AOL, Time Warner Address Regulators

Monday, July 31st 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — America Online's exclusive ``instant messaging'' service is taking center stage, along with Time Warner's extensive cable interests, as regulators examine the two companies' pending marriage.

At a hearing stretching more than five hours Thursday, members of the Federal Communications Commission sought to pin down the two businesses on pledges they have made in conjunction with their proposed merger.

Among those is whether consumers who subscribe to Time Warner's high-speed Internet access — delivered over its cable lines — will be assured a variety of Internet providers to choose from, besides AOL, and when that will become a reality.

``I remain quite confident that we can make that happen,'' said Time Warner Chairman Gerald Levin. He said the company is working now to restructure an exclusive agreement it has with high-speed Internet provider Road Runner so that it can carry other services, and is conducting technical trials of how such a system would operate.

He issued an open invitation to any Internet provider that wanted to talk to Time Warner about operating on the company's cable systems, and predicted that an agreement with a separate online service business was forthcoming.

But Mark Cooper, research director of Consumer Federation of America, urged the commission not to take the companies' word.

``Until they deliver on those promises, don't approve this merger,'' he said. ``Open protocols and fair competition for eyeballs must be the policy of this commission.''

The acrimonious battle between Time Warner and Walt Disney Co. also spilled into the FCC hearing room. Those tensions have been building since a dispute that resulted in Time Warner temporarily pulling Disney's ABC network from cable systems in millions of homes in early May.

Disney raised flags that the merged businesses would steer consumers to their own online content — particularly as interactive television services grow.

``We don't think you can rely on promises of good behavior,'' said Preston Padden, Disney's executive vice president of government relations. The company has asked the FCC to consider requiring Time Warner to separate its ownership of media distribution and production properties.

Time Warner Inc. president Richard Parsons called this request ``almost laughable.''

And FCC Chairman William Kennard seemed wary of Disney using the merger review process to settle its business matters.

``We don't like to have our processes here used as leverage in a contractual dispute,'' he said bluntly.

The FCC is not expected to reach a decision for several months. The merger also needs approval from antitrust regulators here and abroad.

AOL officials faced extensive questioning from FCC Commissioner Gloria Tristani about the issue of AOL's instant messaging service and efforts to make that system work with those offered by rivals.

AOL has worked to develop a standard that would make all the different systems used to send short, real-time messages operate with each other and has even made its own service available free to consumers, AOL Chairman Steve Case said.

``I actually think our company has been a model for how to take a technology and open it,'' Case said.

Not so, said Ross Bagully, head of Tribal Voice, an instant messaging competitor.

``AOL keeps offering PR mantras of protecting consumers instead of offering real work towards real solutions,'' Bagully said. He accused the company of using claims about protecting privacy and security to dodge the issue.


On the Net: Federal Communications Commission site:

AOL site:

Time Warner site: