FCC approves AOL-Time Warner merger

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At 7:15 p.m. Thursday, the Federal Communications Commission removed the last obstacle to the AOL Time Warner merger, first announced over a year ago, by bestowing its approval.

The commission's approval was based on the fulfillment of three conditions. One was that the combined company must "interoperate" with two competing instant-messaging providers before offering advanced IM services over Time Warner cable systems, or show the commission that market conditions had changed significantly enough to not require such a measure.

The commission gave some protection for independent Internet service providers that use Time Warner's high-speed cable access, allowing independent ISPs to control the "first screen," as well as allowing those independent ISPs to directly bill those customers and mandating AOL Time Warner's technical performances do not discriminate against the independent ISPs.

The commission also addressed concerns over AT&T's existing relationship with Time Warner Entertainment by barring AOL Time Warner from entering into agreements with AT&T giving any AOL Time Warner ISP singular access to an AT&T cable systems, or that could affect AT&T's ability to offer competitive rates to unaffiliated ISPs.

Chairman William E. Kennard was joined at the press conference by Commissioners Susan Ness and Gloria Tristani. Ms. Tristani, who had been portrayed in press reports as holding up the merger over her concerns over AOL's competitive advantages in the instant-messaging arena, said "I advocated for even more forceful conditions" in that arena, but had decided that "ultimately voting in favor of the decision serves consumers better than lodging a dissent."

Commissioners Michael Powell, son of Secretary of State-select Colin Powell, and Harold Furchgott-Roth approved the deal, but dissented over some of the remedies proposed in the ruling. Commissioner Furchgott-Roth used the most tart language in his statement, calling the review process "broken" over his concerns the FCC overstepped its bounds by engaging in "open-ended analysis of the entities' businesses."

It was left to FCC Commissioner Susan Ness to utter the groanworthy phrase: "AOL and Time Warner: You've got approval!"

Copyright January 2001, Crain Communications Inc.

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