Washington -- America Online Inc. and Time Warner Inc. last
week took the first step toward winning regulatory approval for their pending merger,
promising the Federal Communications Commission the combined company would provide
consumers with access to "multiple" Internet service providers.
In the FCC filing, the two companies said the newly formed
AOL Time Warner Inc.'s commitment to open access will inspire others to follow its
lead, resulting in an open Internet environment over cable that would not require
"Just as we expect that our services and products will
be directly available to subscribers of other delivery platforms on a commercially
reasonable basis, likewise we intend to offer competing service providers' service on
our systems," AOL and Time Warner said. "The merger therefore will directly
advance the [FCC's] stated goal of providing expanded consumer choice through
The only hurdles in the combined company's march
toward open access are technical and contractual, AOL and Time Warner said. But the
companies said not. They said nothing to indicate that either one was insurmountable.
"AOL and Time Warner have embarked on an irreversible
process of achieving solutions to these problems," the companies said. "Not only
will these solutions be implemented on Time Warner's systems, but AOL and Time Warner
expect that this merger will also lead other companies operating broadband platforms to
provide consumers will real choice."
The merger that would create AOL Time Warner not only
requires approval from the FCC, but also the Federal Trade Commission. In a speech in New
York last week, FTC chairman Robert Pitofsky said his agency will take a closer look at
mergers that require restructuring to survive antitrust review. He did not specifically
refer to AOL-Time Warner.
Richard Parker, director of the FTC's Bureau of
Competition, will head up that agency's review. Last year, Parker replaced William
Baer, whose review of Time Warner's purchase of Turner Broadcasting System Inc. led
to a settlement requiring Time Warner Cable systems to carry a competitor to Turner-owned
Cable News Network.
AOL and Time Warner's FCC's filing, with its firm
promise to support open access, clashed with consumer-press reports that the two companies
were backpedaling on the issue. The Wall Street Journal said the companies had been
fuzzy on exactly when open access would occur, whether all or many ISPs would have access
to AOL Time Warner's cable pipes.
In their filing, AOL and Time Warner said the new company
would have an exclusive contract with Road Runner that could not be ignored. That pact
runs until Dec. 31, 2001.
The companies also committed to providing access to
AOL spokeswoman Kathy McKiernan said reports that AOL no
longer supports open access were wrong. But she said AOL is not "pushing legislation
at this time" on the federal or state level, given "the movement in the
"AOL is as strongly committed to open access today as
we were the day before we announced our merger with Time Warner," she said. "We
are confident that our merger with Time Warner will help quickly bring the benefits of
open access to all consumers."
On Capitol Hill, Rep. Rich Boucher (D-Va.), sponsor of
open-access legislation, said he was pleased with AOL-Time Warner's promise, but
noted that it does not cover all cable systems.
"I am somewhat skeptical that an arrangement that is
voluntary only is going to achieve open access for 100 percent of the cable systems,"
he said. "The likelihood is that a national policy is still going to be necessary and
enacted by the Congress to achieve open access uniformly across all cable systems."
AOL and Time Warner filed for their $152.8 merger with the
FCC on Feb. 11, a month and a day after the deal was announced at a New York press
conference. They requested no waivers and asserted the deal would pose "no
conceivable risk to competition."
Regarding AOL's past calls for FCC-imposed open
access, AOL and Time Warner said the Internet company had called for "a more
proactive [FCC] approach" because of an "absence of progress in the
marketplace" that no longer exists.
FCC chairman William Kennard is expected to name Cable
Services Bureau chief Deborah Lathen to head the agency's first review of a merger
between a major ISP a large cable operator.
Kennard is overhauling the agency's merger process.
FCC general counsel Christopher Wright said last week that the goal is to complete action
on any merger within 180 days of filing.