This month, all eyes are on New York-based AOL Time Warner. The company plans to offer AOL's high-speed Internet access over Time Warner's cable lines. This is of concern to lawmakers and consumers because the provision of this service would consist of a monopoly by the recently merged company. Therefore, Time Warner must open up the use of its cable lines to several competitors before it can offer its own high-speed access service.
High-speed Internet access or broadband is an 'always-on' Internet connection that is much faster than a 56 kilobits per second dial-up modem. 'Always-on' means that there is no connecting and disconnecting the Internet.
Currently, cable and digital subscriber lines (DSL) are the two most common forms of high-speed access. Cable access is normally cheaper because the connection is shared within your neighborhood. Like a dial-up modem, DSL uses your telephone line to connect to the Internet. However, with DSL (unlike a dial-up modem) you can make phone calls while surfing the Web.
According to the conditions of the December 14 merger between AOL and Time Warner, the new company must sign agreements with at least two competing Internet Service Providers (ISPs) in each region before it can provide it's own high-speed access. Opening up one company's cable lines to allow for competition in the provision of Internet access is called 'open access'. For this reason, on July 3rd AOL Time Warner filed a petition with the U.S. Federal Trade Commission (FTC) stating that they plan to allow cable access to potential competitors Juno Online and High Speed Access Corp. (HSA). Previously, they signed a similar agreement with Earthlink.
The Federal Trade Commission's role in regulating the private sector on the open access issue is important because the Internet has evolved, for the most part, free of government intervention. Instead, the industry has regulated itself on important policy decisions. However, self-regulation does not always lead to well-informed policies that take the social needs of the public into consideration. For example, on-line privacy is one area where consumer needs are not being met.
Currently, telecommunications is a competitive sector with many Internet service providers offering service while the cable industry is monopolistic by region. This is why you get three phone bills i.e. local, long distance and mobile phone but only one cable TV bill. This is also why you can only get cable service from Time Warner in Manhattan and Cablevision in the Bronx. However, cable Internet access could become a monopoly if steps are not taken by lawmakers to encourage competition.
In telecommunications, the company that controls "the last mile" of connection between the local phone or cable provider to your home determines who can offer you Internet service. Open access groups such as the Washington, D.C.-based Center for Democracy and Technology (CDT) are pushing to make sure that independent Internet service providers gain access to Time Warner's cable lines. In a March 2 statement to a Senate Subcommittee, the Center's Executive Director Jerry Berman said that AOL Time Warner's position on open access was "a very positive step."
However, AOL Time Warner's current petition to the Federal Trade Commission has not been well received by open access groups. This is because there may be a common financial interest between AOL Time Warner and High Speed Access Corp., one of the potential competitors named in the petition.
Here is a quick review of the potential competitors. New York-based Juno is a free Internet service provider with 4.1 million subscribers that recently announced a merger with NetZero, another free provider. The new company, if approved, would be the 2nd largest Internet service provider, after AOL Time Warner. Colorado-based High Speed Access is funded by Vulcan Ventures, Microsoft co-founder Paul Allen's company. A Center for Democracy and Technology expert rejected High Speed Access as a competing Internet service provider citing common financial interests between AOL Time Warner and Paul Allen.
The Federal Trade Commission has 90-days to review and decide whether or not to approve AOL Time Warner's plan. If the plan is approved, it is likely to be implemented in New York first since both AOL Time Warner and Juno are based in New York. During the first 30-days of this time period, the Federal Trade Commission opens a public comment session to evaluate the proposed Internet service providers.
Another popular cable Internet provider in New York is Roadrunner that was formed in 1998 by Time Warner, MediaOne, Microsoft, Compaq and Advance/Newhouse. While the company may be an alternative to AOL Time Warner's future service and it's newly named competitors, there is no escaping the fact that it is owned in part by Time Warner. In light of AOL Time Warner's planned service, Roadrunner's ownership further contributes to the limiting, rather than broadening, of consumer choice in the broadband market.
Is the proposed AOL Time Warner plan a step towards competition and open access or are New Yorkers faced with a case of media monopoly? On one hand, choosing AOL Time Warner as your cable and Internet provider could minimize the number of bills that sit on your dining room table each month. On the other, consumers should be free to choose whichever Internet provider they like.
Clearly, AOL Time Warner is placing their bets on coach potatoes who would rather write one check for cable TV and high-speed Internet service. While the company is obligated to let other players into the marketplace, they have an advantage as the cable provider. This is why the Federal Trade Commission merger conditions require AOL Time Warner to give access to competitors before they offer their own high-speed service.
This is one issue that New Yorkers should watch closely over the next three months. The Federal Trade Commission's decision may mean the difference between trends toward media monopoly or increased competition. In the end, you may need to decide whether to switch to AOL Time Warner or one of its competitors, or stick with your current provider.
In Other News:
This month, New York became the first state to ban cell phone use while driving. Using a hands-free cell phone and emergency calls, on the other hand, are ok. Violators face fines of $100. Unlike many other mobile companies, Verizon Wireless supports this legislation.
Laura Forlano is a doctoral student studying communication technology policy at Columbia University.
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