As media stocks soared and the folks at the newly minted AOL Time Warner toasted their futures, some feared Monday's behemoth merger could have dire consequences for extending cheap, high-speed Internet access to consumers.
The reason: the deal may have co-opted one of the biggest supporters in the fight to force cable operators to open up their systems to other Internet providers -- just as telecommunications companies have been forced to open up their lines to other competitive long-distance carriers.
So who is the ally that may be turning coat? It's American Online itself. "We think it sucks," said James Love, director of Ralph Nader's Consumer Project on Technology. "AOL has been a big hammer for open access, and this deal means they'll likely abandon that."
The fight for open access primarily has targeted AT&T, which has become the leading provider of high-speed cable modems by aggressively buying up cable-TV networks, most notably the giant TeleCommunications. The company has come under fire for its reluctance to open up its lines to competing Internet service providers.
Now, through its purchase of Time Warner, AOL will own its own cable systems, and some fear the fight for open access will no longer serve the company's interests.
Jeff Chester, executive director of the consumer advocacy group Center for Media Education, said his biggest concern is that AOL has backed out of the public policy debate, preferring to tackle the issue through private negotiations.
Calling AOL Chairman Steve Case the "Benedict Arnold of the digital age," Chester said AOL had to buy its way into cable access. Companies that don't have that kind of money can't do that, he said.
"Everyone who wants to compete on the Internet -- unless they're a close personal friend of Steve Case or (Time Warner CEO) Gerald M. Levin -- should be worried," Chester said.
Mark Lemley, a professor at the University of California at Berkeley's Boalt School of Law, thinks federal regulators should approve mergers such as the one between Time Warner and AOL only if the companies agree to adhere to the open-access standards. Lemley, along with Harvard Professor Lawrence Lessig, has asked the Federal Communications Commission to add an "open access" requirement to its approval of AT&T's acquisition of MediaOne Group.
"It will be interesting to see whether AOL changes its position on open cable access," said Lemley. "I hope they don't do that, but it's possible."
AOL already has come under fire for its hypocrisy in the instant messaging wars. While the company was urging government agencies to adopt open-access laws, it was busy blocking competing technologies by Microsoft and others from taking advantage of its IM network. AOL did not immediately return calls seeking comment.
Smaller ISPs and the trade groups representing them were more optimistic about the merger than some consumer advocates. Doug Hanson, CEO of Denver-based ISP Rocky Mountain Internet, said the move would boost open-access efforts. "AOL now has to open up Time Warner's cable system to all of us other ISPs, or they're going to be looked upon as hypocrites," he said.
Hanson thinks the merger will make the FCC more likely to jump into the debate to ensure open lines because until now federal regulators looked at the issue as a fight between AT&T and AOL. Now the fight is between cable operators including AOL on one side and smaller ISPs on the other. "Without regulation, smaller ISPs cannot very well defend themselves against the giants," Hanson said.
Cliff Staten, executive director of the Open Access Alliance of the Bay Area, agreed. "I think it's good news for open access," he said.
So did Gary Schultz, president of the Multimedia Research Group in Sunnyvale, California. Schultz thinks that combining Time Warner's approximately 20 million cable television subscribers with AOL's 20 million members could double the number of consumers using broadband access by 2004.
Dave McClure, executive director of the US Internet Industry Association, said it's too soon to gauge the merger's effects on the industry, and that AOL has no choice but to continue the open-access fight. "It's very clear that were AOL to suddenly reverse its decision, it would lose credibility in Washington," he said. "Until you see evidence of that, I'd have a tendency to cut them a little slack."
At least one major player in the open-access debate remained on the fence. OpenNet -- an open-access lobbying group backed by AOL's Case, MCI Worldcom and MindSpring -- called a press conference Monday, only to announce it hadn't finalized its statement and wouldn't take any questions.
An hour later, the group issued a terse release saying, "We will seek negotiations with both AOL-Time Warner and AT&T, as well as the rest of the cable industry, to define how and when open access will be implemented, and we will continue to urge the federal government to make open access the rule for the entire cable industry."
The group called AOL "a leading advocate for open access" and said the company would continue to be a member of the organization.
ZDNet News US Staff Writer Jennifer Mack contributed to this story.
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