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RealTime IT News

AOL-Time Warner Commits to Broadband Competition

America Online Inc. and Time Warner Inc. Tuesday reached terms that will establish a framework for open access to its cable systems.

The memorandum of understanding commits the merged company to open access as a standard business procedure and effectively quiets critics of the proposed $160 billion deal currently under review by the Senate Judiciary Committee.

Steve Case, America Online (AOL) chairman and chief executive officer, said choice, competition and innovation have been the factors driving the Internet's explosive growth to date. AOL intends to keep the momentum of an wide open competitive framework driving new services.

"I am very pleased that we have been able to make this significant step forward today toward making open access a reality for consumers in the marketplace." Case said. "It is exactly what we believe our two companies can achieve when we work together: providing new choices for consumers and value in the marketplace."

Gerald Levin, Time Warner (TWX) chairman and chief executive officer, challenged other cable access providers, like AT&T Corp. (T), to make the same commitment to open access.

"I look forward to the rest of the cable industry following this same path of choice and innovation, which I believe will greatly accelerate consumer adoption of cable broadband services," Levin said. "Today's announcement is another step forward in delivering on the promise of the interactive medium and helping make broadband access a reality for every consumer."

Joe Collins, Time Warner Cable chairman and chief executive officer, said the broadband provider looks forward to delivering diverse content and connectivity.

"At Time Warner Cable, we are committed to delivering the services consumers want. Our subscribers want a first-class array of choices, and we look forward to working with AOL and other ISPs to deliver that to them," Collins said.

Key elements of the understanding include commitments offer consumers a choice among ISPs. Consumers will not be required to purchase service from an ISP that is affiliated with AOL-Time Warner in order to enjoy broadband Internet service over the merged companies cable systems.

AOL would not place any limits on the number of ISPs with which could enter into commercial arrangements with the Internet industry leader.

While the announcement is subject to existing Time Warner obligations, including as its contracts with Road Runner, Time Warner affirmed that it is committed to providing a choice of ISPs to broadband consumers as quickly as possible.

The understanding is big win for the much-maligned chairman of the Federal Communications Commissions. Although William Kennard has not offered comment on the memorandum, it proves his point that market forces would work more efficiently than regulatory action to produce competition in the broadband marketplace.

Scott Cleland, Legg Mason (LM) Precursor Group analyst, said the memorandum marks a quantum leap into open access from where Time Warner was last year.

"It's a very significant because its a much more open deal than the AT&T-MindSpring (MSPG) letter