AOL may offer service via AT&T cable lines

Responding to the latest round of questions from the commission earlier this month, AOL also insisted that its potential ownership of Time Warner's cable systems isn't deterring it from pursuing DSL partnerships, and it further defended its AOLTV offering and its role in the instant messaging market.

Focus on that issue is now with the FCC, as the Justice Department has hinted it won't act on instant messaging in its review of the AOL-Time Warner merger.

"AOL continues to seek an agreement with AT&T for carriage of the AOL service on AT&T's cable systems and is presently engaged in preliminary discussions with AT&T to determine what the terms and structure of a viable deal might be," AOL told the FCC in a filing submitted Monday and just released by the commission.

AT&T is planning a multiparty ISP trial on its cable system in Boulder, and AOL said it is "presently reviewing and analyzing documentation" with the aim of possibly being a participant. AOL has entered a nondisclosure agreement with AT&T pertaining to the Boulder trial, the ISP said, but currently AOL has "no agreement or proposed business plan to provide carriage of AOL's ISP service on AT&T's cable systems."

Before its announcement that it was acquiring Time Warner, AOL was busy striking partnerships with DSL providers as a way to gain access to the high-speed Internet market. Federal regulators welcomed those deals and in their latest round of questions expressed concern that AOL might neglect DSL now that it has access to a cable plant.

AOL sought to dispel those concerns, saying it "has continued efforts to maximize the availability of the AOL service over as many platforms as possible." The company added it "continues to seek agreements with DSL providers."

AOL noted that it has continued to pursue deals since the Time Warner announcement and recently inked an agreement with Office Depot under which the retailer will sell AOL's high-speed service, AOL Plus, with DSL registrations in its stores. AOL also is pursuing wireless and satellite agreements, it said, mentioning recent deals with Sprint PCS and AT&T Wireless.

Asked by the commission whether AOL has terminated any of its DSL agreements, the ISP responded with a simple "no."

The FCC has expressed a great deal of concern that the AOLTV interactive service could be biased in favor of Time Warner content or to parties striking deals with AOL. The service, set to debut later this year, connects to a consumer's TV and allows programming to contain Internet-connected content.

In response to a series of questions from the commission, AOL again pointed out that AOLTV is built on open standards, and any content provider could add interactive content using that standard and have its code pass through AOLTV to the consumer.

One difference is that AOLTV partners will have their interactive content pop up automatically in the form of a picture-in-picture window with wrap-around content, AOL said, whereas interactive content from a non-partner would appear in whatever form it was programmed by the show's producer.

Time Warner also answered a series of questions and sought to correct a white paper issued by IM providers that stated Time Warner chairman Gerald Levin told a New York City conference that IM would be the No. 1 asset of AOL Time Warner.

"Mr. Levin did not state that IM would be the most valuable or 'number one' asset," Time Warner said. Instead, the company said Levin agreed with a moderator that AOL's subscriber base would be its most valuable asset, adding that IM was an "unrecognized asset."

In response to an FCC request, AOL submitted a list of 33 separate IM providers with which it competes. It estimated MSN Messenger had 18 million users but couldn't estimate Yahoo, as the company doesn't break out IM users separately from its 155 million registrants. AOL said it has 23 million subscribers, and "a majority" of those use IM.