FCC Chief Encouraged by AOL-Time Warner Merger

The top federal communications regulator gave America Online
and Time Warner Inc.
the thumb’s up Wednesday.

William E. Kennard, Federal Communications
chairman, said the deal was an encouraging sign that market
forces are working to keep high-speed Internet cable access open and

Kennard has chanted the FCC’s official “hands off” regulatory stance since
the open access debate first hit critical mass early last year. Kennard
said the FCC has no interest in requiring cable companies share access to
their networks with independent Internet service providers.

“I think it’s encouraging,” Kennard said. “I’ve been saying since the very
beginning of this debate that the marketplace should work this out.”

America Online (AOL)
heavily lobbied its open-access position before both the FCC and
Congress, demanding regulators require cable companies share lines with
competitors. Even with the proposed Time Warner (TWX)
merger in view, AOL Chairman Steve Case remains a steadfast proponent of
open access to cable networks.

At the press conference announcing the Time Warner deal, Case restated
AOL’s commitment to voluntarily opening Time Warner’s lines noting that
regulatory intervention was no longer required.

Kennard noted that his comments were by no means his agency’s official
view, because the companies had not yet filed for approval of deal.

“This transaction will raise some interesting new issues that we haven’t
confronted before,”‘ Kennard said.

Kennard said the FCC would carefully review AOL’s written commitments to
open access that would likely accompany such a filing.

“Now the devil is in the details and we’ll have to look and see what is
really being committed to but, yes, I’m optimistic and still encouraged.”

Potential regulatory obstructions to completing the proposed merger will
not be revealed until the two companies file with the federal agencies. The
Hart-Scott-Rodino Antitrust Improvement Act requires that a merger of this
magnitude come under federal anti-trust review.

Both the U.S. Department of Justice and
the Federal Trade Commission could be a
part of the congressional merger review. Kennard will most likely testify
at the hearings and weigh in with his agency’s separate review of the merger.

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