- The Washington Times - Tuesday, September 5, 2000

FROM STAFF AND WIRE REPORTS

Federal antitrust lawyers are prepared to block the proposed merger of America Online Inc. and Time Warner Inc. unless the companies agree to let competing services use their high-speed cable lines, sources familiar with the government review said yesterday.

The Federal Trade Commission lawyers are concerned that in markets where Time Warner operates cable systems, there is no other way for competing companies to provide high-speed Internet access, according to a source.

The source, who spoke on the condition of anonymity, said discussions are ongoing between the government, AOL and Time Warner and will continue until a compromise is reached.

A spokesman for the commission, Eric London, declined to comment on the negotiations.

"This is an early point of the process and the decision is up to the commission, and, obviously, these discussions are part of the process that could lead eventually to action by the commission," he said.

FTC lawyers haven't made a final recommendation on Sterling, Va.-based AOL's proposed purchase of Time Warner. AOL, which has 23 million customers, said Jan. 10 it planned to buy the New York-based media company in a deal valued then at $166 billion.

AOL spokeswoman Kathy McKiernan said the two companies "are fully committed to open access."

Open access is a major concern to regulators and consumer groups alike.

Critics have charged a combined AOL Time Warner would give the new company too much control over the lines that deliver services from interactive television to high-speed Internet connections.

In testimony before the U.S. Federal Communications Commission in July, AOL Chairman Steve Case and Time Warner Chairman Gerald Levin promised the merged company would allow rivals access to their cable lines.

But the promise isn't backed by a contractual agreement.

FCC Chairman William Kennard, at the same July hearing, emphasized his own desire to see cable operators open their networks so ISPs can offer high-speed services, and he said consumers will remain skeptical about promises from companies like AOL and Time Warner until they can buy faster Internet service that's delivered over cable lines.

Miss McKiernan said Time Warner did recently reach an agreement to open its cable-television lines to Juno Online Services Inc.

Juno, an e-mail and Internet-service provider (ISP) with more than 3 million subscribers, said July 31 Time Warner agreed to let it offer high-speed Web service over its cable-TV lines.

Terms of the preliminary agreement haven't been disclosed. The agreement would make New York-based Juno the first outside ISP to gain access to Time Warner's 12.6 million cable customers. Until now, Time Warner's network has been used exclusively by Road Runner.

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