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16 <br />Stephen Case. Time Warner needs AOL's experience moving content over the <br />Internet and AOL need's TIME WARNER's broadband pipe to grow its content <br />businesses. The merger represents the best of both possible worlds far <br />entrepreneurial businesses. The merger is a vertical integration of the businesses <br />involved and it postures the new entity AOL-Time Warner as a dominant global <br />force in the media entertainment business. Historically, vertical integration <br />results in preferential treatment by the common ownership entities to the <br />exclusion of other competing businesses. Continued vertical integration of <br />content, intellectual property owners, and conduit, Jnternet-telecommunication, <br />providers may severely disadvantage unaffiliated businesses and result in <br />predatory service rates. <br />The preeminent concern relates to Open Access. Consumer groups feaz that cable <br />operators, such as Time Warner and AT&T, offering high-speed cable modem <br />Internet access could control access to the Internet and imperil the low cost <br />ubiquitous nature of the Internet. Significant reputable consumer and industry <br />groups, such as the Consumer's Federation of America, the Center for Media <br />Federation in America and the OpenNet Coalition, raised the flag on this issue to <br />demand an "open accessZ" platform. <br />The US Congress and local governments brought sufficient pressure to bear upon <br />the parties whereby on'February 29~', AOL and Time Warner issued a MOU or <br />Memorandum of Understanding (Exhibit A) committing their cable network to an <br />open access standard to offer consumers a choice between unaffiliated Internet <br />Service providers. <br />The MOU offers that AOL-TW will allow independent ISPs to sell Internet portal <br />and content services directly AOL-Time Warner customers thereby establishing a <br />direct link between the ISP and the customer. Road Runner (RR) will be among <br />the ISP choices available to AOL-Time Warner customers. This commitment is <br />non-binding, nor does it suggest unaffiliated providers will be able to gain access <br />to the broadband platform on terms that are equivalent to those offered affiliated <br />companies. Because the MOU was "freely" offered by the parties, the Federal <br />Government has withdrawn Open Access as a condition of merger approval. <br />The naw company will have lots of cash, lots of customers, lots of content, and <br />unmeasurable values like the synergy produced by cross~mazketing web sites to <br />te~:vision to magazines. Management has been slow to announce operating plans. <br />ZThe ability of consumers to choose between and among multiple Internet Service Providers on a high- <br />speed cable (television) telecommunication broadband platform. <br />Franchise Fee U-Tax Auditing & Cable Television Administration <br />101 Pocono Lane, Cary, North Carolina 27513-5316 Voice # 919.467.5392 Fax # 919.460.686$ <br />