Kennard warns of distrust

FCC head questions reliability of 'Net access

NEW ORLEANS — In the wake of last week’s struggle between Disney and Time Warner, “a specter of distrust” hangs over the cable industry, FCC chairman Bill Kennard warned Tuesday.

Time Warner’s decision to cut off ABC signals to 3.5 million subscribers has raised questions, “legitimately or not,” about whether the cable industry — the nation’s premier provider of high-speed Internet access — “can be trusted to be an honest gatekeeper on the Internet,” Kennard said.

His statement reflects the common sentiment among cablers that Time Warner overplayed its hand by cutting off the ABC signals in the middle of the night — a particularly painful mistake for Time Warner, which is planning to merge its 12 million cable subscribers with America Online’s 20 million Internet customers.

Consumer advocates and some rival companies, especially Disney, claim that Time Warner’s treatment of ABC is a good indication of its future behavior as a dominant force both in cable and cyberspace after its merger with AOL.

Kennard offered his comments in the form of friendly advice: If cablers want to avoid more attention from legislators and regulators, the industry should do its best not to use its position as the dominant provider of high-speed Internet access to discriminate against competitors.

In addition, Kennard said there are “lingering issues about market power” in the industry generally.

Nevertheless, he said the AT&T/MediaOne merger is in the last stages of approval and could get the final FCC blessing within days.

The five FCC commissioners who will vote on the deal are now debating the proposed conditions for the merger’s approval. AT&T lobbyists are doing their best to beat back a recommendation by agency staffers that the telco/cable giant be given a choice between spinning off its 25% stake in Time Warner Entertainment or Liberty Media as a requirement for approval.

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