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AOL,Time, Pledge Access For Rivals

March 5, 2000 - America Online says it will voluntarily adhere to principles that it asked the government to mandate just a year ago.

AOL chief Steve Case, appearing before the same Senate panel he did last year, said Thursday that the marketplace has answered the problem he had brought to lawmakers one year earlier.

Back then, he had urged government action to ensure competition on high-speed Internet lines.

That was before AOL made its plan to acquire Time Warner, which gives the Internet provider a massive network of high-speed cable pipes for itself over which to deliver its service.

In the second Capitol Hill hearing this week about the company's $133 billion merger, Case said he still remains committed to giving consumers a choice of providers for the next generation of super-fast Web connections.

"I've been very consistent on this issue," he told the Senate Commerce Committee.

The Federal Communications Commission and lawmakers chose not to step in when AOL asked that other cable operators offering Internet service be forced to open their lines to competing providers. In the meantime, the market has started to address those issues, Case said.

"Maybe it shows that the Congress and the FCC are smarter than I," Case said.

AOL and Time Warner earlier this week promised to open up their cable television lines to other Internet service providers. Some senators questioned Thursday whether that pledge would hold without any binding agreement.

"You could make a determination to change it," said Sen. Richard Bryan, D-Nev.

But Case and Time Warner chief Gerald Levin insisted that the policy makes good business sense and that a definitive agreement would be forthcoming.

"The consumer really wants more choice than an AOL service on Time Warner systems," Levin said.

Other senators raised concerns about creating one company for both media content and the delivery of that content.

AOL, with more than 20 million subscribers, is the nation's largest Internet provider. Time Warner is the biggest media conglomerate, with Time magazine, Warner Bros. studios, HBO and CNN.

"We're going down the Microsoft route that has got them in court," said Sen. Ernest Hollings, D-S.C.

"Our country could be left with only a handful of major media companies," said Robert Lande, senior research scholar at the American Antitrust Institute.

AOL also was questioned about claims that it was not working toward an industry-wide solution to make its popular instant messaging service work with similar services provided by other companies.

Officials from AT&T, ExciteAtHome, MSN.com and others had sent a letter to Commerce Committee leaders earlier this week accusing AOL of blocking consumers of rival service from exchanging instant messages or real-time text over the Internet with AOL's 50 million users.

Case refuted the claim and noted that AOL broadly licenses its software to oher companies to build their own messaging service.

Asked also about the need for legislation to ensure consumer privacy on the Internet, Case said he wasn't opposed to such an effort if it is the only way to rein in companies not willing to cooperate.

But, he added, "it would be better if companies could do it on their own."