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U.S. Preparing To Block AOL / Time-Warner Deal
Tuzanor writes: "Yahoo! is reporting that government officials are preparing to block the AOL-Time Warner deal if an agreement over Internet access isn't made in 2 weeks." I'd feel a lot better about this merger if local cable (like Time-Warner has such a big hand in) itself faced tougher competition than it does right now.
Here's the Washington Post article.
The notion of a complete range of content belonging to one company is something that I recall being discussed over six years ago. People worried that a sole company could manage to control, essentially, all points of an average person's day on the web. Well, it's completely plausible now.
Picture, if you will. A user starts on AOL, and, without ever leaving the AOL revenue stream (Ad banners and affiliates) they get news from a dozen diffrent sources. Entertainment and TV/Movie info, running web searches, buying products, etc. And if they really wanted to, AOL could make life really interesting by mandating that no AOL-owned website may link to a non-AOL-owned website. Think it could never happen? Don't kid yourself, folks, it's easier than you may think.
... Andover.Net received permission to acquire open source oriented slashdot.org for an undisclosed sum in stock and cash despite Andover.Net's already substantial web site holdings. No FTC concessions required.
... VA Linux received permission to acquire the combined Andover.Net/slashdot conglomerate, adding these web sites to its linux.com and sourceforge holdings to create the dominant open source web company. Note that all these companies are for-profit, investor owned entities. No FTC investigation or concessions required.
... Red Hat acquires Cygnus Solutions, creating the dominant open source software company and establishing ownership over the development team for the critical GCC development toolchain. No investigation or concessions required.
I think it's odd that we see all these open-sourcers jumping all over corporate mergers when their own small section of the software world is dominated by a handful of players, especially Red Hat and VA. Best to first take the log out of your own eyes, boys.
$30/per and 25% of ad revenues doesn't sound too outrageous to me, given the heavy capital costs of building/upgrading the cable plant. Given MediaOne charges me $40/mo for cable modem service, that leaves $10/mo plus 75% of ad revenues to play with, which, given how cheap telephone modem based service is getting (and T3/dialup/etc charges drop out), seems pretty reasonable. Or, if T3 charges still apply, it's *still* a good deal. (Remember kids, the customer doesn't have to dedicate a $20/mo telephone line to Internet service anymore.)
Not good enough for you? Get your local governments to stop granting legal monopolies in exchange for taxes... er, "franchise fees", and let competing cable companies set up shop with their own plant. Maybe someone will have the brains to do full-blown fiber-to-the-home. "Why yes, I *would* like a 100Mbps pipe to the Internet..."
Sieze power.
It certainly is necessary and practical. The cable infrastructure which carries information to the people is every bit as important as the road, sewer, water distribution, and garbage collection services which are already run by local governments. These functions are often contracted to private entities, but the fact remains that they are operated by the people and in the people's interest.
Regarding cable television, I agree that the technology means that your decision has to be shared with other people. The solution is to abandon the dying broadcast technologies and run very high bandwidth fiber end to end. Technology will make this possible soon. At any rate, the less television you watch the better. :)
Your anti-socialism mechanism is producing false positives.
In such a system, open access would be the norm. Service providers would have equal access to the "other end" of the cables running into every home, and the citizen who was served by that cable would make the decision to hook it up to one or the other.
Hopefully in such a system, we wouldn't have pointlessly diverse content delivery systems (coax, twisted pair, circuit switched, packet switched, etc.), but instead be blessed with an all-fiber network that runs right into the point of delivery.
Doesn't anyone else think that the people should empower themselves this way?
Saying "Anyone can start their own Microsoft" is just like saying "Any US citizen can become president." In theory it's true, but in practice, it's laughable.
/more/ influence over our daily lives, and certainly have a huge influence over who sits in government.
In one hundred years time, people will look back on the 20th/21st century obsession with letting corporations do whatever the hell they want in the same way as we now look back on the "Divine Right of Kings".
They'll wonder why the hell people who are so willing to put immense restrictions (e.g. the US Constitution) on an elected government would be so religiously opposed to putting restrictions on un-elected businesses, who often have
Charles Miller
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The more I learn about the Internet, the more amazed I am that it works at all.
Folks,
The reason why the FTC may block the America Online/Time-Warner is more than just cable modem access.
The big issue here is the fact that between the resources of AOL and Time-Warner, they would create the world's most powerful corporation in terms of control of mass media.
If you look at the combined assets of AOL and Time-Warner, the result is ownership of a very sizeable fraction of the means to create media content AND distribute it. AOL is the world's largest Internet Service Provider (no contest), especially with their purchases of CompuServe, Netscape, ICQ, WinAmp, MapQuest and a few other Internet companies. Time-Warner has a massively powerful presence in movie and television program production, most of the influential cable TV channels (CNN Networks, HBO Networks, Turner Broadcasting), their own TV network, ownership of many cable systems in the USA, a book division, a major periodicals division, and a major producer of popular music.
Is it small wonder why if AOL and Time-Warner merged it would have made the company created by the fictional Elliot Carver from the James Bond movie TOMORROW NEVER DIES a very distinct a frightening reality? AOL Time Warner could have wielded the power to have a major say in what we see in the movie theatres and TV, what books and periodicals we read, what web sites we can visit and what music we can hear. Talk about potential abuse of First Amendment rights! (shudder)
Raymond in Mountain View, CA
I don't care.
:-) And I get my fun from the Web and from MP3s.
The power of the press has always belonged to those who owned one.
AOL/TW are going to be in every damn living room and theatre and TV set.
Except mine, I guess. I don't own one!
Its not as if we didn't have a choice NOT to go there. We just have to insure that they can't choke off everywhere else to go to (Sort of like the RIAA & MPAA and other neo-Ludddites.)
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
Oh, I agree that cable reguation is all f*ed up, and that things like the telcomm act of 96 have made things worse, not better.
Even so, I have doubts that TW has made their 13% profit back on the cable wiring side of their business. Instead, they have built a system where the real profits come from the content side, and they've used that content to subsidize the actual infrstructure costs. AT+T bleeds money off on their cable operations.
As far as competition goes, the system is already sorta "open" in the sense that the telephone companies have full rights to deliver television and data services to you. They also have the capital to do so. But, yet how many people in the US can get TV from the local Bell? Almost no one -- primarily because the Bells know that they'd never make their money back from infrastructure investment.
So, yeah, cable sucks because it's *expensive* to run coax to everyone's house when only 50% of the people will subscribe. (Cable Internet services are really just an incentive to get more people onto the TV system.) No amount of regulation is really going to change that.
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Business. Numbers. Money. People. Computer World.
A monopoly francise made perfect sense back in the 1980s when the cable system was being built out. Running wire to every home is an expensive proposition, and even then, adoption rates were far less than the companies expected. It took most companies years and years to make back their initial investment, usually not before getting bought out by someone huge like AT+T or TimeWarner who could carry the humongous debt load safely.
Keep in mind, cable TV is not exactly an essential service. Maybe a high speed Internet infrastructure will be in the future, but I don't think you can really make that argument right now.
Things like DSL or electric utiltity competition aren't a real solution either -- they primarily shift the edge costs of billing and customer service to other companies and don't address the real infrastructure costs. DSL is getting a real free ride because the copper networks were built out at great expense years ago, and it's only the fact that they've already been paid for many times over that DSL can get away with it's pricing system. (The wiring in my building and the telephone poles outside carrying my DSL was put in the 1920s, for example.)
The only real solution to the "last mile monopoly" problem is wireless. One big reason people the government is trying to auction of spectrum blocks is to let this problem resolve itself without having to regulate big contributers like TW or the Bells.
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Business. Numbers. Money. People. Computer World.
OK, Mr. Clever. If you'd slowed down for three seconds, you might have had the revelatory thought that a combined AOL-Time Warner merger would not only control entertainment, but also more important forms of information such as news and Internet access. Granted, it's difficult to censor the Internet, but it's unnecessary to truly censor it in order to control what people see. People are lazy, and if it's easy to read what AOL puts in front of you and more work to go read The Nation, people will choose the easy alternative. The result of media conglomeration is a decrease in the number and force of conflicting views. Go read Chomsky or Project Censored to find out about these phenomena from reputable, non-conspiracy-theorist sources. If you're not worried about stifled voices, go check out the TV news, and compare it with the New York Times. Now pretend Hard Copy is all you can get, without going to a lot of trouble. Worried now?
Switch the . and the @ to email me.
Hey people....
We have a tendency to criticize quickly and then forget to complement. I think most of us agree that unless competition is protected, the merger should not go through.
I know we squabble about the issues surrounding the periphery, but lets please thank those deserving the credit for doing their job correctly: preserving justice and freedom.
First Microsoft and now this. I'm actually getting warm fuzzies from the government!
The linked article is rather scanty, here's another article that explains exactly what is holding up FTC approval and how it can be resolved.
;T says Time Warner negotiated deal not likely
AT&
Second Law of Blissful Ignorance
Why doesn't someone *gasp* compete and build another one?
You *gasp* can't compete and build another cable network. Most cities that I know of have franchise agreements with a particular carrier. This agreement states that the only one allowed to provide service within that city is that specific carrier. If competetion in the local cable market could be done, it would have been done already.
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After all, if you don't like your cable company, you can move!
(For the sarcasm/humor impaired, don't take the above text seriously.)
I've often wondered exactly what AOL and Time Warner hope to gain from merging. Their early press releases on the issue stated that they wanted to do it so Time Warner could use AOL's 'net infrastructure to distribute media via the Internet... but now it raises interesting questions over cable Internet access. Doesn't Time Warner own a few cable companies here and there? I live in an area where cable Internet access is unavailable because the local cable monopoly, AT&T Cable, hasn't decided to roll out Internet service yet. Could Time Warner cable (whatever their cable divixion is) users be forced to get cable service only through America Online?
Blue Neon - a wonderfully insane online comic
Don't they have freedom of speech too?
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Peace,
Lord Omlette
ICQ# 77863057
[o]_O
They built the cable lines, why should they have to share them?
Al Gore and his DARPA friends built the Internet backbone (no really); why should they have to share it?
Will I retire or break 10K?
Use DLS[sic] instead of cable modem
With DSL you have to live within about 3.5 km of the telco's switch. And most towns don't have their switches placed in such a way to cover the whole town.
Will I retire or break 10K?
What's being overlooked here is that the executives of these companies have a fiduciary responsibility to their shareholders to maximize share value and profit. They personally may like to see open access, but as executives they are pretty much required not to pass up an opportunity to control, in this case, practically the whole damned internet.
AOL has more content, more POPs than any other ISP in the country (maybe the world), and provides their own content in addition to the Internet. Explain to me why this doesn't justify higher prices? It's a better (in 23,000,000 subscribers' minds) product. If you don't like it, don't buy it. They're not holding a gun to your head.
BTW, is anybody else incensed that AOL started using CD's a couple years back? I can't format the disks and use them any more, so end up getting a free coaster about every week or so. They're starting to pile up!
I have an idea... Insteading creating further waste by throwing them away, lets collect as many of those frickin' CDs as we can. Stuff them into 5 gallon garbage bags, and load as many U-Hauls as possible. Then drive down to Dulles, VA and unload them onto the steps of AOL headquarters. Maybe they'd get the message.
Kind of late, but I'll reply anyway. First of all, I doubt anyone in the government is reacting with malice towards Time-Warner; they're simply saying that they might not allow the merger to go through. Time-Warner won't be punished or fined, they'll simply have to remain separate from AOL.
As for who gave them the authority, you answered the question yourself; the voters did. And I don't quite follow the next two sentences; personally I'm for it. I don't like the idea of large corporations taking unfair advantage of their size and market share to squash everyone else. Better big government than big business, because we can at least vote for the government.
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deals with the local ISPs for cable access. In my hometown the local ISP, Northnet has written letters of protest to the FCC and FTC about the deal offered them. AOL wants $30 per ISP customer, plus 25% of the ISP's advertising revenue. Seems a deal like that would put local ISPs out of business.
Seems awful stupid to me to offer such an outrageous deal to ISPs in light of the proposed merger. Who do they think they are, Micro$oft?
They should have offered leased lines at reasonable prices, not a per customer charge, and perhaps 1% to 2% of generated ad revenue. AOL/TimeWarner had better watch their step, or they may become the next target of the DOJ!
"Open code, in other words, can be a check on state power." -Lawrence Lessig
I would feel a lot better about this merger if Time-Warner wasn't one of the top 5 contributors to the Gore\Liebierman campaign (iirc).
Hopefully I didn't put any [] around my words.
The US is a free enough country that anyone can start their own AOL, Microsoft, Time/Warner or whatever.
True, but there's the (significant) chance that you either won't have enough of a customer base as compared to the Big Corporations to stay in business, or that you will just be bought out by one of said Corporations. That is one of the big reason why large corporate monopolies are bad -- they have a tendency to squash potential competition.
If you let the Government push around the companies you don't like, soon they'll start pushing around the companies you do like.
Or, as in more and more recent cases, the company will push the government around. For example, the MPAA et al buying the DMCA.
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I pledge allegiance to the flag...
of the Corporate States of America...
ship em' to me! there is a contest for creative aol cd usage..and i have a good idea...I only need about 4 or 5 thousand more.
The anti-salmon
What's boning them now is Case's flip-flop on open access. Before negotiations for the merger began he was a vocal advocate for legislation forcing network owners to open their networks to competing ISP without their own lines.
Now he's going to be a high muckety-muck with billions in stock and stock options at one of the world's largest corporations, and *poof*! Suddenly, those pro-competitive open networks he used to champion are tantamount to communism. Regulators tend to notice things like this.
Things that make you go "Hmmmmm."
-- He's fantastic, made of plastic....
The idea that a single company would own every entertainment medium on the planet - movies, music, radio, web - doesn't scare you enough?
- I don't care if they globalize against free speech. All my best free thoughts are done in my head.
I see the same thing happening with the Time Warner-AOL deal. Eventually they will relent and agree to open their networks, but when it comes time for them to actually lease a line to a competing ISP, I wager they will balk. They will argue there are technical problems, or claim the other ISP is being unreasonable, or just sell the line for an outrageous price that would make it impossible to make a profit. Whatever the case, don't count on open access very soon, it just isn't in AOL or Time Warner's best interest.
.sigless
Enigma
Enigma
Enigma
This doesn't mean my cable modem acess will be routed through AOL does it? That would REALLY suck... I know they'd find a way to create busy signals =]
cuban
The Federales are getting antsy about the possibility that the USA will be merged next into the Times-Warner-AOL colossus, and then they'll all be demoted to customer support with pimply-faced "1337 #4}{0r5" as their bosses.
A truly excellent pizza parlor is a delight unto the heavens. Treasure the sauce and the toppings!
"The world's largest Internet services provider's efforts to buy the cable and publishing giant Time Warner won European approval on Wednesday only after AOL offered to sever all structural links with German media group Bertelsmann AG (BTGGga.F). That concession eliminated the risk of dominance in the emerging market for online delivery of music over the Internet and software-based music players."
Being Dutch this leaves me slightly puzzled, do I have to believe now that the EU, this most bureaucratic, most inefficient, most undemocratic, and sometimes even corrupt supra-govermental institution did something right for a change?
This seems to be a matter where the EU was aware of the European situation (AOL having ties with Bertelsmann), aware of possible monopolies (AOL+TW+BM against the rest), and they were able to get a result.
The EU categorically forbidding the AOL/TW merger seems to be a bit rich.
BTW: http://www.annodomini.org.uk/aol-t ime -warner/
Screw the FCC and FTC. Neither of these mergers should be happening, but if one is, both should. To allow AT&T to become the next Internet monopolist unimpeded is an astonishing government policy.
It's a little like Microsoft buying IBM and nobody saying anything, but when Apple subsequently buys Motorola the powers that be going ape-shit.
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You are not alone. This is not normal. None of this is normal.
Wired from a couple months ago had an article on the AOL/Time-Warner merger (get it here). It was rather long, but it was very informative, and definitely worth the read if you're not up-to-snuff on the issue. It looks as if these two companies have their leadership infrastructure well planned out. I doubt that there's any chance the merger will just _not happen_. Especially not over something trivial like a bit of a mixup concerning broadband (if such a problem even exists). If anything, the merger is a sure thing; unless of course, the government decides to get involved...or a meteor destroys the north american continent or something. Well, no doubt, the government _will_ get involved (why stop with just Microsoft?); but I'm sure AOL/Time-Warner will get their problems straightened out. It's a natural reaction to fear such an intimidating company, and people will be trying to poke holes in it whenever possible. One could write a book on it. However, the Wired article should suffice. -David "Ryouga" H. Cut the kids in half...
-Ryouga