RealTime IT News

Groups Quick to Condemn AOL-Time Warner Deal

Consumer groups were quick to raise doubts about the proposed merger of America Online Inc. and Time Warner Inc.

The deal would wed the nation's largest online community with the world's largest media and entertainment company.

National consumer organizations including the Consumers Union and the Consumer Federation of America,, Media Access Project and Center for Media Education believe consumers do not want to be beholden to a giant media-Internet dictatorship, even if it promises to be a benevolent one.

"This is the sad result of the Clinton Administration's weak competition policy that has allowed enormous consolidations, which are likely to leave consumers with fewer choices, limited competition, and higher prices. We will immediately ask the Federal Communications Commission to initiate a rule-making proceeding to require open access to the Internet," the groups said in a joint statement.

They also intend to ask the FCC to review its recently revised ownership rules. The new rules could mean that AOL (AOL), Time Warner (TWX), and AT&T Corp. could attain anti-competitive levels of ownership over cable programming and Internet services.

"We want the FCC to require open access, regardless of the promises made by the players," the groups demanded. "We have already complained to the FCC about the lack of an open access policy and Time Warner's relationship with AT&T (T). The FCC has failed to effectively sever that relationship through its ownership rules as it reviews AT&T's acquisition of MediaOne. Adding AOL to the stock of services and products associated with Time Warner makes the problem even worse."

The consumer groups fear that AOL will immediately become the leader in broadband Internet services, as they already dominate narrowband services in the U.S.

Peter Arnold, Hands Off the Internet executive director, said it would be interesting to see how the AOL-Time Warner deal would impact the open access debate.

"For a year now, AOL-backed groups have been active in pushing state and local access regulation in franchise transfers and renewals across the country," Arnold said. "It will be interesting to see if they are as aggressive in promoting this regulation in the service territories of AOL-Time Warner."

Greg Simon, co-director of the openNET Coalition, said the AOL-Time Warner deal is a wake-up call for the cable industry.

"The No. 2 cable company has joined America Online, a leading advocate for open access and a continuing member of the openNET Coalition," Simon said. "The openNET Coalition will continue to fight for open access to all cable networks and we will continue to urge the federal government to make open access the rule for the entire cable industry."

Steve Case, AOL's chairman, has been a longstanding proponent of open Internet access. Case said AOL began discussing open access to cable platforms more than a year ago and they still believe market forces should prevail.

"We started raising the issue of open access a couple years ago, we really were focused on the fact that for the Internet to continue to flourish, we need consumer choice," Case said. "To have consumer choice we needed to have competition among ISPs and access, that continues to be ou