AOL, Time Warner defend merger

AOL's Steve Case and Time Warner's Gerald Levin must now face the FCC

America Online and Time Warner met US regulators on Thursday to defend their proposed merger against accusations that it would stifle innovation and decrease consumer choice.

AOL chief executive Steve Case told a Federal Communications Commission hearing that a combined AOL and Time Warner would "be able to stimulate innovation and competition and consumers will be the winners".

The two companies agreed to merge in January, creating an internet and media giant worth $350bn.

They hoped to complete the merger by the end of this year, but there are now fears that it could be delayed by the regulators.

The FCC has to decide if the transfer of broadcast licences to AOL is in the public interest before a merger can go ahead.

Approval sought

The Federal Trade Commission also has to decide if the deal conforms to anti-trust law.

The merger also requires European regulatory approval before it can go ahead.

Critic of the deal, Walt Disney raised fears that the merged company would favour its own content in internet and television programming.

"Let me be clear: AOL has never done anything like that, and we never would, because it would diminish our members' online experience," Mr Case said.

Open access

Many companies have raised fears about whether the merged company would allow internet service providers access to cable television lines.

Time Warner has one of the biggest cable networks in the US and access to its high-speed broadband cable connections was seen as one of the key reasons for the merger deal.

The FCC has decided to hold a separate hearing on this issue.

"I am very concerned about the issue of open access - so much so that we are opening a separate proceeding on the subject," FCC chairman William Kennard said.

Time Warner Chairman Gerald Levin said the company was restructuring an exclusive agreement with high-speed internet provider Road Runner so that it would be able to carry other services and was conducting technical trials of how such a system would operate.

However, Mark Cooper, research director of Consumer Federation of America, urged the commission not to take the companies' word.

"Until they deliver on those promises, don't approve this merger," he said. "Open protocols and fair competition for eyeballs must be the policy of this commission."