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17 <br />Since the merger announcement, AOL has dropped about a third of its value, <br />but it will continue to attract new investors. Once the merger has been completed, <br />AOL-Time Warner will find itself well-positioned with cash flow that will grow <br />faster than a traditional cable or Internet company. <br />On Apri125`", Consumer groups3 demanded a major restructuring of the proposed <br />Time Warner - AOL merger because it would create dominate the Internet market <br />and consumers would have fewer choices for Internet services and content. The <br />fear is that the combined companies would offer only AOL's service on Tirne <br />Warner's broadband cable modem platform; thus, blocking rival Internet service <br />providers nondiscriminatory access to its customers via the cable system. <br />Although the companies entered into a Memorandum of Understanding, see <br />Exhibit I, pledging to open up their cable TV lines to other Internet service <br />providers, consumer groups want "hard" assurances that any unaffiliated ISP <br />would have access to the high-speed cable modem platform at "reasonable terms <br />and conditions." This concept is known as "open access," and it has been the <br />source of significant public policy debate across the country. <br />With regard to the Open Access issue, a new United States District Court decision <br />(MediaOne Group, Inc. et al v. County of Henrico, Virginia) was issued May 10, <br />2000. The Court ruled that a local government's authority on the Open Access <br />issue is preempted by the Federal Cable Act. Last year, another United States <br />District Court in Oregon held that a local government's authority on Open Access <br />is not preempted by the Federal Cable Act, AT&T Corp., et al v. City of Portland, <br />USDC, Oregon CV-99-65-PA. Neither decision is controlling in North Carolina. <br />The Oregon decision is on appeal and the Virginia decision is likely to be <br />appealed. No doubt, there will be some resolution of this matter at the federal <br />level. Considering North Carolina's strong local government law relating to the <br />regulation of cable operators as "public enterprises," it would be appropriate for a <br />local government to include an "Open Access" provision as a condition for <br />granting approving the AOL-TWC merger. <br />Absent any requirement by local governments to obligate AOL-TW to adhere to <br />the terms of the MOU, the parties (AOL, Time Warner and AT&T) can exercise <br />their discretionary ability to restrict or even cut off customers from content and <br />products offered by unaffiliated Internet based competitors. <br />B. MedfaOne - AT&T <br />USWest,-.a former Regional Bell Telephone Company (RBOC), made a corporate <br />3Consumer Federation of America, Consumers Union, etc. <br />Franchise Fee U-Tax Auditing & Cable Television Administration <br />101 Pocono Lane, Cary, North Carolina 27513-5316 Voice # 919.467.5392 Fax # 919.460.6868 <br />