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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
| January 11, 2001 | ||
STATEMENT OF FCC CHAIRMAN WILLIAM E. KENNARD ON CONDITIONED APPROVAL OF AOL TIME WARNER MERGER
Our conditioned approval of the AOL Time Warner merger is significant not only for the size of the merger we approve today, but also for its scope. AOL Time Warner is a marriage of old media and new media, content and conduit, 20th century know-how and 21st century vision. In a phrase, it’s “Convergence Illustrated.”
I took a hard, careful look at this merger to make sure that this historic marriage would benefit consumers. I balanced the need to protect the public from the danger that any one company will be able to dominate the marketplace against the need to guard against intrusive regulation that could stifle investment and innovation.
The conditions we impose today are forward-looking and fair. They preserve the openness of the Internet. They protect consumers and avoid heavy-handed regulation by using a narrowly-tailored market opening approach. And they ensure that neither AOL Time Warner nor a government agency will pick winners and losers in this dynamic marketplace.
I have long been concerned about bottlenecks – bottlenecks that could stifle competition and innovation. So in reviewing this merger, I was particularly concerned about the future of the instant messaging platform, the ability of competing broadband ISPs to access Time Warner’s cable systems, and the potential for discrimination in the interactive television space.
We don’t rely on good intentions. We require AOL to interoperate with competing instant messaging (IM) providers before it can offer videoconferencing and other streaming video over IM. This condition guards against AOL’s ability to leverage its existing dominance in current IM into the broadband IM marketplace. In order to ensure fair and open access to Time Warner’s cable system, we augment the FTC conditions by imposing specific protections against discrimination – protections that will be particularly critical for smaller ISPs. We also hold AT&T to its commitment to divest its interest in Time Warner Entertainment and impose additional conduct restrictions to protect consumers. Finally, the potential for discrimination in the interactive television marketplace bears watching and we have begun a proceeding to explore the need for the FCC’s involvement in promoting competition in this developing service.
When I look at this merger, the potential benefits I see are the ability to roll out technologies faster and farther, the potential for significant innovation in new services and technologies. But, those benefits could be the proverbial silver lining. AOL and Time Warner each possess significant market power in their respective spheres. AOL is the leading Internet service provider with over 26 million members worldwide, and it continues to grow. In fact, AOL has gained almost six million members in just the last year. Time Warner is the nation’s second largest cable television company with ties to AT&T, the nation’s largest cable operator and owns one of the most popular video content libraries in the world.
The power of these players is immense and so is the potential for anti-competitive behavior. Therefore, I only voted to approve this merger because of the conditions we impose.
With the merger of AOL and Time Warner, we are seeing the creation of a
new platform for communications based on the Internet. Our challenge is to
make sure that consumers get the full benefits of this new world
technology without importing the dangers of monopoly and bottlenecks from
the old world. We have met this challenge.