EN BANC HEARING ON AMERICAN ONLINE, INC., 
	AND TIME WARNER, INC. 
	APPLICATIONS FOR TRANSFER OF CONTROL
	CS DOCKET NO. 00-30

Pages:	1 through 202

Place:	Washington, DC 

Date:		July 27, 2000

	EN BANC HEARING ON AMERICAN ONLINE, INC., 
	AND TIME WARNER, INC. 
	APPLICATIONS FOR TRANSFER OF CONTROL
	CS DOCKET NO. 00-30

			FCC
			445 12th Street, S.W.
			Washington, D.C.
			
			Thursday,
			July 27, 2000

		The parties met, pursuant to notice, at 
1:09 p.m.

		APPEARANCES:

		COMMISSION
		Chairman William E. Kennard
		Commissioner Susan Ness
		Commissioner Harold Furchtgott-Roth
		Commissioner Michael K. Powell
		Commissioner Gloria Tristani

		PANEL
		Mr. Steve Case, 
		    Chairman and CEO, America Online, Inc.
		Mr. Gerald Levin,
		    Chairman and CEO, Time Warner, Inc.
		Esther Dyson,
		    Chairman, EDventure Holdings
		Barry Nelabuff,
		    Professor, Yale University
		Barry Orton,
		    Professor, University of Wisconsin
		Mark Cooper,
		    Director of Research, 
		    Consumer Federation of America	
		Manuel Mirabal,
		    Chair, Hispanic Association on Corporate
		    Responsibility and
		    Chair, National Hispanic Leadership Agenda
		James Love,
		    Director, Consumer Project on Technology
		Cathy Cunningham,
		    City Attorney, Irving, Texas
		Richard D. Parsons,
		    President, Time Warner, Inc.
		Barry Schuler,
		    President, AOL Interactive Services Group
		William F. Reddersen,
		    Executive Vice President, 
		    BellSouth Corporation
		Preston Padden,
		    Executive Vice President, Disney/ABC
		Steven Weed,
		    Vice-Chairman, American Cable Association
		Ross Bagully,
		    CEO, Tribal Voice, Inc.
		Christopher Melcher,
		    Vice President and General Counsel, RMI.NET

		AUDIENCE
		Ms. Nancy Block,
		    Executive Director, 
		    National Assocation of the Deaf
		Mr. Barry Steinhorn,
		    Attorney, American Civil Liberties Union
		Mr. Jeff Shester,
		    Consumer Group Advocate 

	P R O C E E D I N G S
	(1:09 p.m.)
		CHAIRMAN KENNARD:  Good afternoon and welcome to 
this en banc hearing on the proposed merger between AOL and 
Time Warner.  I'm very pleased to see you all here this 
afternoon, and we're very much looking forward to hearing 
the presentations of all of our distinguished panelists 
today.  I want to thank all of them for taking the time to 
appear before us today on this very important matter. 
		I think more than any other potential acquisition 
or consolidation in recent memory, the proposed merger of 
these two companies, AOL and Time Warner, has really 
captured national attention.  And there's good reason for 
this, because ultimately, this merger could ordain the 
essential nature of America's broadband services.  There are 
a lot of important questions that we're seeking answers for 
here today. 
		Will the merger deliver on promises, including 
accelerated broadband deployment, more innovative services 
and continued commitment to multiple broadband platforms?  
Or will it, instead, impair the competitive, consumer-driven 
evolution of these technologies and stymie growth in new 
markets such as interactive television and instant 
messaging?  I very much look forward to listening to all of 
the panelists today and hearing the answers to these 
important questions. 
		Before we do that, I'd like to take just a moment 
to discuss my perspective on reviewing mergers of this kind. 
 We are here today because Congress has mandated that this 
Commission investigate whether approval of transactions like 
this one are in the public interest.  As in all such cases, 
we have a statutory duty to verify whether this merger would 
violate either the implementation or enforcement of the 
Communications Act in our rules and, most importantly, 
whether it might interfere with the progress towards any of 
our statutory objectives as we try to bring more competition 
and more services to the American public. 
		It is the burden of the merging parties to 
persuade us that the merger is in the public interest and 
will yield clear public interest benefits.  I wanted to say 
a brief word about the issue of cable access.  Some people 
call it open access, other people call it forced access.  I 
will just call it cable access.  I believe that the promise 
of the Internet is in its remarkable openness, and I hope 
that this merger would only expand on this openness. 
		I'm very concerned about this issue of access to 
the cable broadband platform, so much so that I will ask my 
colleagues shortly to open a separate proceeding on this 
particular issue.  But I very much want to hear about that 
issue in the context of this particular transaction today.  
But I want to emphasize that this discussion on cable access 
should be a debate about means and not ends. 
		I think everybody agrees that the broadband 
platform should be an open platform.  So this is a question 
of how we get there.  Whether we get there through 
regulation and government intervention or whether there are 
market forces that will drive to an open platform.  Finally, 
I want to note that this is a public proceeding, and since 
my tenure here at the Commission, I have worked very, very 
hard to make sure that the debate over transactions like 
this is open and transparent and in full public view.  I 
believe it's imperative that the public get this chance to 
view our decisionmaking process, the kind of questions that 
we ask and to get all the details and implications of this 
particular transaction and to voice their own hopes and 
concerns about it. 
		Well, I look forward to today's proceedings, and I 
trust that all of the parties involved will do their best to 
assist us at the FCC in doing our job to make sure that the 
American consumer is well served.  Commissioner Ness?  
		COMMISSIONER NESS:  Thank you very much.  We're on 
the threshold of an extraordinary era.  Today's hearing 
provides the Commission with an invaluable opportunity to 
better comprehend the rapidly converging communications 
marketplace and the effect of these changes on the American 
public.  Mergers such as the one we will discuss today have 
the potential of fundamentally reshaping the communications 
landscape. 
		Public attention has been brought to this merger 
due to a couple of factors.  First, it's the largest merger 
before this Commission.  Indeed, one of the largest mergers 
in history.  This combination is significant in its scale.  
But the size of the transaction, while historic, need not 
itself lead to any intervention by the Commission.  Big is 
not necessarily bad, unless it leads to anticompetitive 
behavior harmful to industry or consumers. 
		Also, commenters have raised a plethora of 
intriguing topics related to the dynamic technologies and 
services provided by the merging parties.  These range from 
more traditional communications policy issues, such as cable 
carriage of broadcast signals and access to vertically 
integrated video programming providers, to relatively new 
issues such as interactive television and the 
inter-operability of instant messaging.  I believe our 
biggest challenge today is to maintain a disciplined focus 
as we digest the issues before us.  Given a marketplace in 
fundamental transition, we must exercise our jurisdiction 
and authority with great caution. 
		To that end, just as in any other transaction 
before us, we must ask the following questions:  Will the 
proposed transaction violate the Communications law and 
regulations, impair the Commission's ability to implement 
the Act or interfere with the objections -- objectives, 
rather, of statutes, over which Congress gave us 
stewardship?  Also, will the proposed transaction yield 
tangible and specific pubic interest benefits and will such 
benefits outweigh harms, if any, that are posed by the 
transaction?  
		A number of commenters have alleged that there are 
potential harms from the merger that will frustrate the 
Commission's ability to fulfil its statutory obligations.  
Among other things, some have identified potential harms 
relating to control of conduits, control of content and 
applications, and the web of interrelationships between 
providers or these infrastructures and services.  
		Each of these potential harms must be examined 
through the prism of our core communications policies, such 
as fostering competition among multiple broadband platforms 
and video providers, deployment of advanced services to all 
Americans, diversity of content, and product and service 
innovation.  And in each instance, we must ask ourselves 
whether the potential harms are caused by or exacerbated by 
the merger of these parties.  An issue does not implicate 
the fundamental concerns of the Commission, no matter how 
timely or interesting it might be, or is not merger-specific 
should not affect our decision whether to grant, condition 
or deny the merger application. 
		So the purpose of this hearing, like the other en 
banc hearings we have held in the past several years, is to 
hear directly from the parties and to provide an immediate 
opportunity for others to respond.  The decisions we render 
should be informed by the broadest possible understanding of 
the markets and the consumer interests at stake.  So I look 
forward to a very vigorous debate today, responsive to the 
issues by the parties and responsive to the issues of the 
American public.  And finally, whatever we decide to do in 
this proceeding, we should do so expeditiously.  We do not 
serve the public interest by prolonging the merger review 
process unnecessarily, thereby casting a pallor of 
uncertainty over an entire industry.  Thus, I'd urge us to 
complete our deliberations in a thoughtful but punctual 
manner.  Thank you very much. 
		CHAIRMAN KENNARD:  Thank you, Commissioner Ness.  
Commissioner Furchtgott-Roth. 
		COMMISSIONER FURCHTGOTT-ROTH:   Thank you, Mr. 
Chairman.  The parties before us today have submitted 
license transfer applications to the Commission.  Unlike 
tens of thousands of other license transfer applications 
that this agency reviews each year, this one has been 
singled out for heightened scrutiny and now, for the first 
time ever, a public en banc hearing.  I cannot support the 
Commission's review of the merging parties beyond their 
license transfers, for three reasons. 
		First, although the Commission purports to review 
the merger of AOL and Time Warner, it is in fact -- it in 
fact does not have the statutory authority to do so.  
Second, despite the unprecedented public hearing, the 
Commission's process lacks transparency.  And third, today's 
hearing serves no purpose other than to provide a forum for 
criticism of the merger and for the parties in turn to plead 
for this Commission's approval. 
		As I have stated before, the FCC does not possess 
statutory authority under the Communications Act to review 
the mergers or acquisitions of communications companies.  
Rather, the licensing provisions of the Act require the 
Commission to review applications for license transfers.  
Specifically, the Act merely directs the FCC to determine 
whether the transfer of licenses serves the public interest, 
convenience and necessity.  
		For tens of thousands of license transfers 
annually, that review is perfunctory.  Nothing in the Act 
grants the Commission jurisdiction to approve or disapprove 
mergers that consequently involve the transfer of licenses. 
 To be sure, the transfer of licenses is an important part 
of any merger, but it is simply not the same thing.
		A merger is a much larger and more complicated set 
of events than the transfer of FCC permits.  It includes, to 
name but a few, the passage of legal title for many assets, 
corporate restructuring, stock swaps and the consolidation 
of corporate headquarters and personnel.  Clearly, then, 
asking whether a particular license transfer would serve the 
public interest, convenience and necessity entails a 
significantly more limited focus than contemplating the 
industrywide effects of a merger between the transferee and 
the transferor. 
		Our inquiry should be limited to whether the 
proposed transferee has and will comply with applicable 
Commission regulations.  Our inquiry should not consider, 
for example, how the combination of the two companies might 
affect other competitors in the industry.  That is the 
responsibility of the federal antitrust agencies, the 
Department of Justice and the Federal Trade Commission.  
		Yet, as with past prominent companies who have 
filed for license transfers as a consequence of a merger, 
this Commission has used the highly visible nature of the 
parties here today as an excuse to expand the agency's 
jurisdiction to include merger review.  The Commission seems 
to believe that any matter or practice that occurs as a 
result of the merger is within its jurisdiction.  While many 
seem to accept this theory without much question, its logic 
leads to absurd results. 
		Surely not even the staunchest advocate of the 
Commission's authority would claim power to review AOL Time 
Warner's plans for new corporate headquarters at Columbus 
Circle, but this event is as important -- is an important 
part of the merger and is no more related to the use of the 
radio licenses at issue as the other issues that the 
Commission seems intent on reviewing.  At least I have not 
heard anyone draw a principled distinction among aspects of 
the merger if this is the subject of review, not the license 
transfers.  That would avoid this sort of ridiculous 
outcome. 
		The Commission's review of license transfers and, 
in conjunction, its unauthorized review of mergers, lacks 
transparency and consistency.  The Commission annually 
approves thousands of license transfers without any scrutiny 
or comment while others receive minimal review, and a select 
few are subjected to intense regulatory scrutiny.  Today, 
unfortunately for AOL and Time Warner, they are the first 
applicants required to expend time and money preparing for a 
public hearing before the full Commission. 
		This hearing illustrates the highly disparate 
level of review given to applicants that arise under 
identical statutory provisions.  This is problematic, 
because merging parties have no way of anticipating the 
scale of FCC review that will apply to them.  Regulated 
entities have little basis for knowing ex ante, how their 
applications will be treated, either procedurally or 
substantively.  The Commission's review of license transfers 
should not be arbitrary and discriminatory but, rather, 
uniform and predictably -- predictable. 
		Finally, I would like to emphasize that today's 
hearing is an entirely novel and unprecedented approach to 
the review of license transfers.  As far as I can tell, 
there is no justification for this event other than the fact 
that AOL and Time Warner are large and highly visible 
companies in the communications industry.  In all 
proceedings, the Commission notifies the public and receives 
written comments.  This proceeding has been no different.  
We have received abundant comments from the public, 
including from most of the witness' today. 
		And this proceeding has dragged on for six months, 
far too long.  Mr. Chairman, you could end this at our next 
public meeting next week.  You can invoke Section 5.D of the 
Communications Act, with the objective of rendering the 
final decision within three months -- it would only be three 
months late -- from the date of filing in all original 
application renewal and transfer cases.  This hearing does 
not add to our knowledge.  It is a public spectacle.  I hope 
that the witnesses and their comments today will answer the 
following four questions: 
		What specific authority does this Commission have 
to consider the issues you raise?  Second, if the answer is 
the public interest standard under Title III, how can this 
Commission apply a different public interest standard for 
AOL and Time Warner than it applies for any of the tens of 
thousands of other identical license transfer cases?  
		Third, if your issue is not the public interest 
standard, such as cable access, as the Chairman mentioned, 
why should the issue not be addressed through general 
rulemaking that would apply to the entire industry, rather 
than to just one firm within the industry?  And fourth, are 
the issues raised, such as anticompetitive behavior, being 
reviewed by another federal agency with clear statutory 
authority?  Thank you, Mr. Chairman.  I look forward to the 
testimony of the witnesses. 
		CHAIRMAN KENNARD:  Thank you, Commissioner.  
Commissioner Powell. 
		COMMISSIONER POWELL:  Thank you, Mr. Chairman, and 
let me be the first also to welcome Mr. Case and Mr. Levin 
and all our other distinguished visitors and panelists from 
whom we will hear today, as well as members of the public a 
discussion and a debate about a matter of clear pubic 
importance.  
		Since its announcements, the proposed merger of 
America Online and Time Warner has assumed almost mythical 
proportions among regulatory, legislative and business 
circles, particularly here in Washington, and as a policy 
and analytical exercise, this transaction has proven to be 
irresistible both to those who applaud its promise and to 
those who fear the merged entity's potential power.  By 
seeking to combine some of the most unique and valuable 
assets in both the communications and content worlds, the 
parties have spread before policymakers, advocates, 
competitors and pundits a smorgasbord of tasty issues for us 
to sample or devour as we choose. 
		This merger is particularly challenging to review, 
not so much because of its formidable size but because of 
its novelty.  Normally, when the government reviews a 
merger, it focuses principally on existing products, 
services and markets.  It takes a snapshot, if you will.  
But here, we are faced with a merger that is born from a 
revolution that is in its infancy, and the merger's great 
promise and possible dangers rest principally in the future, 
a future that changes rapidly and often unpredictably. 
		It is very difficult to grasp the effect of this 
combination on consumers in markets that have barely emerged 
or have yet to be created at all.  Thus, the Commission will 
struggle mightily with how to deal with necessarily abstract 
issues and will face tough questions, as when to yield to 
the market's judgment and when to embark on a 
government-crafted solution.  In this vein, I would caution 
that identifying possible problems that result from this 
merger is not the same thing as having a workable regulatory 
solution. 
		We should keep squarely in mind that regulation 
imposes significant costs on producers and consumers.  Valid 
rules require valid and stable economized and technological 
assumptions that may be difficult to come by in this 
innovating space.  The hurdles of enforcement are 
substantial.  Additionally, we should recognize that 
regulatory intervention necessarily directs the course of a 
market and may distort it by diverting capital away from 
certain enterprises and towards others.  Whether this is 
wise in a burgeoning, rapidly changing, innovation-driven 
market is subject to debate and some questions.  
		Finally,  I think it's important to say a word 
about who we are and what we do.  It is important to 
emphasize that many of the interesting challenges, questions 
and concerns that might arise from this combination are not 
within the scope of our review, nor are we necessarily 
empowered to address any and all such questions.  Along 
these lines, I would repeat the caution of the Chairman and 
many of my colleagues in public statements that we do not 
regulate the Internet.
		While our authority does extend to much of the 
infrastructure that affects Internet service, we must react 
cautiously and perhaps even skeptically to invitations to 
intervene in matters that involve Internet content, products 
and services.  It is extremely important, then, that we 
focus on the matters that will inform our decision and not 
dawdle too long with issues that do not lend themselves to 
an FCC regulatory solution.  With that, I look forward to 
hearing from the panelists, and thank you for convening the 
hearing, Mr. Chairman. 
		CHAIRMAN KENNARD:  Thank you, Commissioner.  
Commissioner Tristani. 
		COMMISSIONER TRISTANI:   Before I go to the brunt 
of my remarks, I would like to thank you for holding this 
hearing.  I, for one, was an advocate of having an en banc 
hearing, because this merger has not only caught the 
attention of Washington, it has caught the attention of 
many, many citizens across this country.  It's something 
that I know we're all getting an unprecedented amount of e-
mail on, letters on, questions on, and this is one small way 
that Americans, that the public can have a sense of what 
happens in the halls of the FCC in Washington when these 
issues are concerned. 
		I'm delighted that the press is here, because I 
know this is getting good coverage, and I'm hoping that, in 
a future hearing, we'll have some kind of an interactive 
dialogue with the public.  We should have thought of that 
before.  Having said all of that, there is a procedural 
concern that I have, and that's that yesterday, this 
Commission announced over our Web page that in order to get 
into this room or to view this hearing at Commission, 
citizens would have to come at 8:00 in the morning, starting 
at 8:00 to get a ticket.  
		Now I know that was well-intentioned, because 
there were security concerns, there were concerns about we'd 
have overflow, but I think in the future, Mr. Chairman, that 
if we're going to limit or have different procedures in 
place, we need to let the public know with sufficient notice 
-- at least a week's advance -- because I have no clue if 
there are people that might have wanted to attend this 
hearing -- and I'm talking about American people, not our 
usual crowd of friends and lobbyists and attorneys -- that 
weren't able to come here because they had no clue that you 
had to use these special procedures that, frankly, Mr. 
Chairman, I didn't learn about till someone from the public 
called me and then brought them to my attention.  
		With that, today we will be hearing from the 
proponents and opponents of the AOL Time Warner merger.  
This proposed merger is not only one of the largest in 
United States history but combines the control of conduit 
and content in an unprecedented fashion, implicating issues 
that are at the core of our democracy.  It raises the 
specter of barriers to the free flow of information and the 
marketplace of ideas. 
		If the shelves in the marketplace of ideas are 
stocked by too few hands, a kind of digital imperialism may 
replace a well-informed citizenry.  In the face of this, the 
Commission's statutory authority and obligation is 
abundantly clear.  The public's interest must be advanced if 
this merger is to be approved.  When the proposal before us 
is viewed through the public interest lens, several 
significant concerns and questions arise.  I will highlight 
only a few here.  
		I am particularly concerned about the impact of 
this proposal on the diversity of voices and ideas.  I am 
also concerned that this merger may limit a consumer's 
choice regarding Internet service providers and/or cable 
delivery services.  One question is repeatedly raised.  Does 
the dominance over instant messaging by one corporation 
create impermissible barriers to competition and to the free 
exchange of ideas.  If the extent to which instant messaging 
has penetrated the online world is as great as the record 
indicates, can America afford to leave its ownership in the 
hands of a single entity whose fiduciary duty is to its 
shareholders and not to the public?
		Another persistent question is whether the 
Commission should address the issue of open access or wait 
for an industrywide proceeding.  These and other pressing 
questions will not be answered today, but we must answer 
them before we complete this merger review. 
		In closing, I am reminded of Winston Churchill's 
remarks during the battle of Britain.  When asked if 
Britain's goose was cooked, he remarked, "This isn't the 
end, this isn't even the beginning of the end.  It is 
perhaps the end of the beginning."  If parties are right, we 
are entering the digital century.  Maybe so.  
		Specious limitations on this Commission's 
authority to protect and advance the public interest belong 
in the last century.  Today marks a new beginning in our 
duty to protect the public interest through a review of 
mergers such as this one. 
		CHAIRMAN KENNARD:  Thank you, Commissioner 
Tristani.  Commissioner Tristani is right.  We have a legal 
obligation to make a public interest determination as to 
whether this particular transaction will serve the public 
interest, and that is why we're holding a public hearing -- 
so that the public can be involved in that determination.  
And I just wanted to note for the record that this hearing 
is not unprecedented.  Every major merger that's come before 
this agency, at least during my tenure, we've had an en 
banc, Commission level hearing like this, including Bell 
Atlantic, GTE, SBC Ameritech and AT&T TCI. 
		With that, I wanted to outline just a few of the 
housekeeping matters that we'll be addressing today --
		COMMISSIONER FURCHTGOTT-ROTH:  Mr. Chairman, I --
		CHAIRMAN KENNARD:  Certainly. 
		COMMISSIONER FURCHTGOTT-ROTH:  I just, I can't let 
that remark go without some clarification.  I'd be very 
grateful if you could submit for the record the dates and 
the minutes of those hearings that were held at the 
Commission level.  I don't recall being present at them.  
Perhaps others were. 
		CHAIRMAN KENNARD:  Well, I do recall you being 
present at them and asking some questions.  In fact, I 
remember your opening statement was very much like the 
opening statement that you just made, so, but I'd be happy 
to give you a tape of that meeting, in fact. 
		COMMISSIONER FURCHTGOTT-ROTH:   Meeting?  Was it 
singular?  Or were there one for each of these other major 
mergers, Mr. Chairman?  
		CHAIRMAN KENNARD:  As I recall, there was an en 
banc hearing that considered each of those mergers.  I don't 
think we need to belabor this point, but I would be happy to 
submit the record, not, the tape to you, not for the record 
in this proceeding but just for the record of, for the 
purpose of clarifying the point.  
		Are there any other remarks from the bench before 
we move on?  Hearing none, I just wanted to clarify some 
housekeeping matters before we go on so that everyone will 
know what to expect this afternoon.  We will have opening 
statements from representatives of the two applicants, who 
are seated here at the table now.  
		Then, we will have three other panels.  One will 
be a panel that will broadly put the merger in context, with 
two panelists.  And then, we will have two larger panels.  
One will address consumer perspectives, and the other will 
address industry perspectives on the transaction.  I'll ask 
all of our panelists to confine their remarks to five 
minutes, and we want to reserve some time for questioning 
from the bench after the panelists have had an opportunity 
to speak.  
		We have a very crowded agenda today, so we're 
going to have to be very, very disciplined about keeping 
this moving.  We have a timekeeper.  I'll ask all of our 
panelists to keep an eye on our timekeeper, who is our 
secretary, Magolly Sollis here at the Commission.  And 
please work with us here to that we can get through this, 
and everyone will have an opportunity to state their case.  
		With that, let's begin with our first panel.  It 
is the opening statements of the applicants before us, 
beginning with Steve Case, the chairman and CEO of America 
Online. 
		MR. CASE:  Good afternoon, Mr. Chairman and 
Commissioners and thank you for this opportunity to talk 
about the proposed merger of AOL and Time Warner.  As you 
all know, there has been a fair amount of discussion about 
what this merger will mean and a fair amount of 
misinformation.  So both Gerry and I have been look forward 
to coming here today to explain what we believe the merger 
will mean, not only for our companies but also for 
consumers. 
		We think, when you look at all the facts, you will 
conclude that the merger of AOL and Time Warner will benefit 
consumers and serve the public interest.  We are confident 
that together AOL and Time Warner will build a company that 
helps to take the Internet to the next level, connecting, 
informing and entertaining people around the world as never 
before and benefiting consumers in valuable new ways. 
		Just as important, we want to make clear that our 
commitments to consumer choice and competition will help 
lead our industries into the Internet century in a way we 
can all be proud of.  That's what the merger of AOL and Time 
Warner is really all about.  Helping to lead a second 
Internet revolution that reaches as many people as possible 
as quickly as possible and serves the public interest.  
There are three key reasons why we believe this. 
		One, we are confident that the proposed merger of 
AOL and Time Warner will drive the Internet's development, 
helping to spur a new era of innovation and robust 
competition.  Two, we are confident that our merger will 
help consumers make the most of that innovation, increasing 
their choices and enriching their lives.  And three, we are 
confident that our merger will help to build a truly global 
medium, leaving no community behind.  So let me go through 
each of these points and the principles that underlie them. 
		First, our merger would help to drive the 
development of the Internet.  I don't think I have to tell 
anybody in this room that the Internet is transforming the 
landscape of communications and media.  This transformation 
is evident in everything from the time people now spend 
online, the way it's really embedded now in their lives, to 
the way it's shaping our expectations of what media can and 
should be able to do. 
		And this is just the beginning.  Broadband and 
wireless connections, an ever-increasing array of devices to 
conveniently access the Internet anytime and anywhere, and 
the intersection of traditional and digital mediums are 
fueling a powerful new era of innovation.  It's consumers, 
not technology, that are driving these developments, and 
that's the way it should be, indeed, it has to be.  In this 
new environment, companies of every size will compete to 
bring consumers what they want when they want it at prices 
they can afford, and in ever more useful, convenient ways. 
		This cycle of competition and innovation has 
brought the Internet and both of our companies to where they 
are today.  And it's always benefitted consumers.  The next 
HBO, the next CNN, the next AOL, these are the kind of 
remarkable breakthrough innovations AOL Time Warner could 
create for consumers across a whole variety of platforms.  
And we have no doubt that our commitment to innovation would 
prompt our competitors to develop new and better offerings 
of their own. 
		One of our most recent innovations, AOL TV, is a 
good case in point.  By using open standards, this new 
interactive television service actually enables 
interactivity provided by any broadcaster.  AOL TV will be 
an enabling platform for broadcasters and programmers.  We 
have approached it in a way meant to benefit consumers, 
benefit content producers and benefit broadcasters. 
		As many of the people in this room know, 
interactive TV has not yet begun a widely used product.  
Broadcasters and programmers have little incentive to 
develop interactive content, because there's not an 
audience, and service providers have difficulty creating an 
audience without compelling interactive content.  The merger 
of AOL and Time Warner would go a long way towards ending 
this chicken and egg problem.  Built on open platforms, AOL 
TV can help to jump start an entirely new industry, with 
many competitors.  There are many other areas where we hope 
to spur innovation, such as finance, healthcare, 
telecommunications and online music.  
		With music, for example, we believe that AOL's 
experience in making interactive services easy and secure, 
combined with Time Warner's skill at providing music attuned 
to consumer tastes, will speed the advent of digital 
downloading that both protects artists and service providers 
for the benefit of consumers.  So let me be clear.  A 
combined AOL Time Warner will be able to stimulate even more 
innovation and competition, and consumers will be the 
winners.  
		The second point.  Our merger will further benefit 
consumers by increasing their choices.  In today's 
competitive environment, consumers know they have choices -- 
over 7,000 ISPs, millions of Web pages, and new ways of 
connecting to the Internet -- and consumers exercise that 
power every day.  That's what our AOL anywhere strategy is 
all about.  Making AOL available whenever and however 
consumers want it.  
		Beyond the Time Warner cable systems, AOL has 
already formed alliances with DSL, wireless, and satellite 
providers from Bell Atlantic and SBC to Sprint and Hughes.  
A combined AOL Time Warner could carry on these agreements 
and seek new opportunities to distribute our content and 
communications services on multiple platforms nationwide.  
And you can be assured that if and when other platforms are 
developed, AOL will want to be on those as well. 
		At AOL, we are also deeply committed to delivering 
access to a broad array of the best content available, 
regardless of who produces it.  This will be true in a post- 
merger world, just as it is true today.  It has been 
suggested that a combined AOL Time Warner might somehow 
favor our content over that of our competitors through 
caching or some other technical means.  So again, let me be 
very clear. 
		AOL has never done anything like that and we never 
under, because it would diminish our members' online 
experience.  For those same reasons, a combined AOL Time 
Warner would build on our companies' demonstrated commitment 
to open access.  Real progress has been made on this issue 
in the past couple years.  I have always been a believer in 
open access, and I'm proud of the role AOL has played in 
getting us, and increasingly the marketplace at large, to 
where we are today. 
		It is gratifying to see that most of the country's 
largest cable companies, including Time Warner and AT&T, are 
moving forward with open access policies and implementation 
plans.  On the day we announced our merger, we committed to 
open Time Warner's cable network for competition with 
multiple ISPs.  A month later, we took the next step, 
jointly releasing a memorandum of understanding that is the 
framework for delivering AOL and other ISPs over Time Warner 
cable. 
		As Gerry will talk about in a minute, we are 
increasingly optimistic about how soon we will have a 
multiple ISP environment on the Time Warner cable systems.  
We understand that the Commission will be taking an 
industrywide look at the open access issue, and we want to 
assure you that we will be continuing our own efforts to 
ensure that there really is real choice among ISPs as 
quickly as possible. 
		So again, let me be clear.  The cable systems in a 
combined AOL Time Warner will not discriminate against other 
ISP's on the basis of affiliation with us.  We are serious 
about our commitment to open access, because we know it is 
good for our business and good for consumers.   The same pro 
consumer attitude has guided our business practice on other 
products, like instant messaging.  This is probably the area 
where the most misinformation has been circulating, so I'd 
like to take a moment to set the record straight.  
		Let me start at the beginning.  We developed 
instant messaging technology and introduced it as a feature 
over a decade ago.  As our members realized the value of 
realtime online communication, they began asking to reach 
beyond the community of AOL members, so three years ago we 
made instant messaging freely available to all Internet 
users.  Today, we can clearly see the innovation that our 
decision helped to spur.  There are now more than 40 
companies, including Microsoft, Yahoo and AT&T that are 
providing their customers with similar features. 
		CHAIRMAN KENNARD:  Mr. Case, could you please wrap 
it up. 
		MR. CASE:  I don't have to tell anyone in this 
room that the challenge we all face now is to create server- 
to-server interoperability that allows users of all these 
different services to talk to each other seamlessly.  To 
that end, AOL has taken several steps forward.  Indeed, 
we've recently submitted to the IETF the only architectural 
plan for true interoperability, and we are committed to 
moving forward with interoperability. 
		It's a problem the industry has faced together 
before when standards for e-mail interoperability were 
devised, and we weren't even dealing then with the challenge 
of realtime communications, but we learned from that process 
that interoperability alone isn't enough.  We must also take 
steps to protect people's privacy and security.  This is 
especially true for AOL, where so many of our users are 
families and young people and, therefore, where the risk of 
privacy breaches and inappropriate spam are the greatest. 
		Let me again be very clear.  We are fully 
committed to working within our industry to create true 
server-to-server interoperability, but we are equally 
committed to protecting consumer privacy and security.  We 
have an opportunity to get it right this time, and we intend 
to make the most of that opportunity. 
		Finally -- and I'll wrap up --
		CHAIRMAN KENNARD:  I hope so. 
		MR. CASE:  Because this is an important one.  I 
think it's particularly important to you, Chairman.  We 
believe our merger gives us the opportunity and the 
responsibility to help extend the benefits of the Internet 
to every community around the world.  We all know that the 
future is about more than bytes or bandwidth.  It is about 
how we use new technology to improve people's lives. 
		In fact, nothing has been more crucial to this 
effort in terms of integrating our companies than our shared 
commitment to be a catalyst for meaningful change, not only 
in our companies and our industries but also in our 
communities locally and globally.  And there's no more 
urgent task before us than bridging the digital divide.  One 
of the things Gerry and I are most looking forward to do is 
joining our resources and sharing our ideas to expand 
digital opportunity to all communities.  
		We take this challenge seriously, not only as a 
company but also as individuals with a shared personal 
conviction that we must use our leadership to build a better 
world.  These are commitments that will drive and the 
principle that will guide a combined AOL Time Warner.  Our 
goal is to be able to look back on this time and say we 
helped create a medium that had a positive impact on 
people's lives, and that, we think, will most assuredly 
serve the public interest we are all committed to upholding. 
 Thank you.   
		CHAIRMAN KENNARD:  Thank you, Mr. Case.  Mr. 
Levin?  
		MR. LEVIN:  Chairman Kennard, Commissioners, last 
January when Steve and I announced this merger, it was with 
the vision of creating the first Internet-powered media and 
communications company.  In the short time since then, the 
velocity of technological change has continued to accelerate 
and only reinforces our confidence in the promise of this 
new venture.  From Time Warner's perspective, this merger 
represents a very logical step in our efforts to increase 
consumer choice in communication services and content, which 
we understand is the Commission's bedrock policy. 
		Expanding consumer choice is a part of who we are. 
 It's as basic to our corporate DNA as editorial 
independence and integrity has been to Henry Luce's Time, 
Inc., and Ted Turner's CNN.  Since HBO's debut 28 years ago, 
Time Warner has been a leader in overthrowing the paradigm 
that limited the public's programming choices to those 
selected by a triopoly of broadcast networks.  Our 
leadership in expanding consumer choice in the television 
marketplace has proven quite successful.  The new networks 
we've developed from CNN to TNT to the Cartoon Network have 
enriched people's options for more programming. 
		And the billions we've invested in our cable 
systems have dramatically enlarged the number of channels, 
not just from Time Warner but from a wide variety of 
sources.  This includes MSNBC and FOX, public affairs from 
CSPAN, innovative kids' television from Nickelodeon and 
Disney, ethnic and gender-focused programming from BET and 
Lifetime.  It also extends to Time Warner Cable's successful 
introduction of 24-hour local news services in a number of 
our systems. 
		And while we're proud of our role in breaking open 
the television universe, we also recognize that we've been 
one of the first to take advantage of digital technology to 
present revolutionary new options like high-speed 
interactive services, video on demand, telephony and data 
delivery.  Our early experiments going all the way back to 
Cube, in Columbus, Ohio, Quantum, in Queens, New York, 
presage our effort to establish the first fully interactive 
digital network in Orlando, Florida.  And over the past five 
years, we've invested more than $6 billion in the 
development and deployment of broadband architecture. 
		So 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 now see that, while we began with America's leadership, 
that leadership is already being challenged in Europe, Asia 
and Latin America.  And it was that shared understanding of 
the intense global competition that the Internet is spawning 
which helped give our initial conversations the sense of 
real urgency. 
		We also recognize the opportunity to create a 
company specially adapted to the uncharted terrain.  One 
that can offer consumers an astounding array of quality 
content from the widest selection of sources, along with Web 
features, services and communities that provide ease, 
convenience and personalization.  Let me be very particular 
to the Commission about the three things that we think you 
should focus on, which are the public benefits which flow 
from this 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, 
including news and lifestyle information on demand and 
interactive television, and this will help accelerate our 
competitors' efforts to innovate. 
		Second, by actively pursuing our 
marketplace-driven multiple ISP initiative, we'll ensure 
real consumer choice on our cable systems, but importantly 
provide a catalyst for other cable companies to follow suit. 
 And third, as we speed up deployment of broadband capacity, 
we will increase the consumers' appetite for broadband 
services and clearly hasten deployment across competing 
platforms, whether that's cable, DSL, wireless or satellite, 
which we believe is a critical FCC goal, pursuant to Section 
706 of the '96 Telecommunications Act. 
		The merger of Time Warner will be especially 
beneficial to bring the public real diversity of Internet 
service providers, and we are committed to making our 
services available on a nonexclusive basis over a 
multiplicity of platforms.  Our company will promote a 
competitive environment, which encourages all broadband 
platforms.  We will also carry out the initiative 
articulated in our memorandum of understanding.  
		This is what we've already done.  We've already 
moved to restructure our Road Runner partnership, thus 
enabling us to introduce multiple ISPs substantially in 
advance of the 18 months remaining on the Road Runner 
exclusivity.  In addition, we are negotiating with AOL and, 
importantly, with other ISPs, about providing high-speed 
Internet service.  And finally, in our Columbus, Ohio 
system, we have begun technical trials providing multiple 
ISP service.  And we've, therefore, taken our commitment 
from the ideal to the practical. 
		And by doing this, we've prompted other cable 
operators to modify their business plans to provide for 
multiple ISPs, and you can see already that in DSL, 
satellite and wireless, all these providers are accelerating 
their own deployment.  So, from the consumers' point of 
view, we're providing and stimulating more choice, better 
value and lower prices. 
		Finally, no medium in history has surpassed the 
wildly democratic potential of the Internet to break down 
the barriers to human communication or to overturn the 
limits on cross-cultural understanding and expand the 
educational and economic prerogatives of people everywhere, 
because the Internet, which cannot be controlled by any 
company or any government agency, is the technology of human 
freedom.  So it is our hope that we can bring about and 
stimulate this revolution, a hope I believe we hold in 
common with the Commission.  Thank you.
		CHAIRMAN KENNARD:  Thank you, Mr. Levin.  We'll 
now have a period for questioning from the Commissioners.  I 
had a couple of questions I want to begin with.  My first 
question is about the cable access issue.  It's one that we 
have been grappling with here at the Commission for about 
two years, and we have -- as I said in my opening remarks, 
we all believe in openness.  Obviously, it's been good for 
the Internet and it's important for the future of the 
Internet as we move to broadband, but thus far, we've heard 
a lot of good intentions.  
		We've seen some industry agreements, nonbinding 
industry agreements, I might add.  We've seen some technical 
trials.  But it's my belief that until we actually see an 
open access platform in cable broadband implemented where 
people can actually see it and touch it and feel it and the 
ISP community can actually get confidence that they'll have 
access to it, that there will continue to be a lot of 
skepticism on this issue, for good reason.  
		I would like to ask you, when can we expect to see 
this?  When can we expect to see an open access platform in 
cable broadband that will give us some confidence that this 
is really going to happen?  That the market is driving 
toward this. 
		MR. LEVIN:  Well, first of all, Mr. Chairman, we 
are trying to roll back the exclusivity bar to beginning 
multiple ISPs that was intrinsic in the Road Runner 
partnership, and we have begun that restructuring, and I am 
confident, although it requires the consent of all the 
parties, that we will achieve that so that we don't have to 
wait 18 months before we can actually begin.  And I would 
hope by the end of the year we will be able to do that.  
		Secondly, we are entering into 
multiple-affiliation agreements with third-party ISPs, and I 
expect shortly we will make the announcement about the first 
third-party affiliation agreement which, again, will confirm 
that marketplace template for the arrangement.  And finally, 
the trials that I've referred to are actually very important 
because up until now the ability to install and service 
high-speed Internet access has had to be proven in the 
marketplace.  And that activity, I think, has proceeded 
sufficiently so that we now have confidence.  
		And we have installed the first, what I'd call 
multiple-ISP router in Columbus, Ohio.  The trials have 
begun, and I'm optimistic that by the end of the year, we 
will also have in place the sufficient software to enable 
the multiple billing of ISPs.  The other thing I would say, 
Mr. Chairman, is that I do think the understanding that was 
signed between Time Warner and AOL is binding on us and, in 
fact, it made several breakthroughs that I think are quite 
significant.  And that's where our activity, I think, will 
lead the industry in several respects.  And we are now 
embedding those provisions into our affiliation agreements.
		MR. CASE:  If I could just add, I think, you know, 
from some of our previous discussions, that I share your 
passion about the importance of open access in terms of 
preserving the open character of the Internet, and also 
would share your skepticism that until it's actually 
happening, it sounds like a lot of promises.  But I would 
note that a year ago, when the Commission looked at this, 
the Commission concluded at that time that there was a 
reasonable probability of competition in broadband.  It 
wasn't just about cable.  DSL, satellite, wireless would 
emerge as alternatives.  And there was a reasonable 
probability that the marketplace would indeed work. 
		In the past year, I think there's a lot of 
evidence to suggest both premises were correct.  There is 
far more competition now in each of these other broadband 
technologies, billions of dollars now being invested to 
deploy DSL, experiments now being put in place to actually 
deliver video over DSL.  Just last week, Blockbuster 
announced an initiative to do just that with DSL and phone 
companies.  Satellite companies have done quite a bit, 
announcing ventures with other ISPs just in the last few 
weeks.  
		And venture capital is pouring into wireless 
technologies.  And also in the past year, the cable industry 
overall has gone from a position where they really weren't 
focused on open access to a position where, now, the 
majority of the companies are recognizing that it is 
something that's going to happen and it's better to happen 
sooner rather than later and it's in their business interest 
to get ISPs working on their platform, as opposed to a 
competing platform.  
		So in the past year, I think there's a lot of 
evidence to suggest that there are competing broadband 
technologies and the cable industry is moving towards open 
access.  And we recognize that people really are eager to 
see some definitive agreements and see some systems in 
place, and we're confident we'll be able to demonstrate that 
very shortly. 
		MR. LEVIN:  It really is the marketplace at work. 
 I just want to underscore.  This is not to satisfy a 
regulatory requirement.  The intense activity, particularly 
in DSL, both from marketing and the provision of services, 
is really extraordinary, and for a cable operator not to 
energetically move to provide consumer choice, the cable 
system will lose out in the marketplace.  That's very clear.
		CHAIRMAN KENNARD:  Well, I think that everyone in 
this room would hope that we have an environment sooner 
rather than later where we have multiple broadband platforms 
competing in the marketplace.  Cable, DSL, satellite, 
terrestrial wireless.  But what if our hopes aren't 
realized?  What if there are communities in America where 
their only choice for broadband will be the cable modem 
product?  Will people in those communities have confidence 
that the market will drive to an open access environment 
when there are no broadband competitors?  
		MR. LEVIN:  Well, I don't think factually that can 
occur because, first of all, with respect to the telephone 
system, which is universally available, DSL is being 
activated broadly.  And you can just see it in the marketing 
activity, so that in almost every community that certainly, 
we operate in, there is an intense DSL activity.  Secondly, 
satellite, which is universal, covers the entire geography 
of the United States, is now offering high-speed service and 
in fact is using either a telephone return path or, shortly, 
a satellite return path.  
		And finally, I would not underestimate the growth 
of wireless, because in fact, the ability to have -- and we 
see this happening already in Europe and in Asia -- the 
ability to have Internet access, including with impending 
3-G, to have broadband access on a portable device, is 
probably -- all you have to do is test the marketplace.  The 
highest infrastructure valuations today happen to be in the 
wireless area because of the opportunity for broadband 
wireless.  
		MR. CASE:  If I could just add that the -- we made 
a big investment in satellite, partly because it is the only 
way to ensure ubiquity in terms of the national footprint.  
We're working with Hughes on that project, and even with 
this merger will continue to work with them and others to 
develop all these different technologies, so I don't think 
the concern you have is likely to play out.  But if it does, 
if down the road you find that there really is only one 
broadband technology and the industry isn't moving 
forcefully enough to open it up, it would be appropriate for 
the Commissioner or others to look at that issue and put a 
national policy in place.  
		As it relates to this merger, these are the 
companies that are actually doing things about open access. 
 I think the steps we've taken should be applauded, and we 
really are committed to going from the concept stage to the 
reality stage, not just around cable broadband technology 
but also deploying other broadband technologies. 
		CHAIRMAN KENNARD:  Okay.  Well, it's, just so I 
understand what you're both saying.  Absent a competitive 
dynamic, absent pressure, competitive pressure from other 
broadband providers, I understand you to say that there may 
not be pressure for a market-driven incentive for the cable 
operator to open their, their broadband platform.  Is that 
right?  
		MR. LEVIN:  No, no, no.  I wouldn't, I wouldn't 
articulate it that way.  First of all, it is clear that 
there are going to be multiple broadband providers.  But as 
a matter of business development for the cable system, the 
importance of developing these new revenue streams, given 
the fact that the more traditional analog delivery of 
television signals, or indeed digital delivery of must-carry 
signals, has a certain ceiling on it in terms of its 
expansion.  
		The growth opportunities for the cable company 
really come about in, in the deployment of broadband, so I 
can say to you that our business plan, with or without the 
obvious competition, is to make the investment and actually 
to accelerate the investment in broadband deployment, and 
then the costs that are the variable costs that are 
necessary to deliver cable modems.  Again, I can't 
underscore enough that this is a business proposition that 
grows out of the next development, in this case, the 
development of the cable industry, both because of the 
competition and it makes intrinsic sense. 
		MR. CASE:  One other point to emphasize is that 
Time Warner has a significant cable presence, but only 12 
percent of households in the United States have Time Warner 
cable access, so 88 percent we need to reach, the national 
brand with the AOL service through other means.  So it is in 
our interest more than probably any company's interest to 
make sure all broadband technologies are open and 
competitive, easy to deploy and affordable.  It would be 
silly for us to focus just on the 12 percent when we have a 
national business and need to focus on 100 percent.  
		So it's in our interest as much as yours, maybe 
more in our interest, to work as forcefully as we can to 
establish arrangements with all the cable companies to 
deploy cable broadband, as well as all the DSL companies, 
satellite companies, wireless companies, so we really have a 
national footprint, with a tapestry of broadband solutions. 
		MR. LEVIN:  You know, history is instructive, 
because on the one hand, having cable has been very helpful 
in the creation of all of these services.  On the other 
hand, the history of our company, whether it's HBO, CNN or 
pay-per-view movies, is to work through cable, satellite and 
DSL -- any delivery system -- because that's in the nature 
of content, which should be delivered on every platform.  
		So there's nothing new about this concept of 
stimulating all of the delivery mechanisms, including the 
one that Steve Case referred to in an announcement of 
Blockbuster to use the Enron system and then, ultimately, 
DSL, to deliver, in effect, video on demand movies into the 
home.  And you don't see any cable mentioned in that 
release. 
		CHAIRMAN KENNARD:  Thank you both.  Other 
questions from the Bench.  Yes?  Certainly. 
		COMMISSIONER TRISTANI:  So what I'm hearing is it 
makes wonderful, eminent business sense to have open access. 
 I'm hearing that.  Can you tell me what your timetable is 
again?  Is it --
		MR. LEVIN:  Well, let me characterize it.  We have 
at our cable company -- just speaking on behalf of our cable 
company -- what's known as a multiple-ISP initiative.  And 
we have been -- and this has been true in the industry -- 
contractually precluded from beginning to have more than one 
ISP, because of an exclusivity provision in a partnership 
agreement as a result of a Justice Department mandate.  We 
are trying now to reform that so that we can remove the 
exclusivity bar.  Once we do that, we then turn to the 
technological capability. 
		So we have now installed the kind of router that's 
necessary and the software that's needed to distinguish 
among several ISPs for the consumer.  We are now doing that. 
 And finally, you need affiliation agreements and, as a 
matter of fact -- you know, maybe I should give my e-mail 
address -- any ISP that would like to come and negotiate 
with Time Warner Cable, we're open and ready, willing and 
able.
		COMMISSIONER TRISTANI:   But what's the timetable?
		MR. LEVIN:  Well, as I just said, our -- well --
		CHAIRMAN KENNARD:  What's the e-mail address?  
		MR. LEVIN:  GML --
		COMMISSIONER TRISTANI:  I'm not being flippant 
about the timetable.  I just want to have a sense of -- 
because I've heard maybe the end of the year, but could that 
mean --
		MR. LEVIN:  Well, but as I've indicated, there is 
a contractual bar right now.  I mean if you look at -- there 
is an exclusivity provision. 
		COMMISSIONER TRISTANI:  But you said those 
contracts could be reformed. 
		MR. LEVIN:  Yes, but it requires other parties to 
agree to do that. 
		COMMISSIONER TRISTANI:   So you can't tell me what 
a timetable is. 
		MR. LEVIN:  No, I, I remain quite confident that 
we can make that happen faster than anyone else in the 
industry, because there's another exclusivity provision that 
runs longer for Excite@Home.  I'm confident, but I can't 
warrant it today, but I'm confident in my ability to make 
this happen.  We've obviously already begun the process of 
restructuring.  And so that the first thing that will 
happen.
		Secondly, there will be affiliation agreements.  
You need an agreement with an ISP that sets the terms and 
conditions.  It's very similar to the terms we had in our 
MOU.  And I think I said earlier that there will be an 
announcement of an affiliation agreement shortly.  Finally, 
this is a, not a trivial technological activity and, 
frankly, that's the reason why the industry went slowly to 
see whether the modems would work, they could be installed, 
whether the service would be high speed, whether you could 
bill.  We now have confidence in that management capacity.  
		Now you need software, which hasn't existed 
before, with a router that enables you to address separate 
ISPs going into separate homes.  I'm confident that we will 
build that software.  Our company has a history of doing 
this.  We've done it.  We've done it before. 
		And that's why I'm highly optimistic.  But most of 
all, it is a business imperative.  It's built into our 
business plan.  Multiple ISPs are necessary for the revenue 
growth.  And besides, in every market that we're in, DSL is 
being marketed competitively to this concept. 
		MR. CASE:  If I could just add.  We, as I said in 
the opening remarks, we understand, probably better than 
anybody, the importance of open access and also understand 
the importance of demonstrating a real commitment to open 
access by having real deals with real unaffiliated ISPs that 
can be implemented in a real way, quickly.  And we recognize 
that that's an important issue to you.  It's also an 
important issue to us, because our credibility is on the 
line. 
		I have been arguing for open access for years, and 
I continue to believe open access is critically important.  
We just now have the wherewithal, we believe, to achieve 
that within Time Warner systems sooner than might have been 
thought, because of this restructuring of Road Runner.  And 
we also are optimistic that we can get other cable companies 
to embrace it.  
		So we need to demonstrate this quickly, and we 
will demonstrate this quickly.  Not just because we think 
open access is a good policy decision or that open access is 
a good business decision, but also because we recognize we 
have made a commitment and we're going to live up to that 
commitment. 
		COMMISSIONER NESS:  Following up on that, to what 
extent will you be limiting the number of ISPs that will be 
able to partake of your system?  
		MR. LEVIN:  Again, I'll repeat my invitation.  As 
we said in our agreement, we're not providing any limitation 
on either the number of ISPs or whether they are national, 
regional or local.
		COMMISSIONER NESS:  And to what extent will you be 
making the technology available to other cable systems so 
that others will be able to also open up their systems?  
		MR. LEVIN:  Well, we're -- we are not a technology 
company, in the sense that we make and sell technology, but 
anything that we've developed -- for example, the paradigm, 
the hybrid fiber coax architecture that is currently the 
industry standard was developed by the engineers at Time 
Warner Cable.  We actually won an Emmy for it.  And that 
template, that architecture has been made freely available. 
If -- the software that we'll be created -- what's necessary 
here is not the router, because the routers do exist.  
		What's necessary is software that hasn't been 
written, to distinguish that the traffic going through 
belongs to one ISP and not another and make sure that the 
bill goes to the proper place.  That software we will 
acquire from somebody, who will then be able to sell that 
software.  See, that's my point, that this innovation, it 
hasn't existed before, so we're the first ones to do it.  
		By making it happen, it then travels to other 
systems and, again, if it doesn't happen, you have, you 
know, the telephone companies constantly spending much more 
money on marketing in the marketplace.  So I think the short 
answer to your question is if it's developed for Time Warner 
Cable, then others would be able to use it.
		COMMISSIONER POWELL:   Let me just ask more 
pointedly.  By the terms of the Road Runner contract, does 
it have a natural expiration date and, if so, what is it?  
		MR. LEVIN:  It's the end of 2001.  December 31st, 
2001. 
		COMMISSIONER POWELL:   Okay.  So at the latest, 
pursuant to the Justice Department decree, is there a 
timetable that shortens that?  
		MR. LEVIN:  No.  I'm trying to be helpful and 
opportunistic.  No.  But what the Justice Department has 
said is that AT&T must divest its interest in Road Runner so 
that it isn't in both Excite@Home and Road Runner.  And 
frankly, what I'm saying to you is that I'm trying to take 
that mandate and turn it around so that that event becomes 
an event to restructure the ownership of the partnership, 
and while we are doing that, also remove exclusivity.  
		You know, it's something that is another 
indication of, you know, our commitment to want to make this 
happen.  Because the exclusivity on Excite@Home, I think, 
extends until the end of 2002.  So that's why, maybe, people 
have not been rushing to enter into affiliation agreements. 
 So that's why I'm trying to do that and, as I say, once we 
get an announcement out of a third-party affiliation 
agreement, I think that will encourage others also. 
		MR. CASE:  One other point in terms of the timing. 
 The Road Runner and @Home exclusivities also would impact 
AOL.  So, unless the Road Runner date is moved up, AOL will 
not be able to provide access over Time Warner Cable systems 
or any other systems, so clearly we have an interest in 
trying to restructure this, to accelerate the date that all 
ISPs -- AOL and other ISPs -- would have access. 
		MR. LEVIN:  I should -- it's fortunate that I'm 
accompanied by those who know better than I do -- the 
Justice Department decree does push for an earlier 
restructuring if that's possible, so there is an incentive  
there. 
		COMMISSIONER FURCHTGOTT-ROTH:  Would it place Time 
Warner systems at a competitive disadvantage is this 
Commission were to condition the license transfers in such a 
way that Time Warner systems had a different federal mandate 
for open access than other cable operators had?  
		MR. LEVIN:  Yes.  Certainly the answer to that is 
yes.  
		CHAIRMAN KENNARD:  Commissioner Powell, did you 
have something?  
		COMMISSIONER POWELL:   It was going to be a 
question, but I'm going to make a comment, in the interest 
of time.  I've read through many, many of your testimonies 
and your presentations, and on many of these issues that are 
of some concern by other commentators -- commitments to 
multiple platforms, open access to ISPs, the commitment not 
to leverage content distribution systems, not to favor your 
own content through caching and primary screens, no attempt 
to leverage the AOL-AT&T linkage -- often conclude with, 
"Trust me, we won't."  
		And one of the central criticisms of the opponents 
is that, why should you?  And I would concede that in a 
market in which we don't necessarily know how things will 
evolve, there may be room for "trusting you," but I thought 
I would represent some things that concern me.  One of the 
best indicators of that is historical performance.  
		And it seems to me that -- I look at things like 
the high-profile case in which time Warner was stripping the 
vertical blinking interval for an EPG.  I look at the fact 
that some fairly heavy-handed tactics by local franchising 
authorities of Time Warner's and SBC's region on DSL.  I 
look at over a year ago some of AOL's public promises on 
open Internet messaging services that have still yet to be 
fulfilled.  I'm not personally criticizing those choices.  
There may be rationales for them, and they both all may be 
things not even within the scope of our authority but, 
nonetheless, they are historical backgrounds of credibility 
on the trust point.  
		And what I would like to emphasize is that I think 
it's very, very important that the companies, in proving 
their case, show why there are very powerful economic 
reasons, not just behavioral reasons, to pursue open models 
and not leverage content.  And Mr. Case, I think you made a 
good point about, you have to get on systems elsewhere, and 
I think that's the kind of argument we need to hear.  But I 
would add one refinement.  The key is, at what terms and 
conditions and prices?  
		And I think one of the concerns, or the anxieties 
raised are that the extreme ability you will have as a 
content provider may be able to allow you to trade off and 
dictate terms and conditions that are more favorable to you 
than others.  And I don't need a voluminous response to 
that.  But I just wanted to guide responses to the idea of 
demonstrating why, as a business matter and economic matter, 
these are the things we can expect to happen, as opposed to 
trust. 
		MR. LEVIN:  Well, the short answer is really that 
the, it's the consumer who makes these choices, and if we 
were ever to exclude, you know, whether it relates to EPG 
which is a subject that the Commission has under advisement, 
and we will carry -- whatever line the Commission draws, 
that's exactly what we will do.  But we'll carry anything 
and everything, because it's the consumer that is making the 
choice for navigation.  
		And the same thing applies to programming.  And 
that's really the history.  If you're not providing the 
programming or the material or the convenience that the 
consumer wants, it's very clear that the consumer can go 
elsewhere and, in fact, now that we're talking about the 
opportunity to go elsewhere on the Internet, there are all 
these distribution systems.  So the economic compulsion is 
really overwhelming to service the consumer.  
		Having said that, I have to also comment that I 
think that this company, these two companies and this new 
company is distinctive, not only because of its history, but 
the desire to want to serve the consumer, the public 
interest with a set of values that really count.  I think 
that's very important to us.  So that, yes, we are 
responsive to shareholders, but we're also responsive to the 
public interest.  Indeed, it's built into our charter.  That 
was the charter at Time, Inc., and it is at AOL, and it will 
be at the new company. 
		So, we have the best of all possible worlds.  We 
have the recognition that the consumer is making a choice, 
and you have a company that values its social commitment. 
		MR. CASE:  Let me just add that as I said in my 
opening remarks, there's a lot of misinformation flying 
around, and I think some of it was embedded in one of your 
premises regarding instant messaging in particular.  And I 
certainly take issue with that characterization.  I actually 
think our company has been a model for how to take a 
technology and open it up.  
		But as I said in my opening remarks, we invented 
this, actually 15 years ago.  Three years ago, we made it 
free so anybody could download the software for free or use 
it for free.  And then in the past year we've licensed it to 
more than a dozen companies on a royalty-free basis.  That's 
not something that Microsoft, for example, has done with 
Windows.  
		If the Justice Department, as their remedy in 
this, suggested that Windows should be put on the Web so 
anybody could download and use for free and license on a 
royalty-free basis to a dozen other companies, they would 
have been laughed out of Washington as a much too stringent 
remedy.  We did both of those things voluntarily and, 
additionally, have indicated our commitment to 
interoperability proposed to the IETF in architecture for 
server-to-server interoperability.  
		So I think we've done a lot to make sure that 
anybody can talk to anybody, nobody has to subscribe to AOL, 
you can use it for free if they want, if companies want to 
create their own interface, they're free to do that.  And if 
we can get agreement with these companies about server-to- 
server interoperability, we're ready, willing and able to do 
that.
		CHAIRMAN KENNARD:  Commissioner Ness and then 
Commissioner Tristani. 
		COMMISSIONER NESS:  A number of commenters have 
been very concerned about your ability, not just to 
discriminate in favor of your own product but, rather, 
potentially, to discriminate in favor of the product of 
other major players in exchange for benefits that you might 
receive from such relationships.  And it's been described as 
a colony of two 800-pound gorillas dancing, and thereby 
stomping a number of other smaller players who might want to 
be able to play in the marketplace.  Can you comment a 
little bit about these concerns that have been raised?  And 
I'm sure we'll be hearing them as the panels proceed. 
		MR. CASE:  Want me to start on that one?  I think 
people who make that claim do not understand what's happened 
on the Internet.  What's happened on the Internet is the 
blowing up of traditional barriers to entry, which is 
resulting in an unprecedented flood of competition and 
choice.  When I was growing up, the only thing I could watch 
on television and ABC, CBC, NBC and PBS.  Now, you've got 
dozens of stations in some markets, hundreds of stations in 
other markets, and millions of Web sites to choose from. 
		So this notion that people are constrained in 
choice is a little silly.  What's happening is unprecedented 
choice, and we're trying to stimulate more choice on 
television.  We, you know, some say, well, you should worry 
about these guys because they're potential monopolists.  
		Actually, if those companies are worried about us, 
it's because we're populists, trying to take the Internet 
model to television, and instead of consumers going home and 
turning on the television and watching what the networks 
want when they want, they want to work like the Internet 
where they choose to go where they want, do what they want, 
when they want.  So we want to take that Internet model, 
which is a model of competition and choice, and bring it to 
television.  It's not surprising to me that some companies 
would rather protect the status quo.  Consumers want the 
Internet model on top of television.  
		COMMISSIONER NESS:  The expectation, however, is, 
for example, you'd have major cable companies exchanging 
benefits with each other to the detriment of others who do 
not have cable facilities.  Cable still remains, in most 
areas of the country, as a major bottleneck provider.  Can 
you comment further on that?  
		MR. LEVIN:  I don't think that the cable companies 
are working together with other cable companies in any way. 
 As a matter of fact, I think the history of the cable 
industry is in fact what Steve Case has just indicated is 
now being carried out on the Internet.  And that's 
deconstructing the establishment.  That's really always been 
the history, providing more services that were not otherwise 
available.  
		We used to have this very narrow aperture through 
which programming can pass.  And in fact, each, as each day 
goes by, there are more services that are being created.  
And frankly, when we, when I look at the conventions coming 
up, the political conventions, I think it's time to 
recognize that the public interest, convenience and 
necessity has now shifted from broadcast licensees to the 
cable industry and the Internet industry, because who's 
going to carry, on a 24-hour basis, everything that's 
happening in, you know, two of the most important political 
events so it's available on an interactive basis to all 
Americans?  It's coming from all the cable networks, it's 
coming from CSPAN, it's coming from local cable news 
services, it's coming from all the Internet services.  It's 
the most exciting thing to happen.  It's not coming from the 
broadcast licensees.  
		So in fact, I think it's time to recognize that in 
fact the net effect of creating more capacity, which is what 
cable has done and what the Internet now explodes on an 
infinite basis, is providing more choice and more 
opportunity for independent programmers.  The last thing I 
would say is a lot of the comments we're hearing seem to 
belie the other proceeding that we're involved in, which is 
at the FTC, examining the antitrust issues.  The issue here 
is not to protect competitors but to stimulate competition. 
 And I think that's what all this technology is designed to 
do. 
		MR. CASE:  I also would add that there's a big 
distinction between television of the past and how you think 
about it and limited channel capacity and whose gets 
carriage, essentially, and the Internet model, which, 
essentially, everybody gets access, everybody gets carriage. 
 And certainly on AOL, people can go wherever they want 
whenever they want, and this notion that we would somehow 
block the Yahoo domain or somehow slow it down is 
ridiculous.  We, we've never done that, we never would do 
that.  
		The reason is if we did that, our members would 
quit, because they don't want a constrained Internet.  They 
want an open Internet, and that's what they get from AOL.  
If we tried to do some of the things that some of the people 
are suggesting, it would be harmful to our business. 
		MR. LEVIN:  If I could just go back to, again, the 
difference between the marketplace and a regulatory 
requirement.  The concept of high-definition television, 
which we've been working on for many, many years.  There's 
more activity taking place by Home Box Office, which is not 
a regulated licensee in that sense, than by any broadcaster. 
 And the reason for that is the picture quality is 
exquisite, and it makes a lot of sense from a kind of a 
competitive advantage.  
		So that's a marketplace desire.  It's part of the 
history of innovation, and I think that needs to be 
acknowledged, because that's what's driving so much of all 
of these new services. 
		CHAIRMAN KENNARD:  Commissioner Tristani, and then 
we're going to have to wrap up this first panel. 
		COMMISSIONER TRISTANI:  I have here a four-page e-
mail that I received from a Joel Payne from Massachusetts.  
And I told you I got lots of e-mails about this merger, and 
most of them are, like, two paragraphs, garden variety, deny 
the merger, they're too big, danger to democracy.  Mr. Payne 
goes into a bit more detail, but his main concern is instant 
messaging, and you must love the service, and I commend you. 
 If you invented it, it sounds marvelous, and I'm going to 
check it out. 
		But his concern -- well, first of all, he wants, 
wants us to deny the merger, but he said, if you do allow 
it, make sure instant messaging is interoperable and that 
everybody can have it.  I hear you saying that you're 
already taking a lot of steps to do that but, aside from Mr. 
Payne's e-mail, a lot of our commenters have said that for 
about 18 months, AOL has said a lot but done too little in 
this area.
		And I hear that you're committed to doing this, 
but how strong can your commitment be?  I mean, can you say 
this is something that absolutely must be done?  And I'll 
tell you what drives his concern.  I didn't know much about 
instant messaging until I got this e-mail and started 
thinking about it, but if it's as good as it sounds, I can 
see a lot of people who are going to say, I'm not going to 
get any other system that can't use it, and we may end with 
the one system that has it, and --
		MR. CASE:  Well, I understand the concern.  Again, 
I'll just try to reiterate some of the facts, that we did 
open it up and make it freely available, that issue three 
years ago.
		COMMISSIONER TRISTANI:  Well, but let me ask you, 
does that mean that everybody that's on the Internet can 
have it?  
		MR. CASE:  Yes.  Yes.  For free.  That three years 
-- up until three years ago --
		COMMISSIONER TRISTANI:  So I can have it?  
		MR. CASE:  The only way to get instant messaging 
was to pay us a monthly fee, because it was part of our 
service.  And we said, well, that's a benefit and, indeed, 
may attract and keep members.  Wouldn't it be better for us 
to open it up for anybody --
		COMMISSIONER TRISTANI:  So how would I go about 
getting it for my provider?  
		MR. CASE:  Go to AOL.com and you can download AOL 
instant messenger for free, whether you're using Mindspring 
or Earthlink or the Microsoft Network or any provider.  It 
doesn't cost you anything to download.  It doesn't cost you 
anything to use it.  
		COMMISSIONER TRISTANI:  And I can, I can put it in 
my system?  
		MR. CASE:  Yeah, absolutely.  Or you can download 
it from many other companies like Lycos and Apple and Novel 
and Lotus, their own customized versions using the same 
technology. 
		COMMISSIONER TRISTANI:  So how come there's been 
so much e-mail like this?  
		MR. CASE:  Because there's a merger pending and 
there's an opportunity, and people like to focus on issues. 
		COMMISSIONER TRISTANI:  It is as easy and simple 
as doing that?  You know, I don't really know --
		MR. CASE:  Well, I welcome you to download it 
tonight and see it for yourself.  I would also add, I would 
also add that what's happened in instant messaging is 
competition.  There are some pretty big companies, including 
Microsoft, who have entered the market.  Microsoft launched 
their messenger services less than a year ago.  Last week, 
announced they 18 million users of it.  So this is a market 
that we're hardly monopolizing.  There are many, many, 
companies --
		COMMISSIONER TRISTANI:  But let me ask you 
something.  If, let me get back, because you've gone into 
another issue.  But if I don't want to go through the 
trouble -- and you say it's real easy, but I'm not 
technology-savvy, and I'd suspect a lot of Americans my age 
are not either -- if I don't want to go through the trouble 
of having to do that, what's wrong with there being an open 
system, where I don't have to do that?  
		MR. CASE:  There is nothing wrong with it.  That's 
what we're working toward. 
		COMMISSIONER TRISTANI:  Particularly when there 
are 23 million subscribers who, you know, who are probably 
my buddies. 
		MR. CASE:  The issue right now is anybody can use 
our instant messaging system for free.  Nobody has to pay us 
anything. 
		COMMISSIONER TRISTANI:  But you're not answering 
my question.  Why couldn't there be an --
		MR. CASE:  No.  I'm about to answer your question. 
 Anybody can use any of the messaging systems of any of the 
dozens of companies, pretty significant companies, Lotus and 
Apple and Lycos, and so forth, that have their own 
customized versions of this.  What we're trying to now do is 
server-to-server interoperability so you can download some 
other system and the servers talk to each other in a way 
that protects the privacy and security and prevents spam and 
pornography and things like that. 
		COMMISSIONER TRISTANI:  Which is back to --
		MR. CASE:  That requires a technical architecture, 
which we have submitted to the IETF, which companies are now 
able to comment on. 
		COMMISSIONER TRISTANI:  When did you submit that?
		MR. CASE:  About a month ago. 
		COMMISSIONER TRISTANI:  About a month ago?  
Because I think we got into another issue.  Yeah, you can do 
it eventually, but the idea is since this is such a 
wonderful --
		MR. CASE:  Well, to be honest, this is an issue 
which troubles me, because I think if today we were sitting 
here with a huge market share in instant messaging and the 
only way to get instant messaging was to pay AOL a monthly 
fee, and people said, you know, maybe, because instant 
messaging is becoming more important, maybe this company 
should actually make it available to other companies on some 
kind of license basis, I think nobody would have 
hypothesized that an appropriate, fair thing to do would be 
require us to give it away free to consumers and license it 
on a royalty-free basis to companies.  I think that would be 
viewed as overreaching, just as I think that would be viewed 
as overreaching if the government thought that, you know, 
the way to deal with the Microsoft issue was to basically 
put the Windows on the Web -- anybody could download it for 
free and any company could modify it and use it for free.  
		But we did both of those things voluntarily, and 
now we're going an extra step and trying to work with the 
Internet standards body, IETF, to promote server-to-server 
interoperability that will allow anybody to talk to anybody 
using any system in a way that protects privacy and avoids 
spam and a lot of other problems that could emerge.  I think 
we should be applauded for what we've done. 
		CHAIRMAN KENNARD:  We'll have some more discussion 
on instant messages.  Commissioner Powell, you'll have to 
have the last comment, because we --
		COMMISSIONER POWELL:  I just want to, again, try 
to make sure we sharpen these concerns.  I applaud and am 
more impressed by the second half of your answer, but I want 
to say something about the first.  It is classic information 
industry network effect to give product away in order to 
build and install base to substantial levels, and only then, 
when you have substantial customer bases, to then 
potentially try to develop new and more value-added services 
from which the revenue comes. 
		I'm sure I wouldn't ask you nor would you want to 
commit that any and all services that would be generally 
categorized as instant messaging will stay free forever.  
For example --
		MR. CASE:  I think it's highly likely they will 
stay free forever.  It hasn't in industry, but we have no 
plans to change that.  We believe instant messaging is a 
feature, not a business, and we want to make that feature 
broadly available. 
		COMMISSIONER POWELL:  Well, it would be one thing 
if it's, if you're going to make some representation it will 
stay free forever, but we expect, and I think that we would 
applaud, that there'll be development of innovations using 
that technology, for example, net-to-phone functionality for 
voice services will then offer, I think as it is on AOL, for 
a cent a minute or two cents a minute, there are service 
relationships and fees associated with those services.  And 
I think those are good things, but those are not free 
things, and a free thing can be a leverage to things that 
ultimately produce revenue.  
		And I just want to emphasize that that's part of 
the concern, and I don't, again, I don't think that it means 
it's wrong, but it, but it means that I think it's important 
in the responses to be focused on to what degree --
		MR. CASE:  Well, if I could just quickly respond. 
I understand the network dynamic, and I would just add that, 
as I said before, Microsoft launched a messaging service 10 
months ago and now has 18 million users, so it hardly 
suggests that somehow the network effects in this particular 
feature are such that it's somehow impeding competition.  I 
think competition is robust.  I think Microsoft is going to 
integrate, unless the government doesn't allow them to, that 
messaging service in the operating system and will have far 
more than 18 million customers a year from now.  So it's a 
vibrant, competitive market. 
		CHAIRMAN KENNARD:  Thank you very much for your 
testimony, and we'll invite the next panel to come up, which 
is Esther Dyson and Barry Nalebuff.  Thank you.  While 
people are coming up for this next panel, I'd like to ask 
everyone here to please turn their cell phones off.  This is 
the FCC.  We love cell phones but not in our open meetings, 
so please turn them off.  We're very pleased to have our 
next two panelists, Esther Dyson and Barry Nalebuff, and 
I'll remind you to please confine your presentation to five 
minutes so we can have some time for a free interchange with 
you.  Esther?  
		MS. DYSON:   Thank you very much, Chairman and 
Commissioners.  I'm glad to be here.  I'm neither an 
economist nor a lawyer, so I am generally going to try and 
set some perspective from the viewpoint of a longtime 
industry observer, a venture capitalist and someone who's 
intimately involved with some of the policy issues for the 
Internet's infrastructure.  
		I'd like to start out by saying that I think these 
hearings are tremendously important and useful.  The Federal 
Communications Commission may have some very specific things 
it can and cannot do, but the role of government is not 
simply to either interfere or let things move forward 
without interfering.  It is to educate the citizenry 
broadly, to educate the press, the consumers.  I think what 
we want here is neither federal regulation nor is it 
self-regulation.  It is regulation by the marketplace. 
		And in order for that to happen, the marketplace 
has to be informed.  Consumers may have a lot of choice, but 
if they don't know what those choices are, if they aren't 
aware of them, they won't be able to exercise them.  So I 
want to say from the start, even though I do believe this 
merger should go forward, I think these hearings are an 
important part of the process of what the government should 
be doing.  And with that, I'd like to talk in my remaining 
three minutes about the marketplace and a little bit about 
the government's role. 
		This market is changing incredibly rapidly, and I 
don't think the Federal Communications Commission or Time 
Warner or AOL or I or anybody here could really figure out 
what is going to happen, but it's clear to me that the way 
people are looking at this market now seems to be missing a 
number of very interesting phenomena.  Nobody here today has 
mentioned Napster or Gnutella.  
		This whole -- we're talking about the content 
business as if the business of eating were entirely Lutess 
and perhaps McDonald's.  But there's a huge amount of home 
cooking going on.  And AOL built its business by providing 
its users access to each other more than it did by providing 
content.  It is now heavily reliant on commerce.  Content is 
almost -- it's like the beer you serve in a bar, but what 
you're really selling is the ambience -- the bartender, the 
other people in the bar.  And to look only at content is to 
miss the point.  
		We're looking today also at access.  We're, again 
there's going to be huge amounts of competition from various 
other players.  This has been gone into at length.  But 
another part to mention is the whole billing relationship 
with the customer.  That's, that's what AOL has now, to some 
extent.  It sells access to these consumers for purposes of 
e-commerce.  And in that way, it's going to be competing 
with banks, with utilities, with Amazon.com. 
		The real key is to have that customer 
relationship, and here I would like to disagree or at least 
point out something that I think was missed.  Through AOL 
you can indeed get to all these other Internet sites, and 
they would be incredibly stupid to try and block access.  
But they do provide links.  They have favored marketing 
partners, for which they are paid.  And that's part of what 
the issue is here today. 
		How much choice does the consumer have and know 
about?  How easy is it?  At what point does making things 
incredibly convenient for the consumer limit the consumer's 
choice because he doesn't know about what else is out there? 
 And that's why I think consumer education is tremendously 
important.  In that context, then, the role of the 
government, I think, should be to let this go forward but to 
raise concerns -- to say this is what we're going to be 
watching for.  
		Some people will say, well, that's unpredictable 
and arbitrary and the government should stick to its 
knitting and simply implement the laws, but this is a 
fast-changing market.  There are concerns.  There are 
concerns about things like instant messaging and, yes, AOL 
is starting to do the right thing, but I would hardly say 
it's voluntary.  I would say it's in response to consumer 
and political pressure.  And God bless it.  I like to see 
that happen.  And I see hearings like this as part of that 
whole process. 
		Finally, there is indeed all the issues of open 
access,  and Barry's going to talk about this, but let me 
just end by saying open access is not just a matter of 
principle, it's a matter of pricing.  And so, watching those 
contracts and the terms of those contracts is indeed an 
important function.  Thank you very much. 
		CHAIRMAN KENNARD:  Thank you very much.  Dr. 
Nalebuff. 
		MR. NALEBUFF:  Chairman, Commissioners, many 
people here, myself included, are trying to understand the 
future of the Internet, its impact on our lives and the 
economy and how this proposed merger will change the course 
of history.  Yes, actually I think the stakes are that big. 
 And at the same time, I think that predicting the future of 
the digital economy is actually hopeless.  In fact, given 
the flux of the environment today, I would be more than 
content to predict where we are today.  
		So that leaves us in a predicament.  The stakes 
are high and our knowledge is low.  In this type of an 
environment, how do we best set policy?  My answer here is 
simple.  Keep a level playing field so that the best man, 
woman, technology company may win.  This one single rule 
should be what guides any policy prescription. 
		Now, of course that's easier said than done.  What 
is the field?  Is it home?  Work?  Mobile?  What is level?  
Do we want to emphasize levelness within a technology, and 
thereby promote intersystem competition?  Or emphasize 
levelness across technologies, and thereby promote 
intersystem competition?  We certainly don't want to create 
equality by bringing everyone to the lowest level.  And the 
current environment is decidedly unlevel.  
		While phone and cable technologies are converging, 
the regulatory environments have not.  There are open access 
requirements on DSL that do not exist for cable.  Do we 
relax requirements on DSL?  Create requirements for cable?  
Try to find some middle ground?  Or simply rely on 
competition to sort things out?  
		I think that creating a level playing field for 
open access will be your most challenging problem, and that 
is where I will focus my remarks.  I believe that it is in 
the self-interest of Time Warner AOL to provide access to 
their system and that this is in line with their public 
statements.  The question is at what price and with what 
terms?  
		The bundling of a cable modem pipe and an ISP is 
not all that different than bundling an operating system and 
a network browser.  The ability to sell a package of 
complementary goods and services as a bundle offers the 
bundler a tremendous advantage in the marketplace.  By 
"complementary," I mean goods that enhance each other's 
values, as in hardware and software, hamburgers and french 
fries or, in this case, broadband cable pipes, ISPs and 
content. 
		What's interesting here is that the advantage of 
the bundler comes from being able to offer a lower -- not 
higher, but lower price.  And this is now where you see my 
role as a theorist come into play.  When two separate firms 
get together to coordinate their pricing of complementary 
products, such as A and B, the monopoly price is lower than 
the result with uncoordinated pricing.  The intuition is 
that when the price of A falls, that helps expand the market 
and part of those gains go to B.  Unless the sellers of A 
and B work together, they won't fully recognize those gains, 
and thus the price will be too high. 
		This is in direct contrast to when firms 
coordinate the price of substitutes or competing products, 
and thereby raise the price.  When firms coordinate the 
price of complements, the price goes down.  Thus, at first 
glance both the firms and the consumers are better off.  The 
only reason that you may be wish to be concerned is that 
those who don't or who can't bundle are left at a big 
disadvantage and over time that may change the nature of 
competition. 
		Bundling is neither win-win nor win-lose.  It's 
win-win-lose.  A win for the bundler, a win for consumers 
today, and a lose for those who are excluded from the 
bundle.  This brings us back to the issue of a level playing 
field.  Do you want to help keep the level field -- the 
playing field level for players who are left out of the 
bundle?  What does the FCC want to do for players who, like 
AOL just a few months ago, are worried they'll have no one 
to dance with?  
		If all consumers could choose between competing 
bundles for broadband, this wouldn't be a concern.  In many 
places, competition does exist, from DSL bundles, from RCN 
second cable line, from wireless, cable and satellites.  I 
expect that third generation mobile wireless technology will 
really solve this issue, but we are not there yet.  
Therefore, the question is whether or not to level the 
playing field by giving other ISP and content providers 
access to the Time Warner AOL bundle.  
		I don't wish to regulate how the elements of a 
bundle should be prices when broken up into its components. 
 The resulting arguments over setting those prices would be 
a lose-lose game.  But we do have the advantage of AOL 
selling dial-up service and content as an add-on to those 
with Internet access.  
		That leads me to ask whether the price they set 
for those two services, whatever they choose, might be a 
useful proxy for how much to discount the cable bundle when 
offering their cable pipeline services to other players.  In 
particular, I think the discount should be at least the 
bring-your-own-access price, currently $9.95, plus some 
fraction of the extra price for dial-up service, currently 
$12.00 -- to get to the $21.95 price -- reflecting the basic 
ISP services.
		My final point is that there's another subtle 
example where the playing field today seems tilted.  And 
it's a problem I think you should be concerned about, and 
it's something, actually, we heard again and again in Mr. 
Levin's testimony.  This proposed merger is what has caught 
your eye, but practically every single issue that you will 
talk about today could also arise as a result of contracts, 
typically exclusive contracts.   And you've heard about the 
problems that have been created by the Road Runner contracts 
and the @Home contracts, many of which are trying to be 
undone today.  I believe that the FCC and other government 
agencies should be paying as close attention to these 
contracts as they do to merger agreements.  Thank you. 
		CHAIRMAN KENNARD:  Thank you.  Thank you both for 
that testimony.  It was wonderful testimony.  Let me follow 
up with a couple of questions, first for Dr. Nalebuff.  Is 
there a role in this future of telecommunications as you see 
it for anyone who doesn't or can't bundle?  Will we lose the 
unbundlers, if you will?  Or the unbundled companies. 
		MR. NALEBUFF:  If, in the end, there is enough 
competition in different types of platforms, the advantages 
of opening up those platforms to, if you'd like, single 
providers, I think will allow them to exist.  On the other 
hand, whether or not venture capitalists and the market will 
fund those companies in a world where they're not sure to 
get access is a question.  The fact that they do have access 
now on dial-up or in the case of DSL certainly is helpful.  
		I'm less worried, I guess, in a world in which you 
could have bundle against bundle competition.  But I think 
it is inevitable that people who are -- who don't have a 
bundle to offer will be at a disadvantage in the 
marketplace. 
		CHAIRMAN KENNARD:  Okay.  And let me -- I don't 
mean to characterize your testimony.  I'm really just trying 
to understand here.  Are you saying that in order to create 
that environment where someone who is not able to bundle its 
access to the platform, if you will, are you suggesting that 
requires some government intervention to make that happen?  
		MR. NALEBUFF:  I believe that they will certainly 
have access.  The question is at what terms and what price. 
 And moreover, I believe that if you required everything to 
be unbundled, actually prices would be higher, and adoption 
 would be slowed down and consumers would be worse off.  And 
so there is this tradeoff, if you'd like, between success 
today, penetration today and serving consumers today, and 
the ability of people to play going forward.  I don't have 
more of an answer, I guess, than that. 
		CHAIRMAN KENNARD:  Okay.  Fair enough.  Other 
questions?
		COMMISSIONER POWELL:  Yes.  Ms. Dyson, I was 
really quite intrigued by your, your observation that by the 
nature of this medium and this phenomenon itself, there's a 
certain really high value to being able to go where you 
want, when you want in the way that you want, and that there 
is an economic incentive to do that, and I think it's an 
important point.  And you pointed out that the more critical 
issue is favored status potentially, or links, or what 
consumers may not know about something. 
		I, too, used to be sort of more persuaded by that 
argument, but I wanted to probe with you something that at 
least modified my thinking about it.  I'm struck by the 
fact, in Internet space, that one's brand is, in fact, 
directions to their house.  That is, if I'm Commissioner 
Mike.com, that's not only who I am, that's where I live.  
And in advertising or raising the prominence of my brand, 
I'm also raising the prominence of how to find me. 
		And we could all go outside and sit on Independent 
Avenue and watch Metro buses go by with extraordinary 
amounts of dot com advertising.  Television revenues and ads 
last year increased dramatically by virtue of the increased 
advertising by dot com companies.  We tend to forget, I 
think, that reaching consumers about the possibility of 
sites or Web sites and access is not limited to whatever 
portal or medium accesses on the instrument itself.  
		And I have a hard time seeing the day when I see 
an ad for Gaps.Jeans.com that I want to go to and AOL won't 
let me get there and forces me to go to Levis.  We're going 
to have a very nasty conversation very quickly.  And could 
you sort of comment on that phenomenon and whether that 
mitigates that concern to some degree. 
		MS. DYSON:  Well, I'm not sure whether I agree 
with you or disagree with you.  I, the point I was trying to 
make is, though, even though you can type in GapJeans.com, 
and people will, and you can also go to a search engine, you 
are, when you get to, for example, the AOL site, there's 
going to be a link that says come to such and such a place. 
 There are going to be ads, and you can follow those links. 
 That happens a lot as opposed to people typing stuff in.  
		And at the same time, there is a new generation, 
which unfortunately is not testifying, at least not so far 
as I know, which is 22-year-olds, who are much more 
comfortable with the medium, are used to using search 
engines and floating around and so forth, but there is, 
there is a challenge to have you get onto that piece of 
prime real estate, which is whatever the consumer sees when 
he first logs on, whether it's the AOL home page or -- a 
depressingly small number of people pick their own home 
page, which is not that of their primary provider. 
		So the issue is making sure that at least those 
contracts are disclosed.  If I get linked to someplace, I 
should know that somebody paid something to have me go 
there.  That it wasn't that somebody thought it was simply 
the best place to buy jeans, but that they get 29 cents for 
every, every time I buy a jeans there.  
		It's becoming, for better or worse, a very 
mercenary world.  That's probably better than a world where 
people control things for political reasons, but it is very, 
very commercially driven. 
		COMMISSIONER POWELL:  I guess the point I was 
making is I'm concerned about the overstatement of the 
sophistication required for a user to get to something other 
than the favored link that the provider, by virtue of the 
bombardment and, by the way, often rich experiences of 
television advertisement, which people will say is the 
singly greatest mass marketization tool, advertising, 
newspapers, magazines, I mean everything is dot com.  My 
five-year-old thinks everything is dot com.  
		And I know that there's this youth component, but 
I'm not so sure that -- I guess I'm questioning that one's 
knowledge about what's available is really as sophisticated 
a function when there is this mass marketization of dot com 
addresses anyway. 
		MS. DYSON:  Again, I think there is this 
incredibly large commercial component, but people are also 
very much driven by their friends, and they -- the whole 
Napster, Gnutella phenomenon.  They go where it's not 
commercial.  And they understand that difference in a way 
that maybe the adults don't.  They know what's commercial 
and what's not and, of course, they understand people are 
going to be trying to advertise to them.  They, they're much 
more cynical than we are.  
		But those things exist.  And that was all I was 
trying to say.  I have a fair amount of faith in the 
consumer, but I also believe in the role of the press and 
government and everybody else in educating them about what's 
going on. 
		CHAIRMAN KENNARD:  Mr. Furchtgott-Roth?  
		COMMISSIONER FURCHTGOTT-ROTH:  I would 
particularly like to welcome our witnesses, and particularly 
Professor Nalebuff.  He and I were undergraduates together 
and sat through Professor Houseman's public finance course 
together.  I think I had the seat right behind him, and if 
I'd been more clever I would have perhaps copied from 
Professor Nalebuff's notes, because he was the star of the 
class.  And I think I may be one of the few people in the 
audience today who actually understood everything professor 
Nalebuff had to say. 
		I particularly want to ask you, Professor 
Nalebuff, about the following situation, and this gets to a 
level playing field.  Most of the issues that have been 
raised today potentially come under the rubric of potential 
anticompetitive behavior.  The merger, at large, as opposed 
to license transfers -- the merger, at large, is being 
reviewed by the Federal Trade Commission.  If the 
circumstances had been slightly altered, if perhaps the 
market valuation of the companies at the time of the 
acquisition had been slightly different, it might well have 
been the case that Time Warner had acquired AOL, in which 
case this hearing would not take place, because this agency 
would have no license transfers to review, there would have 
been no application for license transfers to come to the 
FCC. 
		There are two situations.  You might even describe 
them, as an economist, as two games that might be followed. 
 One, in which -- and two entities come before one antitrust 
authority.  And I wonder if you could comment first on 
whether any and all the issues that have been raised today 
will in fact be reviewed by the Federal Trade Commission in 
their antitrust review.  And second, whether the outcome of 
a single -- the review by a single antitrust agency is 
likely to be different from a review by multiple antitrust 
agencies. 
		MR. NALEBUFF:  I have to say that you have 
obviously picked up on the -- quite rightly that many of the 
issues here are as much competition policy and antitrust as 
they are communication policy.  I am also in Esther's camp 
in the sense of getting companies to talk about what their 
policies will be, establishing track records, getting this 
out in the open, I think will actually solve many of the 
concerns that people are, people have.  
		Take one specific case.  I think it is possible 
for cable operators to control and limit possibly access 
through their pipes.  That if they decided that they didn't 
want Napster, no matter who your ISP is, it's possible they 
could block that.  I think, in the end, they're not going to 
do it.  I think that there will be a public discussion about 
this point and, as a result, if people thought that this was 
one of the things that they would go ahead and do, the 
clamor against that would actually prevent it from 
happening. 
		So my view is that, like Esther's, that the 
process of getting people to talk about their plans for the 
future and the kind of commitments that they intend to make, 
the type contracts, is actually a good substitute in this 
case for regulation.  And if they do that once or if they do 
that twice, I don't think it hurts.  And that's my take.
		CHAIRMAN KENNARD:  Sounds like a good endorsement 
for this hearing.  Any other questions from the bench?  
Commissioner Tristani. 
		COMMISSIONER TRISTANI:  I wanted to follow up, 
professor, on your comment about contracts, which you made 
in your statement and you've just made now when you said the 
FCC and other government agencies should pay more close 
attention to these contracts.  Can you enlighten me as to 
what paying close attention might mean?  
		MR. NALEBUFF:  Well, we see today how much effort 
Time Warner is going through to get out of the contracts 
that it was so happy to enter into two years ago.  We see 
the problems that are possibly caused by the @Home 
contracts.  So to the extent that you are all concerned with 
issues of open access, to the extent that this is in the 
companies' own interests, you know, how do we get ourselves 
to this position today?  
		And the answer is that these companies signed 
contracts which do not look to be in either the public 
interest or their own interest,  where we sit today.  And 
yet, part of the problem was there was no discussion about 
those at the time.  They sort of went under the radar.  And 
I suspect that having the same type of public attention, 
press attention to the contracts that would literally keep 
other players out of the market and shape the game -- well, 
let me go back one step -- as a game theorist, I think the 
way you win, the way you succeed is not necessarily just by 
playing the game well, but by changing the game. 
		And ways you can change the game include changing 
the players, as we see through this merger, and sometimes by 
changing the rules.  And that's a way of doing it -- 
contracts are a way to do that.  And so when we see cases 
where the game is being fundamentally changed, either 
through the playing field, the rules, the players is a time 
when we should be thinking about the consequences of that. 
		CHAIRMAN KENNARD:  Commissioner Powell?  
		COMMISSIONER POWELL:  I had a pretty 
broad-reaching question about -- people seem to accept quite 
simply that vertical integration or bundling is, A, 
necessarily going to prove advantageous as a producer or 
provider and, B, will automatically be accepted by 
consumers, when there are some fairly nontrivial examples, 
historically, of incredibly failed attempts to do that.  
Particularly, oddly enough, in information industries.  
		Many people widely believe that Apple Computer 
Corporation's refusal to license other producers of its 
systems limited its network in a way that put it under water 
for a very long time.  Similar, vertical integrations by IBM 
in hardware and/or software.  The lists go on.  Ford Motor 
Company doesn't produce steel anymore, as opposed to doing 
this.  And there are some interesting examples of even 
bundled services being rejected by consumers.  Some things 
as simple as they don't want a $350 communications bill, but 
they seem to be more comfortable when they're on six 
different ones. 
		Could you opine a little bit about how safe an 
assumption it is that these vertical integrated companies 
and/or this bundled services will actually prove superior or 
is detrimental as suggested. 
		MR. NALEBUFF:  I think you're spot on there, and 
companies have gotten better and more sophisticated in their 
use of bundling.  If you'd like, you don't just have a happy 
meal choice.  You can also buy a hamburger or fries or a 
drink too, but you're given incentives to do all three.  I 
think the notion that you would bundle and not give people 
any incentive to buy the individual components would be 
foolish both from a business perspective, as well as from a 
policy perspective. 
		And so now the question is how much of an 
incentive will you have to buy what bundle?  What are the 
combination of bundles that will be available?  And who will 
be invited to play in those games?  And so, yes, you can try 
to carry it too far, but I think we've seen, especially in 
the software industry, just the dramatic success of software 
bundles.  And here, I actually don't mean Explorer and 
Windows.  I really mean Office. 
		MS. DYSON:  I'd just like to add that another 
phenomenon that's going on is outsourcing, and AOL itself 
got rid of its own ISP operations and found it more 
effective to operate that way.  I think you're going to see 
a lot of banks and other people offering ISP services not 
because they themselves own anything but because they're 
reselling them.  And again, they have that consumer 
operation.  
		So what looks like bundling from the point of view 
of the consumer may well be an assembly of different 
services from different providers.  And that often is more 
effective, because nobody's very good at doing everything.  
And it's controlling that access, again, that is the issue. 
		CHAIRMAN KENNARD:  Commissioner Ness?  
		COMMISSIONER NESS:  You mentioned earlier that 
what we need to see is more disclosure of the provisions of 
the contract, and if consumers know what would be in these 
contracts, then they would be able, presumably, to make 
better choices as to where they want to go and what they 
want to see, and public pressure on the companies to provide 
more opportunities.  How do we achieve such disclosure?  Is 
this something that will happen within the marketplace 
itself?  Either one of you. 
		MS. DYSON:  Ideally, you do it by getting the 
press to write about it, by holding hearings such as these, 
by getting consumers to ask, by creating competitive 
pressure.  If that doesn't work, you probably, as the FCC, 
call up your friends at the FTC.  There are -- and it's not 
simply what contracts some provider may have with another 
provider.  It is what -- how much is being paid for this 
link. 
		And you know, there's a question.  How much do 
consumers want to know?  How much do they take for granted? 
 But I would like to see simply a broad education system 
where people understand this stuff.  And if they don't, then 
maybe it's the government's job to educate rather than to 
regulate.  But I hope the press pays more attention to this 
stuff, makes consumers more economically literate. 
		CHAIRMAN KENNARD:  Any other questions from the 
bench?  Hearing none, we'll move to the next panel.  Thank 
you both very much.  We really appreciate your taking the 
time to do this.  And I wanted to publicly acknowledge and 
thank Esther Dyson's work with ICANN.  That is a tremendous 
public service, not only for the country, for the world, and 
we're very appreciative of your work. 
		(There was a brief recess.)
		CHAIRMAN KENNARD:  Okay, we're prepared to begin 
our next panel.  We have a very distinguished set of 
panelists here.  I also want to note that there are 
representatives from AOL and Time Warner at the table here. 
 They will not be making opening statements, but they will 
be available to respond to arguments and critiques from the 
other panelists.  
		It's my view that we have a more robust discussion 
if we can get a little bit of a debate going.  It usually 
fleshes out the issues a little bit more and it makes for 
more interesting dialogue.  So that's why Mr. Parsons and 
Mr. Schuler are sitting at the table.  And with that, I'd 
like to begin with our first panelist, Professor Orton from 
the University of Wisconsin.  And I'll ask that you give 
your name and affiliation for the record when you begin your 
statement.  Professor. 
		MR. ORTON:  I'm Dr. Barry Orton, professor of 
telecommunications at the University of Wisconsin, Madison, 
and I'm a consultant to local governments who are 
franchising authorities in cable television.  I'm an 
original founder of the National Association of 
Telecommunications Officers and Advisors and president of 
its Wisconsin chapter.  I advised the city of Milwaukee and 
28 Milwaukee area suburbs on the Time Warner AOL merger and, 
in fact, one of those suburbs was Brown Deere, Wisconsin, 
the hometown of Deborah Latham's family.  So I've been 
representing local municipalities for about 20 years on 
cable matters.
		After reviewing the technical, legal and financial 
qualifications of AOL Time Warner and receiving assurances 
that existing franchise obligations would remain intact, my 
Milwaukee area franchising authorities all approved the 
transfer of control last month on my recommendation.  They 
did not consider open access platform issues as part of 
their transfer process, and they are convinced that this is 
a national issue rather than an local issue. 
		However, they are concerned about the local 
impacts of broadband convergence as reflected in this 
merger.  Historically, they have had good experiences with 
Time Warner and its predecessors, going back to original 
Warner Amex back in the early '80s that got the original 
franchise in the Milwaukee area.  From most communities' 
perspective, Warner has been a relatively good cable 
operator and a responsible corporate citizen.  They have 
been, as you heard, at the forefront of experimentation with 
two-way cable and in development of quality programming.  
		They were one of the original social contract 
cable operators, as you know, and they've been long 
supportive of public educational and governmental access on 
the local level.  The willingness of the Milwaukee area 
municipalities I represent to approve this merger largely 
stems from the fact that the Time Warner entities holding 
their franchises remain in place, and Time Warner has agreed 
to continue to abide by the provisions of those franchises. 
 There is a level of trust that's been built up from 
long-term service and from relationships with Time Warner's 
people.  When problems have occurred, there has been good 
faith efforts to find solutions and make corrections.  
		America Online has a far different history and 
does not enjoy the same level of trust on the part of local 
governments.  Their repeated failure to provide adequate 
service capacity to meet the demand their marketing 
generates has a track record that makes local officials very 
nervous, quite frankly.  AOL -- to most professional users 
and long-term users of the Internet, AOL has been looked at 
as the sandbox where people learn to use the Internet and 
perhaps graduate to more sophisticated services.  
		My colleagues in education, particularly in 
distance education, have told me from various parts of the 
country that they have had problems with students who tried 
to take distance education courses who were on AOL, because 
they don't have all the full features that others do, for 
example, the ability to take full attachments from anywhere. 
 And that's been a real detriment to some individuals trying 
to take distance education while on AOL.  
		In some periods between 1996 and 1998, AOL's 
performance quality and level of customer service rivaled 
the worst cable operators before cable re-regulation in the 
'92 Act.  If AOL hadn't been in the virtual marketplace but 
in the real marketplace and they sold hundreds of thousands 
of tickets to Bruce Springsteen concerts with only 50,000 
seats available for the public, they probably would have 
been indicted.  
		The three successive assurances of voluntary 
compliance with multiple state attorney generals, where they 
were explicitly forced to correct every part of their 
operation from the size of their modem pool to their refund 
policy to their telephone support system, their marketing 
materials and service capacity really bear looking at very 
carefully.  In 1996, 20 states required AOL to refund 
customers who tried and failed to cancel their service and 
AOL abruptly switched to a 1995 flat monthly rate. 
		In 1997, 36 attorneys general required them to 
stop advertising until they could provide sufficient modem 
access.  In 1998, a 44-state attorney generals voluntary 
compliance act forced AOL to clarify its free trial offers, 
disclose its minimum -- its premium surcharges, its 
cancellation procedures and reform its other business 
practices.  As Ohio Attorney General Betty Montgomery said 
in 1998, "The problem we're experiencing with AOL is similar 
to a parking attendant that sells too many monthly passes.  
When drivers show up at the garage, it's already full of 
cars."
		You should look at these voluntary compliance 
assurances and their subsequent reports to the attorney 
generals that they were actually meeting the terms of those 
and, in case you have problems getting them, which we did, 
I've finally gotten them and I've passed them on to the 
cable bureau staff.  So I would recommend your looking at 
that.  
		Finally, I recommend that you consider your 
regulations established under Section 76 through .309 that 
allow local governments to enforce minimum standards for 
telephone availability, installation and service calls and 
outages for cable television, and expand those to include 
high-speed cable modem service so that local governments 
could have the tools to answer the inevitable complaints 
they will get when providers of all sorts on cable modem 
service, whether it's @Home, Road Runner or others have 
outages, have service call problems, have telephone 
problems.  
		Give local governments the tools they need to 
enforce those kinds of customer service standards, and I 
think some of -- at least the customers that do have 
problems will have someplace to go.  Thank you. 
		CHAIRMAN KENNARD:  Thank you, professor.  Mr. 
Cooper?  
		MR. COOPER:  Thank you, Mr. Chairman.  My name is 
Dr. Mark Cooper.  I'm director of research at the Consumer 
Federation of America.  The Consumer Federation and its 
member groups have testified on this issue from Cambridge to 
Los Angeles to Broward County, Florida.  
		We believe that the principle of nondiscriminatory 
access is not technology-specific.  It has governed the 
communication and commerce highways of this nation since its 
founding, from roads to canals to railroads to highways to 
telecommunications network, open access, nondiscrimination 
is a standard that stands above technology and accommodates 
changes in technologies.  
		Open access is above economic interests.  Economic 
interests must be subservient to the principle of 
nondiscrimination.  We firmly believe that if we had not 
taken up that fight at the local level, there would be no 
national policy debate, there would be no concessions.  It 
is the cities across this country who voted for open access 
and went and got sued by AT&T that have created this debate 
and turned all of the major newspapers in this country 
around on the issue. 
		For while consumers have enjoyed the benefit of 
hundreds of competitors on the narrowband Internet, things 
are moving in a very different direction on the broadband 
internet, which of course the Department of Justice has 
defined as a separate market.  We have a dramatic increase 
in the concentration from recent mergers.  We have the 
refusal of vertically integrated facilities owners to 
provide open access.  We have the failure of proprietary 
platform owners to inter-operate for communications. 
		The chokepoints on the broadband Internet are 
clear, backbone, bit rates and bootstream.  The sticky 
features that lock consumers into the Internet platforms 
have been identified, instant messaging, keywords, e-mail 
addresses and electronic programming information.  A handful 
of dominant firms are leveraging those chokepoints to 
extract economic rents and foreclose choices to consumers.  
		The cable industry has succeeded for several years 
now to prevent competition by banning streaming video.  
Millions of consumers have been denied a choice of ISPs on 
their cable modem systems.  The dispute over AOL's instant 
messaging practices has simmered for a year with no end in 
sight.  AOL's would-be cable subsidiary has given the public 
and policy makers a brutal lesson in what it looks like to 
negotiate with someone who can pull the plug. 
		If wire owners can give their own programming an 
edge, we will not have fair competition for eyeballs.  What 
is quite clear is that as the commercial value of the 
Internet increases, these companies are more than willing to 
destroy its openness in pursuit of their proprietary 
economic interests.  These powerful interests will frustrate 
commercial negotiations for nondiscrimination.  
		Two years after we first asked for open access, 
the exclusionary contracts are still in place.  Virtually no 
deal -- details of nondiscrimination have been provided.  
And there is no way for any individual ISP to assert a right 
to that nondiscrimination if they are frustrated.  The 
frailty of the voluntary access promises was demonstrated in 
Los Angeles when AOL was asked to simply put its MOU at the 
back of the franchising agreement.  And it objected 
vigorously. 
		How can it be that it is in the economic interests 
to provide open access but when you ask, would it hurt them 
if they were required to do so, it suddenly becomes a 
disaster?  The two cannot both be true, unless they want 
commercial leverage in negotiation, which is exactly what 
they're exercising.  We do not have to tolerate the refusal 
to interconnect and to provide open access.  
		The U.S. Appeals Court in the Ninth circuit 
clearly concluded that the "provision of conduit services of 
underlying telecommunication services are, in fact, subject 
to a common carriage obligation," that 200-year-old 
principle I mentioned at the beginning of my remarks.  Open 
access is the law of the land.  Open protocols and fair 
competition for eyeballs must be the policy of this 
Commission.
		We have outlined four specific steps that this 
Commission should take before they allow this merger to go 
forward.  And one of them might well be until they deliver 
those promises, don't approve this merger.  Wait till the 
end of the year or the middle of next year until you see 
what open access looks like before you let the merger go 
forward.  And that may be a fifth one. 
		First, in order to maximize rivalry between 
companies, you should prevent them from owning any interest 
in each other's operations.  There's a handful of them left 
competing for consumers in this industry.  Second of all, 
although cross-technology has never disciplined market 
forces in this industry, we must maximize that policy by not 
allowing any entity to own more than one platform 
technology.  
		Third, to prevent the leveraging of market power 
in conduit in facilities into the content market, we must 
have open access.  And fourth, proprietary --
		CHAIRMAN KENNARD:  Thank you, Dr. Cooper.  Mr. 
Mirabal. 
		MR. MIRABAL:  Thank you.  My name is Manuel 
Mirabal.  I'm chair of the board of directors of the 
Hispanic Association on Corporate Responsibility, better 
known as HACR.  HACR is a coalition of 10 of the largest 
Hispanic national organizations working on public policy in 
the U.S.  We represent the interests of 36 million Hispanic 
Americans. 
		HACR has a vital interest in the proposed merger. 
 We believe it is essential that the potential economic and 
social benefits of the Internet and telecommunications 
revolution must be available to all segments of the 
population.  We further believe that the proposed regulatory 
process, which we're seeing today, is necessary.  These 
hearings afford citizens the right to be heard, and through 
this process, we must ensure that the interest of the public 
is protected.  
		HACR has serious concerns about the claims AOL and 
Time Warner have made.  I have concerns that the merger will 
not foster a more competitive environment, offer more 
choices nor create social benefits.  We believe that the 
merger will create a dominant entity, which has the 
potential to limit competition, restrict content and 
monopolize services in an industry that continues to evolve 
rapidly and that will penetrate more and more into our 
everyday lives. 
		The combined record of both applicants in 
responding to the needs of the Hispanic community consists 
of minimal efforts to address programming, cable service and 
Internet access.  Furthermore, neither company has responded 
to our request for information concerning the impact of the 
merger on the Hispanic community.  Consequently, we are 
deeply concerned that this merger will make matters worse 
than they are now for the Hispanic community, because of the 
limited ability of this community to afford costly Internet 
services, the existing disparity in access to Internet and 
telecommunications services and the limited geographical 
cable service areas, which exclude large segments of our 
community. 
		We, therefore, are urging the Commission to deny 
the application for transfer of control by AOL and Time 
Warner.  Combined, the new company would become a cable 
Internet media conglomerate, dominating three important and 
distinct elements of this industry -- cable and television 
content, Internet content, and cable assets.  The potency of 
this vertical integration in one company, we believe, could 
serve to dampen competition and harm all consumers. 
		Diminished competition would disproportionately 
affect the Hispanic community due to socioeconomic reasons. 
 AOL brings with it 23 million narrowband customers.  Time 
Warner brings a dominant position in the delivery of 
entertainment news and educational programming in geographic 
markets it serves.  With this impressive collection of 
assets and dominance in the related markets, the combined 
AOL Time Warner will be able to behave in ways that could 
limit consumer choice and harm competition.
		This merger, which brings these elements together 
under the control of one company may prove a threat to the 
competition in conduits and content if left unchecked.  AOL 
Time Warner will have complete control of content and 
distribution in markets served by Time Warner Cable and may 
engage in controlling content by denying or complicating 
access to their cable delivery system.  
		It's not enough that Mr. Levin and Mr. Case have 
signed a nonbinding memorandum of understanding pledging to 
open their cable lines to multiple Internet services.  We 
have to see that in place.  The new company will also have 
greater incentives to control or discriminate with regard to 
content as we move into the uncharted territories of 
Internet interactive television.  Cable has a virtual 
monopoly in the delivery of this television service, and 
that doesn't appear to change in the near future. 
		Absent conditions prohibiting AOL Time Warner from 
discriminating against content it does not own or control, 
it is conceivable that the new company could dampen 
competition.  Of equal concern to the potential risk of 
content discrimination, should the merger be approved 
without safeguards to protect the consumer, is the threat to 
competition in the market of delivery of broadband and 
content services. 
		The potential for consumers to be harmed by the 
diminished competition in content and its delivery is far 
greater if AOL Time Warner is allowed to engage in 
preferential dealings with other cable providers.  Together, 
AOL Time Warner will reach 80 percent of American 
households, and together their content ownership will cover 
the majority of the most appealing content in cable and on 
the Internet.  If allowed to engage in business dealings 
which favor each other, undoubtedly, competition and 
consumers, we believe, will be harmed. 
		The record of AOL and Time Warner in addressing 
the concerns of the Hispanic community is poor.  Although 
Time Warner has done more than AOL to respond to issues, 
which we have raised in the past, we cannot state today that 
they have acted responsibly in addressing our concerns about 
programming, diversity and community-building investment. 
		We are reminded how little commitment there is to 
address these issues when we continue to see movies like 
Fort Apache regularly shown on their stations and production 
companies like Castle Rock produce shows that use the 
burning of Hispanic flags as jokes and typecast Hispanics as 
gang members from the West Side Story decades ago.  Time 
Warner has done little to rectify this situation to date.  
One documentary, Americanos, does not resolve the problem 
that we have with their programming. 
		AOL's Steve Case has stated to investors that the 
proposed merger would create something new and powerful and 
would become even more central to people's lives.  With a 
record as bare as AOL's in addressing Hispanic-American 
concerns and with no apparent interest in learning about our 
needs, this merger is a recipe for disaster for the Hispanic 
community. 
		The two companies have independently operated 
without regard for the Hispanic community in areas of their 
businesses from employees to customers to businesses at the 
very top of both organizations.  The Hispanic community has 
been systematically ignored or denied equitable service and 
opportunity.  For these reasons and others, which are stated 
in our submission to you, we urge you to deny the 
application.  Thank you. 
		CHAIRMAN KENNARD:  Thank you, Mr. Mirabal.  Mr. 
Love. 
		MR. LOVE:  Thank you.  My name is Jamie Love.  I 
work in Washington, D.C. for a consumer group, a group that 
was started by Ralph Nader in 1995.  I work a lot on issues 
relating to Internet, intellectual property rights.  I used 
to do a lot of work in telecommunications, but I haven't 
done it for a while, and people like Mark Cooper, Jeff 
Shester, other people kind of got mad at me and told me to 
get involved in this issue, so I'm here today. 
		A lot of people have said a lot of, I think, 
important things.  I'm not going to repeat everything.  I'd 
like to thank the Commission for the excellent panels.  I 
thought that Esther and professor Nalebuff -- I'm saying it 
wrong I'm sure.  Barry and Esther, I thought did a very nice 
job of setting the stage for the debate.  
		I appreciate the discussion a lot about the 
bundling issues and the contract issues.  I thought that was 
quite important.  And I think that the other witnesses 
before me on this panel have done a nice job of reminding us 
that it's not always a good idea to sit around and have a 
charming CEO of a company or two come up and -- these guys 
are good salesmen, that's what they do.  
		I mean how else could Micro -- how else could 
America Online persuade people to pay a premium price for a 
service that force-feeds you ads and makes it almost 
impossible to find the real Internet beneath, at the same 
time telling people they're too dumb to figure out how to do 
it the regular way.  I mean that's what I call salesmanship. 
So, you know, we have a tough job here to compete with them.
		Now in terms of the architecture, the thing that 
strikes me about looking at this issue is not the Internet 
we know today, which is nondiscriminatory access where 
anybody could connect to an Internet server and anybody can 
get their product out there and connected to people at the 
same time, but it's the next generation Internet that we're 
reaching.  
		And really, the issue that I think the Commission 
has been derelict at looking at and what people have tried 
to raise to the Commission, in our case back in the 
mid-1990s before we just stopped beating our head against 
the wall, is where that's going to be in terms of the 
broadband platform.  Now I'd like to skip in my testimony to 
the top of page 3 and read some excerpts from a document 
that Cisco prepared that you may have seen before.  It deals 
with the way they're designing services for cable operators 
to control data that's going to go into broadband networks. 
		It starts out at the top of the page.  It says, 
"The ability to prioritize and control traffic levels is a 
distinguishing factor and critical difference between new 
world networks employing Internet technologies and "the 
Internet."  So the first thing they do is they say, the 
Internet that we know today is going to be the past and 
what's going to replace it is going to be something that's a 
network that employs Internet technologies but it's not the 
same as the Internet.  That's something to think about. 
		The next paragraph, they point out the kind of 
things that technology they're providing for cable operators 
to track content, and I'm going to read it, because I think 
you should think about this.  It says, "Traffic type 
identification allows you to isolate different traffic types 
in your IP network.  Through Cisco quality of service, you 
can identify each traffic type.  Web, e-mail, voice, video. 
 Tools such as type of service bits identification allow you 
to isolate network traffic by the type of application, even 
down to the specific brands, by the interface used, by the 
user type and individual user identification or by the site 
address."
		So that's really what the cable companies are 
asking the company to build for them in terms of the 
technology to track data.  Now skipping down a bit in the 
paragraph that begins with, "Among other things," Cisco 
points out that quality of service can also propel you 
forward by giving you the information you need to offer 
advanced differentiated service at a profit.  For example, 
time and usage-based billing.  Now that's something that 
people on the Internet have always -- I'm sure the 
Commission's heard about these kind of ideas about metered 
Internet use, but this is sort of one of the features of the 
new technique is the ability to more efficiently do this 
from the cable operator. 
		Next paragraph.  "Cable companies can optimize 
service profits by marketing express services to premium 
customers ready to pay for superior network assets."  So 
it's really a fast pipe, a slow pipe, a go-fast button, 
things like that.  And what people are concerned about is 
the highly differentiated level of service and who's going 
to get and at what terms and at what level of discrimination 
to access. 
		And the next paragraph on the next page, the full 
paragraph, it says -- this is -- and I think quite a key 
paragraph.  They're talking about competitors' service here. 
 And they say, "If a push information service that delivers 
frequent broadcasts to its subscribers is seen as causing a 
high amount of undesirable network traffic, you can direct 
CAR" -- which is, you know, one of the Cisco services -- "to 
limit subscriber access speed to the service.  You could 
restrict the incoming push broadcast, as well as the 
subscriber's outgoing access to the push information site to 
discourage its use.  At the same time, you could promote and 
offer your own or a partner's services with full-speed 
features to encourage the adoption of your services."
		Now, what in the history of the cable industry, of 
all the years of discrimination makes you think that these 
companies won't want to do this to benefit their own 
integrated services?  And what, in the history of litigation 
and broken promises and things like that and failure to make 
real specific commitments make you feel that you can leave 
the public in the lurch on an issue like this?  My time is 
up.  Thank you very much for the opportunity to be here. 
		CHAIRMAN KENNARD:  Thank you, Mr. Love.  Ms. 
Cunningham. 
		MS. CUNNINGHAM:  Thank you.  I'm Cathy Cunningham. 
 I'm here from the city of Irving, Texas, and I also am here 
on behalf of the National Association of Telecommunications 
Officers and Advisors, which has 432 local government 
members representing over 20 million cable subscribers. 
		I would like to deviate or supplement the comments 
that I filed with -- first of all, by addressing some of the 
things that I've heard brought up in the initial comments of 
the Commissioners and subsequently.  First of all, in regard 
to whether -- why it's important that we meet -- and I 
wanted to say I'm very grateful, as a representative of a 
local government to be here and that the FCC is showing this 
kind of interest in the role local government plays in 
response to the consumer advocacy on behalf of our citizens.
		But I think it's important to have these kind of 
hearings as just a person who lives out almost in, maybe not 
quite in the middle of nowhere -- I'm near Dallas -- but 
still, in the middle of America.  It's, this is an issue 
that's very interesting to people, and I think that if you 
had just passed over this like a standard type of license 
transfer, it would be seen as not gaining the public trust. 
 The public wants to hear these things talked about.  I 
don't think it would benefit the public, the Commission or 
the companies involved not to have this kind of hearing.
		I think that the public wants a hearing like this, 
and I think that it's -- it would really be actually 
detrimental even to the companies to not have this.  It 
would just be seen as wrong by the public, by those people 
who aren't living in this city but who live outside this 
city.  I think they want this sort of thing and they want to 
be able to see it and know that -- and hear these 
explanations that are being produced by the company 
representatives, by the panel before us, this panel and the 
next panel.  This is the sort of thing the public wants to 
hear about.  
		And I think the answer to all four of those 
questions that were posed is really that it's important for 
public trust, as much as public interest or anything else.  
And as the professor, whose last name I won't even attempt, 
said before, two hearings doesn't hurt.  People, hearing it 
more than once sometimes helps some of us what some of the 
issues are and to either get a comfort level or know where 
we're not comfortable. 
		Secondly, a comment I heard several times 
mentioned was there were discussion about marketplace.  And 
I know that this Commission struggles with and is sincerely 
interested in doing the right thing as far as marketplace 
versus governmental regulation or even intrusion into 
certain areas.  In my city, in the city of Irving, Texas, we 
have been blessed or cursed, depending on how you want to 
look at it, but the location.  We have more than 20 
telecommunication companies that have build-out facilities 
in our rights of way.  
		And in all that 20 new companies, none of them 
have come to the residents to offer competition.  They're 
going to the big businesses or they're just passing through 
town.  So taxpayers are helping to, in some ways acquire 
that property they benefit from, but the individual resident 
has not seen the competition, they're not seeing additional 
choices.  And in the area of town I live in, which is 
considered a middle-class neighborhood with a lot of 
Internet users, there's not DSL. 
		I mean it's not -- it would be very nice, I would 
like to hear all these things and say yes, a marketplace 
exists, but sometimes it doesn't.  It doesn't in all parts 
of the country.  It doesn't in my neighborhood.  And that's 
despite the remarkable facilities built out that I struggle 
with at work trying to find room for all of these companies.
		So once -- right now, our cable company, which is 
a partnership between Time Warner and AT&T, hasn't yet to 
rule out the broadband services -- I think that's coming 
soon -- but right now, there's no high-speed broadband 
access, and when the cable company does roll it out in the 
next couple of months they said, they'll be the first ones 
and for a while they'll be the only ones.  I suspect that 
DSL is coming, but it's not there yet.  
		And so right now, without, without governmental 
intrusion, the marketplace isn't working, because there is 
no marketplace for some of us right now.  What I think the 
cities want -- I don't think the cities are -- speaking on 
behalf of all of them, which is pretty presumptuous for me 
to do, but at least on behalf of myself, I don't think we're 
here to give answers, because you're struggling with some 
very difficult questions, but we're here to encourage you in 
that struggle.  We want to encourage you to help us make 
sure that our citizens have a quality, universal, timely  
service.  
		We want to work in partnership with the Federal 
Government, as Professor Orton mentioned as far as consumer 
standards or something like that.  If you were to set those 
types of standards, we would certainly be -- the level of 
government that consumers are going to turn to when they 
have problems, they're probably not going to dial a long 
distance number.  They're going to dial us, and they're 
going to expect something gets answered.  
		Second, this goal goes along with it.  I thank you 
for including us in this.  I hope you will continue to 
include your local governments as these sort of things 
develop, and I would like to mention that our city -- and in 
closing, I would just like to mention our city did approve 
the transfer agreement.  And in our city, Time Warner agreed 
and actually provided language concerning an open access 
provision in the transfer agreement.  I think that if it was 
okay for us, I don't know why it wouldn't be okay across the 
country.  
		And if the feeling is that the agreement, as I 
heard in the testimony, the first panel, that the agreement 
is binding, I don't see what it would hurt for this 
Commission to put a stamp on it or for somebody to put a 
stamp on it and help make that so for the American public.  
Thank you. 
		CHAIRMAN KENNARD:  Thank you very much, Ms. 
Cunningham.  And thank you all, all the panelists for your 
testimony.  I want to direct my initial questions to Mr. 
Mirabal.  Mr. Mirabal, you made some what I consider to be 
fairly serious allegations against the merging parties here 
and, in particular, you allege that Time Warner has not been 
providing service to the Hispanic community.  
		I believe that that is one of the most serious 
allegations you can make before this Commission, and that's 
not a personal whim.  I think that that's strongly grounded 
in Section 1 of the Communications Act, which charges this 
Commission with ensuring that we have a truly nationwide 
communication service that serves all of our communities, 
including the rich diversity of our country. 
		So I'd like to find out a little bit more from you 
what's behind these allegations.  You mentioned programming, 
but I want to, in particular, find out whether you have 
concerns about the deployment of services by Time Warner in 
the Hispanic communities, if you have allegations in that 
regard.  You touched on it briefly, but you didn't really 
elaborate. 
		MR. MIRABAL:  Certainly, Mr. Kennard.  We do have 
additional data and reports that we can give to the 
Commission concerning those issues, but let me just say that 
we, we have been attempting to work with Time Warner over 
the last several years -- about three, to be exact -- yet 
upon their commitment to us to conduct a self-evaluation on 
those issues, which we mentioned -- they include governance, 
employment, diversity issues in the company, the issue of 
procurement for minority suppliers, the issue of service of 
their cable and other facilities to our community -- we have 
yet to receive a report from Time Warner on those very 
issues. 
		They have made repeated requests to us to delay 
reporting on these matters to us, although we have raised 
concerns that go all the way from south Florida through 
Atlanta up through New Haven and all of the Northeast states 
and many other areas of the country about concerns about 
being able to access certain cable services where those 
services do not go into certain communities for various 
reasons.  That information has not been made available to 
us.
		CHAIRMAN KENNARD:  When did you request this 
information?  
		MR. MIRABAL:  This started almost three years ago, 
sir.  And shortly afterward, Time Warner joined a corporate 
board of one of our member organizations and made to 
commitments to conduct, as I said before, a self-evaluation 
of these issues.  And that has yet to be presented to us.  
More recently, when the merger was announced by AOL Time 
Warner, we sent a letter to the chief executive officers of 
both companies, and Mr. Levin was one of them, and requested 
a meeting, because we wanted to address our concerns 
regarding this merger as far as it affected the 
Hispanic-American community.  
		And we have yet to be able to hold a meeting where 
we get any details or any answers as to when those details 
will follow to us.  So we --
		CHAIRMAN KENNARD:  Mr. Parsons, would you like to 
address this issue?  
		MR. PARSONS:  I think I would, Mr. Chairman.  I 
want always to be careful not to seem to engage in a food 
fight on these kind of panels but I, like you, think the 
allegations that have been made are serious.  And first, I 
would hope that whatever followup data Mr. Mirabal is going 
to share with the Commission he would also share with us.  
To my knowledge, which is while not exhaustive, at least 
extensive on this subject, since it is an area that reports 
to me and our corporation, I think we have an exemplary 
record in terms of not only serving the Hispanic community 
but serving the full breadth of, as you call it, the 
diversity and the richness of the communities in which we 
operate.  
		To start, with our cable company, we serve all 
areas of the franchises in which we are in.  We're the 
first, I think, cable company to enter into a social 
contract with the FCC where we made commitments within 
communities to not only serve all areas within the 
communities but to make sure that we drove broadband 
deployment of our, of our plant into all areas of the 
communities.  That commitment, which we made in 1994, was to 
have, in terms of the 20 million homes passed that the Time 
Warner Cable franchises serve, all of those plans upgraded 
to full 750 megahertz capacity by the end of this year.  And 
as I think the chairman knows, we're on schedule to do that.
		We also committed to wire all the schools in those 
communities and so that the schools would have access to the 
broadband capacity beyond the cable service.  And so I would 
be more than amazed, I would be shocked if there were, if 
there was actual data to support the allegation that we 
somehow are underserving the Hispanic community within the 
franchises where we operate. 
		Secondly, from a programming perspective, I think 
that you can look at Time Warner's programming across its 
many programming platforms, which includes broadcast with 
the WB, HBO in terms of premium cable, all of the Turner 
services, and they have been more than even-handed.  We have 
reached out to the minority communities, including the 
Hispanic community because, frankly, they over-index in 
terms of television watching.  In fact, HBO will launch in 
September the first of what will be called HBO Latino.  It 
will be one of the multiplex services on our HBO offering, 
because we understand there is a need in that community and 
there is an appetite in that community.  
		The Americanos, which Mr. Mirabal spoke about, was 
a movie project and book project we did in conjunction with 
James Edward Olmos that was precisely to celebrate, and give 
visibility to, the impact and contribution that the Hispanic 
community is making to America today.  And that has traveled 
around the country.  I could go on and on.  
		WEA Latina.  We are, as you know, a major record 
company.  About 20 percent of the Latin music that's 
available in this country is from artists that we've gone 
out and found and developed and nurtured and then brought to 
the public's attention.  So I would be very interested to 
see the documentation that Mr. Mirabal has agreed to share 
with you.  We have probably -- in fact we just won an award 
for having one of the best minority and women in business 
development initiatives in corporate America.  So I can't 
say that our track record is entirely spotless or that we 
are the exemplar.  We sure try.  We've sure been recognized.
		There's lot of tangible data to point to that 
suggests we're making some progress and, while I listened 
very carefully to Mr. Mirabal's response to your very direct 
question, I didn't hear any actual evidence of, or factual 
allegation that suggests that we aren't doing our job in 
this area.  The fact that he has not had the meeting that he 
has asked for with Mr. Levin is something I'll have to look 
into in terms of whether he's met with any of the other 
people in our company.  But on the record and on the facts, 
I think we're hard to fault.  
		CHAIRMAN KENNARD:  Well, there seems to be an 
interesting disconnect here, and I look forward to the 
information that you plan to submit, Mr. Mirabal.  Other 
questions?  Yes. 
		COMMISSIONER TRISTANI:  I just have a question, 
and I don't know if you keep these statistics, but do you 
know what proportion of your subscribers are Hispanics?
		MR. PARSONS:  I don't as I sit here today.  I 
could get that information for you, I suspect. 
		COMMISSIONER TRISTANI:  I'd be interested.  I'd be 
interested.  Thank you.  
		CHAIRMAN KENNARD:  Any questions.  Commissioner 
Furchtgott-Roth. 
		COMMISSIONER FURCHTGOTT-ROTH:  I'd like to thank 
the witnesses for coming today.  I'd particularly like to 
thank Ms. Cunningham for addressing the questions that I 
asked and for her comments about the value of this hearing. 
 I, too, listened very carefully to Professor Nalebuff's 
comments and to Ms. Dyson's comments as well, which I 
interpret as meaning that there's value in having public 
discussion of matters that are of great public interest.  I 
still wonder about whether this agency has been -- does this 
in a discriminatory manner or not in choosing which issues 
to raise and which not, and also whether there aren't other 
federal agencies that address these more directly. 
		And so I'd like to hear from each of the witnesses 
whether, in fact, the information that you are providing to 
the FTC -- FCC today is similar to information that you may 
have provided to the Federal Trade Commission as well. 
		MR. COOPER:  Let me -- I didn't want to directly 
use the initial time.  I expected you would come back around 
to your questions.  And let me make a couple points about 
why there is multiple review of mergers between agencies.  
Second of all, why some mergers attract more attention than 
others.  
		It seems to me that the Communications Act, for at 
least six and a half decades, has recognized that 
communication and broadcast are special and different.  And 
that's why we have a Communications Act in addition to a 
Sherman Act.  And it holds these industries, because they're 
so vital to democracy, to a higher standard.  And you have a 
statute that exposes to a public interest test, which is 
different than a market competition test.  
		And we have, we have a variety of rules on 
limitations on ownership that go way beyond the Sherman Act, 
some of which have been involved in recent mergers and one 
merger that is more or less still pending.  So that the 
Communications Act is different, it establishes different 
authorities, it establishes different standards, and so I 
think there's a legitimate reason to ask both similar 
questions and different questions.  That's why we have 
multiple review across the agencies. 
		Second of all, why does a merger like this attract 
more attention than other mergers?  Well, one, in some 
license transfers there's a de minimis issue.  If it's a 
small transfer between two companies, it may not matter.  
Second of all, this merger involves cross-ownership between 
content and conduit, which have been the subject of a great 
deal of concern in public policy.  So that raises different 
kinds of questions than other mergers. 
		Third, I would suggest that, given that we have a 
pending petition for reconsideration on the AT&T Media One 
merger, you literally have before you almost two-thirds of 
the wires in the cable industry to be considered.  So, in 
point of fact, if you were to treat those two mergers -- I 
understand you have ruled initially on the AT&T Media One, 
but we do have a petition on reconsideration and clearly 
these mergers were before you at the same time -- you could 
have the effect of establishing what is virtually an 
industrywide policy in a framework that is much quicker than 
the normal rulemaking. 
		So those, I think, are good reasons.  The whole 
industry was here, a cross-ownership issue was here.  
Communications Act is very different than the Sherman Act.  
Those are good reasons that this Commission gives a very, 
very hard look at these kinds of mergers and, in fact, 
passes through a single license by a small operator that 
doesn't own any content.  I don't think the differential 
scrutiny is inappropriate when you have so many important 
issues and so much of the industry structure at stake. 
		COMMISSIONER FURCHTGOTT-ROTH:  Dr. Cooper, by your 
own testimony, the Sherman Act and the Communications Act 
are quite different, and I come back to my question, which 
is, is the information that you testified about today 
similar to the information that you've presented to the 
Federal Trade Commission, which enforces the Sherman and the 
Clayton Acts. 
		MR. COOPER:  Well, some of it is and some of it 
isn't.  We don't necessarily raise, and I personally haven't 
raised, all of the issues I raise here under the 
Communications Act down at the FTC or the Department of 
Justice under the Sherman Act.  But there is an overlap.  
The Congress passed the Communications Act 30-plus years 
after the Sherman Act -- I'll do the math -- and they 
understood that there was an overlap.  And in fact, because 
communication and broadcast is so important, it is not 
unreasonable to have two agencies look at the issue.  So, 
certainly a certain amount of the information is the same. 
		COMMISSIONER FURCHTGOTT-ROTH:  But Dr. Cooper, 
isn't it the exact same public interest standard under the 
Communications Act that applies to broadcast, to all 
wireless licenses, to the tens of thousands of license 
transfers that this agency reviews every year, and to which 
this agency does not apply anticompetitive tests, does not 
hold public hearings?  
		MR. COOPER:  Well, again, the difference in this 
merger -- and I think I have testified in almost all of the 
en banc hearings the chairman referred to -- these are very 
large mergers affecting substantial portions of the country, 
frequently involving, in this case, cross-ownership of 
content and conduit, so they raise different issues.  They 
clearly raise different issues when I'm looking at AOL Time 
Warner versus a small license transfer, SBC Ameritech, which 
definitely was a similar context.  
		So I think it is, it is reasonable for the 
Commission to give different levels of scrutiny to mergers 
that are -- the magnitude is dramatically different.  So I 
do not see anything unfair in giving high scrutiny to a 
merger that raises so many issues.  
		CHAIRMAN KENNARD:  Mr. Love. 
		MR. LOVE:  Well, we've talked to the Federal Trade 
Commission about this merger.  We've talked, you know, 
today, to this one.  We've actually had different 
conversations.  One of the reasons why the conversations 
were different is that the Federal Trade Commission has a, 
has a particular expertise in competition policy where it's 
more fruitful to explore certain types of issues.  
		For example, the Federal Trade Commission, along 
with the Department of Justice, administers the merger 
guidelines.  And we have concerns -- and this has been a 
case that's brought up -- that the treatment of 
collaborative ventures, the so-called joint venture 
guidelines -- are too much of a safe harbor for mergers and 
not enough of a, don't do enough to capture the degree to 
which the companies are not really independent.  The fact 
that -- people have talked as if AT&T and Time Warner are 
somehow these independent companies, but they have an 
incredible web of joint ventures and collaborative 
agreements, which makes them something different than just 
independent entities.  
		And so this merger, in a sense, from that point of 
view, we think is, would be cast a bit different.  And then 
another issue that has come up with the Federal Trade 
Commission and the Justice Department is whether or not 
mergers in these cases remove players from regulatory 
proceedings.  The case would be -- in a case in the regional 
Bell operating companies, the problem was companies like 
Compaq Computer and Intel would only intervene in certain 
markets, depending on the ARBAK (phonetic) and -- 
proceedings I was involved in -- and Intel told me this and 
so did Compaq, that they had board-level decisions not to 
intervene in Bell Atlantic's territory for both Intel and 
Compaq, because of corporate relations.  
		So when Bell Atlantic merged with Nynex, that was 
just a half, you know, half a country.  They couldn't really 
intervene in it.  And so we raise that issue, because we 
believe that having more players makes the regulatory 
environment work better because you hear more voices.  Now 
that's something that's sort of different.  Now --
		COMMISSIONER POWELL:  Why is that remarkable?  
		MR. LOVE:  What's that?  
		COMMISSIONER POWELL:  Why is that remarkable that 
corporate interests might elect not to intervene in a public 
proceeding.  I mean you couldn't possibly suggest that the 
government should compel --
		MR. LOVE:  No, no, but I mean Intel --
		COMMISSIONER POWELL:  Or encourage parties to file 
in the proceedings if they choose not to for their own 
self-interest. 
		MR. LOVE:  No.  Well, Intel, Intel was very active 
in this particular set of proceedings I was involved in -- 
Pac Bell Territory, U.S. West territory -- and we worked 
closely with Intel and in some cases with, and some SBC 
tours, and also with Compaq in some of these proceedings.  
But then they would in some areas and they wouldn't in other 
areas.  And we had issues with 3COM, whether 3COM would 
intervene in some and not in others.  And it's, I didn't 
find it remarkable at all, but I found it a consequence of 
merging a bunch of ARBAKs (phonetic) together is that nobody 
wants to intervene because there's just too much at stake.  
There's too many. 
		At one point, to give you an example, Pac Bell 
took a videoconferencing product that Intel sold, they threw 
it across the table at the salesmen and they said, why are 
you intervening in this ISD in re case we have in -- this 
was back about five years ago in California -- and go talk 
to your, you know, go talk to your government relations 
people and come back, and then we can talk about, you know, 
whether we're going to buy your product or not.  Well, Pac 
Bell's a pretty big customer for that kind of thing.  
		So, you know, those kind of discussions take 
place.  So when there's a merger of companies, after a 
while, it's more and more difficult to -- like, consumer 
groups have, you know, miniscule resources, we kind of 
depend upon maybe some giant company will see things our 
way.  Like, we're glad Disney's on the next panel, for 
CNIPES sakes.  That's pretty weird.  But, you know, that's 
the way it is.  
		Now, that's what we have to kind of depend on in 
this world.  Now, you put everybody together, it's harder to 
get somebody to take on the 12,000-pound gorilla, you know, 
so I mean that's kind of an issue.  We tried to raise that 
with Justice and we're trying to raise it with FTC, because 
these are kind of generic issues for them that go way beyond 
what you do.  And you may not, you know, necessarily have as 
much interest as they have.  
		On the other hand, the reason to bring things up 
in this proceeding is because you have more of a permanent 
relationship with the cable industry than the FTC does.  FTC 
looks at these things from time to time.  You look at them 
on an ongoing basis, and so in a way you're more of a, 
you're more related to them than the Justice Department or 
the FTC is.  And so I think you have more of an oversight 
role.  But I also think you have more of a responsibility.  
		Some of the solutions are more regulatory than 
antitrust in nature, by their, because of the, just you 
can't come up with, you know, a little consent order today 
that would solve all the problems tomorrow, because you 
don't even know what they're going to be yet.  And so you're 
trying to sort of, I think as some people implied in the 
last panel, develop a bit of a, what is the body language, 
you know, what, you know, you tell them kind of where you 
want them to go and then, you know, you're going to see them 
again.  So that sort of makes more sense to have that 
investment.  If Robert Petowsky has that discussion, it's 
not really that meaningful.  
		CHAIRMAN KENNARD:  Mr. Love, I'd like to take the 
discussion away from jurisdiction and process and back to 
sort of the substance of the issues that are before us in 
this particular transaction.  We've had some discussion from 
this panel on the access question, the open access question. 
 And one of the frustrations I have with this debate is that 
there is not a baseline definition.  
		When the cable industry talks about open access, 
they have a very different -- which they call forced access 
-- they have a very different definition of what acceptable 
access is for the consumer than the discussion I hear from 
some competitors to the cable industry, particularly the 
telephone companies and the consumer groups.  Mr. Cooper, I 
know you to be a veteran of the telephone wars where we have 
debated this issue of access to a platform ad nauseam all 
across the country.  I would like to ask you how you define 
open access.  
		Is it more than interconnection?  Does it get into 
issues of caching and speed and pricing?  So that we can 
have a better understanding of what we're talking about when 
-- at least when we hear from you -- on this open access 
question.  You mentioned that open access is one of your 
four recommendations as to how we deal with this merger, but 
you didn't really tell us what that means. 
		MR. COOPER:  Well, the Commission certainly has a 
very lengthy description of open access that I filched from 
AOL and AT&T.  You will recall that AOL, in San Francisco 
and AT&T, in Canada, defined in great detail to regulatory 
bodies what they meant by open access.  And frankly, what 
they said, and certainly what AT&T said in Canada, looked an 
awful lot like 251, 271 under the Telecom Act.
		And as I read the 9th circuit, that is one path 
you may have to go down, depending on how that plays out, 
the nature and structure of common or open access, because 
it may or may not be full common carriage under the Telecom 
Act now applies to the cable industry, at least in the 9th 
circuit, although obviously, we may yet litigate that 
question with you.  But, so at one level, that is the level 
of detail into which this Commission may have to go under 
the law.  
		The interesting thing is that for the almost two 
years that we have been arguing for this around the country, 
we had not advocated that.  We had advocated almost a simple 
sentence that said, essentially, unaffiliated Internet 
service providers shall be allowed to gain access to cable 
modem systems on "rates, terms and conditions that are no 
less favorable than" affiliated ISPs, the identical language 
that we have for cellular providers interconnecting with 
ARBAKS.  
		So you have that history.  And in that case, there 
is not this huge structure of regulation that we have had to 
live through in the last four years in 271.  Those are two 
models of access that this Commission has and has applied in 
a nondiscriminatory framework.  We don't have to do an awful 
lot of work, as I pointed out to this Commission in the case 
of Texas and New York.
		You have operating irreversibly open markets.  In 
those states, the Commissions in those states have worked 
out with the dominant incumbent carriers open access rules. 
 One can argue that under the Ninth circuit, you should 
apply those rules to the cable system.  We have been asking 
for a lot less than that for the last couple years.  We may 
have a legal right to all that.  
		So my answer to you is either use the 
nondiscrimination language from the cellular providers or 
the nondiscrimination structure from New York and Texas.  
Off the shelf.  They exist.  No long proceedings.  We know 
how to do it.  
		Alternatively, I'll give you another example.  
Recently, Montgomery county adopted a policy in which they 
defined open access, which was interconnection, at the head 
end, with no other modification to the system.  I also read 
that as no other intervention between the customer and the 
ISP from the host cable operator.  Very simple definition.  
One paragraph.  I'll make sure you have it.  
		And language like that put it into this merger 
agreement, put into the AT&T merger agreement under 
reconsideration will have the effect of establishing the 
level playing field we heard about.  It will balance the 
bargaining power of the unaffiliated ISP and the affiliated 
ISP.  That's a level of detail I think answers your 
question. 
		CHAIRMAN KENNARD:  Not exactly.  You outlined a 
couple of options. 
		MR. COOPER:  Yes. 
		CHAIRMAN KENNARD:  But my question very 
specifically, are you recommending under your formulation of 
open access, that we consider the issue of pricing and 
speed?  
		MR. COOPER:  I, the best language is, "rates, 
terms and conditions that are no less favorable than 
affiliated entities get."
		CHAIRMAN KENNARD:  But that just begs the 
question, because rates, terms and conditions usually 
include the issue of pricing. 
		MR. LOVE:  What that does, if you, if AOL had 
agreed in San Francisco to what they had advocated or if San 
Francisco had agreed to what AOL had advocated, what would 
happen then is that the ISP would have the right to ask for 
interconnection, access to the system on rates, terms and 
conditions no less favorable.  If that entity felt that they 
were being discriminated against, that entity would have a 
legal right to litigate or perhaps arbitrate, which is the 
framework of the Telecom Act in 251, 251.  
		So that may be the better way to go.  Give them 
the right.  Tell them to arbitrate disputes so that you 
don't have to try and write rules.  We tried to get through 
this without writing rules by letting private parties have 
the private right of action.  That is what AOL asked for in 
San Francisco.  
		CHAIRMAN KENNARD:  Thank you, Mr. Cooper.  Any 
other questions of this panel?  Commissioner Ness, you 
haven't gone yet. 
		COMMISSIONER NESS:  Disney claims that the merged 
entity would be able to discriminate in routing and caching 
of data, among other things.  Dr. Cooper, since you have 
addressed this in previous discussions, do you agree with 
that statement?  
		MR. COOPER:  Well, they clearly have the technical 
ability.  That was the great service that the Cisco 
documents gave to us.  The answer is that a policy to allow 
nondiscrimination would prevent that.  And I thought 
Montgomery county did a good job of pinning that down.  That 
is, a provider like Disney ought to be allowed to deploy its 
own caching or obtain caching that -- on rates, terms and 
conditions that are no less favorable than the cable 
operator provides to its affiliated service provider. 
		COMMISSIONER NESS:  Mr. Parsons, would you care to 
respond to this question?  
		MR. PARSONS:  Well, I think that both my colleague 
from AOL, who's more technically proficient, and I would 
care to respond.  I'm going to let Barry start, but I have a 
point that I want to make in summary. 
		MR. SCHULER:  Yes.  I've listened to this issue 
being discussed of limiting choice, this notion that somehow 
the merged entity is going to limit choice to consumers, 
will somehow disadvantage competitors.  I just wanted to 
point out that that idea is an old media idea.  It's not an 
idea that really applies to our media world.  
		What's happening today is, if you think about, if 
you think about old media, you think about choice is 
important because there's finite choice.  There's so many 
hours of prime time at night.  Therefore, if you're in the 
media business, your job is to try and get as many people 
doing exactly the same thing.  That's how you make money.  
That's how you get ratings. 
		In the Internet world, because it's infinite 
because it's on demand, because you can get what you want 
when you want it.  Our motivation is different.  We've 
learned that the good thing and what consumers want are lots 
of choice.  It doesn't matter to us whether or not people 
are all doing the same thing.  
		In fact, if you asked 100 different people what 
AOL is to them, you would hear them say they're completely 
different things.  It's where I get news, it's where I talk 
to my friends, it's where I get sports, it's where I get, 
talk to my friends, where I go to the quilting forum.  So 
from our point of view, we can't discriminate content.  If 
we were to employ some kind of caching that somehow 
discriminates against content, what that means is, to some 
segment of our members, they all of a sudden have a bad 
experience.  And so it makes absolutely no business sense.  
In fact, if we did it, what it would do is they would 
complain.  
		COMMISSIONER NESS:   Mr. Orton has agreed that 
that happens.  Have you not?  
		MR. SCHULER:  They would complain to us. 
		MR. COOPER:  Let me respond. 
		COMMISSIONER NESS:  Go ahead, Dr. Cooper. 
		MR. COOPER:  Technically, he's admitted, well, the 
question was a technical question.  Can he?  And the answer 
is yes.  And so his point is that, look, if I discriminated 
against CNBC, then my viewer experience is degraded and I'm 
going to lose a customer.  However, if, yeah, I discriminate 
against CNBC, but they go over to CNN, which really isn't as 
good on content but now is just, is faster and prettier and 
quicker, the answer is that I don't know how far they've 
degraded, and of course they've captured all the economic 
rents from the fact they're saving the customer. 
		MR. SCHULER:  That, that is not how, unfortunately 
-- and I think our friends at Disney would be the first to 
say -- consumers buy brands.  Brands are not fungible.  The 
fact of the matter is somebody wants to watch the Yankees, 
it's not as good to go watch the Mets.  Someone wants to 
watch, you know, Disney, it's not as good to go watch Mickey 
Mouse.  If someone wants to go --
		CHAIRMAN KENNARD:  But Mr. Schuler, what if the 
Mets are in black and white as opposed to color.  Isn't that 
the question?  
		MR. SCHULER:  But understand, but understand that 
because of the fact that the experience of the Internet is 
so diverse and it's so different and it's so nonreal-time 
based, meaning anybody can go on at anytime, our job, and 
what consumers are buying from us, is providing the best 
quality of service to what they want when they want it.  And 
we never know what that is.  It's impossible to know what it 
is.  
		In fact, history has shown to AOL, who six years 
ago when the Internet came along, was a proprietary service, 
there was no Internet.  The Internet came along.  Everyone 
said it was going to kill us, it was going to put us out of 
business.  Instead, what we did was we embraced the 
Internet.  We incorporated it into our service.  
		In fact, we set out to be the best Internet 
service provider out there.  And we discovered that by doing 
that, by providing unrestricted access to content, that 
people came.  Today, 23 million households have decided to 
buy that.  
		COMMISSIONER NESS:  Okay.  Thank you.  Mr. Levin, 
you wanted to respond also. 
		MR. PARSONS:  I would like to make a comment.
		COMMISSIONER NESS:  Okay.  One moment.  Mr. 
Parsons, and then Mr. Levin. 
		MR. PARSONS:  Commissioner Ness, you know, you 
folks have a tough job because you've got to, you have to 
make a fine balance.  Virtually everything that we've heard 
on this panel today is about stuff that could happen.  In 
fact, as I was sitting here doing a mild slow burn on Mr. 
Mirabal's comments and thinking about things like CNN en 
Espanol and People en Espanol and all the things we do in 
that area, I remembered one of his comments.  He said, it's 
conceivable -- this is a quote, I think -- "it's conceivable 
that this could have an anticompetitive effect." 
		Now that's unarguable.  It is conceivable.  I 
mean, technically, you could degrade the stream on the 
Internet.  Technically, you could degrade the stream that a 
cable company puts across, but what Barry is saying is not 
only why would they do it -- they don't do it.  They don't 
do it because, because of the marketplace, because of the 
competitive dynamic.  
		And I think too many of the commenters on these 
proceedings have come from the point of view of, not, are we 
trying to protect competition, but are we trying to protect 
a competitor?  Competition won't let them do, or us 
ultimately if this Commission and FTC sees its way to clear 
our merger, do or enter into the kinds of behavior that are 
conceivable, because there'll be lots of other ISPs out 
there that are carrying these brands, and we've committed to 
open access in the way we've defined it in our MOU, Mr. 
Chairman, so that you can see it. 
		So that I think, you know, the Commission has the 
job of understanding -- yes, the dimension of the playing 
field, what is the art of the possible -- but the Commission 
also has the very difficult job of trying to find the 
balance so as not to, to borrow a phrase from constitutional 
law and the first amendment, not to put a "chilling effect" 
on innovation and on competition by trying to conceive of 
everything that could go wrong and anticipatorily block it. 
		I think that the genius of our economy and the 
strength of our economy over the last 15 or 20 years has 
been, frankly, a cutting back of regulatory impositions that 
has allowed innovation and competition to go forward.  And 
it's enabled to sort of put ourselves in the front rank.  So 
that --
		COMMISSIONER NESS:  Okay, thank you.  Mr. Levin, 
you wanted to respond.  I know we're running out of time.
		CHAIRMAN KENNARD:  You're on the next panel too, 
so you'll have a chance to continue your monologue.  But --
		MR. PARSONS:  Appreciate it. 
		MR. LEVIN:  AOL right now discriminates in 
content.  You get the front page of AOL and it's not a 
random selection of little content that you see on the page. 
 There are people that pay millions of dollars to AOL to 
have discriminatory placement on the thing.  That's what 
they do.  That's the difference between AOL and a generic 
ISP is you have strategically placed content.  
		The reason that they've been fighting with 
Microsoft is Microsoft gave a number of discriminatory 
events that have affected AOL in certain ways that AOL has 
complained to the Justice Department, and they've seen it 
happen in the very marketplace that Mr. -- that was 
described by AOL as something that would be impossible.  I 
mean this is really a load of crap.  This idea that the 
cable companies don't discriminate is ridiculous.  That's 
what they do.  They're the gatekeeper of the platform.  They 
decide whether you get the golf channel or the food channel, 
and, you know, if they're part owner of you, your odds of 
getting on tend to be a little higher, but I mean that's 
exactly precisely what they do. 
		Now, what's going on with the architecture at the 
next thing is different than what AOL deals with right now. 
It's going to be qualitatively, characteristically 
different.  The people at -- Steve Wolf, the guy that used 
to run NSF's operation on the Internet that went over to 
Cisco used to debate this, you know, about eight years ago 
on the Com.priv list (phonetic), and he used to talk about 
wouldn't people pay for a go-fast button?  Now, what's 
driving it is multimedia.  If you're talking about simple 
frames of Web pages and e-mail message, you don't really 
have to have this high-tech, go-fast stuff like you do now, 
but with streaming media, the kinds of things they want to 
convert the Internet into, these things resurface.  
		The fact that the technology is where it is right 
now is part of a cycle.  It's like this now.  Five years 
from now, it's going to be different.  And maybe five years 
later it will be like it is again now.  It goes through 
cycles.  Thank you. 
		CHAIRMAN KENNARD:  Excuse me, I'm going to have to 
cut you off.  We are running very far behind.  Commissioner 
Powell has an engagement, so he has to leave soon.  
Commissioner Tristani, you'll have the last question on this 
panel.  Then, we're going to have to break for the final 
panel. 
		COMMISSIONER TRISTANI:  I had a question for Mr. 
Mirabal and a bit of a comment, but first of all, you made 
some statements that Time Warner was running a -- and I 
think it was a Seinfeld episode?  -- is that a fact?  And 
I'm talking about the Seinfeld episode which ridiculed 
Puerto Ricans, burned the Puerto Rican flag and made all 
Puerto Ricans look like rioters. 
		MR. MIRABAL:  That's correct. 
		COMMISSIONER TRISTANI:  They are running it on 
syndication?  
		MR. MIRABAL:  They, they produced it through one 
of their production companies, Castle Rock.  And prior to 
the airing of that episode, a coalition of Hispanic 
organizations requested well in advance that we be allowed 
to screen that episode because of the denigrating manner in 
which it presented --
		COMMISSIONER TRISTANI:  I know about that, and 
that's kind of, that happened, but my concern is now, is 
that still being run?  Do you know that as a fact?  
		MR. MIRABAL:  The, the piece that is continuing to 
be run is Fort Apache, which is worse than the Seinfeld 
episode, because the Seinfeld episode, to the extent that it 
is a comedy, treated that with some humor, which we were not 
happy about.  But Fort Apache does not treat it with any 
humor.  And that continues to be run on the station. 
		COMMISSIONER TRISTANI:  Have you asked them not to 
run it?  
		MR. MIRABAL:  Yes, we have.  They have, they 
probably in their records continuously dating back from when 
they began running that, that particular movie.  I saw it 
once only three months ago when I was in Boston doing a 
speech, and I was appalled that it was running again on the 
station. 
		COMMISSIONER TRISTANI:  And let me ask you 
another, and this will be my final question, but you, I 
think, raised some concerns about there not being 
programming about Hispanics.  Is this something that's just 
a problem with Time Warner or is it a problem with other --
		MR. MIRABAL:  No, it is not.  I'm a member of the 
National Hispanic Media Coalition, and we've been very 
public about our concerns on all stations, lack of 
programming addressing the Latino community.  And as I said 
before, there is limited programming in all stations, but 
we're, we're citing Time Warner, because that is the basis 
of this discussion today. 
		COMMISSIONER TRISTANI:  Thank you, Mr. Mirabal. 
		CHAIRMAN KENNARD:  Finished?  Okay.  Thank you all 
very much for this panel.  We will take a 10-minute break 
and then reconvene.  We need to move through the next panel 
quickly, because I'd very much like to reserve some time for 
statements from the general public.  Thank you. 
		(There was a brief recess.)
		CHAIRMAN KENNARD:  Before we begin our next panel, 
I wanted to make an announcement.  We very much view this 
process as an ongoing process of collecting information for 
the record that we're developing in connection with this 
proposed transaction.  And in that regard, we have 
established a Web site and an e-mail address where people 
who are interested in contacting us about this transaction 
and providing additional comment, which will be included in 
the record, can do so by sending their comments to AOLTWPS 
at FCC.gov.   That's AOLTWPS at FCC.gov.  
		We'll now go to our next panel, which will be 
industry perspectives on this transaction.  And the first 
witness will be Mr. William Reddersen, executive vice 
president of BellSouth Corp.  Mr. Reddersen. 
		MR. REDDERSEN:  Mr. Chairman, I suspect that I 
don't have to introduce myself now.  I am Bill Reddersen, 
and good afternoon to all, Commissioners and to the staff.  
Let me start by thanking you for this opportunity to share 
with you BellSouth's concerns surrounding the merger of 
these two great companies.  Before I get into the specific 
issues, I would like to make a couple of brief comments up 
front. 
		Today's industry convergence is a very natural 
outcome of both broadband and Internet technology, and this 
trend will likely result in a limited number of vertically 
integrated players like this combination and AT&T.  Given 
this consolidation, we at BellSouth do not object to this 
merger, per se.  However, we do believe that this merger 
must be conditioned to ensure that the consumer value 
created by it is not outweighed by the potential 
anticompetitive choice-limiting impacts of it.  
		Finally, these issues are purely about conditions 
on a voluntary merger.  They have nothing to do with 
regulating the larger Internet, per se.  Given the 
consolidated market power and concentration of key resources 
created by this merger, there are three deal-specific areas 
with which this Commission, the FTC and the Justice 
Department must be concerned. 
		First, if a limited number of megaplayers is a 
natural industry progression, then real competition will 
result only if these new megaplayers are required to compete 
rather than allowed to cooperate and share markets.  
		Secondly, the scarce and required resources 
individually controlled by AOL and Time Warner, each with 
their own substantive market power, must be made available 
on market-based terms and conditions, or competition will be 
reduced.  
		Third, all of these players, including AOL, are in 
the network business.  This Commission has understood for 
decades that independent or unconnected networks restrict 
competition.  Given these points, we believe this merger 
must be conditioned it the following three ways. 
		First, a very bright line must be drawn between 
the new AOL Time Warner and the merged ATT/TCI/Media One.  
The DOJ has already identified this concern but clearly did 
not have this additional merger in its scope.  These two 
gigantic companies must be required to compete and not 
allowed to share markets in any way.  All current and joint 
ownership between AOL and AT&T should be eliminated and 
prohibited going forward.  The simple test which must be 
applied to all future AOL AT&T relationships is to require 
that they be based solely on generally available market 
terms and conditions. 
		Second, as both AOL and Time Warner stated in 
their May 11th filing, open access to content is their 
policy.  The public interest will be best served if this 
voluntary policy is clearly codified.  The dominance of 
AOL's distribution control is unrivaled by any other network 
today, broadcast, cable or satellite.  This Commission 
clearly knows that withholding content will have serious 
impact on competition.  
		You lived it with satellite and cable 
overbuilders, and you will relive it in the broadband 
Internet world if we are not vigilant.  The relationship 
between Time Warner content and AOL-packaged distribution 
must be based on generally available market terms and 
conditions.  Again, a simple principal simply applied to 
this merger. 
		Finally, AOL is a network in and of itself.  In 
fact, it is one of the highest volume communications 
networks in the world.  It is the largest by an order of 
magnitude of any other consumer Internet network.  Combined 
with Timer Warner Cable, it will grow even larger in its 
market power.  The issue here is simple, as well.  Like any 
other network, AOL must be required to openly interconnect 
with other networks.  
		This issue is best seen in the instant messaging 
debate.  If I reduce this complex debate to a simple 
telephone analogy, what it would mean is that customers on a 
competing SELEX (phonetic) network would not be allowed to 
talk to customers on BellSouth's network equally.  Without 
such standards-based interconnection, no long distance or 
local telephone competition could ever or would ever 
develop.  Certainly, such a standard should be applied to 
this merger, as well. 
		In closing, let me summarize quickly.  First, AOL 
Time Warner and ATT's TCI Media One must be fully separate 
and must compete with each other and not allowed to join 
together.  Second, Time Warner content that is packaged and 
distributed through AOL's dominant Internet environment must 
be made available on market terms and conditions.  Finally, 
AOL's network must openly interconnect to others.  
		It is no accident that these merging parties 
clearly recognize these critical issues going into this 
merger.  That is why they voluntarily offered up their MOU 
and their May 11th letter to this body.  Now, all that 
remains is for these stated promises and policies to be 
refined and codified as conditions to deal approval.  
		I've listened to all of the discussion today very 
carefully.  There's been a consistent theme coming out of a 
lot of different points made.  That is that we're dealing 
with a past history of closed environments.  We're dealing 
with the technical capability and potential self-interest to 
continue some of that behavior.  We're dealing with a theme 
of "trust me," going forward that doesn't make sense 
anymore.  
		And all of the panelists, to a member, have said, 
don't take the "trust me" theme.  Codify the promises.  
Thank you, Mr. Chairman. 
		CHAIRMAN KENNARD:  Thank you.  Mr. Padden?  
		MR. PADDEN:  Thank you, Mr. Chairman.  I'd like to 
focus my remarks today on interactive television, which, at 
least to our way of thinking, represents the convergence of 
traditional television, Internet content, communications and 
commerce.  And our company is investing millions of dollars 
in developing wonderful new interactive television content 
for consumers.  For example, on election night this year 
we're going to have interactive election coverage, the likes 
of which the American people have never seen before.  They 
won't have to wait for the race, the information about the 
races they're interested in to be selected by the director 
in the studio to come up on the screen.  
		You'll be able to pull up and call the election 
results you want.  We'll be able to do instant polls.  We're 
also doing, although not quite on the same level of civic 
responsibility, a play-along game with Regis Philbin on Who 
Wants to be a Millionaire, and interactive content to go 
along with Sunday night and Monday night football.  And even 
on Saturday mornings, we have interactive content for 
children.  We call it Zoog Disney.  The Zoog's are creatures 
that live in the Zether, which is the space between the 
computer and your television.  And we've had wonderful 
success with all of this. 
		And Mr. Love remarked that he thought it was a 
little strange that a big company like Disney was taking the 
position we are.  But it's really very easy to explain.  All 
we want is a world where, as we deploy this interactive 
television content, consumers have the right to choose or to 
not choose our content based on how good a job we do 
creating it and promoting it.  And what we're trying to 
avoid is a world where that choice is skewed or limited by 
the business interests of the company that owns the pipe to 
the consumer's home. 
		And we are very focused on the cable plant, 
because all the analyst reports that we read say the hybrid 
fiber coax network will have great advantages over every 
other technology in delivering this interactive television 
product.  Certainly, DSL, which may be competitive with 
cable modems for high-speed Internet access, at least as it 
exists today and for the foreseeable future, consumers are 
not going to have the option of getting interactive 
television over DSL, because the technology just doesn't 
support it. 
		Satellite is great, but a lot of consumers don't 
have access to satellite, and even those that do, the return 
path is not comparable to the return path available on full 
interactive two-way cable.  Now our company stayed out of 
other mergers that have come before this agency, despite 
significant concerns.  We've also stayed out of the open 
access debate.  We've not been among those who have been 
critical of this agency for not moving more quickly, 
frankly, because we heard the rationale that you didn't want 
to stifle the development of broadband, slow its deployment, 
and that made some sense to us. 
		There's two things that pushed us over the line 
with respect to this transaction.  First, you heard Mr. 
Levin say that they are now starting to install routers that 
are capable of open access.  And I think in that statement 
there's a very important fact.  And that is the architecture 
for interactive television systems is being set now.  
Decisions are being made now about what kind of routers are 
in fact going to be installed in these networks.  What 
capabilities will be in the box and in the operating system.
		And we think it's important that the concept of 
openness get built in now.  Also, we believe this merger is 
different than any other merger that has come before you.  A 
different collection of assets.  It's a merger of the AOL 
walled-garden marketing environment with the narrow, 
bottleneck cable pipeline and the Time Warner content 
library.  Several of the witnesses have referred to all the 
pieces of the puzzle that come together in this company -- 
cable past 20 million homes, half of the narrow-band 
Internet marketplace, and on and on -- we don't think you 
can rely on promises of good behavior.  
		We think there's a history here with both 
companies, the common thread being abusing bottlenecked 
facilities to limit consumer choice.  I'll give you just a 
few examples.  AOL, if you want, if you're a company that 
wants to put your content inside their walled garden, their 
contract will require you to disable navigation links 
otherwise available to the consumer.  There is no way to 
characterize that requirement as pro consumer choice.  It's 
anti-consumer choice.  It's taking choice and options away 
from the consumer.  
		We've provided those contracts to the Federal 
Trade Commission.  If we can work out the appropriate 
protective order, we'd be happy to provide them to you.  
With respect to Time Warner, they refuse to carry the local 
and regional news channels they don't own.  That's not the 
consumer making the choice, that's Time Warner making it for 
them.  They refuse to carry Disney channel on basic.  They 
own a children's channel called Cartoon Network.  We believe 
they have a conflict of interest and that's why they did 
that. 
		I see my time is up.  We're very concerned about 
what they're going to do in this interactive marketplace, 
particularly discrimination on the return path.  And I just 
wanted to read you the one sentence from our 
just-negotiated, hard fought retransmission consent 
agreement with Time Warner with regard to the return path so 
you'll know, despite all the focus on this issue, what we 
were able to achieve.  
		The contract says, "Nothing contained herein shall 
obligate operator to provide broadcaster with access to any 
return path provided to subscribers by operator for any 
purpose."  So we got nothing.  Thank you, Mr. Chairman.
		CHAIRMAN KENNARD:  Thank you, Mr. Padden.  Mr. 
Weed?  
		MR. WEED:  Good afternoon, thanks for being here. 
 I'm Steven Weed.  My real job is I run a group of cable 
systems in the Northwest, but I'm here today as vice 
chairman of the American Cable Association.  The ACA 
represents about 300 independent cable companies, 
representing about three million subscribers, primarily in 
smaller and rural markets.  ACA must transact with media 
conglomerates like Disney/ABC, Viacom, Fox and Time Warner 
for programming essential to its video business.  
		Those companies have overwhelming market power 
over independent cable companies.  In many cases, they use 
this market power to determine -- to the detriment, excuse 
me, of independent cable and its customers.  That's why 
we're here today.  On behalf of our members, I thank the 
Commission for the invitation to voice our concerns.  ACA 
has participated in this proceedings to raise one important 
public interest issue.  
		Postmerger Time Warner AOL will control essential 
Time Warner programming, AOL services, including AOL TV, and 
substantial investment in the largest direct TV broadcast 
company, Direct TV.  These factors give AOL Time Warner the 
market power to threaten the public interest and a viable 
independent cable industry and its progress in closing the 
digital divide.  
		I want to about the digital divide.  The 
Commission has voiced repeated concerns over the digital 
divide.  That is, the concern that consumers in certain 
markets, including smaller markets in rural areas, will not 
have access to broadband services.  In fact, recently, 
Chairman Kennard observed that the lack of high-speed access 
in rural regions stems primarily from the high cost of 
providing such services.  Chairman Kennard stated, 
"Providing customers with sophisticated services in areas of 
low density is an expensive undertaking."
		ACA members know this economic very well.  But one 
important point is overlooked in the digital divide.  
Independent cable is making great progress in smaller 
markets.  Increasing numbers of ACA members are delivering 
high-speed broadband services, including high-speed Internet 
access, to smaller communities in rural areas throughout the 
United States.  It's an expensive undertaking, but 
independent cable is figuring out how to serve these markets 
and is taking the risk and making it happen. 
		But the business model in smaller markets is far 
from proven.  Independent cable's progress could be stalled 
by the imposition of costly local, federal regulation or by 
abuse of market power by companies that control essential 
programming and Internet services.  This brings us to the 
ACA's primary question to the applicants.  Will AOL Time 
Warner require independent cable operators to carry AOL 
services as a condition of access to essential Time Warner 
programming?  
		If they answer in the affirmative, the question 
would pose a serious threat to independent cable's progress 
in providing advanced service to smaller markets.  It could 
ultimately force many smaller systems out of the business 
altogether.  Here's how it could happen: To advance AOL's 
anywhere strategy, AOL Time Warner could require carriage of 
AOL service on independent cable systems as a condition of 
access to essential Time Warner programming.  They could 
make independent cable pay for these services like 
Disney/ABC and others make independent cable pay for 
undesired services as a condition of access to its essential 
broadcast and satellite programming now. 
		Independent cable systems would have no choice but 
to accept Time Warner's terms or lose customers to satellite 
dishes.  This would disrupt existing ISP partnerships, raise 
costs for small cable operators, cut margins, deter 
investment and stall network upgrades.  AOL and Time Warner 
have responded to ACA's question but in inconsistent ways.  
		First, the applicants argue that they would not 
require carriage of AOL services as a condition of access to 
Time Warner programming, because it was not in their 
economic interest to do so.  Independent cable operators 
would just find an alternative programming, Time Warner 
said.  This economic argument does not work.  Of course it 
is in the applicant's economic interest to leverage key 
programming assets to force carriage of other services.  
		As a prime example, Disney/ABC.  To gain access to 
ABC programming and essential services like Disney and ESPN, 
independent cable must agree to a varying array of 
burdensome and costly conditions.  AOL Time Warner would 
have the same incentives to tie programming and AOL services 
unless they valued the public interest and a viable 
independent cable industry.  The applicants have suggested 
they might.  
		In their July 12th filing, AOL and Time Warner 
made an unequivocal statement that they would not require 
carriage of AOL services as a condition of access to Time 
Warner programming.  ACA cheered.  Time Warner and AOL, it 
seemed, to be the first media conglomerate acknowledging its 
obligation to temper its economic interest with the public 
interest and fair treatment of independent cable companies.
		But then, in the applicant's July 17th filing, 
they appeared to retreat from this statement.  With this 
apparent inconsistency on the record, ACA asks today for 
clarification.  The most appropriate clarification for these 
applicants is to affirm that they will not condition access 
to any Time Warner programming on carriage of any AOL 
services.  With that clarification on record and included in 
this Commission's order in the docket, ACA can support the 
merger. 
		Moreover, ACA can commend AOL and Time Warner for 
their willingness to step up to the important public 
interest obligations of supporting independent cable and its 
efforts to close the digital divide in smaller markets.  
		CHAIRMAN KENNARD:  Thank you, Mr. Weed.  Mr. 
Bagully?  
		MR. BAGULLY:  Good afternoon, Mr. Chairman, 
Commissioners.  I'm Ross Bagully, CEO of Tribal Voice.  
We're an independent provider of instant messaging services. 
 I want to first thank you for the opportunity to be here 
today and to participate in this hearing.  I would also like 
to depart from the printed text that I have previously 
provided, to take the opportunity to address some of the 
comments made here today. 
		But initially, I want to comment that there are 28 
million deaf and hearing impaired American citizens who rely 
on instant messaging services, much like most of us use the 
telephone, and I would ask, do any of us believe that those 
28 million citizens should have less functionality in their 
communications media than those of us who use the telephone 
have today.  Certainly, none of us would tolerate the 
example that we heard from BellSouth, where you had to have 
a different service to communicate with somebody who had 
AT&T or Sprint or MCI.  Certainly, that should be -- that 
should carry over in the world of instant messaging to the 
deaf and hearing impaired community. 
		Earlier today, Mr. Case discussed the availability 
of the AOL instant messenger and his commitment to 
interoperability.  However, one year ago, Mr. Schuler 
promised to fast-track interoperability within the IETF.  
During that one-year cycle, there has been very limited if 
any participation by AOL in the IETF process.  Two to three 
months ago, Mr. Case again addressed the issue of IM 
interoperability, and at that time, his suggestion was you 
could achieve interoperability by licensing AOL's software. 
 Shortly thereafter, AOL has again changed its position, 
again promising to fast track interoperability with the IETF 
but using as an excuse, security and privacy concerns of its 
members. 
		I guess my question, Barry, would be why didn't 
you tell us that a year ago?  And the next question would be 
were you misleading us then or are you misleading us now?  
On the question of interoperability and its effect on 
security for the members and privacy concerns, there's not 
been one indication that anybody has demonstrated that 
security and privacy is in any way more threatened or 
further at risk with interoperability than it is without it. 
 And in fact, maybe Mr. Schuler can address that later this 
afternoon. 
		One of the comments was -- that Mr. Case made was 
that AIM can be downloaded for free from the Internet and 
can be used.  This is absolutely correct.  However, the 
answer to that is, what happens to the competitive 
marketplace and where is the incentive for new features, new 
functionality, new choice for the consumer if everybody in 
fact is using a single delivery product?  
		The other point on that, by the way, was while it 
is free, there is a licensing agreement.  The licensing 
agreement gives AOL the unilateral right to change the terms 
and conditions of your use of that product at any time in 
the future.  Now, that's not unusual in a licensing 
agreement.  What's unusual is that this is an excuse why 
there doesn't need to be any competition and it's okay for 
them to completely own the market. 
		Commissioner Tristani, I would urge you to take up 
Steve Case's offer to download AIM and to try that product. 
 And I would ask you at the same time, try Microsoft's, try 
Yahoo's, try Tribal Voice's, try Otogo's et cetera.  And 
after you do that, I would ask you to think about when you 
want to make your choice about which product to use, do you 
want to have the option of making the choice because one 
product had features and functionality that you preferred, 
or because one product gave you access to 92 percent of the 
world to communicate with and the other products limited you 
to eight or 10 percent?  
		We all know that interoperability is essential for 
networks to grow and expand.  That's been true for a long 
time.  Mr. Parsons discussed a lot of issues earlier, and he 
was saying that we were anticipating bad behavior, but what 
I'm talking about today isn't anticipatory at all.  I'm 
talking about bad behavior that has been occurring for the 
past 12 to 18 months.  AOL consciously, intentionally and 
knowingly blocks ours, Icast's, AT&T's, Microsoft's access 
to inter-operating with their system,  all companies using 
protocols, which AOL published themselves and which they use 
for their own system.  
		In closing, I ask the Commission to join us in 
telling Mr. Case, break down this wall.  Thank you. 
		CHAIRMAN KENNARD:  Thank you.  Mr. Melcher?  
		MR. MELCHER:  Thank you, Mr. Chairman.  I'm last. 
 I hope I'm not least.  Good afternoon, my name is 
Christopher Melcher and I'm vice president and general 
counsel for RMI.NET.  I would like to thank the Commission 
for providing me the opportunity to comment on the proposed 
merger of AOL Time Warner and its impact on the issue of 
open access for residential and business consumers to 
Internet access over the cable technology.  
		RMI.NET is a national Internet commerce solutions 
provider with a strong regional focus in the Midwest, 
Southwest and Western United States.  We will have 
approximately $50 million in revenue for year 2000.  
Significant in our minds, but obviously pales in comparison 
to the other folks at this -- some of the other folks at 
this table and who have spoken previously.  We believe 
ourselves to be a provider of the broadest possible range of 
Internet access services to business and residential 
customers and a premier one-stop provider of Internet access 
and web services to small- and medium-sized business 
customers.  We are one of the small to midsize ISPs that 
have been talked about here today. 
		We provide Internet access to more than 100,000 
customers nationwide, and we offer the full spectrum of 
Internet access from standard dialup to DSL to high-volume 
T1s and DS3s all the way up to wholesale Internet access as 
a backbone provider for other smaller ISPs.  We are a 
primary Internet access provider for thousands upon 
thousands of residential Internet users across our nation, 
especially those located in rural America and isolated 
communities throughout the Midwest and Western United 
States. 
		We are a member of the United States Internet 
Industry Association, a nonprofit association that 
represents the interests of smaller to midsize Internet 
service providers.  RMI.NET and the U.S. Internet Industry 
Association both strongly support the opening up of the 
nation's cable systems to true competition at the wholesale 
and retail level.  We believe this should be an express 
condition of any FCC approval of the proposed merger between 
AOL and Time Warner.  
		As Chairman Kennard correctly raised earlier 
today, the real issues is not whether high-speed cable as a 
broadband access technology will compete with DSL or other 
forms of high-speed Internet access.  The issue is whether 
we should close one form of high-speed access to the 
Internet to competition.  Given that cable may prove to be 
the superior form of broadband Internet access, your 
decision will affect the entire Internet industry and will 
affect how our nation and the world communicate. 
		With the change in AOL's position on open access 
from prior to their proposed merger with Time Warner to now 
their position following that announced merger, it becomes 
imperative that the FCC take up the cause of open access for 
consumers on the nation's 8,000 smaller Internet service 
providers.  The FCC should make open access a clear and 
enforceable condition of its approval of the AOL Time Warner 
merger.  Let me explain briefly why we support open access 
and discuss the four most common myths perpetuated by 
opponents of open access.  
		First, we believe the correct analogy should be 
the analogy to DSL.  Open access should mean that Internet 
service providers have access to the cable plant and to the 
cable head end, and that should be that we have direct 
access to the consumer, with no interference.  The first 
myth the cable industry will tell you is that open access is 
not fair.  They will tell you that they have built or 
purchased their systems and have the right to control 
access.  
		In fact, we believe those systems were built with 
the support and participation of the public, not only 
through franchise awards but through guaranteed consumer 
revenue for the cable companies in the form of predictable 
cable rates and increases a local regulated monopoly, if you 
will.  I would argue that the public, therefore, has some 
portion of equity or ownership in these cable systems, which 
entitles the public to have competitive open access and 
choice on that system which they helped to build.  
		In reality, we believe AOL and Time Warner would 
prefer to create a tilted and skewed playing field by 
creating a closed system for Internet access and 
telecommunications services over that system.  This would 
force the consumer to make difficult, noncompetitive 
choices. 
		Myth number two is that open access cannot be 
accomplished quickly.  Until recently, the argument was that 
open access could not be accomplished at all.  It was 
technically impossible.  I assume AOL and Time Warner would 
agree that today there are no technological barriers to open 
Internet access over the cable plant.  As we all know, AT&T 
admitted as much several months ago in a letter to the FCC 
with Earthlink.  
		The question of open access for all Internet 
service providers over the cable system is no longer a 
question of whether there should be access, but the question 
is simply is only when and under what terms.  AOL and AT&T 
have now publicly admitted that the critical issue will be 
how open access will be implemented, and both have started 
to develop and implement open access cable trials to explore 
how multiple Internet service providers would operate over 
that cable system.  AT&T began a trial in Boulder, Colorado. 
 We've just learned recently that AOL is starting a trial in 
Columbus, Ohio. 
		We are pleased to be a participant in the AT&T 
open access cable trial, and we are beginning that process 
now.  We also would hope to be a participant in AOL's open 
access cable trial, and I would like to take Mr. Levin up on 
his offer that any ISP that requests will be asked to 
participate.  We so request.  But those trials are 
proceeding very slowly and with very limited focus.  
		We have seen absolutely nothing yet that would 
support any decision by the FCC to delay or eliminate the 
immediate intervention and regulation to ensure true open 
access over the cable system.  These trial are going through 
several phases.  We do not expect those, even the 
preliminary phase to be completed until well into later this 
year or into next year, 2001.  We don't expect there to be 
any significant results on a number of issues until well 
into 2001, perhaps 2002. 
		History has taught us that you cannot allow the 
owner of a monopoly or monopsony technology to control the 
terms of the access to that technology.  This is what we 
learned from the breakup of Ma Bell in the 1980s and the 
Telecommunications Act of 1996. 
		The third myth is that requiring open access would 
hurt competition and the marketplace.  What will hurt 
competition in the marketplace is to allow AOL in concert 
with AT&T to divide and control nearly 75 percent of the 
broadband access market.  If AOL Time Warner are allowed to 
control and close off a significant percentage of the 
broadband access market, the remaining small Internet 
service providers like RMI will quickly be extinguished.  
		Competition, as one Commissioner mentioned 
earlier, is not allowing two 800-pound gorillas to fight 
over a technology superior product.  It's allowing for all 
of the Internet service providers to compete over that 
product.  That's the model that has resulted in the 
phenomenal growth and success of the Internet.  Cable may be 
the superior product.  
		DSL and other high-speed broadband access pass 
only roughly 30 percent of the homes in America today.  
Cable and cable broadband currently pass nearly 90 percent 
of the homes in America.  It's a significant issue. 
		The final myth is that open access will hurt the 
consumer.  Again, dead wrong. 
		CHAIRMAN KENNARD:  Mr. Melcher, I'll ask you to 
sum up, please. 
		MR. MELCHER:  Thank you, Mr. Commissioner, Mr. 
Chairman.  In sum, we would say that the final myth is that 
open access will benefit the consumer by allowing the 
consumer to retain the service that they have now from their 
local Internet access provider.  We ask the FCC to mandate 
open access as a condition of this merger.  Thank you very 
much. 
		CHAIRMAN KENNARD:  Thank you.  And thank you all 
for your presentations.  I think, in fairness to Mr. 
Schuler, we should give him an opportunity to respond to the 
questions of Mr. Bagully that were offered in his 
presentation. 
		MR. SCHULER:  Thank you.  Let me just provide a 
lot of perspective, or at least put some context around this 
instant messaging issue, which I know is very confusing to 
people.  And it's important to know, when we talk about 
instant messaging being free, which was a surprise to some 
people, that we made it free voluntarily.  We actually 
stimulated -- I think the reason why Tribal Voice is in 
business today is because we created that category.  
		The way consumers are using instant messaging 
today is, while the services don't talk to each other, every 
consumer can talk to each other.  If your friend happens to 
use Yahoo Messenger and you know it, you download Yahoo 
Messenger.  And it's not like the telephone metaphor, where 
you have to have six phones.  It's really all on your 
computer.  We're talking about the difference between how 
many buddy list windows might you have up.  One, two or 
three. 
		But for consumers today, they essentially have 
interoperability.  Now, that does not mean that we think 
interoperability is a bad idea.  We think it is a good idea, 
for a lot of the reasons that are, have been suggested.  And 
it's also been suggested we've slow-rolled interoperability 
for some ominous reason, but I'd like to talk about that as 
well.  And I want to use e-mail as the point of history.
		If you go back 15 years, e-mail also was not 
interoperable.  Corporations, who mostly used e-mail all had 
their own systems, and you could only mail people inside of 
a corporation.  Then, the industry decided to create 
protocols to allow e-mail servers to talk to each other.  We 
believe that that's exactly the way you need to enable 
instant messaging interoperability.  
		However, while e-mail interoperability was done 
successfully, unfortunately, when it was done, no one knew 
about spam.  No one thought about the idea that when servers 
had open protocols and that they could talk to each other, 
that harmful people out there would all of a sudden start 
figuring out how to send lots of mails, which were, are 
either marketing materials or, worse yet, pornographic 
materials that end up in people's mailboxes.  You've heard 
about things like the Love Bug virus that caused damaging 
effects on networks.  Those are all distributed via e-mail.
		And I can tell you we have 8,000 people in our 
call centers.  We take two millions calls a week from our 
customers.  The single biggest complaint we get from them is 
spam.  They think we let it get through.  We get -- I read 
these things, I see it, I've seen things, why did you let my 
daughter see a pornographic picture?  
		So in thinking about this interoperability issue, 
our biggest concern is, so now, when we go to do this again, 
how do we make sure we build in the controls that are going 
to A, give consumers the ability to filter out what they 
don't want, B, to ensure that the hackers and spammers out 
there who seem to be much smarter than all of us who run the 
networks and manage to get their way in, will be prevented? 
 And how can we, who each want to run independent services, 
can maintain the standards of our service?  
		And this is the most important thing of all.  On 
AOL, instant messaging is a feature.  And one of the reasons 
people buy AOL today is because we have standards.  We have 
community standards, and we monitor and police them.  If 
people do bad things, we throw them off.  
		On our instant messaging service, we have a little 
button, and it says "Notify AOL."  And what it does is if 
someone's harassing you, if someone is -- and understand 
that spam or harassment in instant messaging is real time.  
It's someone who's talking to you and may be saying bad 
things to you -- if that happens, we have a button that you 
press.  It says, "Notify AOL."  When you press it, it goes 
to a real live human being in our call center who 
immediately intervenes.  That's the standard of service we 
offer, and that's what we pay for -- that's what people pay 
us for. 
		If you go to Tribal Voice -- and they also have 
standards, but let me tell you how, on their own Web site, 
they tell you to deal with a person who harasses you.  I 
will just read this.  It won't take too long.  "If you've 
been abused or harassed on Powwow, find the IP address of 
the perpetrator by clicking on the name field in the 
person's powwow window.  The window cycles between the 
person's powwow ID and his or her IP address."  It goes on 
and on for a couple of more paragraphs. 
		"Once you have the IP address, you can look up the 
person's Internet service provider using any WHOIS program. 
 The Internet provides a Web page from which you can run a 
WHOIS inquiry directly.  Such an inquiry usually returns the 
name, address and phone number where you can file a 
complaint.  Be sure that you can provide the IP address, 
offender and the time of the occurrence.  If you are 
unsuccessful at identifying abusers, e-mail Abuse at 
Tribal.com and we will track them down.  Please include the 
person's powwow name, powwow ID, powwow address."  It goes 
on and on.  
		And then it comes to the end.  "In addition, if 
criminal actions are involved, we urge you to contact your 
local police.  Tribal Voice will cooperate fully with the 
authorities."  Now, the point I'm making here is that he is 
free in his business to set the standards for his community 
he wants.
		There are two ways to do interoperability.  
There's a right way and a wrong way.  In the wrong way, the 
client-to-client or peer-to-peer way, we would be forced to 
the lowest common denominator of providing service to our 
members.  In the right way, server-to-server, the proposal 
which we put forth to the IETF, the IETF has been struggling 
with this issue --
		COMMISSIONER TRISTANI:  I think one other point 
you maybe misunderstood Mr. Bagully made was that a year 
ago, he was told one thing, and then a few months ago, he 
was told it's the privacy issue --
		MR. SCHULER:  Well, no --
		COMMISSIONER TRISTANI:  And the security issue.  
Let me finish. 
		MR. SCHULER:  Um-hum. 
		COMMISSIONER TRISTANI:  And he also indicates that 
there had been flip-flops.  
		MR. SCHULER:  Okay, so let me clarify --
		COMMISSIONER TRISTANI:  So there were different, 
so, and, and it would surprise me that you weren't thinking 
about these issues a year ago or 18 months ago if you were 
really seriously thinking about doing interoperability. 
		MR. SCHULER:  Okay.  My turn?  We have been 
absolutely consistent all the way through - and we can go 
show you my quotes -- that privacy and security and the 
difficulty, the technical difficulty of getting these 
systems, which must communicate in real time to be able to 
allow us to do what we're talking about doing.  And that is 
us to offer a level of service, other companies to offer a 
level of service.  It is very hard.  We run another service. 
 We have another instant messaging service --
		COMMISSIONER TRISTANI:  Do you think this is 
something you can do?
		MR. SCHULER:  We do.  We do, and we put forth the 
way we believe it can be done.  Just so you know, the 
industry standards body, who has been working on this issue 
for more than a year gave up.  The people, the work group 
who has been trying to figure out how you put forth the 
protocols absolutely gave up, and finally --
		COMMISSIONER TRISTANI:  Were you, were you working 
with them?  
		MR. SCHULER:  We were working with them.  And 
finally, they just basically said, look, we'll take 
proposals from the industry on how to do that.  We were the 
only ones who did it.  We came forward --
		COMMISSIONER TRISTANI:  But you were working with 
them throughout from the beginning?  
		MR. SCHULER:  Yes.  And we put forward a proposal 
that outlines how to do this server to server 
interoperability.  Nobody else did.  Microsoft didn't.  
Yahoo didn't.  Tribal Voice didn't.  No one else came 
forward with a proposal.  We did. 
		CHAIRMAN KENNARD:  Mr. Schuler. 
		MR. SCHULER:  And the important thing to add is 
that interoperability has to be true interoperability.  
There are many services out there --
		CHAIRMAN KENNARD:  Mr. Schuler. 
		MR. SCHULER:  Let me finish.  Let me finish.  The 
fact of the matter is -- Oh, I'm sorry, I'm sorry. 
		CHAIRMAN KENNARD:  I understand your getting 
carried away with the excitement, but we really do need to 
get back to a couple fundamental questions.  I just want to 
know what the time frame is.  You've said that you want this 
to happen and that you can do it.  Could you tell us for the 
record when it will get done?  
		MR. SCHULER:  Well, we can tell you for the record 
that there are two pieces to the puzzle.  One piece of the 
puzzle is building the technology that will allow our 
servers to interoperate with other services and incorporate 
all the controls that allow us to protect our consumers.  We 
think that's about a 12-month job.  Then, there's another --
		CHAIRMAN KENNARD:  Twelve months from today. 
		MR. SCHULER:  We are working at it right now.  But 
there's another issue --
		CHAIRMAN KENNARD:  Is that a yes?
		MR. SCHULER:  Well, yes.  Twelve months from 
today. 
		CHAIRMAN KENNARD:  Twelve months from today. 
		MR. SCHULER:  But let me clarify.  That's 12 
months to do the technology.  There is another issue that's 
important, and that is the issue -- understand that as we 
are publishing what we are doing, as these protocols are 
public, that at the same time that we are developing and 
other people are developing their systems to interoperate 
with ours, the hackers and spammers are out there figuring 
out how to break it.  
		This is an issue we deal with every single day.  
Our system is under attack every single day.  And so along 
with the development of the system, there has to be a period 
of quality assurance, a period of us testing the system and 
assuring that when we put it up -- because understand, and 
this is an important issue, this is a Pandora's box. It's 
like mail.  When the door is open, you can't take it back.  
		The reason that spam is such a horrible issue 
today is that, with the door open, you can't ever close it 
up again.  So the important thing is to do it properly.  
There's a technology component and there's a component of 
ensuring that you've built the most unbreakable system 
possible.  
		And I don't think there's anyone here -- because 
today instant messaging on all services are run relatively 
spam- and intrusion-free -- but I don't think there's anyone 
here who wants to one day say that, you know, we pushed this 
issue and in the process we got interoperability, but we 
took a service that people love and enjoy and introduced a 
factor they hate, and that's spam and intrusion forever. 
		CHAIRMAN KENNARD:  Okay.  Thank you, Mr. Schuler. 
 I want to return to something that Mr. Padden said in his 
testimony.  He testified that his company had not jumped 
into this debate earlier but felt compelled to for a number 
of reasons, and one of which was that his view is that the 
architecture is being built out now, investments are being 
made and if this Commission does not act now, we may have 
lost an opportunity.  
		And I'd like to get a reaction on that argument 
from either AOL or Time Warner, because I think it's an 
important issue that needs to be fleshed out.  Do you want 
to go first?  Maybe you should have a rest, Mr. Schuler. 
		MR. SCHULER:  Okay.  Well, I just want to comment 
on the issue that Preston brings up, which is focused on 
return path.  You don't need a broadband cable system to 
have a return path.  In fact, our AOL TV product, which 
we've just introduced, doesn't use cable at all.  It uses 
standard telephony as a return path. 
		So the fact of the matter is that the architecture 
for interactive television -- and this is a whole new area. 
 Who knows how it's going to turn out?  Starting out today, 
you can do interactive TV with a telephone, and we're doing 
it.  I'm a little confused about his argument, because we've 
approached every broadcaster and cable network about working 
with us on AOL TV and told them that they all can program 
their interactivity and have a return path and work with us 
to make this platform happen, and they have, ABC is one of 
the networks that has turned us down for some reason. 
		So I'm curious as to, if they're so concerned 
about having return path, and by the way, there is none 
today.  There are very few set top boxes I know that offer a 
true interactive return path.  I'd be curious why, when give 
the opportunity  -- and by the way, no cash required, we're 
not asking them for any money.  We just want to work with 
everybody to kick start this whole new category.  They 
turned us down for the opportunity to have return path for 
all the programming we'd love to have them develop.  
		CHAIRMAN KENNARD:  Mr. Padden, would you like to 
respond to that? 
		MR. PADDEN:  Sure.  You know, I described what 
we're going to do on election night this year and consumers 
doing interactive television with a separate TV and a PC 
with the PC connected to the public switch telephone 
network, which is still open, will be able to interact.  But 
if that same consumer was trying to interact in a single 
screen experience using a Time Warner Cable box, the new 
cable boxes that I saw at the cable show in March had no 
phone modem in them at all.  It was the cable in and the 
cable out.  
		And I've read you the provision from our contract, 
which gives us no access whatsoever to the cable return 
path.  That consumer, when migrating from the dual screen 
relying on the telephone network to the single screen in the 
cable infrastructure would lose the opportunity to interact.
		CHAIRMAN KENNARD:  But Mr. Padden, what about the 
broadband platform?  You know, the U.S. Congress loaned the 
broadcasters a lot of spectrum worth a lot of money for them 
to develop their own digital platforms.  And why not develop 
your own as opposed to requiring some divestiture of the 
Time Warner system?  
		MR. PADDEN:  Well, so far, our company has 
invested about $65 million in trying to build out that 
digital spectrum, including -- I think you know we did 
Monday night football in high definition throughout the 
entire football season last year -- but there's no return 
path.  Certainly nothing comparable to the broadband two-way 
path of the cable infrastructure that has any remote chance 
of being an effective substitute for consumers to what the 
cable plant is going to offer.  And what we're focused on is 
what, what the consumer's effective choices are going to be 
in the world of interactive television.  And all the 
analysts that we have read to date indicate that the two-way 
broadband hybrid fiber coax network will enjoy advantages 
over every other architecture. 
		CHAIRMAN KENNARD:  Mr. Parsons. 
		MR. PARSONS:  Mr. Chairman, with respect, I have a 
slightly different perspective on this subject matter, 
having been deeply involved in it.  I think, I think the 
reason that Disney is here today is a simple one.  And that 
reason was because they basically said to us at one point in 
time in the negotiation, if you don't agree to these 
demands, we're going to go down and throw, splash cold water 
all over your merger before the FCC and the FTC.  And it's 
important --
		CHAIRMAN KENNARD:  What demands were today, Mr. 
Parsons?  In retransmission context?  
		MR. PARSONS:  The demands in terms of what I'll 
call open access and nondiscrimination.  It's important to 
note that we in fact offered a nondiscrimination on the 
basis of affiliation place and that's not what they wanted. 
 What they wanted was essentially, something goes, that in 
effect would require us to discriminate in favor of Disney, 
because if thin about what real nondiscrimination is, they 
basically wanted us to carry all of their stuff, or whatever 
we carried of ours to carry of theirs, and to heck with the 
rest of the world.  
		And the remedy that they now come before this 
Commission with, which is to break apart, or suggest that 
you require the breaking apart of the distribution platform 
from the content platform is, in my judgment, almost 
laughable in the face of the last 50 or 60 years of history 
of this country and, in particular, in the face of the 
beneficiaries of the relaxing of the regulatory provisions. 
 The notion that we would go back to sort of 1948 and 
separate content from distribution or as, or go back to the 
1970s with the thin-thin rules.  Precisely the beneficiaries 
of the relaxation of those rules, and allowing the industry 
to come together in a vertically integrated way, as Gerry 
was saying earlier, not only has resulted in the 
proliferation of content, but choice for consumers.  
		And, you know, I think the Commission should think 
long and hard as it seeks to consider how to really 
encourage -- I'll put it that way -- a proliferation of both 
choice and content in this new medium.  Do you let the 
market do it, where consumer will will drive what is 
ultimately presented to them?  Or do you try and regulate 
that from, you know, from behind the parade, if you will, 
because of some fear of a host of horribles that a 
competitor has said I could be hurt?  Not competition could 
be hurt.  I could be hurt, because I've invested a lot of 
money in a business model that relies -- that requires 
access to this return path and if I don't get it, I might be 
hurt in the way in which I'm approaching the marketplace.  
		But what about the consumers?  I would submit that 
the trend has been clearly in a direction away from what the 
Disney folks are suggesting and proposing.  And the result 
of that trend has been more choice, more consumer 
empowerment, greater diversity in content.  And why would 
this Commission want to reverse that?  
		CHAIRMAN KENNARD:  Commissioner Ness. 
		COMMISSIONER NESS:  Thank you.  Can you tell me if 
you provide a return path for any other programming that's 
on your cable system?  Is there two-way interactive 
programming for any other programmers that are on the 
service?  
		MR. PARSONS:  We do, we do on a, on a conventional 
and negotiated basis.  For example, there's a service called 
Wink.  A little eye will pop up on your screen.  You can pop 
the eye.  It takes you into an Internet-based service.  And 
that's right, Gerry reminds me that it's unaffiliated with 
us -- that is a commercial service that's out there that 
comes to the cable operator and comes to the programmer and 
makes a deal to have their service ride along board.  We're 
totally comfortable with that.
		That's a negotiated arrangement with unaffiliated 
services.  We'd be totally comfortable with our friends at 
Disney, which they know.  But that's not what they want. 
		COMMISSIONER NESS:  Did you want to respond?  
		MR. PADDEN:  A couple specific examples.  We know 
that advertisement are being made today with interactive 
triggers.  For example, an ad for a car.  Click here if you 
would like to test drive this jeep.  What we asked -- and we 
put these letters in the record -- what we asked our friends 
at Time Warner was, we're pretty sure if that interactive ad 
runs on a channel Time Warner owns, that the system 
functionality will enable that interaction and the customer 
will have a chance to register for a test drive.  All we 
asked them was assure us that if Chrysler buys that schedule 
on ABC instead of on TNT that the system will function the 
same for the consumer when they're trying to interact.
		Another example.  In the letter that's in the 
record, we said, in this new interactive world, we're sure 
consumers will have the opportunity to drill down while 
watching CNN if there's a news story they would like more 
detail about, they'll be able to click and get transported 
to a broadband Web site that CNN will have developed with 
more detail on that news story.  We're all working on these 
same opportunities for consumers.  We said, just tell us 
that the system will function the same if this consumer's 
watching ABC News and they'd like to drill down.
		We have not asked for any kind of preferential 
anything.  In fact, we're having a hard time trying to think 
of all the questions we asked.  And the bottom line -- and 
you'll see this in the letters -- we asked of Time Warner, 
just assure us that the system will function for consumers 
when they're seeking to interact with our content the same 
way it does when they're seeking to interact with your 
content. 
		COMMISSIONER NESS:  Response from Time Warner or 
AOL. 
		MR. PARSONS:  There'll be one from both actually. 
 First of all, one of the differences between us and Disney, 
I think, is they seem to think they know how the world of 
interactivity is going to roll out in the future and, 
therefore, can answer all the questions today.  Our concern 
was and is -- and it should be a concern of this Commission 
as well -- that no one really knows how these interactive 
services and how interactivity, once introduced into 
television, will roll out and that it should be determined 
by the players in the marketplace and by customer and 
consumer demand, as opposed to trying to lay the tracks now 
that will keep the train from going where it needs to go but 
put it on a path that someone thought may happen. 
		Secondly, I have to disagree respectfully with Mr. 
Padden's characterization of what they asked for.  
Essentially, they asked for parity with all of our services 
and it's, so that, you know, instead of nondiscrimination on 
the basis of affiliation.  And when I responded -- well, I 
won't get into all of the discussions, but they were 
essentially saying, protect us, and we're fine.  Promise to 
do for us everything that you do for your own services, and 
we're fine.  
		The fact that that might, and would in fact, 
preclude other services that consumers might want -- we 
don't even, we don't even, as the Commission well knows, 
carry all of our services, because we're guided by the 
consumer demand.  So I think the ask was a lot more 
substantial, and I think that the concern was -- what Disney 
was trying to do, and what we hope this Commission will 
refrain from doing, is to lay some tracks across the 
wilderness when we don't know where the watering holes are, 
when we don't know where the customer demands are, where we 
don't know how this is going to roll out, because the 
marketplace needs to determine that.  But I know that Barry 
wanted to add something. 
		MR. SCHULER:  I just wanted to add that laying the 
tracks means even though there are digital set top boxes out 
there, in order to enable the kinds of applications that Mr. 
Padden is  talking about, interactive, more information on 
news, playing along with games, you need software, you need 
services, you need technology to be able to run on those 
platforms.  It may be that the current platform today can't 
necessarily support that, but we did introduce, just 
introduced a platform that does do it and, again, I will 
repeat, gave ABC the opportunity to do exactly what they're 
asking to do without charging any money, and they said no.  
		So I don't know exactly what their issue and 
concern is, because AOL TV does enable exactly the kind of 
technologies they're talking about, to do single screen 
work, to read those triggers he's talking about and enable 
them.  And so, given the opportunity, the answer was no. 
		CHAIRMAN KENNARD:  Commissioner Tristani. 
		COMMISSIONER TRISTANI:  I wanted to go into 
another area.  Mr. Weed asked a question that I would like 
you to address.  And by the way, Mr. Weed, I really 
appreciate the work that a lot of your members do in the 
rural communities, in hard-to-serve communities, in 
communities where no other players will go so -- he said 
that he's received inconsistency responses from AOL Time 
Warner on the question whether you will require carriage of 
AOL services as a condition of access to Time Warner 
programming.  Which is the answer?  Unequivocally?  
		MR. PARSONS:  Unequivocally.  We will not.  We 
will not tie them together in that way.  We had thought, we 
had thought we were clear in our previous submissions.  
Obviously, we weren't.  Mr. Weed has raised the point.  But 
we're being unequivocal now.  We will not tie them. 
		CHAIRMAN KENNARD:  Commissioner Powell and then 
Commissioner Furchtgott-Roth. 
		COMMISSIONER POWELL:  I want to briefly go back to 
this interactive television issue, because there's a lack of 
clarity here that I think has a lot to do with merger 
specificity that's important to distinguish.  We have being 
discussed what is essentially two different products or 
platforms with two different potential problems or not 
problems, and they're not necessarily interchangeable.  
There is AOL TV, a product, as I understand, sold at retail. 
 A product, as I understand has a relatively open 
opportunity for programming interoperability.  
		And then there is the potential for Time Warner 
digital set top box problems.  And I want to get clear from 
ABC whether they're concerned about both of those, or 
principally about the cable set top box as a gateway with 
Time Warner, which does not capture or bring in the AOL TV 
product.  You have tended to answer Mr. Schuler's question 
about programming by going back to the cable box, which is 
not his product.  And I'm not so sure your concern, if its 
exclusive to one of those, is necessarily specific to the 
combination.
		MR. PADDEN:  Well, you're right.  They're two 
separate products.  I would, we certainly have a concern 
that I hope we've articulated about the, what we believe is 
going to be a cable bottleneck for the delivery of broadband 
two-way interactive television.  But with respect to the 
stand-alone AOL TV box, my understanding, Mr. Schuler, is we 
have not said "no."  
		Various parts of our company were approached by 
AOL, and the offer was we -- AOL will make available or 
proprietary offering tools to enable you to create content 
for this AOL TV stand-alone box that is for now, anyway, 
unconnected to their cable distribution.  We had an internal 
meeting, and each of our divisions either has or will be 
getting back to AOL TV to seek more information about 
exactly what they're talking about.  I will say that the 
minute we heard proprietary offering tools, a bunch of 
caution flags went up around our company, because today the 
beauty of the narrowband Internet is you don't need any, you 
don't need to rent anybody's -- or have them loan initially 
before they have any market penetration loan them for free 
-- you don't need anybody's proprietary offering tools. 
		The, you have end-to-end connectivity, anybody can 
play.  What, we're going to explore the AOL TV stand-alone 
box offer more specifically, but we have concerns about the 
standards issue.
		COMMISSIONER POWELL:  Just one thing quickly about 
that.  I'm not so sure, when you have a stand-alone 
technological product, I assume with some form of operating 
system, that there are often proprietary tools for writing 
to that system.  I mean certainly the case is true of 
Microsoft operating systems or any other operating systems, 
that you have to have the APIs and protocol in order to 
write effectively.  I'm not so sure that that's --
		MR. PADDEN:  Well, that's why I said caution flags 
went up and we will be getting each of the operating 
divisions, I mean they came separately to ESPN, to Disney 
channel, to ABC, and they're each going to be getting back 
to them. 
		COMMISSIONER POWELL:  Time's short, so I don't --
		CHAIRMAN KENNARD:  Go ahead, Mr. Melcher, quickly.
		MR. MELCHER:  I'd like to just raise a point that 
I think this is obviously an important discussion for Disney 
and Time Warner on open access with regards to open access 
with regards to content.  I think up until very, very 
recently, open access has always focused on open access to, 
via, or for Internet access via a new technology.  
		And so I would hope we make sure the distinction 
is kept separate, that whether or not you agree Disney 
should have open access in terms of content, what is, I 
think, more of immediate interest to the American public is 
that they have access to this cable technology for Internet 
access, and not necessarily to watch interactive TV but to 
surf the Internet, to use it for work, to use it in all the 
ways that we use the Internet.  
		And that's what I think we'd like to focus on as a 
service provider.  We want access to this technology on a 
wholesale basis, equal access, to use it in whatever way we 
see fit to serve the American public as they use the 
Internet, not interactive TV.  Thank you. 
		CHAIRMAN KENNARD:  Thank you.  
		COMMISSIONER POWELL:  Mr. Chairman, I had one more 
point. 
		CHAIRMAN KENNARD:  Oh did you?  I'm sorry.  Go 
ahead, Commissioner Powell. 
		COMMISSIONER POWELL:  We've heard a lot of talk 
about instant messaging and AOL's interoperability.  I 
assume you're going to tell me Tribal Voice has no problem 
inter-operating with any and all other IM providers?  
		MR. BAGULLY:  We are, actually two points, 
Commissioner.  One, we are completely free and agreeable to 
inter-operate with anybody that wants to, and we openly 
exchange protocols.  But we are part of a new group called 
IM Unified, which, in fact, consists today of about eight, 
and it's a rapidly growing number of Internet, or instant 
messaging companies that have committed to publishing 
standard for interoperability among our companies in the 
next six to eight weeks, and to have complete 
interoperability among our companies by the end of the year. 
 We think the long-term solution is, in fact, the IETF 
publishing standards, but rather than wait, we've decided to 
go ahead and do this on our own. 
		COMMISSIONER POWELL:  Okay.  I want to jump in, 
because I want to be clear.  That's an announcement just 
this week.
		MR. BAGULLY:  Yes sir.  
		COMMISSIONER POWELL:  But for the last year, if I 
downloaded any of these other IM products -- Microsoft's, 
Yahoo's, yours -- would I have inter-operating functionality 
that we're insisting that AOL have?  Is the answer to that 
yes or no?  
		MR. BAGULLY:  It's yes with Microsoft.  It's yes 
with AT&T.  It's no with Yahoo, though we are working with 
them.  They're part of this organization too. 
		COMMISSIONER POWELL:  So Microsoft's IM product 
can talk to anybody's IM products except AOL. 
		MR. BAGULLY:  Can talk to ours.  I don't know -- 
and it cannot talk to AOL's.  Beyond that, I don't know. 
		COMMISSIONER POWELL:  So all these other IM 
products are not necessarily yet reached this same level of 
interoperability that's so important.
		MR. BAGULLY:  No.  The difference, Commissioner, 
is that everybody else, or all the other IM companies, are 
striving, working together to try to make this happen as 
quickly as possible, as opposed to what we believe is a 
stalling tactic. 
		COMMISSIONER POWELL:  Okay. 
		CHAIRMAN KENNARD:  Okay.  Commissioner 
Furchtgott-Roth. 
		COMMISSIONER FURCHTGOTT-ROTH:  Thank you, Mr. 
Chairman.  I do have a question for the panel, but before I 
get to that, I think I may owe you a bit of an apology, Mr. 
Chairman.  We did hold a hearing on December 14th, 1998, 
that looked at mergers generally, and there were single 
panels on each of three license transfer applications before 
the Commission -- AT&T, TCI, Bell Atlantic GTE, SBC 
Ameritech -- although those license applications for Bell 
Atlantic GTE, SBC Ameritech were subsequently withdrawn and 
resubmitted in radically different forms.  There were no 
CEOs at those hearings. 
		COMMISSIONER TRISTANI:  Yes there were. 
		COMMISSIONER FURCHTGOTT-ROTH:  Not all of them.  
Who was there?  
		CHAIRMAN KENNARD:  Actually, you were doing pretty 
well.  Let him finish, okay?  
		COMMISSIONER FURCHTGOTT-ROTH:  There was a general 
review of mergers.  It was not particularized to one merger. 
 Notabart (phonetic) was in Illinois on that Monday. 
		COMMISSIONER TRISTANI:  Well, somebody, somebody 
--
		CHAIRMAN KENNARD:  All the CEOs were there, as I 
recall, but no need to belabor the point here. 
		COMMISSIONER FURCHTGOTT-ROTH:  Not according to 
Com Daily.  
		COMMISSIONER TRISTANI:  Oh, don't trust everything 
you read in Com Daily. 
		COMMISSIONER FURCHTGOTT-ROTH:  Oh, I do.  Anyway, 
if one looks at all of the major license transfer 
applications we've had before the Commission while we've 
been here as a Commission, even if one counted all three -- 
and I'm not sure I would -- that's just a small minority of 
the major applications that have been before this 
Commission.  But I do accept there has been a hearing in the 
past.  
		The issue that the gentlemen here raise are all 
very important issues.  I don't mean to suggest otherwise.  
What I would suggest is, in some instances, these are issues 
that may well be being reviewed by the Federal Trade 
Commission.  In other instances, they're not being reviewed 
by the Federal Trade Commission because, frankly, it's not 
clear they are narrowly related to the license transfer or 
the merger but rather to general problems between the cable 
industry generally and the broadcast industry, or electronic 
messaging generally. 
		The question I have is, for instance, Mr. Padden, 
are these issues that are narrowly related to just AOL Time 
Warner, or are these problems that are more generic that 
need to be reviewed by the Commission industrywide.  Do you 
have the same problems as a broadcaster in dealing with 
other cable operators?  And the same for the folks involved 
in electronic messaging.  Is this narrowly involve just AOL? 
 Or are these issues that, frankly, may be more amenable to 
generalized rulemaking rather than rules that would apply to 
just one player in the industry and not to anyone else?  
		MR. PADDEN:  I can certainly say for our part, we 
are here because of the specific collection of assets in 
this merger and our specific history of problems with these 
companies.  We've not had other Internet service providers 
ask us, insist that we remove consumer links that would 
allow consumers to navigate more freely in order to do 
business with them.  Disney channel was being carried on the 
basic tier in 60 million American homes while Time Warner 
refused to carry it.  
		So we certainly are here because of this specific 
merger, the marriage of the AOL closed, proprietary, 
walled-garden marketing environment with the Time Warner 
content assets and cable bottleneck distribution.  That is, 
we believe, a deadly combination for consumer choice, and 
that's why we're here. 
		MR. PARSONS:  May I, Commissioner, because I 
think, first of all, you've put your finger on something 
that I think is very fundamental.  Let's take IM for one 
second.  There's nothing about this merger that implicates 
the IM issue.  Time Warner isn't in the business.  It's, 
there is no question as to somehow by the joining up of 
these companies, will the IM situation get better or worse? 
 It will be stay the course.  
		So one question is, is this, a license application 
like this, an opportunity to sort of open up the entire 
business practices of both companies and look around and see 
what you would do differently if you ran the company?  I 
mean, there is no jurisdictional relationship, for example, 
between the IM issue and the merger.  So I think that's one 
set of questions.  
		But the second is, are these, is this a spillover 
of business disputes now dressed up to look like important 
public policy issues.  And I submit it, that's exactly what 
it is.  There is no question.  It's well-documented.  
Everybody sort of had an opportunity to have their, their 
fling at the media about the well-publicized disputes 
between Time Warner and Disney.
		But to then, to then dress it up as a public 
policy issue, as Preston said earlier that, well, there are 
conflict of interest, Time Warner has the Cartoon Network 
and everybody else put Disney down on basic.  It's money.  
That's all it is.  
		CHAIRMAN KENNARD:  I need to follow up on that.  I 
need to follow up if you'll permit me.  I'm not sure if you 
finished.  But in the interchange we saw a few minutes ago, 
it did sound like what was fundamentally at stake here was a 
contractual dispute between ABC/Disney and Time Warner.  
		And I have to ask you very bluntly, Mr. Padden, 
because I've seen this happen before -- in fact, you were 
involved -- when NBC brought allegations against News 
Corporation when you were at News Corporation.  Serious 
public policy issues were addressed.  We developed a record.
		Then there was a deal that was made between NBC 
and the Fox network.  Suddenly, their allegations 
disappeared.  And we don't like to have our processes here 
used as leverage in a contractual dispute.  And you alluded 
to some meetings coming up, and is this the kind of 
allegations that suddenly we're going to see ABC/Disney 
disappear from this proceeding, because their issues are 
resolved at the negotiating table?  
		MR. PARSONS:  No, Mr. Chairman.  And I appreciate 
the opportunity to answer the question, because I think what 
you have here is sort of the reverse of the situation you 
described with NBC and News Corp a few years ago.  Here, the 
commercial deal got done, and the public policy dispute 
follows.  So we can't possibly be here trying to gain 
leverage in the commercial transaction, because we did that 
transaction.  
		What happened is we raised in our commercial 
negotiation with Time Warner -- and again, the letters are 
in the record -- we raised a host of what we believe are 
public policy issues involving nondiscrimination, one of the 
core principle of the enabling statute of this agency.  And 
running through a whole host of operating parameters, 
knowing that we were doing a contract that was going to run 
seven years into the future, and without being able to know, 
even, all the right questions to ask, our core ask in a 
public policy sense was, just tell us that you're not going 
to discriminate in the functionality of this system for 
consumers depending on whether they're trying to interact 
with your content or with ours.  And it runs through all the 
issues.  Caching, return path, data rates, all of it.  
		But what happened in the negotiation is they said, 
we will conclude the financial negotiation and you take 
those public policy issues to Washington, because we're not 
going to deal with just you on them, because if we give 
this, if we agree to be nondiscriminatory to you, we have to 
be agree to be nondiscriminatory to everybody, to which we 
said, well, of course. 
		So we ended up doing what they asked.  We closed 
the commercial deal.  That's over.  And we are here 
advancing the public policy issues to this agency. 
		CHAIRMAN KENNARD:  Mr. Melcher, Mr. Schuler and 
then Commissioner Ness has some questions. 
		MR. MELCHER:  Two quick points, Mr. Chairman.  
Thank you.  I have, while I welcome the participation of Mr. 
Padden at Disney, I have questions, as well.  Recently, it 
was announced that AT&T secured an agreement with Quest and 
U.S. West that they would not participate in the AT&T cable 
license transfer.  Specifically, it was a deal so that if 
U.S. West Quest did not come in and say that the cable 
should be open for open Internet access, that AT&T would not 
oppose the U.S. West Quest merger.  And that deal was just 
publicized through the efforts of a commission in 
Washington, I believe.  So I have suspicions. 
		Secondly though, more importantly, I think this 
issue may be drawing some attention away from what I, again, 
believe to be the most significant issue, which is open 
Internet access, not whether the Disney content gets on Time 
Warner but whether the American public gets the superior 
Internet access product, which is cable.  I believe it will 
be.  And I think, following up on Mr. Reddersen's comment 
earlier, I think FCC could do well to codify the agreement 
that AT&T, that AOL and Time Warner have all stepped up and 
said that they will honor open access, make them codify it 
and enforce it.  
		I think a rulemaking really is appropriate, but 
time is running out.  And I would agree with Mr. Padden on 
that point.  Time is running out.  There is no time to wait. 
 We need to make conditions now on this merger and get into 
a rulemaking, because if we don't, I think we'll have an 
architecture that's built out in the next six to eight, 12 
months, which will prevent open Internet access.  
		And that is my fear.  That AT&T and AOL and Time 
Warner right now are building out an architecture with 
billions of dollars that will prevent open access.  If you 
do not act quickly, you will lose the opportunity. 
		CHAIRMAN KENNARD:  Thank you.  Mr. Schuler, very 
briefly, and then Commissioner Ness. 
		MR. SCHULER:  Very briefly.  To your point about 
Disney's motivations in using these proceedings.  If you go 
to page 47 of their own filing, they say right here in black 
and white, "AOL Time Warner can prove Disney wrong.  All it 
has to do is come to the negotiating table and agree to 
arrangements with Disney."  Blah, blah, blah, blah, blah. 
		MR. PADDEN:  No.  Don't do blah, blah, blah.  
Finish.  It says to provide nondiscriminatory access.  
That's all we're looking for.
		MR. PARSONS:  No, no, no.  You have it exactly 
right, Mr. Chairman.  It's the same dance, it's just a 
different order of the steps. 
		COMMISSIONER TRISTANI:  I just want to comment 
that I think AOL shouldn't talk about the same dance or not 
using proceedings and then changing course.  It used the 9th 
circuit very effectively till it got a reason not to do it. 
 That's the American way. 
		COMMISSIONER NESS:  Mr. Melcher, you mentioned Mr. 
Reddersen, who was commenting also on nondiscriminatory 
access to programming and his concern about multiple cable 
provides not effectively, not enabling companies that are 
providing DSL service, for example, from getting access to 
the programming, be it AOL or Time Warner.  Is that, that 
was the essence of your testimony.  Is that right? 
		MR. MELCHER:   One of the three points, yes, 
Commissioner. 
		COMMISSIONER NESS:  Okay.  Can Time Warner and AOL 
please comment about whether they will be making, on a 
nondiscriminatory basis, programming available to DSL 
providers. 
		MR. SCHULER:  I can say that on AOL's part, we 
have gone to every DSL provider in the country to cut deals 
to offer our services over DSL.  We have cut deals with 
everybody except Bell South, who has not wanted to do a deal 
with us.  So our intent is to offer ubiquity of broadband 
services everywhere, whether it's cable or satellite or 
broadband wireless or DSL, because that's what makes our 
business work. 
		COMMISSIONER NESS:  Mr. Reddersen, would you like 
to respond?  
		MR. REDDERSEN:  Yeah, I was about to say earlier 
that I didn't think I was in a contract dispute with these 
people, so I couldn't comment, similar to Mr. Padden, but 
obviously I am.  Since Mr. Schuler has brought it up, I will 
tell you he is right.  We do not have an agreement where 
they will provide AOL service over Bell South's DSL service. 
 The reason we don't is because they want substantially 
better terms and conditions than anyone in the marketplace 
and they won't do a deal without them.  
		We have available wholesale tariff and we have 
volume discounts on that wholesale tariff, and there are 
many large ISP's out there participating on it and they can 
participate in that tariff anytime they want to do that.  
Let me finish now, Mr. Schuler, please.  The issue, I think, 
that was brought up earlier is really important.  And that 
is, the real issue, while there's an issue of cable access 
here and it's very, very important, the real bottleneck here 
going forward is the AOL environment.  I think that's what 
Ms. Dyson was describing.
		And when we talk about and when Disney talks about 
that control environment and the content flow in and out of 
it, what we're really describing is whether other content 
players will have open access to that environment and 
whether content that flows from Time Warner through that 
closed AOL environment will be available to other Internet 
service providers.  
		Let me give you a simple and easy example.  If the 
Braves games are available on streaming media but only 
available on the AOL environment in Atlanta, then all other 
ISPs providing broadband streaming media might as well close 
shop in Atlanta.  So this is a two-way issue here for 
content providers having reasonable market terms and 
conditions into that environment and for the Time Warner 
content to be made available openly to other ISPs.  So if 
both parties are concerned about that control point, there 
must be some reason for that.  And it's not a contract 
dispute on our part.  I will guarantee you that. 
		COMMISSIONER NESS:  Time Warner, go ahead. 
		MR. PARSONS:  Well, I submit though, that the 
beginning of Mr. Reddersen response puts this all in 
context.  He says AOL wants too much money.  They say he 
won't pay them the fair amount.  Business dispute, you know. 
And I, and I do think that, when I say it's the same dance 
that, with our friends at Disney, it isn't just a question 
of nondiscrimination because, as I said, we put that on the 
table.  What they wanted was -- and if you look at their 
letters and read them carefully -- they wanted to be treated 
exactly the same way in all instances that we treat our own 
content.  
		So does that mean, for example, if you put a CNN 
box on some web site, that you have to put an ABC News box 
on the web site.  Those things have to be negotiated in the 
marketplace.  You can't, this Commission, I don't think, can 
deal with the subtleties and the nuances and the 
complexities of trying to arrange business arrangements that 
are going to enable a business to grow and be dynamic and 
innovation to occur.  You've just got to leave that to the 
marketplace. 
		Now, what we have done is we've committed to open 
access on the broadband platform.  I will tell you, we've 
heard Gerry Levin say it, I will say it.  Time Warner, we 
make stuff.  And the way you maximize the value of making 
stuff is you sell it to as many distribution channels and 
across as many, as many outlets as you can.  
		And if you look at the way we manage our business 
now, that's what we do.  That's what we've said we're going 
to do in the new environment.  
		COMMISSIONER NESS:  Mr. Reddersen response, 
please.
		MR. REDDERSEN:  Very simply, and please don't let 
this whole debate and the issues get narrowed down to any 
dispute between Disney and Time Warner AOL.  The whole 
message being brought to you by Time Warner AOL, both 
excellent companies -- I marvel at the products and services 
that they bring to the marketplace -- is twofold.  First, 
it's "Trust me, I will be open, in a world where I may not 
have been in the past, but trust me in the future.  I will 
be."  I would urge you, having tried that argument over the 
last 15 years in the telecom industry --  it probably didn't 
work -- not to take that argument here. 
		The second issue and more important issue may be 
let the market work.  Well, the only other player out there 
that has the potential to provide the leverage against AOL 
Time Warner to make the market work is AT&T TCI Media One, 
and there are so many interlocking relationships between 
those two entities, that it's unlikely that they will 
establish market terms and conditions between the two 
parties that are at all reasonable to the rest of the 
industry.  So I urge you, if you can establish that 
separation, you may at least have a large player out there 
that can establish market prices and terms and conditions 
that are reasonable.  Thank you. 
		CHAIRMAN KENNARD:  I'm sorry, but that'll have to 
be the last word for this panel.  I'm sorry, we're running 
way over, and I want to hold at least 15 minutes so that we 
can have some statements from people in the audience who 
have been waiting throughout this entire panel.  So thank 
you all very much.  I thought we had a really good, robust 
debate there, and I appreciate your participation.  
		We'll take 15 minutes and 15 minutes only for 
anyone in the audience who would like to make a statement 
for the record in this proceeding.  I'll ask that you speak 
for no more than two minutes, and I'll ask our timekeeper 
here to make sure that we keep everybody on the clock.  
Okay, please begin here on my right.  Nancy?  Welcome. 
		MS. BLOCK:  Hello, my name is Nancy Block, and I'm 
the executive director of the National Association of the 
Deaf, an independent consumer-based nonprofit association 
representing 28 million deaf and hard-of-hearing Americans. 
 As advocates for communications accessibility, we are, of 
course, deeply interested in all technologies that can solve 
particular challenges for people who are deaf, late 
deafened, hard of hearing and deaf-blind. 
		In its current incarnation, instant messaging 
enables deaf-to-deaf and deaf-to-hearing seamless 
communication for people with computers and Internet 
connections, but only as long as they share the same 
provider.  Therefore, we have a strong interest in making 
sure that open and interoperable communication functions 
that have helped fuel the explosive growth of the Internet 
continue as the medium makes new forms of communication 
possible. 
		As instant messaging technology develops and 
instant messaging moves on to wireless devices such as 
pagers and cell phones, the possibilities for enhanced 
communication become even more exciting.  A fundamental 
principal of accessibility is that users of critical 
communications functions should be able to communicate with 
all others, even those who have different service providers. 
 Ease of communication, regardless of the provider, is 
important to all consumers, and especially so to deaf and 
hard of hearing people, for whom instant messaging 
represents an important new advance. 
		Recently, at our biannual convention -- sorry -- 
our biannual national conference earlier this month, 
delegates passed a resolution calling for FCC and FTC 
attention to the issue of instant messaging, open access and 
interoperability.  It is of particular importance that 
people who are deaf, late deafened hard of hearing and deaf- 
blind be able to take advantage of the many advantages that 
instant messaging has to offer for seamless, instantaneous 
and barrier-free communication.  Attention must also be 
given to the universal design and the importance of planning 
for access right from the start.  Thank you.
		CHAIRMAN KENNARD:  Thank you, Nancy.  We 
appreciate you being here.  Yes sir. 
		MR. STEINHORN:  My name's Barry Steinhorn.  I'm 
the associate director at the American Civil Liberties 
Union.  I hadn't actually originally planned to speak during 
this session, but the last panel gave me the impression that 
perhaps I should.  I don't think the Commission should be 
diverted from some of the main issues here by a concern 
about whether or not some of the comments at the 
presentations of the last panel were based on business 
disputes rather than important public policy issues.  
Perhaps they were, perhaps they weren't. 
		But there are important public policy issues here. 
 In particular, there's the issue of open access.  And I 
want to endorse the proposal that was made by Mark Cooper 
and others -- and I won't repeat that -- but I want to put 
it in a slightly different context.  ACLU, for example, has 
on a number of occasions represented a small Web site, 
operates in the city of Philadelphia, called the Critical 
Path AIDS project.  Critical Path AIDS project, as the name 
suggests, provides information about sexually transmitted 
disease, partly sexually transmitted disease.  They are 
somewhat controversial.  They have been threatened on a 
number of venues with various kinds of punitive actions.
		We are very concerned that if this walled garden 
that others have described does in fact occur, it's not so 
much that Disney may have difficulty getting into the walled 
garden, because we assume that there, the marketplace 
perhaps would be able to solve these problems, but the 
Critical Path AIDS Project and other small providers, who 
the Internet has given an opportunity to speak to audiences 
large and small will, in fact, be walled off.  That they 
will not, for example, have the same access as, perhaps, Web 
MD, or some other large medical Web site, which may not be 
affiliated with Time Warner AOL or with AT&T, but may have 
an arrangement or even a credibility with Time Warner AOL or 
AT&T that may lead them to get preferential treatment in all 
the ways that you've discussed here -- caching and access 
streaming video, et cetera. 
		So we urge you to enact an open access requirement 
rather than simply trusting the marketplace to solve that 
problem, and to keep in mind the small content providers, 
not simply the large commercial providers.  Thank you. 
		CHAIRMAN KENNARD:  Thank you for that statement.  
Jeff Shester. 
		MR. SHESTER:  Thanks.  And Barry has stated some 
of my concern, that what was in part missing from today is 
the role that the Internet plays in our democracy and that 
the mission that we have, I think, that you have, historic 
mission that you have at this point is to make sure that 
this end-to-end architecture principal that has allowed all 
of this diversity, content diversity, including 
noncommercial and independent voices to exist and flourish, 
as well as competition, to help them make the transition to 
the broadband environment, which will be dominated by the 
ITV space.  
		Mr. Parsons, I have to say I follow what you're 
doing, and you're running the tracks, you're creating the 
railroad, you're creating the engines and a closed system is 
moving into place, and we have to ensure that an open access 
policy ensures that those noncommercial diverse community 
voices are as powerful in some way as the Disneys and the 
NBCs.  Thank you. 
		CHAIRMAN KENNARD:  Thank you, Mr. Shester.  Are 
there any other statements from the public.  I don't see 
anyone else lined up.  Well, thank you all.  It's been a 
long day, but I think it's been a very worthwhile and 
productive day, and I think that you've certainly 
enlightened us, and I appreciate your patience and all the 
preparation that went into these presentations.  
		I also want to thank the Commission staff who 
worked so hard to make this event happen today.  Deborah 
Lathan, chief of our cable services bureau and her great 
team, including Royce Dickens and John Norton in the cable 
bureau and Ruth Dancey, who we're happy to have back at the 
Commission.  Also Michelle Ellison and Michelle Rouseau and 
Darrell Cooper were very instrumental in making this happen 
today.  So thank you all very much and this hearing is 
adjourned.  
		(Whereupon, at 6:04 p.m., the hearing in the 
above-entitled matter was adjourned.)
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	REPORTER'S CERTIFICATE

FCC DOCKET NO.:	00-30

CASE TITLE:	In Re: America Online & Time Warner

HEARING DATE:	July 27, 2000

LOCATION:		Washington, DC

	I hereby certify that the proceedings and evidence 
are contained fully and accurately on the tapes and notes 
reported by me at the hearing in the above case before the 
Federal Communications Commission.

Date:   _7-27-00__            _____________________________
                              John DelPino
                              Official Reporter
                              Heritage Reporting Corporation
                              1220 L Street, N.W., Suite 600
                              Washington, D.C. 20005-4018

	TRANSCRIBER'S CERTIFICATE

	I hereby certify that the proceedings and evidence 
were fully and accurately transcribed from the tapes and 
notes provided by the above named reporter in the above case 
before the Federal Communications Commission.

Date:   _7-27-00__            ______________________________
                              Richard Grossman
                              Official Transcriber 
                              Heritage Reporting Corporation

	PROOFREADER'S CERTIFICATE

	I hereby certify that the transcript of the 
proceedings and evidence in the above referenced case that 
was held before the Federal Communications Commission was 
proofread on the date specified below.

Date:   _8-7-00___            ______________________________
                              George McGrath
                              Official Proofreader
                              Heritage Reporting Corporation
 

 
 
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