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AOL, Time Warner defend interactive TV services

Executives tell federal regulators that the combined company's interactive TV services would not dominate the market, but instead would spur innovation and growth.

America Online and Time Warner executives this week told federal regulators that the combined companies' interactive TV services would not dominate the market, but instead would spur innovation and growth.

The Federal Communications Commission has raised numerous questions about the proposed You've got Time Warner $116 billion merger and issued three formal requests for information from the two companies. Michelle Russo, a spokeswoman for the FCC's Cable Bureau, which is reviewing the merger, said regulators wanted clarification on the AOLTV interactive service after a recent meeting with executives of both companies.

In half a dozen separate filings this week, AOL and Time Warner executives asserted that AOLTV would be an open platform, accessible to all programmers and broadcasters, unlike AOL's proprietary Internet system.

"Because AOLTV is based on open standards, it will allow every video programming service to create unique interactive content that can flourish on AOLTV or competitive interactive TV platforms," wrote AOL's senior vice president of global and strategic policy, George Vradenburg, and Time Warner's senior vice president of global public policy, Timothy Boggs.

Time Warner and AOL executives said that by using Liberate Technologies' open platform they will spur broadcasters to develop interactive content.

"We really need to make this attractive to broadcasters," one source close to the situation said.

The interactive TV market has been hit by a chicken-and-egg problem, as both interactive hardware manufacturers and programmers have been waiting for the other to make the first move.

Combining Time Warner's content with AOLTV won't be anti-competitive; it "will prompt other video programmers to develop innovative and compelling interactive features," wrote Barry Schuler, AOL president of interactive services, citing Microsoft's WebTV in particular.

Glenn Britt, president of Time Warner Cable, said the service's "incredible ability to make advanced communications technology more user-friendly" will raise people's comfort level with interactive television.

AOL is reaching agreements "with as many video programmers as it can," wrote Steven Teplitz, AOL's senior director of telecommunications policy. However, programmers don't have to sign with AOL to develop interactive content for AOLTV. Those with an agreement will enjoy co-marketing opportunities with AOL. Teplitz added that they also will be prohibited from "promoting AOL competitors within (their) customized AOLTV interactive content."

A source at AOL confirmed that competitors will be defined as those in AOL's existing market, such as Internet service providers. The definition won't be expanded after the merger to include Time Warner's competitors, the source insisted.

AOLTV is expected to launch nationwide this fall as a stand-alone service, in time for the holidays but presumably before federal regulators complete their review of the merger.