Access to Grind

AOL & TW say market should settle issue

WASHINGTON — Still standing tough, AOL and Time Warner told FCC officials this week that the agency should stand by its own precedent to let the marketplace resolve the thorny issue of open access, rather than making it a condition of their pending nuptials.

“Moreover, the FCC has reiterated that the merger context is not the appropriate forum in which to debate an open access requirement,” Peter Ross, attorney for AOL, wrote in a Sept. 19 letter to the Federal Communications Commission.

The AOL/Time Warner merger, which needs the approval of the FCC as well as the Federal Trade Commission, has become mired in concerns that the resulting combo would monopolize cable and Internet lines by giving special preference to its extensive stable of content. Staff at both the FCC and the FTC have indicated that certain conditions should be imposed upon AOL/Time Warner, particularly around the issue of open access.

By Thursday, AOL/Time Warner spokesmen had stopped making any comment on a barrage of news stories about the possibility of government-ordered concessions. But the Sept. 19 letter, as well as a letter filed Sept. 18, reveals the tone taken by top AOL/Time Warner execs in two meetings with FCC staff Sept. 15 and Sept. 18.

In the sessions, AOL/Time Warner continued to maintain that the $1.83 billion merger will actually promote competition in the areas of high-speed cable access and interactive TV.

Further, Ross stated in his letter, the FCC set a clear precedent that open access should not be a merger requirement when approving the recent unions of AT&T/TCI and AT&T/Media One. Any uniform national policy regarding open access should be determined through a planned study by the FCC, rather than enacted through conditions on the AOL/Time Warner merger, Ross said.

In addition to Ross, those attending the meetings were AOL senior VP for global and strategic policy George Vradenburg III, AOL VP for telecommunications policy Steven Teplitz and Time Warner VP for law and public policy Catherine Nolan. FCC staff in attendance included cable services bureau chief Deborah Lathen and deputy general counsel Michele Ellison.

Opponents of the merger argue that AOL/Time Warner could pose a serious threat by using vast cable lines — Time Warner is the second-largest cable operator in the U.S. — to pipe in its own content, at the peril of other content providers.

Both the Walt Disney Co. and NBC have gone public in their opposition to the merger. In the latest round, NBC met Sept. 13 with FCC commissioner Harold Furchtgott-Roth to discuss its concerns, following up on a letter filed with the FCC over the summer.

NBC exec VP and general counsel Richard Cotton, along with NBC VP for Washington law and policy Diane Zipursky, told Furchtgott-Roth of a recent exchange between the Peacock and Time Warner Cable over carrying NBC’s Olympic coverage.

NBC execs said Time Warner refused in those negotiations to take up the issue of whether TW would grant the Peacock nondiscriminatory access to its broadband facilities.

“Time Warner’s share of cable households gives Time Warner the power to block new cable services by denying prospective entrants the ability to achieve the nationwide penetration that is critical to the successful launch of a new cable offering,” Zipursky stated in a Sept. 13 letter to the FCC summarizing NBC’s meeting with Roth.

Repeated reassurance

AOL/Time Warner has repeatedly assured both the FTC and FCC that it would indeed open up its high-speed cable lines to competitors in a nondiscriminatory fashion.

The AOL/Time Warner merger is also hitting roadblocks overseas, where the European Union’s antitrust watchdog came out Sept. 18 with a preliminary recommendation to block the merger, particularly because of Time Warner’s music holdings. While the EU can’t officially block the merger of two U.S. companies Stateside, it could lock them out of Europe, a large and growing market the partners are eager to exploit.

The FCC and FTC are expected to act on the merger next month.

An FCC spokesman had no comment on the recent meetings with AOL/Time Warner.

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