the merger.

PUCO has set a pre-hearing conference for Oct. 21. Kimmins
said the commission had to set a date for a conference or, under state law, it would have
been deemed to have approved the merger.

"And we didn't want to do that," he added.

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