OPENING STATEMENT OF TIME WARNER INC.

Presented by Gerald M. Levin

Chairman and CEO

Federal Communications Commission

Washington, D. C.

July 27, 2000

Chairman Kennard, Commissioners, I'm pleased to have this opportunity to
participate in the Commission's hearing on the proposed merger of Time
Warner and AOL. Last January, when Steve Case and I announced the
merger, it was with the vision of creating the first Internet-powered
media and communications company. In the short time since, as the
velocity of technological change has continued to accelerate, our
confidence in the promise of this new venture has grown even stronger.

From Time Warner's perspective, the merger with AOL represents a logical
next step in our efforts to increase consumer choice in communications
services and content---a goal that coincides directly with the
Commission's bedrock policies. Expanding consumer choice is part of who
we are. It's as basic to our corporate DNA as the editorial independence
and integrity of Henry Luce's Time Inc. and Ted Turner's CNN. Since Home
Box Office's debut over a quarter of a century ago, Time Warner has been
a leader in overthrowing the old paradigm that limited the public's
programming choices to those selected by a triopoly of broadcast
networks and designed to appeal to a single mass audience.

As you know, our leadership in expanding consumer choice in the
television marketplace has proven immensely successful. The new networks
we've developed---everything from CNN to TNT to the Cartoon
Network---have enriched people's options for quality programming. The
billions we've invested in our cable systems have dramatically enlarged
the number of channels available and allowed a whole new level of
programming diversity not just from Time Warner, but also from a wide
variety of sources. This includes news from MSNBC and Fox; public
affairs from C-SPAN; innovative kids' television from Nickelodeon and
Disney; ethnic- and gender-focused programming from BET and Lifetime. It
extends to Time Warner Cable's success in introducing local cable news
channels to a growing number of its systems.

While we're proud of our role in breaking open the television universe
to the benefit of consumers, we're equally proud to be among the first
to recognize the ability of digital technology to provide revolutionary
new options for high-speed interactive services, such as
video-on-demand, telephony and data delivery. Our early experiments with
interactive television---QUBE, in Columbus, Ohio, and Quantum, in
Queens, New York---presaged our effort to establish the world's first
fully interactive digital broadband network in Orlando, Florida. The
development of this breakthrough architecture by the engineers at Time
Warner Cable made us the first to offer a broadband avenue for
interactive communications.

Over the past five years, Time Warner has invested more than \$6 billion
to the development and deployment of the broadband infrastructure that
our engineers pioneered and created. Today, the role of this
architecture in the broadband evolution of the Internet is clear.

Whatever the delivery mechanism, whether wired or wireless, cable or
satellite, it's obvious that the digital revolution has put the global
economy in general and the global media industry in particular on fast
forward. We've now entered a new context: *Internet time*. As you know,
the United States enjoys a leadership position in developing and using
the Internet. But that leadership is already being challenged by
competitors in Europe, Asia and Latin America.

It was our shared understanding of the intense global competition that
the Internet is spawning which helped give the initial conversations
between AOL and Time Warner a sense of urgency. Steve and I saw that the
world was entering a new competitive landscape, more challenging, more
exciting and more unforgiving than ever before. Equally, we recognized
the possibility for creating a company specially adapted to this
uncharted terrain---one able to offer consumers an astounding array of
quality content, from the widest selection of sources, along with Web
features, services and communities that met their needs with
unprecedented levels of ease, convenience and personalization.

In particular, as the Commission considers the merger of AOL and Time
Warner, I believe it would be useful to focus on three of the public
benefits that will flow from our combination:

-   First, as well as making traditional media more accessible for
    online and interactive applications, our company will be a leader in
    developing new services. This, in turn, will help accelerate our
    competitors' efforts to innovate.

-   Second, by actively pursuing our marketplace-driven multiple ISP
    policy, we'll ensure real consumer choice on our cable systems and
    provide a catalyst for other cable companies to follow suit.

-   Third, as we speed up deployment of broadband capacity, we'll
    increase the consumer appetite for broadband services and hasten
    deployment across competing platforms, whether cable, DSL, wireless
    or satellite---a critical FCC goal pursuant to Section 706 of the
    1996 Telecommunications Act.

As Steve mentioned earlier, AOL's recently announced television
service---AOLTV---offers a way to enrich programming with interactive
features. Going forward, the combination of AOL's strength in providing
consumer-friendly services and Time Warner's array of content will
unlock many other possibilities. These range from the development of
online financial services to e-commerce and telephony.

The merger of Time Warner and AOL will be especially beneficial in
bringing the public a real diversity of Internet Service Providers. AOL
is committed to make its service available on a non-exclusive basis over
a multiplicity of platforms. Our new company will promote a competitive
environment which encourages *all* broadband platforms to offer multiple
ISP options.

We will also carry out the principles regarding multiple ISP service
articulated in the Memorandum of Understanding signed by AOL and Time
Warner. We're already moving to restructure our Road Runner partnership,
thereby enabling us to introduce multiple ISPs substantially in advance
of the 18 months remaining on the Road Runner exclusivity. In addition,
we're negotiating with AOL and other ISPs about providing high-speed
Internet service. In Time Warner Cable's Columbus, Ohio, system, we've
begun technical trials of multiple ISP service, taking our commitment
from the ideal to the practical.

By taking such actions, we've prompted other cable operators to modify
their business plans to provide for multiple ISP choice. DSL, satellite,
and wireless providers are responding by accelerating their own
broadband deployment efforts. From the consumer's point of view, this
intensifying competitive struggle to take advantage of the untapped
opportunities presented by the Internet revolution offers the best of
all possible worlds: more choice, better value, and lower prices.

In this newly emerging Internet-oriented marketplace, companies can
choose either to engage in open-ended competition or they can seek to
co-opt the regulatory process to their own benefit and, ultimately, to
the disadvantage of consumers. For our part, we agree with the
Commission that competition is preferable to regulation. Our goal, like
yours, is to give consumers access to content from all of the sources
they desire, over as many platforms as possible, anywhere, anytime.

No medium in history has surpassed the wildly democratic potential of
the Internet to break down the barriers to human communication, overturn
the limits on cross-cultural understanding and expand the educational
and economic prerogatives of people everywhere. The Internet is the
technology of human freedom.

Together with our partners at AOL, we at Time Warner not only welcome
the chance to accelerate this revolution. We embrace it.

Thank you for this opportunity to discuss our hopes for the
future---hopes I believe that we hold in common with this Commission.

We'll now be happy to answer your questions.