Consumers Union Comments On Aol-Time Warner Merger Approval

CONSUMERS UNION COMMENTS ON AOL-TIME WARNER MERGER APPROVAL

CU says FCC and FTC transformed merger that once threatened competition
into one that could expand consumer choice

WASHINGTON, D.C. -- Gene Kimmelman, Co-Director of Consumers Union's Washington DC Office, made the following statement today following the Federal Communications Commission (FCC)'s approval of the merger of America Online (AOL) and Time Warner. The FCC's action follows the Federal Trade Commission (FTC)'s approval of the merger on December 14 :

"In the face of enormous dangers to consumers, federal regulators have imposed critical consumer protections on the merger of AOL and Time Warner. The combined actions of the FCC and the FTC have transformed a merger that threatened competition into one that could actually expand consumers' choices for high-speed Internet and interactive TV services.

"We asked the FCC to sever the ownership links between AT&T and Time Warner, which are America's two biggest providers of cable television, serving about half of the consumers across the country. Last month, the FCC ordered AT&T and Time Warner to split their joint ownership of cable properties, and the agency reiterated this determination in its review of the AOL-Time Warner merger. This is a huge victory for consumers because it creates an opportunity for significant rivalry between AT&T and AOL Time Warner in the cable-programming and Internet-services markets.

"Meanwhile, we asked the FTC for a strong 'open access' requirement for AOL Time Warner. The FTC came through for consumers by insisting on such a requirement, which means that the merged company has to keep Time Warner cable lines open to Internet service providers other than AOL. It guarantees that consumers served by Time Warner cable systems will have a variety of choices among high-speed Internet service providers not affiliated with AOL Time Warner. And the FCC has specifically ensured that local and regional Internet service providers must receive fair consideration for carriage on AOL Time Warner's cable systems.

"We also asked the FTC to require nondiscriminatory access for interactive television providers, who will eventually offer consumers a sort of 'split-screen' access to the Internet and TV programming. Interactive television could become the most popular way for consumers to watch TV and surf the Net. Thanks to the FTC's actions, AOL cannot prevent rival providers of interactive TV from offering their services to consumers served by Time Warner cable. And the FCC is taking these nondiscrimination requirements a step further by starting a process to develop common rules for all carriers of high-speed Internet and interactive TV.
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"With millions of consumers communicating by instant messaging in the same way they communicate over phone lines, it is increasingly important to ensure that instant messaging companies can connect their services in the same way that telephone competitors connect all calls. The FCC has imposed a requirement on AOL Time Warner to begin interconnecting its instant messaging customers with those of its competitors as AOL Time Warner adds new interactive features to its messaging services. This should begin the process of allowing consumers to communicate with one other by instant message, regardless of which messaging service they use.

"When this merger was announced a year ago, we were enormously concerned about the possible harm to consumers. We made our arguments to the FCC and FTC through a series of reports, petitions, and meetings, and we're very pleased at the final outcome. What could have been a disaster for consumers now holds the potential to promote competition and consumer choice."

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Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers

Thursday, January 11, 2001