FINALLY!.....Report: FCC Staff Backs AOL-TW Deal
WASHINGTON (Reuters) - The staff of the Federal Communications Commission
(FCC)
has recommended the agency approve the $183 billion merger of America Online Inc
(NYSE:AOL - news) and Time Warner Inc (NYSE:TWX - news), if the firms agree
to
conditions on Internet access, the Washington Post reported Thursday.
The paper said it had obtained a draft order, but quoted sources as saying the
document
represented an early snapshot of FCC staff thinking and that the review was not
complete.
The sources told the Post the FCC could still move to block the deal if the companies
did
not accept substantial conditions.
One condition outlined in the draft would require the companies to make legally binding
their pledge to allow rival providers of
high-speed Internet access to reach customers over their cable television systems, the
Post reported.
The draft order raises concerns about the intensifying control of the nation's cable
television systems by a handful of huge
companies at a time when the industry has emerged as the leader in high-speed Internet
service.
But it concludes that an ``open access'' condition -- a rule requiring that Time Warner's
cable customers be allowed to freely
choose their Internet provider -- would sufficiently protect against potential collusion
by the company with AT&T Corp
(NYSE:T - news).
AT&T and Time Warner, the nation's two largest providers of cable service, are joint
investors in a cable partnership. AOL is
the world's most-frequented gateway to the global computer system.
Linking those three players ``would create a powerful duopoly through which
AOL/Time Warner and AT&T would have the
ability and incentive to coordinate their cable deployment strategies,'' the FCC staff
draft, dated Sept. 8, warns.
Consumer advocates have been urging regulators to forcibly pry apart AT&T and
Time Warner, making the dissolution of their
partnership a condition of merger approval.
FCC officials have not ruled out such a condition, the Post quoted one source with
knowledge of the FCC review as saying.
The FCC has set an Oct. 12 deadline for its staff to issue a recommendation to
Chairman William Kennard, the Post said. It
quoted the chief of the FCC's cable bureau as saying the agency had yet to arrive at
any conclusions.
``I personally have not made any recommendations to the chairman or any of the
commissioners,'' said bureau chief Deborah
Lathen. ``We are still at the preliminary stages of analyzing this merger.''
The Federal Trade Commission in Washington and the European Union in Brussels,
are also reviewing the deal. Both agencies
harbor strong concerns about the merger amid growing worry that too much video
programming, Internet content and music is
controlled by too few corporate hands.
FTC attorneys have said they are prepared to block the deal if AOL and Time Warner
fail to guarantee that competitors have
access to Time Warner's high-speed cable lines.
Under the conditions proposed in the draft, AOL and Time Warner would have to
formally enact their memorandum of
understanding saying that they will share their cable systems with Internet rivals,
according to the Post report.
Specifically, the merged company would have to allow rival Internet services to link to
its network on ``nondiscriminatory
terms.'' It would have to supply customers with software allowing them to choose from
an alphabetical list of available
providers, and it would have to allow those service providers to bill customers directly. |
