Access Issue Could Thwart AOL-Time Warner Merger

Federal antitrust attorneys, fearful of a media juggernaut that could control the Internet, are prepared to block the America Online Inc.-Time Warner Inc. merger unless they agree to keep open their high-speed cable lines to competing entertainment and online companies, the Washington Post has learned.

Federal Trade Commission staff attorneys are concerned that in certain markets where Time Warner operates cable systems there is no viable competition to provide high-speed access to the Internet through cable TV lines. As a result, consumers could be forced to accept AOL-Time Warner programming and Internet content exclusively, according to sources.

The staff decision by no means is a death blow for the merger deal, which was announced Jan. 10. Discussions are expected to continue until some compromise is reached.

The FTC’s Bureau of Competition staff has not forwarded a recommendation to the commission.

“This is an early point of the process and the decision is up to the commission, and obviously these discussions are part of the process that could lead eventually to action by the commission,” FTC spokesman Eric London said.

AOL has pointed to a recent agreement between Time Warner and Juno Online Services Inc. as an example that they are committed to a policy of open access.

“AOL and Time Warner are fully committed to open access and just recently announced the first ever open-access agreement with independent ISP Juno,” AOL spokeswoman Kathy McKiernan said. “Our ongoing conversations with the regulatory agencies are proceeding well, and we are on track to close in the fall.”

Together, Dulles, Va.-based AOL and New York-based Time Warner would control 40% of the Internet access market and reach 20% of cable-equipped homes.