Regulators fear AOL-Time Warner merger
Published: 05 Sep 2000 09:10 BST
America Online and Time Warner must now persuade regulators in both the United States and Europe that their merger won't stifle broadband access and digital music.
Broadband is topping the agenda in the United States. The Washington Post reported Monday that unless AOL gives a formal promise to provide open access to its high-speed cable lines the Federal Trade Commission will seek to block the Internet giant's merger with Time Warner.
Citing sources close to the matter, the Post says that FTC officials fear a lack of viable competition in certain areas controlled by Time Warner will force consumers to accept the new merged company's service. Negotiations to resolve these concerns are already underway; however, no details on the specifics have been provided.
The European Commission, meanwhile, fears that the merger, in conjunction with Time Warner's planned joint venture with EMI, would lead to an oligopoly of four firms dominating the West European recorded music market. The EC's competition department, which is holding separate investigations into the EMI/Time Warner venture and the AOL/Time Warner merger, is holding a closed-door hearing into the EMI/Time Warner venture on Wednesday and Thursday.
The EC said its detailed investigation was also likely to focus on music publishing and the digital delivery of music via the Internet. Announcing the AOL/Time Warner in-depth probe, the Commission said it would "examine the effects of the transaction on the emerging business of music distribution over the Internet and on the markets for Internet dial-up access and paid-for content."
According to an EMI spokesman, EMI and Time Warner will tell the EC they are prepared to counter any fears they could dominate the online provision of entertainment by promising to give non-discriminatory access to their network to other content providers. "We have undertaken not to discriminate in favour of AOL. There will be no exclusive tie-up," the spokesman said. "It's in our interests to use as many outlets as possible to ensure the widest possible dissemination of our music."
Federal concerns over open access are not new. Back in July, Time Warner chief Gerald Levin appeared before a Federal Communications Commission hearing -- pledging that his company had every intention of offering consumers high-speed access to multiple ISPs on its cable lines, just as soon as it could rework an exclusive agreement it has with the Road Runner Internet service. Appearing at the same hearing, AOL CEO Steve Case told regulators that the merger would increase consumer choice and spur technology innovations by rivals, not stifle competition.
But, last month, the FCC sent a letter to AOL and Time Warner, asking that they produce any and all documents related to the issue of open access to Time Warner's cable lines and AOL's instant-messaging network. The letter marked the third time the FCC has asked for more information regarding the merger.
Reuters contributed to this report.
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