Agenda - 06-29-2000-5b - Laserfiche WebLink

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12- Closed Access, the absence of Open Access, constitutes a power vested in cable - telecornmunication companies. This power, if not mitigated by government, can result in a regime that determines how broadband gateway telecommunications should develop. Closed Access grants the cable-telecommunication companies, like AOL-Time Warner, a monopoly on the high-speed broadband platform. As such, they have. the ability to protect themselves from competitors by not allowing unaffiliated ISPs access to the broadband.platform or by restricting or limiting Internet traffic to unaffiliated competitive ISPs. Common wisdom offers that the competitive marketplace, but not government regulation, is the best means to assure widespread availability ofhigh-speed Internet service. To make certain that a competitive marketplace evolves, the government should implement minimalist measures to assure Open Access to the broadband platform so that consumers can benefit from i) choice between content providers, ii) lower prices and iii) improved service. On April 25th, consumer groups voiced their concern regarding the acquisition of Media4ne's 2S.S 1 % interest in Time Warner Cable by AT&T. This business deal would establish AT&T as the largest and most dominant cable television company in the United States. The acquisition locks the number 1 and 2 largest cable operator's together in a gigantic conglomerate with significant market power and vast telecommunication resources. C. Financial Aspects of the Deal for the CEOs The deal creates several sets of multimillionaires and places Gerald Levin and Steve Case squarely in the super wealth class. Recall that AOL is swapping 1.5 of its shares for each Time Warner share. The day before the deal was announced, AOL stock was trading at $75 per share, Time Warner was at $64 per share: AOL is paying a bit above $110 a share, a $45 premium over the pre-deal price of Time Warner. The merger represents a good deal far Time Warner stock shareholders and Gerald Levin. The $110 price increases the value of Levin's unvested options by $125 million and the value of his vested options by $240 million; total gain is $365 million. Steve Case is the clear winner. The value of his unvested options exceeds $600 million, which he could not otherwise sell unless AOL was traded to a new company. Mr. Case's vested options are valued at near $775 million; his new found wealth approaches $1.375 billion. Cable Carried Incentive for AOL Merger, Allan Sloan, Newsweek. Franchise Fee U-Tax Auditing & Cable Television Administration 101 Pocono Lane, Cary, North Carolina 27513-5316 Voice # 919.467.5392 Fax # 919.460.6868