Copyright 2001 The Atlanta Constitution  
The Atlanta Journal and Constitution
February 24, 2001 Saturday, Home Edition
SECTION: Business; Pg. 3F

LENGTH: 543 words

HEADLINE: Small Net access providers wary of AOL Time Warner;
Largest rivals seen profiting

BYLINE: Marilyn Geewax

SOURCE: AJC

BODY:
New York --- Internet service providers said Friday the government agreement that allowed the creation of AOL Time Warner Inc. could decimate their ranks, leaving consumers with only a few large ISPs to choose from.

"There is not one scintilla of evidence" that the Internet and media giant is giving many competitors access to online customers over high-speed cable lines, said Stephen Heins, marketing director of NorthNet, a Wisconsin-based Internet service provider.

"I would encourage everyone to start collecting examples of anti-competitive contracts and behavior," he urged ISP executives at an Internet convention here. "We can be outmanned and outspent, but we cannot afford to be outwitted."

Access to AOL Time Warner cable systems could be a matter of life and death for the nation's thousands of small ISPs. Such companies typically offer a more sluggish service over telephone lines, using access provided by local phone companies.

But in coming years, more and more Americans are likely to want to reach the Internet through high-speed cable connections.

In December, when America Online and Time Warner were trying to win regulatory approval for their merger, they promised the Federal Trade Commission they would allow competition.

In the final agreement with regulators, they said Time Warner cable customers would be given the option of subscribing to high-speed "broadband" service from at least one other ISP before AOL itself could begin offering such service. Then, within 90 days of AOL launching its broadband service, Time Warner cable would have to provide at least two additional ISP options.

In theory, that would guarantee vigorous competition wherever broadband would be rolled out.

AOL completed its acquisition of Time Warner on Jan. 11.

But Don Howser, vice president of Socket Internet Services, an ISP with about 50,000 customers in the Midwest, said he has little hope now of getting access to the more than 12 million households that take Time Warner cable.

Though his company does have customers in Time Warner markets, he said he has not heard a word about getting a chance to compete in the broadband world. He said he expects AOL Time Warner to work with the minimum numbers of online competitors --- three --- and that those would be big companies, such as EarthLink, not "mom-and-pop" ISPs such as his.

As a small company, "we don't have the legal horsepower" to negotiate a fair contract with an immense corporation like AOL Time Warner, he said.

Unless the government guarantees all ISPs "open access" to cable systems, the migration to broadband will end the era of fierce ISP competition. "It's starting to kill us already," he said.

The open-access debate is a political hot potato in Washington. It's not yet clear where antitrust regulators in the new Bush administration will stand on the issue.

In the final weeks of the Clinton administration, the Federal Communications Commission opened a "notice of inquiry" into the issue. That means the industry is facing the possibility of federal regulations to force open their networks, as consumer advocates and ISPs want. Cable companies argue they should be allowed to negotiate access deals without government regulation.

LOAD-DATE: February 24, 2001