[Random-bits] AOL/TW and access to set-top boxes

[James Love]

Thanks to Jeff Chester for this forward.  JL

reshma.kapadia@reuters.com Fri Sep  8 09:47:41 2000
Date: Fri, 08 Sep 2000 09:46:09 -0400
From: Reshma Kapadia <reshma.kapadia@reuters.com>
Subject: article
To: jeff@cme.org

     By Reshma Kapadia
    NEW YORK, Sept 7 (Reuters) - America Online Inc. <AOL.N> and Time 
Warner Inc.
  <TWX.N> said Thursday the combined company would open up its cable
system to Internet services providers, but that set-top boxes are not
included. 
    In a filing to the Federal Communications Commission, the 
companies expanded on the open access issue they had addressed in a
memorandum of understanding signed in February.
    Open access, or the ability for AOL-Time Warner's rivals to 
access its cable pipeline, has been at the heart of regulators' concerns
over the proposed deal between the Internet services provider and media
giant that is now valued at $127 billion.

   [snip]

    AOL and Time Warner said in the filing made Wednesday responding to
queries from the FCC that they would keep their promises to not
discriminate against Internet services providers (ISPs) and let multiple
ISPs use their  cable lines.
    However, the companies excluded access for unaffiliated ISPs or
Internet telephony services via interactive set-top boxes. They said
the  devices were not part of the memo of understanding they signed in
February pledging that they would let rivals access Time Warner's cable
system.
    Set-top boxes are currently used to convert digital signals from
cable or satellite to enable two-way interactive programming on a
television set. 
     "The next generation for the Internet is interactive television and
the set-top is key to that access," said Jeff Chester of the Center for
Media Education. "The set-top must be included in open access for this
merger to go through. It underscores everything. They are foreclosing on
any type of competition."

    [snip]

    Time Warner said in the filing it is always willing to discuss
relationships with potential providers of any other services. Time
Warner Cable said it will also not restrict streaming video delivered by
the ISPs.
    The two companies also said they would keep their promise to let
consumers access their competitors' content, emphasizing that the roles
of Time Warner as a cable system operator and AOL's role as an ISP will
remain  distinct.
    With this distinction, AOL will not have any special ability to
monitor cable modem connectivity that is not available to another ISP.
    In terms of pricing, Time Warner Cable said it expects that
financials and terms of any broadband pacts would vary with each ISP,
but the economic relationships would not be based on any type of
affiliation with AOL-Time Warner.
    The companies also updated the progress of Time Warner's multiple
ISP trial in Columbus, Ohio, and said the first of the planned three
phases began on July 28 and is expected to run for one to two months.
    The ISPs included in the first phase are AOL, CompuServe Classic,
Juno Online Services Inc. <JWEB.O> and Time Warner high-speed joint
venture Road Runner.
    The pact with Juno was reached in late July but exact terms have yet
to be hammered out.
    The second phase of the trial will involve offering the service to a
larger group of subscribers and the final phase will involve a
roll-out throughout the Columbus area. The last phase aims to provide
the final refinements for the migration of AOL Time Warner's cable
system to include multiple ISPs.

        ((-- New York technology desk, (212) 859-1860))