WASHINGTON — Regulators may not find much in the America Online-Time Warner deal to chew on, but public interest advocates are gnashing their teeth over what they see as one of the most painful defections since Darth Vadar turned to the dark side.
“Steve Case is the Benedict Arnold of the digital age,” said Jeff Chester of the Center for Media Education. Chester and other public interest advocates believe, despite AOL chairman Case’s assurances to the contrary, that AOL, soon to be a cable system operator, will abandon its fight to force cable systems to open their high-speed networks to other Internet service providers.
Case has been a leader in the so-called open access fight, arguing the issue himself before the Federal Communications Commission and on Capitol Hill, and his company has spent millions funding public interest groups that also want cable systems to give consumers a choice between Internet service providers.
The cable industry opposes the effort insisting that if AT&T, or Time Warner for that matter, want to force subscribers to pay for their @Home or Roadrunner Internet service provider as a condition for high-speed Web access, that’s their business.
Analysts suggested Monday that there will not be much room for regulators to interfere with the deal. The FCC has limited authority to review the deal, although it must rule on the transfer of Time Warner’s WTBS in Atlanta.
In addition, the FCC will have the authority to review dozens of microwave licenses operated by Time Warner.
Because of the size of the deal, either the Justice Dept. or the Federal Trade Commission must review it for potential opportunities to abuse market power. But analysts insist that AOL and Time Warner operate in separate worlds, leaving little room for overlap that would increase market power from current levels.
Just as public interest advocates blasted Case’s decision to join forces with Time Warner, cable industry execs embraced the merger as good news for the entire industry. “We have basically averted a war with AOL,” said one media industry mogul. The source explained that AOL now has tied its fate to the cable industry and will no longer push for anything that works against that interest.
During the press conference announcing the deal, Case insisted that he was still committed to open access, but public interest groups remain unconvinced. “Consumers do not want to be beholden to a giant Internet dictatorship, even if it promises to be a benevolent one,” said the Media Access Project, the Consumers Federation of America, the Consumers Union and the Center for Media Education in a statement jointly released by the orgs.
The coalition of public interest groups places the blame squarely on the Clinton administration, which it says enforced a “weak competition policy” that has allowed for “enormous consolidations.”
Chester specifically blames FCC chairman Bill Kennard for AOL’s decision to purchase Time Warner. Kennard has refused to regulate cable’s business on the Internet, much to AOL’s and Case’s frustration. Chester believes Case felt that he had to buy Time Warner to ensure that his company would survive as the Internet moved to higher-speed conduits controlled by cable companies.
According to Chester, Kennard should have done more to assure AOL and other Internet companies that cable would not be allowed to shut out competitors on their high-speed networks.