PRESS STATEMENT OF COMMISSIONER MICHAEL POWELL ON THE APPROVAL OF
AOL-TIME WARNER MERGER

This is unquestionably one of the most significant mergers in history
and I am pleased to support it. It has presented challenging issues. The
challenge is found in the fact that the merger's putative benefits and
harms principally lie in the future and will be realized, if at all,
only after combining unique assets and offering innovative services.
Fascinating though the issues are, and as serious as they are, I believe
the Majority has given in too much to their collective imaginations,
rather than sound reasoning based on the record, in reaching some of the
conditions on the merger.

**Instant Messaging (IM)**

I concede there are serious questions presented by AOL's dominance of
current IM products. But, at the end of the day, I believe the record
and the anticompetitive theory did not support mandating
interoperability. The Majority, however, accepts a competitive analysis
that I believe is flawed and undermined by the known evidence. No
competent antitrust authority, to my mind, would conclude intervention
was necessary, nor do I believe such an analysis would withstand
judicial review. Indeed, the Federal Trade Commission (FTC) having
reviewed the merger did not choose to condition IM, nor did the European
Union merger authority. Yet according to the evolving analysis as it
exists now, the FCC is undeterred and wherever the competitive analysis
is obviously ailing, the holes are plugged by resorting to the venerable
and amorphous public interest standard. Moreover, the Majority appears
to proceed based on its own sweeping technical conclusion that IM is an
essential facility for nearly all future real time, interactive Internet
communications---A breathtaking prediction and conclusion by a
regulatory agency.

Despite the Majority's analysis that purports to show a competitive
problem in need of a remedy, the Majority (perhaps to its credit) does
not mandate interoperability for current iterations of IM. Instead, it
drives to condition a hypothesized product and a hypothesized market. By
its action, the Commission mandates that AOL Time Warner must offer
interoperability for a product that does not as yet exist---some sort of
new-fangled video Instant Messaging product that it calls an Advanced
IM-based High-Speed Service, or "AIHS." When a regulatory agency has to
make up its own acronym to describe a product or service it intends to
regulate, one should be concerned. ("Behold the Wizard of AIHS.")

The concern is the implication for Internet regulation. This *Order*
makes clear that the FCC has jurisdiction to regulate virtually every
Internet product, or service that facilitates communications under Title
I of the Communications Act. But, imposing IM conditions under that
authority ignores the fact that the Commission, for decades now, has
expressly *declined* to regulate similar computer, data processing and
information services for the very reason that such interference would
undermine the energy and drive toward innovation that characterizes
these highly competitive markets. Based on the letter of the statute,
this may be correct and FCC involvement in Internet communications
services may be inevitable. Yet, the implications of that step are not
fully considered here and that is why I am most hesitant (indeed
unwilling) to make such a substantial leap in the context of an
adjudicatory proceeding, without greater notice and a fuller and broader
opportunity to comment that would result from an inquiry or rulemaking
proceeding. Unlike traditional telecommunications infrastructure, like
cable or DSL, that affect Internet transmission, IM is a software
application born purely of the mother Internet. We accept this child
with little appreciation of what the responsibility entails.

**Cable High-Speed Internet Access**

As for the conditions regarding high-speed Internet access, I would
point out that we have, in our previous mergers, repeatedly declined to
address the question of mandating open cable access because most of the
questions raised were not merger-specific, and more rightly were a
debate about the regulatory paradigm for these new services offered over
cable infrastructure. Indeed, we have already initiated such a
proceeding. I would not have abandoned this prudent policy, especially
given that any concerns could easily be addressed in the open access NOI
proceeding.

I agree that there are clearly enhanced dangers that result from the
combination of these specific companies. AOL is by far, the largest ISP.
Moreover, it is gaining ownership of the second largest cable system, as
well as Time Warner's leading high speed Internet service provider and
its very significant content. Thus, as a general matter, I would agree
that there are merger-specific risks presented that should be addressed
by government.

I believe, however, that the FTC consent decree substantially, if not
fully, answers these issues, and can easily be read substantially to
encompass even those specific conditions that we gratuitously pile on to
the FTC's good works. I see no reason for these conditions here,
notwithstanding my colleagues' suggestion that these are essentially
only icing on the pro-competitive cake baked by the FTC. I would,
however, support any decision by the Majority to state expressly that
the conditions imposed in this merger do not prejudge the high-speed
Internet access NOI, that the parties appear to have accepted such
conditions in their agreements, and that these conditions provide
substantial flexibility for parties to negotiate commercially reasonable
terms and conditions. As a practical matter, I have no doubt that these
conditions will distort discussion about what, if any, rules are
necessary to promote the availability of multiple ISPs on cable or other
broadband platforms.

## Interactive Television

I am persuaded, with some reservations, that the Commission should begin
to look more closely at interactive television (ITV) to see whether
regulatory intervention is necessary and appropriate. This merger has
highlighted the growing development of ITV and has identified specific
potential obstacles to the development of a competitive landscape for
such services. Yet, ITV remains (stubbornly) in its infancy, leaving us
with an unfocused picture of what the products should be or of the
contours of the market for such products. In sum, although it is surely
possible to hypothesize public interest harms flowing from a cable
operator's control of assets like those at issue in this merger, the
market is too immature to conclude with any confidence whether such
harms are sufficiently probable to warrant direct government
intervention.

Nevertheless, the issues raised in this proceeding are not trivial, and
clearly warrant fuller examination by the Commission. By our action, we
initiate a proceeding to develop a thorough and comprehensive record to
guide our future deliberations on this issue, to determine whether a set
of generally applicable rules are warranted, and to flesh out what
specifically those rules would need to address.