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Date: Mon, 10 Jan 2000 06:12:00 -0800 (PST)
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	marchris.robinson@enron.com, lisa.yoho@enron.com, 
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=09Broadband Fight Still On Despite Megamerger=20
?????The proposed merger between Internet giant America Online and=20
entertainment behemoth Time Warner will do little to cool the ongoing fight=
=20
over how to regulate new high-speed Internet services, industry watchers sa=
id=20
Monday.=20
=09
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?????It is unclear how or whether AOL would allow competing Internet servic=
e=20
providers access to its proposed cable network, said industry analyst Bill=
=20
Whyman of the merger, currently valued at $350 billion. AOL has fought=20
aggressively over the past year in Congress, the Federal Communications=20
Commission and with local governments to force AT&T to open its high-speed=
=20
cable network to competitors.=20
?????"It's one of the monster issues," said Whyman, who is a principal at=
=20
Legg Mason's Precursor Group. AOL CEO Steve Case "said they're committed to=
=20
consumer choice. What we don't know is whether other ISPs besides AOL will=
=20
have nondiscriminatory access to Time Warner networks."=20
?????Whyman said the merger will likely turn the Internet into a video=20
vehicle quicker than initially expected, which will ultimately put pressure=
=20
on telephone companies to speed up their deployment of high speed digital=
=20
subscriber lines (DSL).=20
?????Barbara Dooley, executive director of the Commercial Internet eXchange=
=20
Association, said the merger proves that the marketplace is working, and th=
at=20
it's too early to determine which way broadband will grow. She added that=
=20
smaller ISPs are still in a position to make deals with other broadband=20
providers.=20
?????"There will be other alternatives to cable," she said. "An ISP in a=20
particular area will not have to offer all options."=20
?????On the cable side, AT&T, a frequent sparring partner with AOL over=20
broadband issues, said the merger reconfirms the importance of cable=20
broadband.=20
?????"The proposed deal underscores the significance of broadband=20
distribution and it reconfirms the value of AT&T's considerable broadband=
=20
assets," a spokeswoman said.=20
?????And National Cable Television Association President and CEO Robert Sac=
hs=20
boasted in a statement that the deal proves that cable is the future of=20
high-speed Internet service and that regulators have been wise to stay out =
of=20
the broadband fight to date.=20
?????The Baby Bells remained adamant in their argument that they need=20
regulatory relief to compete with the new mega companies like AT&T and now=
=20
AOL.=20
?????"This new mega-company would be providing cable, Internet and telephon=
y=20
virtually regulation free," said David Bolger, spokesman for the United=20
States Telecom Association, which represents the Bells. "We have the shackl=
es=20
and they don't."=20
?????The merger must pass muster with the Justice Department and the Federa=
l=20
Communications Commission. The FCC had no comment on the AOL-Time Warner=20
announcement.=20
=09=09
?=09=09- by Rebecca S. Weiner =09
?=09=09AntitrustAntitrust Anticipation Follows Merger Announcement=20
?????Opponents of the proposed merger of America Online and Time Warner=20
raised antitrust concerns Monday about the monopolization of the market for=
=20
high-speed Internet access and consolidation of content on the Web.=20
?????But proponents of the merger said the announcement underscored the=20
marketplace ability=01,s to resolve competitive concerns, and noted a combi=
ned=20
AOL-Time Warner would present a potent new competitor to Microsoft and to=
=20
AT&T.=20
?????"Consumers do not want to be beholden to a giant media-Internet=20
dictatorship, even if it promises to be a benevolent one," said Andy=20
Schwartzman, president of the Media Access Project, which issued a joint=20
statement with Consumers Union, the Consumer Federation of America, and the=
=20
Center for Media Education expressing strong reservations about what would =
be=20
the biggest corporate merger in U.S. history.=20
?????The groups are calling for the Federal Communications Commission to=20
require cable and other high-speed Internet access providers to open their=
=20
networks to competitors and asking that AT&T's ownership interests in Time=
=20
Warner are severed.=20
?????But others dismissed those arguments, noting that "over the past two=
=20
years, we have this phenomenon whereby a new merger or technology is=20
announced and some company is immediately put forward as the media giant,"=
=20
said James Gattuso, vice president for policy and management at the=20
Competitive Enterprise Institute, citing a string of prognostications about=
=20
SBC, BellAtlantic, Microsoft, AT&T, and now AOL-Time Warner.=20
?????If consummated, the merger is also likely to benefit Microsoft=01,s de=
fense=20
against the Department of Justice=01,s antitrust lawsuit, said William Kova=
cic,=20
an antitrust law expert at George Washington University Law School. "The fa=
ct=20
that the industry environment is extremely turbulent and unpredictable and=
=20
can change the position of companies in a real hurry makes it hard to=20
prescribe remedies that won=01,t go into affect for two-and-a-half years."=
=20
?????A spokesman for Microsoft said the company had no comment on the merge=
r.=20
?????Kovacic also said he anticipated a free-for-all among regulatory=20
agencies seeking jurisdiction to review the proposed merger, including the=
=20
Department of Justice, the Federal Trade Commission, the FCC, state attorne=
ys=20
general, municipalities, public service regulatory bodies and foreign=20
governments.=20
=09=09?????The merger's critics are particularly concerned that AOL will re=
verse=20
its long-standing argument to force broadband networks open.=20
?????"I think [AOL CEO] Steve Case is the Benedict Arnold of the digital=20
age," said Jeff Chester, executive director of the Center for Media=20
Education. "To me, what I heard today was a reversal of their public=20
position," said Chester.=20
=09
?=09=09- by Drew Clark =09
?=09=09On The Hill
Lawmaker Calls For Antitrust Hearings=20
?????Senate Judiciary Antitrust Subcommittee Chairman Mike DeWine, R-OH, sa=
id=20
Monday that the Judiciary Committee intends to hold hearings to scrutinize=
=20
the proposed America Online-Time Warner merger.=20
?????"It seems that this deal could make sense for consumers by creating an=
=20
organization that will deliver news and information more efficiently across=
=20
the video/broadband spectrum," DeWine said in a statement.=20
?????"However, whenever a dominant Internet company merges with a leading=
=20
media conglomerate, it raises a whole host of competition and public policy=
=20
issues," DeWine said. "One concern in particular is the impact this may hav=
e=20
on the so-called 'marketplace of ideas.' We need to examine the many=20
implications of this deal."=20
?????"This merger also adds a new wrinkle to the broadband 'open-access'=20
debate by potentially resolving it through private negotiation rather than =
by=20
government regulation," DeWine concluded.=20
?????In a statement released Monday, Senate Judiciary Committee ranking=20
member Patrick Leahy, D-VT, expressed more skepticism. "We will have to loo=
k=20
closely at whether it makes public policy sense to consolidate control of=
=20
content, cable and Internet service distribution channels," he said. "At so=
me=20
point, all of this concentration and convergence has implications for=20
consumers because it will minimize competition and choice, giving us fewer=
=20
voices and fewer pipelines in the marketplace."=20
?????Although Leahy said, "this merger between one of the largest owners of=
=20
content with the largest provider of Internet services may have been=20
inevitable," he added, "an element of caution is only prudent given the sco=
pe=20
and impact of this planned merger."=20
?????"The great promise of the Internet has been to allow people a wide ran=
ge=20
of information sources and choices," said Leahy. "What we should do is make=
=20
sure that all that information does not become funneled and controlled by=
=20
just two or three sources."=20
?????A spokesman for Senate Commerce Committee Chairman John McCain, R-AZ,=
=20
said he had no comment about the proposed merger. =09