Consumer Groups Alarmed Over AOL’s ‘Pullback’
Despite America Online’s assurances that buying cable giant Time Warner wouldn’t weaken its support for opening up cable lines to outside Internet companies, consumer groups say AOL is no longer an aggressive advocate for so-called open access.
“America Online has been a terrific advocate of open access . . . but [AOL Chairman] Steve Case now is being very ambiguous,” said Erik Sten, a city commissioner in Portland, Ore. Portland is trying to force cable operators to open their networks to rival Internet operators. “So this merger underscores the fact that government action is absolutely needed to ensure open access and a fair playing field.”
On Monday, executives from AOL and Time Warner pledged to open Time Warner’s cable networks to rival Internet providers and to back open access.
But there also were comments about taking the open-access debate “out of Washington and out of City Hall” and putting it in “the marketplace.”
Open-access advocates were alarmed. AOL “has spent millions of dollars to lobby city councils, the Federal Communications Commission and Congress on open access,” said Gene Kimmelman, co-director of the Washington office of Consumers Union. “This is clearly a pullback from their previous stance.”
AOL disagrees. “Let’s not think this [merger] is a step backward. It’s a step forward,” said George Vradenburg, AOL vice president of global and strategic policy.
So far, federal regulators have said that competition will probably eliminate the need for government-mandated open access.
“Open access as an issue is not going to go away,” said Blair Levin, a lawyer in Washington and a former FCC chief of staff. “But whatever negligible risk there was that government would step in is now even less.”
Currently, cable operators that sell fast Internet access package the service with an affiliated Internet service provider. But consumer groups and local phone companies want customers to be able to pick and choose among Internet service providers.
Phone companies already provide that choice.
Pacific Bell, for example, sells high-speed Internet access using regular phone lines and digital subscriber line technology, or DSL.
But although the phone company would prefer that customers select its own Internet service provider (Pacific Bell Internet), customers are free to subscribe to any Internet company, from AOL to EarthLink.
If cable companies keep their monopoly and also control which Internet service provider customers get with their cable connections, it could lead to fewer choices and higher prices for consumers, consumer groups say.
That fear is being intensified by AOL and Time Warner’s proposal to merge. Combining the two companies would bring together the world’s largest Internet service provider and a content juggernaut whose vast portfolio has Time and Sports Illustrated magazines; cable channels HBO, CNN and TNT; Warner Bros. and much more.
An AOL-Time Warner deal will lead to “a surreptitious use of favoritism and tilting the playing field in favor of particular [Internet] services,” Kimmelman said. “That’s what the fear is.”
Much of the open-access debate has revolved around AT&T; Corp., which with its purchase of Tele-Communications Inc. and pending acquisition of cable company MediaOne Group is the nation’s largest cable operator.
Recently, AT&T; pledged to open its cable lines once its exclusive deal with Excite@Home expires in 2002. AOL and Time Warner now say they will work to provide open access to their lines when the exclusive contract expires with Internet provider Road Runner in 2001, if not before.
Still, Kimmelman said, the battle over open access will continue, especially because cable companies such as Cox Communications, Comcast and others have not agreed to share their lines with outside Internet providers.
In addition, local phone companies believe the absence of open-access rules for cable firms leaves phone companies at a competitive disadvantage in the lucrative market for high-speed Internet connections.
Times staff writer Michael A. Hiltzik contributed to this report.