Cabler warns FCC of TW’s set-top lock

K.C. company protests AOL merger, requests conditions

WASHINGTON — A cable company attempting to offer broadband services in Kansas City has complained to the FCC that Time Warner stifles competition by striking exclusive agreements with manufacturers of set-top boxes.

Everest Connections, a cable “overbuilder,” is one of numerous parties asking the FCC to impose certain conditions before approving the $183 billion AOL/Time Warner merger, arguing that the union will create a conglomerate with a virtual lock on conduit and content.

Proprietary problem

In its Sept. 19 filing with the FCC, Everest maintained that its efforts to provide high-bandwidth cable TV, Internet and telephone services in the Kansas City metropolis have been stymied because of proprietary agreements between Time Warner and various set-top box makers. The arrangements allegedly require that boxes not be sold to competitors in mutual markets.

Such arrangements are not unprecedented, one cable industry official said.

Last April, Everest won a contract to build a broadband network in Kansas City, where Time Warner cable is offered. In July, an attorney for Time Warner wrote Everest Connections CEO James Moffitt warning Everest not to disrupt any existing wire and cable when setting up its system.

“If you, on the other hand, are not one of those pushy out-of-towners but instead want to work with Time Warner cable in freeing up available space for you and any other new entrants to the market, my client will be happy to work with you,” stated the letter, a copy of which Everest included in its FCC filing.

A Time Warner spokesman declined comment on Everest.

Conditions cloudy

Regulators at the FCC and FTC, both of which must approve the AOL/Time Warner merger, could well impose certain conditions before giving a stamp of approval, including that TW agree to open up valuable cable lines to competing providers of content. Overseas, the merger awaits the approval of a wary European Commission.

Last week, AOL chairman-CEO Steve Case and Time Warner chairman-CEO Gerald Levin met with top officials at the FCC, assuring them that the merger will actually spur competition in broadband services.

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