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Senators voice opposition to AOL-Time Warner union

A growing number of U.S. senators are asking regulators to examine the proposed merger, applying pressure that could be a powerful force in swaying opinion among federal regulators.

A growing number of U.S. senators are asking regulators to take a closer look at the proposed merger between America Online and Time Warner, saying the combination could disfavor competitors seeking carriage on the company's Internet access network.

Sen. Jesse Helms, R-N.C., is the latest addition to a mixed collection of legislators weighing in on the merger. Helms last week sent letters to Federal Trade Commission Chairman Robert Pitofsky and to the Federal Communications Commission asking the agencies to "carefully" scrutinize the merger to ensure that AOL Time Warner lives up to its promises for open access.

The Senate does not vote on mergers, but pressure from its members can be a powerful force in swaying opinion among federal regulators charged with approving them.

"If they can give the enforcers some backbone, maybe they can embolden them" to take a particular course of action, said Robert Lande, a professor at the University of Baltimore Law School. Three regulatory bodies must approve the merger before it goes through: the FTC, the FCC and the European Commission.

Helms and at least a half-dozen other senators have written to U.S regulators about the deal. While the senators do not openly oppose the merger in their letters, they all raise a skeptical voice about the advantages of the deal for consumers.

For example, in his letter to the FTC last week, Helms raised concerns about whether AOL Time Warner would treat rival content providers equally on its cable and dial-up access networks. The merged company would join the nation's second-largest cable operator, the world's largest media company, and the world's largest Internet service provider in one company.

Helms wrote that because communications systems allow consumers to get news and information from several providers, the Internet should also offer content on a basis of "equal access."

In response to the letters, an AOL representative said the company remains steadfast in its promises to open cable access to outside ISPs.

"Our commitment to content diversity and open access is crystal clear and couldn't be stronger," an AOL representative said.

A representative for Helms' office confirmed the letters but declined to comment.

Other senators who have sent letters to the FTC during the past few months include Edward Kennedy, D-Mass.; Dianne Feinstein, D-Calif.; Barbara Boxer, D-Calif.; Mike DeWine, R-Ohio; Herb Kohl, D-Wis.; and Orrin Hatch, R-Utah.

The concerns of this small choir of senators reflect sentiments expressed by AOL's and Time Warner's competitors as well as those of consumer groups.

Rivals fear that AOL Time Warner would favor its own content on its cable Internet access network. Cable ISP consumers can use the Internet at high speeds, allowing content providers to create interactive programming that combines a variety of media, including video. Many broadcasters and media companies view cable broadband as the next step in the evolution of their businesses.

Walt Disney has led the charge in criticizing the merger. The company has lobbied Congress aggressively, demanding that federal regulators split the cable business from the content business as a condition of the merger.

You've got Time Warner Other media companies including General Electric's NBC have joined Disney's efforts. Consumer groups have also testified against the proposed merger, saying the combined company could threaten consumer choice.

For their part, AOL and Time Warner have vehemently argued that the merger would not threaten consumer choice, and that restricting choice would be detrimental to business. The companies in February released a memorandum of understanding to federal regulators.

The document gave general assurances that consumers could subscribe to any ISP supported on Time Warner's cable lines even if it has no affiliation with the company or AOL. The memorandum also said AOL Time Warner would not put restrictions on how many ISPs it will support on its broadband cable network.

Last month, executives from AOL and Time Warner testified before the FCC, reiterating their promise to open cable lines to rivals. Time Warner chief executive Gerald Levin said his company was in the midst of restructuring its agreement with Road Runner to be the exclusive cable ISP on its network. Levin added that Time Warner is "ready and open" to negotiate a carriage contract with any ISP.

Soon after Levin's statements, Time Warner announced it had signed on ISP Juno Online Services for carriage on its high-speed cable network.

While certain senators continue to voice concerns over the implications of the merger, many remain steadfast against regulation of the merged company.

"While we are firmly opposed to increased regulation of this developing industry, we also urge your agencies to carefully examine...its consequences for competition and consumers," Kohl and DeWine wrote in a joint letter to the FTC.