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AOL, Time Warner Stump for Merger

The chief executives of America Online Inc. and Time Warner Inc. defended their merger in Washington Thursday and attempted to convince federal regulators that the deal would accelerate broadband services in the U.S.

The FCC en banc hearing, a rare gathering of all five commissioners to question witnesses, is utilized when the regulatory body needs to carefully examine an issue that merits unusual scrutiny. Recent mergers of several large telcom firms received the same review.

After establishing the federal agency's jurisdiction to review the $150 billion merger, William Kennard, FCC chairman said he believes all parties concerned want access to the broadband cable platform.

"I believe that the promise of the Internet is in its remarkable openness it embodies," Kennard said. "I am so concerned about this issue of access to the cable broadband platform that debate today should not be able attaining that end, but the means of how the promise of broadband Internet access will be fulfilled, by regulatory or by market forces."

Commissioner Harold Furchtgott-Roth repeated his position that the FCC does not have the authority to review any merger beyond transfer applicable license transfers. Deferring to the Department of Justice for merger review, Furchtgott-Roth said the debate was an expensive opportunity for America Online and Time Warner to beg for regulatory approval of the deal.

During the hearing Steve Case, AOL chairman and chief executive officers said the merger would benefit consumers and serve the public interest.

"What this merger will mean for our companies and consumers is that together, AOL and Time Warner will build a company that will take the Internet to the next level," Case said.

"Our commitment to consumer choice and competition will help lead our industry forward to a second Internet revolution reaching as many people as possible as quickly as possible," Case added. "The merger will drive Internet development through competition, offer the greatest variety for consumer choice, and build a truly global Internet community."

"We will use our leadership to build a better world," Case said.

Gerald Levin, Time Warner chairman and chief executive officer, said expanding consumer choice is the heart of its corporate identity.

"The new networks we've developed have enriched peoples options for programming," Levin said, "and the billions of dollars we've spent on building our cable network to carry more and more channels and break open the television universe."

"The public will benefit from the new company's ability to offer diversity in interactive television content, offer multiple ISP access over our Road Runner service, forcing other cable operators to follow suit, and deliver broadband services that will break down the digital divide," Levine said. "The Internet is the technology of human freedom."

Levine told Kennard the merged company would work to open barriers to cable access before the exclusive nature of its alliances expires in 18-months. He said the recently announced Ohio trials of shared cable access should be ready for review by the end of the year.

Levine invited all ISPs to start making arrangements to carry its broadband cable services now. He said Time Warner could make diversity happen faster than Excite@Home . Levine added that a new agreement to provide cable broadband transport would be made public soon.

"Multiple ISPs are necessary for our revenue growth in every market we compete with digital subscriber line services," Levine said.

Esther Dyson, EDvent



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