FCC Considers Rules for Interactive TV Services

U.S. regulators for the first time are considering rules for new interactive television services, easing anti-competitive fears raised by foes of America Online Inc.’s planned purchase of Time Warner Inc., people familiar with the plans said.

The Federal Communications Commission is reviewing a staff recommendation to regulate the emerging services and might start the process as early as next week, said agency officials familiar with the issue. The five commissioners have the option to reject the proposal.

U.S. broadcasters want their programming, including interactive services that let viewers shop online, to reach customers untouched by distributors such as cable TV. The planned $97.1-billion AOL-Time Warner union has underscored the ability of a single company with control of content and pipelines to shut out rivals providing interactive services.

“The fact that they’re doing a proposed rule-making indicates an acceptance of the fact that whoever sends that signal has some right to offer the public access to the Web or to some other information,” said Gene Kimmelman, co-director of Consumers Union in Washington.

The staff recommendation covers the obligations of companies that transmit programming and the rights of content owners, as well as a cable company’s duty to carry TV signals when new features are added.

A spokeswoman for AOL declined to comment on the FCC’s focus. Shares of AOL fell 45 cents to $34.80, and Time Warner fell $1.36 to $52.24, both on the New York Stock Exchange.

The FCC is wrestling with interactive television as it reviews AOL-Time Warner. The Federal Trade Commission order approving the transaction Dec. 14 prohibits AOL-Time Warner from interfering with other companies’ content, such as removing interactive features.

An FCC rule about interactive TV would have a broad effect because it would apply to the entire industry, analysts said.

The technology raises the prospect of new revenue for broadcasters, cable and satellite companies and Internet providers. A key question in the proposed rule focuses on who controls each step along the connection between the content provider and consumer.