|
|
|
Press Release Wednesday, April 26, 2000 |
Contact: · Mark Cooper, Consumer Federation of America (301) 384-2204 |
|
|
|
Washington, D.C - Some of the nation's leading consumer and public
interest groups are petitioning the federal government to block the
merger of America Online (AOL), Inc. and Time Warner, Inc., unless
the transaction is significantly restructured.
Consumers Union (CU), Consumer Federation of America (CFA), Media
Access Project (MAP), and the Center for Media Education (CME) filed
a formal petition with
the Federal Communications Commission (FCC) today in opposition to
the deal, which would fuse the country's largest online company with
the world's biggest media and entertainment conglomerate.
The groups contend that the merger would reduce the diversity and
program choices in video and Internet content. They also believe that
it would impede innovation and economic growth in the Internet
sector.
The "petition to deny" seeks to block FCC approval of the merger.
It is accompanied by a report that details a wide array of harms and
legal violations that the groups believe would result from the
merger. Among the findings:
· The merger would allow two enormous firms to dominate the markets for broadband and narrowband Internet services, cable television, and other entertainment services, which could leave consumers with higher prices, fewer choices, and the stifling of free expression on the Internet.
· The business links between AOL Time Warner and telecommunications giant AT&T would create cross ownership problems that violate antitrust merger guidelines and the FCC's public interest principles.
· AOL was once a vigorous advocate for rules to require that cable wires be left open to competitors to provide Internet services. Now that AOL stands to become the owner of cable properties, it has changed its view, arguing that open access should be more limited and merely voluntary.
"AOL Time Warner involves a complex web of cable and Internet
properties that would be in a position to thwart competition in many
markets across the country," said Gene Kimmelman, Co-Director of CU's
Washington DC office. "This merger links AOL with AT&T, making
them the two largest cable companies in the United States controlling
over half of America's cable lines and nearly half of the
most-watched channels on cable TV. They would also control access to
more than half of the narrowband Internet subscribers and
three-quarters of the broadband Internet customers," Kimmelman
said.
"Before AOL purchased a cable company, it claimed that the cable
industry had such a stranglehold on the emerging Internet that
regulators need to impose nondiscriminatory open access rules for
broadband transmission," said Dr. Mark Cooper, Research Director for
CFA and lead author of the report. "The voluntary open access it has
offered in its Memorandum of Understanding with Time Warner does not
even come close. That is why we are asking the FCC to impose AOL's
own nondiscrimination rules on AOL's cable affiliates."
"Emerging technologies offer unprecedented opportunities for a
wide range of civic discourse and innovative forms of program
content," said Andrew Jay Schwartzman, MAP President and CEO.
"However, the sheer size of these two companies' assets and their
inadequate commitment to open access fall short of what the public
interest requires and the law permits," Schwartzman stated.
"Companies such as AOL-Time Warner and AT&T, which control
both conduit and content, need to be held to a high public standard,"
observed Jeffrey Chester, Executive Director of CME. "They will wield
tremendous power in the marketplace of ideas, with the ability to
shape the future of the Internet and other digital media. The FCC can
no longer afford to sit back and watch this parade of media giants
march by without enacting the necessary safeguards to ensure open,
fair, and competitive access."
The Consumer Federation of America is the
nation's largest consumer advocacy group, composed of over two
hundred and forty state and local affiliates representing consumer,
senior, citizen, low-income, labor, farm, public power an cooperative
organizations, with more than fifty million individual members.
Consumers Union, publisher of Consumer Reports
magazine, is an independent and nonprofit testing, educational and
information organization serving only the consumers. We are a
comprehensive source of unbiased advice about products and services,
personal finance, health, nutrition and other consumer concerns.
Media Access Project is a twenty-six-year old
nonprofit, public interest law firm that represents the interests of
the public to speak and to receive information via the electronic
media of today and tomorrow.
The Center for Media Education The Center for
Media Education is a national nonprofit organization dedicated to
improving the quality of electronic media. Its Broadband Initiative
(www.cme.org/broadband) focuses on the arrival of high-speed Internet
connections that will largely shape the way Americans communicate in
the twenty-first century.
