The U.S. Federal Communications Commission (FCC) has delayed the launch of its formal inquiry into the issue of open cable Internet access, saying on Thursday it will wait until after decisions are made regarding the proposed mega-merger of America Online (NYSE: AOL) and Time Warner, Inc. (NYSE: TWX).
According to observers, the delay was calculated to give the FCC and the U.S. Federal Trade Commission (FTC) additional bargaining power when they try to impose open-access conditions on the media giants.
Two Week Delay
FCC Commissioner Gloria Tristani, widely seen as the agency’s strongest advocate of open access, initially requested a four-week delay. However, Commissioner Tristani agreed to a two-week delay, reportedly under pressure from FCC Chairman William Kennard.
“It is very important that we get this item done,” Kennard said. “It is incumbent for this agency to step up to the plate and begin to develop a comprehensive record.”
Tristani said she preferred waiting until the AOL-Time Warner merger review is completed before starting general policy hearings on open access, but added that she believed it was “high time to proceed with consideration of a national framework on this issue.”
Creating a National Framework
The FCC decision on whether to require cable television companies to share their lines with rivals who also want to provide high-speed Internet access will likely have a significant impact on consumers.
Consumer groups have pushed for the forced sharing of lines because they believe that competition will keep high-speed Internet service prices down and offer consumers more choices.
Commenting on the delayed policy hearings, Jeffrey Chester of the Center for Media Education (CME), which advocates opening broadband networks to all ISPs said, “I strongly support Tristani’s action. The FCC should be focused on the issues raised by AOL Time Warner.”
Looking for Assurances
The FTC and the FCC would like concessions from AOL and Time Warner on the open access issue before the national framework is put in place. The FTC, which is believed to favor the open access policy, wants a legally binding agreement from the two giants before they merge.
Both AOL, the largest Internet service provider (ISP) in the world, and Time Warner, the media conglomerate with vast cable television holdings across the U.S., have said they would allow equal access, but recent disputes have caused concern among consumer groups and government officials.
Earlier this year, Time Warner yanked ABC programs off the air due to a dispute with ABC’s parent, the Walt Disney Company. AOL has also angered rivals by steadfastly refusing to give the 20 million members of its instant messaging system access to competing services.
The FCC could take up to a year to complete its inquiry into the issues raised by open access. Designing a national framework raises many questions and issues, and requires time for public comment.
Open access proponents fear that AOL and Time Warner might use the national policy hearings as evidence that their merger should not be subject to conditions.
Before the FCC decided to inquire into open access, the agency had refused to get involved in the argument for two years, with Chairman Kennard saying he preferred to allow market conditions settle the matter and that federal regulation could hamper the expansion of e-commerce.
The FCC decided to enter the fray for a variety of reasons, including concerns over the proposed merger of AOL and Time Warner, as well as contradictory court rulings on whether broadband is a cable television issue subject to local laws, or a telecommunications issue subject to federal laws.
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