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ComputerWire: IT Industry Intelligence

The US Federal Communications Commission this week denied a request from EarthLink Inc, one of the nation's largest ISPs, to have AT&T Corp, Comcast Corp and AOL Time Warner Inc reveal the terms of their cable internet access deal.

After reviewing the contracts, the FCC said, in a 3-to-1 vote, the terms of the deal were not relevant to the merger of AT&T Broadband and Comcast, as EarthLink had claimed. Democrat Commissioner Michael Copps dissented, saying revealing the documents would be in the public interest.

At stake is the controversial issue of ISPs being allowed to offer access services to the subscribers of unaffiliated cable companies. Unlike copper, cable is not regulated to that extent in the US, which has been the subject of review and debate within the government for some time.

EarthLink says the deal under which AOL gets to offer internet access services on AT&T Comcast cable systems is anticompetitive. The ISP was supported by the Consumer Federation of America (CFA), Consumers Union, the Center for Digital Democracy and the Media Access Project (MAP).

"EarthLink's greatest concern with the proposed merger is that it will have the effect of expanding and reinforcing the policy of both AT&T and Comcast generally to refuse to sell cable-based high-speed data transport to independent ISPs," EarthLink said.

In its response to the motion, AOL said: "It is significant that MAP and EarthLink fail to explain how a pending agreement that will increase consumer choice of competing high-speed ISPs available on AT&T Comcast cable systems conceivably could be harmful to the public interest."

The FCC sided with AOL, saying: "The issues that have been raised by CFA and EarthLink... are not merger-specific; they relate to business relationships between all unaffiliated ISPs and all cable operators."

EarthLink had argued that AT&T and Comcast had used their combined muscle to leverage a deal in which AOL was forced to make substantial concessions, and that this meant the companies were unfairly using their power, and could offer the same meager terms to other ISPs.

But the FCC pointed out that the terms of AOL's access deal would remain the same with AT&T even if the merger does not happen. It also pointed out AOL is obliged by regulators to offer other ISPs access to its Time Warner cable on the same terms as its ISP unit gets from other cable companies.

AT&T Comcast Corp, as the company will be known, will come into being possibly as early as today. The company filed a statement last week warning the stock market that the spin-off of ATT Broadband and its merger with Comcast to form one of the world's largest cable firms could happen, at the earliest, on November 8.

© ComputerWire

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