Time Warner vows no breaks for AOL

Levin testifies in front of Judiciary Committee

WASHINGTON — Time Warner CEO Gerald Levin said Monday that America Online will get “no preferential treatment” on Time Warner cable systems — allaying a key concern of consumer groups, regulators and legislators who are weary of Levin’s plans to combine with AOL in the biggest media merger in history.

Levin made the statement while testifying in front of the Senate Judiciary Committee, but only after AOL and Time Warner released the terms of an agreement that would give any Internet Service Provider (ISP) equal access to Time Warner’s cable systems.

In addition, Levin promised that other ISPs such as Mindspring or any of the 5,000 other companies which sell Internet access to consumers, will be able to bill companies directly. In addition, Time Warner said there will be room for “multiple” ISPs on its network.

The Time Warner announcement ups the ante on AT&T which is facing similar pressure from Washington to open up its network. AT&T, which is trying to close its $50 billion deal to acquire MediaOne, has insisted it is economically and technologically impossible to do what Time Warner has promised. It has specifically rejected the idea that other ISPs could bill AT&T customers directly for high speed Internet service. It has also claimed that its planned acquisition of MediaOne is financially dependent on its ability to give preferential status to @Home, an ISP controlled by AT&T.

“We are taking this as a very positive development,” said Media Access Project executive director Andrew Schwartzman. Schwartzman, a longtime media watchdog, said he still has concerns about the concentration of media properties in the merged AOL/Time Warner.

But not all consumer advocates were equally impressed. Consumers Union Gene Kimmelman agreed that the statement by Time Warner and AOL was a step forward, but also pointed out that the two companies are resisting efforts to make the agreement legally binding and are fighting other efforts to give the federal government the ability enforce an “open access” policy on the high-speed Internet networks controlled by major cable companies.

Indeed at Tuesday’s Judiciary hearing, several senators expressed concern about the deal. Committee Chairman Orrin Hatch (R-Utah) said he would continue to view the announcement with “healthy skepticism.”

In addition, like other members of the Judiciary Committee, Hatch said he has concerns about the concentration of media outlets in the combined Time Warner and AOL. Hatch said his concern is heightened, because the deal proposes to marry the world’s largest ISP with one of the world’s largest media companies. “Will Internet consumers be led into content cul-de-sacs owned and operated by Time Warner?” asked Hatch.

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