INTERNET ACCESS PRIME CONCERN IN FCC’S AOL-TW REVIEW

According to the Washington Post, an early draft order shows the FCC leaning toward approving the $183 billion merger. A source told the paper the FCC could still move to block the deal if the companies did not accept substantial conditions, including making their pledge to allow rival providers of high-speed Internet access to reach customers over their cable television systems legally binding.

The draft reportedly scrutinizes Time Warner's relationship with AT&T, a joint cable company investor.

It suggests an "open access" condition, which would allow Time Warner's cable customers to freely choose their Internet provider, would sufficiently protect against potential collusion by the company with AT&T. The merged company would have to allow rival Internet services to link to its network on "nondiscriminatory terms." Customers would have to be supplied with software allowing them to choose from an alphabetical list of available providers, and service providers would have to bill customers directly.

According to the draft, linking the companies "would create a powerful duopoly through which AOL-Time Warner and AT&T would have the ability and incentive to coordinate their cable deployment strategies."

Consumer advocates have been urging regulators to make to make the dissolution of AT&T and Time Warner a condition of merger approval. According to the Post, FCC officials have not ruled out such a condition.

The FCC has set an Oct. 12 deadline for its staff to issue a recommendation to Chairman William Kennard.

The deal is under scrutiny by the Federal Trade Commission and the European Commission. Both agencies have expressed concern the merger would further monopolize video programming, Internet content and music.

The FTC will block the deal if AOL and Time Warner fail to guarantee competitors' access to Time Warner's high-speed cable lines.