Time Warner, AOL Promise ‘Open Access’

WASHINGTON — Seeking to ease regulators’ concerns, Time Warner and America Online pledged Tuesday that they would give rival Internet service providers “open access” to their high-speed cable TV lines if their merger is approved.

In a memorandum of understanding unveiled here, the two companies promised to negotiate arm’s-length contracts that would allow competitors direct relationships with their customers without having to go through AOL.

They also pledged to permit other ISPs to provide their customers with video streaming, which effectively enables them to receive live television pictures on their home computers via the Internet.

Some antitrust authorities had expressed concerns that the proposed merger would give the new media giant, AOL Time Warner, an unfair advantage over smaller rivals. Although analysts expect the merger to be approved, it is likely to face tough scrutiny.

The announcement drew a mixed response from members of the Senate Judiciary Committee, which held a hearing on the merger Tuesday to question Time Warner Chairman Gerald M. Levin and AOL Chief Executive Stephen M. Case.

Sen. Orrin G. Hatch (R-Utah), the panel’s chairman, and several other senators asked repeatedly whether the commitment to an open-access policy would be legally binding--that is, could be legally enforced from outside.

“Given that this [memorandum of understanding] lacks both enforceability and specificity, this committee remains to be convinced of its value beyond the boardroom and public relations office of AOL Time Warner,” Hatch said.

He urged the two executives to make the companies’ compliance a condition of the merger.

But Levin demurred, arguing that the question of whether the open-access policy could be enforced is little more than “a legal nicety,” since the two companies are committed to carrying out the new policy.

And Case told Hatch: “I think you’ll find that that will be unnecessary, because it will already have taken place in the marketplace and there will be no need for government involvement.”

The two corporate executives also sought to ward off suggestions by a few senators that the merger might raise antitrust questions or call for close regulation of the new industry giant.

Levin told the lawmakers that the fact that billions of people worldwide have access to the Internet and neither governments nor providers have the power to serve as gatekeepers “puts a new perspective on traditional antitrust concerns.”

Besides issues concerning access by rival ISPs, committee members also questioned the two executives about whether the merger would result in distortions of journalistic integrity, and whether it might affect consumers’ privacy by making data available about AOL customers.

Both men insisted that neither concern would prove to be justified. Levin repeatedly cited what he called Time Warner’s “tradition” of high journalistic standards. And Case said the new company would protect consumers from abuses of their privacy.

Reaction from consumer organizations was muted. A spokesman for the Consumer Federation of America said that organization generally was “upbeat” about the pledge to provide open access. Consumer groups had been critical of the companies’ earlier stand on access issues.

Tuesday’s memorandum pledged that AOL Time Warner will offer high-speed broadband Internet access to “multiple” ISPs without requiring customers to buy service from an AOL Time Warner affiliate.

It said the terms of those arrangements would not discriminate against ISPs that were not affiliated with AOL Time Warner, promising that rival providers would have access to the same programming and technology. No ISP would be denied access to video streaming.

Company officials said the pledge announced Tuesday would not break previous arrangements Time Warner has with Roadrunner Inc., an ISP in which it has a stake, that designate Roadrunner as the sole ISP on its cable lines until the end of 2001.

Case and Levin told the Judiciary Committee, however, that they would try to persuade Roadrunner to revise the agreement soon to make it consistent with the new open-access policy.