Time Warner’s AOL Spin-off: How the Failure to Require Network Neutrality (Open Access) Led to a Failed Mega-Media Merger

News that Time Warner will spin-off AOL should also be analyzed in the context of the network neutrality debate.   AOL would never have had to pursue merging with Time Warner if the Clinton FCC had supported its call–backed by many consumer groups–for “open access” to broadband.  Denied the ability to migrate its successful telephone/common carrier-based business model to cable broadband by the FCC, AOL had no choice but to buy its way into the cozy cable industry club.  Here’s what Steve Case, then president of AOL, said at the National Press Club in 1998, as covered by my CDD:

“Government,” as he told the National Press Club in October 1998, “has a responsibility to preserve an open playing field—to preserve the openness, innovation and competition that are at the heart of the Internet….” Nor did Case shrink from suggesting that regulation was the key to untangling the broadband puzzle. “Significant challenges currently face regulators in the communications realm,” he conceded. “There is currently one set of policies that governs telecommunications, and another governing cable. These legal, policy and regulatory frameworks have little to do with each other….” Thus it was the government’s responsibility, Case concluded, to see that the cable broadband environment conformed to the “openness, competition and rapid innovation” that is the very “DNA” of the Internet. “The bottom line,” Case insisted, “is that competition in all ‘last mile facilities’ should remain open so that consumers have the same kind of choices in broadband that they do in narrowband.”

If the Clinton FCC, then under Chairman William Kennard, had supported open access, we (including the many Time Warner and AOL investors who lost considerable sums) may have avoided further media consolidation and the wreck which became AOL Time Warner.  It’s a history lesson the in-coming FCC chair and others should review.

Author: jeff

Jeff Chester is executive director of the Center for Digital Democracy. A former journalist and filmmaker, Jeff's book on U.S. electronic media politics, entitled "Digital Destiny: New Media and the Future of Democracy" was published by The New Press in January 2007. He is now working on a new book about interactive advertising and the public interest.

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