- The Washington Times - Wednesday, December 13, 2000

The Federal Trade Commission is expected to meet privately today to make a decision on America Online Inc.'s proposed purchase of media giant Time Warner Inc.
Even as regulators near a decision, efforts continue to derail or modify the union estimated at $166 billion when it was announced Jan. 10.
But rivals of AOL, the Sterling, Va.-based Internet service provider with 26 million subscribers, said killing the deal appears unlikely.
"We think it's an uphill battle," said Joe Marion, executive director of the Federation of Internet Solutions Providers of the Americas, a coalition of 200 small and medium-sized Internet service providers (ISPs) that are concerned a merger will restrict their access to AOL-Time Warner content.
Mr. Marion also is pushing for open access to cable lines for all ISPs. Open access is the practice of allowing ISPs to lease access to cable lines so they can offer broadband Internet service. The issue has come up because Time Warner Cable has 12.6 million subscribers.
ISPs covet that access because cable lines transmit data up to 100 times faster than telephone lines. So far, there is no federal open-access policy.
Barry Steinhardt, associate director of the American Civil Liberties Union in New York, met with FTC Commissioner Sheila Anthony for 30 minutes yesterday to outline his organization's concerns over the transaction.
While the ACLU doesn't oppose the deal, it wants regulators to condition the merger on giving smaller ISPs open access to Time Warner's cable system.
"If AOL and Time Warner are able to create a walled garden and exclude other ISPs, consumers' choice of ISPs and their choice of content will be limited," Mr. Steinhardt said.
AOL and Time Warner have agreed to some concessions to persuade regulators to approve the deal.
In July, Juno Online Services Inc., an e-mail and Internet service provider, said Time Warner agreed to let it offer high-speed Web service over Time Warner's cable lines. That made New York-based Juno the first ISP to negotiate access to Time Warner's cable lines.
Until that agreement, only Road Runner, an on-line service co-owned by Time Warner, had permission to offer Internet access over the cable lines.
Then in November, EarthLink dropped its two-month effort to torpedo the merger after AOL and Time Warner agreed to let the Atlanta-based ISP offer Internet service through Time Warner Cable.
But critics such as Mr. Marion oppose the company-by-company deals Time Warner has made so far and the secrecy surrounding the contracts. They want a broad open-access policy that applies to all ISPs.
The difficulty regulators have in making a decision about the AOL-Time Warner union stems from the fact that the two companies aren't direct competitors whose merger would give them an obvious monopoly.
"The competitive concerns cannot be addressed in the same way [by demanding divestiture of a portion of their assets]," said Howard Morse, an antitrust lawyer and former assistant director of the FTC's bureau of competition. "The FTC will either have to accept a remedy that in many ways is regulatory they tell them how to behave rather than structural, or they will have to stop the transaction."
While an FTC decision against the AOL-Time Warner deal seems unlikely, ACLU's Mr. Steinhardt said he hoped regulators would delay their vote.
Last month, AOL and Time Warner extended negotiations with the FTC to mid-December, giving antitrust regulators time to review the effect of the EarthLink contract.
Another delay would buy opponents more time to lobby for more favorable terms in the transaction.
"We would love to have more time," Mr. Steinhardt said. "I think the commissioners are wrestling with this. It's clearly not over with."

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