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.

Comments

In Other News Around the World ...

[Aaron M. Renn]

... 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.

Re:In Other News Around the World ...

[KjetilK]

The problem is, in my eyes, if this merger is completed, this huge corporation controls the information flow to millions of people. So, you've got 30 million americans who are reading Time Magazine, watch CNN, surf the web starting at AOL, and thinking they are informed, but in reality, they never got anything outside of AOL/Time-Warner.

Now, it may not be a problem as long as journalists have some integrity and money doesn't mean everything, but then...

Local cable operations

[Jeffrey Baker]

I'd feel a lot better about cable operations if the people owned their own cable plants. That is, I believe it would be ideal for the citizens of a city to own and operate the cable television, telephone, and electric facilities in their city via their local government.

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?

The most obvious reason to block merger

[RayChuang]

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)

Re:No, I think you are confused.

[IntlHarvester]

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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credit to Gov't on this one

[jefe289]

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.

Who's been busy with the clue stick?

[Col. Panic]

First Microsoft and now this. I'm actually getting warm fuzzies from the government!

AT&T is the bottleneck

[Carnage4Life]

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.

AT& ;T says Time Warner negotiated deal not likely

Second Law of Blissful Ignorance

Local cable competition

[waldeaux]

Of course local cable has intense competition!

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.)

Re:Well you know the saying...

[session]

Uh... You're missing the point. Let's say you have two grocery stores in your town, one being twice as large (with 50% as many products) as the other one. The larger grocery store raise prices in order to cover their larger cost of operation. Does this make them a monopoly? No. Why? Because people will shop at the smaller store. The smaller store now benefits, and so do consumers.

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.

Re:Am I the only one who thinks this is a bad thin

[AntiNorm]

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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Flip-flop of death

[plastickiwi]

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."

Huh?

[Fervent]

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.

The idea that a single company would own every entertainment medium on the planet - movies, music, radio, web - doesn't scare you enough?

Don't hold your breath

[Enigma2175]

Hmmm, something like this happened recently when AT&T bought TCI and Media One. The feds hammered them about internet access and opening their system for competition. AT&T resisted, but finally gave in and said "Sure, we'll open our lines, we'll allow competition". So where is it? I see absolutely no competition in the cable market in my region. All I see is my cable TV prices rising, my cable internet getting an upstream cap, and AT&T promoting the hell out of the @Home service-oversubscribing the nodes.

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.

Enigma
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Enigma

AT&T good, AOL bad. But why?

[squiggleslash]

I don't understand why AT&T is allowed to gobble up every cable company in sight even when it has a clear policy and history of refusing to listen to open access demands, and has an even longer history of acting as a monopolist, yet a large but nonetheless player in the ISP market can't merge with another cable company, despite being the major force pressing for competitive measures like open access, because somehow it's going to be a big monopolist if it does (and T wouldn't be?)

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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