The proposed merger of America Online and Time Warner, Inc. came to a fork in the road earlier this week, when a coalition of consumer and media groups called upon the U.S. government to block the deal.
Advocacy organization Consumers Union and three other groups filed petitions with the Federal Communications Commission (FCC) asking the government to prevent or impose strict conditions on the proposed merger. The groups say the merger would add “a dangerous new dimension to the emerging structure of the cable and TV broadband Internet industry.”
The Consumers Union filing, which is co-signed by the Consumer Federation of America, the Center for Media Education and the Media Access Project, expresses concern about the concentration of power in AOL/Time Warner television and Internet content, as well as its distribution through narrowband telephone lines and broadband cable.
Plan to Divest AT&T of Time Warner Holdings
Consumers Union co-director Gene Kimmelman told the Washington Post that he believes the FCC should force AT&T to divest itself of its Time Warner holdings in order to prevent the two companies from having any common cable ownership.
However, many industry analysts point out that such a condition would probably be required anyway for the merger to be approved.
Still Some Hurdles
Consumer advocates are not alone in their concerns. In March, U.S. Senators from both sides of the aisle expressed serious reservations about the planned merger between the media giants.
“It looks like you are going straight down the Microsoft route,” said Senator Fritz Hollings, a Democrat from South Carolina.
During the congressional hearing on the proposed merger, U.S. Senate Commerce Committee members quizzed AOL chief executive Steve Case and Time Warner chairman Gerald Levin on issues ranging from online privacy to opening AOL’s chat services to competitors.
Heavy Burden of Proof
The serious consequences of the proposed merger were a recurring theme throughout the hearing, as Senator Slade Gorton, a Republican from Washington, reportedly said the union would require a heavy burden of proof that it would not lessen competition.
A task easier said than done.
For example, until the company proves that its version 5.0 software does not actually disable other ISP connections — as alleged in a class-action suit filed in February — many observers will continue to consider AOL a monopoly.
Though AOL claims the suit has no merit, about 40 other consumer suits have reportedly been filed since.
Must Resolve IM Controversy
Officials from iCast, a company that has developed an instant messaging service with Tribal Voice, claim that AOL is still blocking them from its ubiquitous Instant Messenger (IM) service.
AOL promised to “fast track” its efforts to develop a standard, but iCast officials allege that AOL is dragging its feet. The iCast allegations echo those made by Microsoft and others in an e-mail sent last month to the members of the Senate Commerce Committee, which also complained about IM blocking.
All of these quagmires lead me to pose a very simple question: What has become of AOL? The company that was once a vociferous critic of monopolistic tactics and an ardent supporter of open access seems to have undergone a seismic — and unwelcome — shift.
AOL’s reputation is built around the ideal of creating an open Internet community that serves the interests of its huge membership, but the gleam of the Time Warner deal seems to be blinding the company to its original mission.