AOL, Time Warner use regulators' words to blunt review

Top brass at the Federal Communications Commission met Friday and again Monday with lobbyists from the two companies. According to information obtained from the FCC, the parties discussed cable open access, free access to non-Time Warner content on the Internet, and AOL's instant messaging, in which the FCC has expressed increasing interest.

AOL and Time Warner repeatedly made the argument that despite the size of the merger, nothing about it is unusual or unique, and there's no reason it should be held to a tougher standard, such as AT&T was in acquiring TCI and MediaOne. The evidence presented in the meetings pertained to past FCC decisions, but the same subject matter also is under review at the Federal Trade Commission and the European Commission.

The lobbying effort comes at a time when the merger is under increasing scrutiny from regulators, both in the United States and Europe, at a level much more intense than company executives predicted when the merger was announced.

The companies supported their case with seven pages of quotes from agency decisions--mostly the TCI and MediaOne reviews--showing how the FCC had declined to impose open access or other severe conditions. They also presented the commission with a 13-point checklist including everything from open access to programming access that they said had been addressed in previous merger reviews.

"The FCC has reiterated that the merger context is not the appropriate forum in which to debate an open-access requirement," AOL counsel Peter Ross wrote in a letter accompanying the support papers.

The commission has ruled that any issue that has merit outside a merger review should be kept outside it, Ross said, adding "if any FCC proceeding is the proper forum to address questions concerning the interoperability of instant messaging, clearly this merger review is not it."

In the meetings, AOL lobbyists were relentless on the instant messaging issue, insisting that the company supports interoperability of competing systems but wants to let the working group that is developing a standard complete its work. According to AOL, the lobbyists told FCC staff that some competitors are pushing a "quick fix" purely for their own financial benefit.

Both companies again insisted that they will provide open access to Internet service providers on their cables and insisted that, as in the AT&T mergers, no one's content would be blocked online as a result of this merger.

Deborah Lathen, chief of the FCC bureau overseeing the merger review, was joined in the meetings by two representatives from the agency's general counsel's office, Michele Ellison and James Bird. The lobbyists included AOL's Ross, George Vradenburg and Steven Teplitz, and Time Warner's Catherine Nolan.

The FCC is aiming to conclude its review of the AOL-Time Warner merger by mid-October.