Court Asked to Open Comcast-AOL ISP Deal

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A federal court in Washington, D.C., Monday was asked to require the Federal
Communications Commission to order cable operator Comcast Corp. to reveal terms
of a nonexclusive Internet-carriage agreement with AOL Time Warner Inc.

The Consumer Federation of America and other public-interest groups are suing
over the agency's decision to approve the Comcast-AT&T Broadband merger last
year without requiring production of the Internet-service-provider
agreement.

AOL Time Warner concluded the ISP deal with AT&T Corp. as part of the $9
billion restructuring of Time Warner Entertainment. The deal occurred while the
Comcast-AT&T Broadband merger was pending before the FCC and the Department
of Justice.

The DOJ reviewed the ISP deal, as did some FCC staff members. But the FCC
rejected the CFA's demand seeking access to the agreement on a confidential
basis.

The CFA wants to determine whether the ISP agreement bars AOL from providing
"video streaming" to Comcast subscribers. Comcast sources said the company has
not disclosed whether such a restriction was in the ISP deal.

Inclusion of such a restriction, the consumer groups contended, would show
that Comcast has market power to exclude Internet-based competition to its
primary video business and that the FCC erred in approving the merger without
assessing the agreement's impact on video competition.

Cheryl Leanza, a lawyer with Media Access Project who represented the CFA,
said Comcast didn't want customers switching from ESPN on its cable systems to
ESPN on AOL Broadband.

"Comcast would prefer that you watch it on their system," Leanza told the
three-judge panel of the U.S. Court of Appeals for the D.C. Circuit.

FCC attorney Joel Marcus said the FCC did not regulate agreements between
cable operators and ISPs and, thus, the agency did not have a rule in place to
declare video streaming an out-of-bound provision.

"For this reason, the commission found that [the CFA's request] was not a
merger-specific matter," Marcus said, adding that it was his "understanding"
that although the Comcast-AOL Time Warner deal included a video-streaming
restriction on America Online Inc., it did not preclude AOL customers from
visiting streaming sites through their own Web surfing.

Oral arguments were heard by U.S. Circuit Judges A. Raymond Randolph, Harry
T. Edwards and Merrick B. Garland.

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