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

“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
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
, 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

r view”

Case said the merged company would continue to promote open and competitive
access to cable networks.

“This company will be leading the charge, we are looking forward to being
on the cable platform and we expect to have many competitors on that
platform,” Case said.

Blair Levin, former FCC chief of staff and current consultant for [email protected] (ATHM), said that the real solution for consumer options among cable Internet access providers remains in the marketplace.

“What this transaction is about is taking this issue out of Washington,
D.C. and city halls, and putting it back in the marketplace,” Levin said.
“What will result is more choice as it relates to more content and the
creation of a whole new set of cable ISPs.

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