FCC balks at AOL/Time Warner wedding

On Friday, just after AOL and Time Warner shareholders gave their overwhelming final blessing to the proposed $123 billion merger, the US Federal Communications Commission (FCC) spoiled the party by demanding additional information from both companies in its investigation into issues related to competition, Reuters reports.

The FCC is asking pointed questions about AOL's new television service, wondering what services AOL-TV subscribers will get, and what deals the company has made with cable operators. The Agency also requested information about AOL's investment in TiVo, a personal television service which allows viewers to schedule programming, the wire service says.

The FCC also wants to look into Time Warner's cable system and will examine documents related to plans for Road Runner, a joint venture owned by Time Warner, Microsoft and Compaq.

The Agency also asked for a list of all companies in which either AOL or Time Warner holds a stake of five per cent or more, as well as the price to be asked of ISPs to gain access to the merged company's cable systems.

And if that wasn't enough, US watchdog organisation Consumers Union announced Friday that it will challenge the ownership links between AT&T and the proposed AOL/Time Warner mono.... em, very large corporation.

Together, the companies would control more than half of the cable lines in the US, Consumers Union reckons. They would also control access to over half of the Internet subscribers who connect through standard modems and three-quarters of broadband customers.

"These transactions could allow AT&T and AOL/Time Warner to undercut competition and inflate cable and Internet charges," Consumers Union stated on Friday.

Precisely what the FCC seems to have in the back of its mind too, though few analysts expect it to reject the proposal outright. What we're seeing here is probably more of a 'close read' of the two companies' various projections and rosy promises, with an eye to closing the loopholes. ®