Why AOL Time Warner Promised Open Access

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In January, when Steve Case stood on stage with Gerald Levin and Ted Turner and announcing the largest merger in American history, consumer groups across the country gasped. Surely the AOL Time Warner behemoth would be bad for the little guy — marrying the world's largest Internet portal with the biggest media conglomerate is a formula for info-monopoly, they argued. Not any more, say the firms' top brass. Case and Levin on Tuesday presented a jointly signed "Memorandum of Understanding" promising that if their companies merge, they'll keep their vast cable holdings open to competing Internet services. Time Warner is America's second largest cable operator, and some competitors have feared that it would offer only AOL over its broadband wires. (It is also the parent company of TIME.com.)

Case and Levin drew mixed reactions from the Senate Judiciary Committee Tuesday afternoon. While some members lauded the effort to open web access to other providers, Sen. Orrin Hatch (R-Utah), the committee's chairman, criticized the agreement as nonbinding, saying "this committee remains to be convinced of its value beyond the boardroom and public relations office of AOL Time Warner." Others questioned whether Case was being hypocritical. Before AOL was in a deal with a major broadband supplier, Case lobbied the feds to impose regulations requiring this sort of open access. Now he's saying that the market should self-police. "This is the only course they can take," says TIME business editor William Saporito. "If you say we're going to close off the pipe to anything that's not AOL-Time Warner, you've got huge regulatory issues to face. You're going to cut your own throat. So they have to do it. It certainly looked different to AOL when they weren't the broadband providers."