July 27, 2000
 
 STATEMENT OF CHAIRMAN WILLIAM E. KENNARD
 
 Re:		En Banc Hearing, Applications of America Online, Inc. and Time Warner, Inc. for 
Transfers of Control (CS Docket No. 00-30)

I’m very pleased to be here this afternoon to hear what our distinguished panelists have to 
say about this proposed merger.  I would also like to thank each of you for taking the time to 
appear before us today to discuss the very important issues this merger presents.

More than any other potential consolidation in recent memory, the proposed merger of 
AOL and Time Warner has captured the attention of the American public. One need only to look 
across this crowded room – or outside today on Twelfth Street - to witness firsthand the passions 
and fears that have been aroused by the possible merger of these two communications giants.  

And for good reason. Currently, 2.7 million subscribers have high-speed broadband 
Internet access. It is projected that 16 million Americans will have high speed Internet access as 
of 2002 and 33% of U.S. households will have broadband high-speed access by 2003  
Ultimately, this merger could ordain the essential nature of the broadband services that 
Americans receive.  Will the merger deliver on the promises that have been made, including 
accelerated broadband deployment, innovative services, and a continued commitment to multiple 
broadband platforms?  Will it usher in the anticipated convergence of the Internet with television, 
and unleash all of the intriguing possibilities therein?  Or will it instead, as others contend, 
potentially impair the competitive, consumer-driven evolution of these technologies?

These are some of the major issues I eagerly anticipate hearing our panelists address 
today.  

I’d also like to take a moment to discuss our perspective for reviewing mergers.  We are 
not the only agency looking at this merger, and I welcome views on what the Commission’s role 
ought to be in reviewing this deal.  We are all here today because Congress has mandated that 
this Commission investigate whether approval of transactions such as this one are in public 
interest.  As in all such transactions, we have a duty to verify that this merger will violate neither 
the Communications Act nor any of our rules.  Moreover, as this Commission has indicated in 
other recent merger decisions, and in keeping with our statutory obligations, we also must 
examine whether this merger will frustrate the implementation or enforcement of the 
Communications Act, or interfere with progress toward any of this agency’s statutorily directed 
objectives.  Finally, the merging parties must also persuade us that this merger will yield clear 
public interest benefits, such that consumers will be made better off.

In their applications before us, AOL and TW claim that their union will accelerate the 
deployment of existing advanced services, and further, that the merger will enable and spur the 
creation of many new services.  Innovation certainly lies at the heart of what this industry is 
seeking to accomplish for consumers, and we encourage the Applicants to bring their visions 
fully to life this morning.

Meanwhile, opponents of the deal have identified a variety of potential harms that 
allegedly may arise out of this merger.  These include, but are not limited to, detrimental effects 
in markets for video programming, interactive television, instant messaging, electronic 
programming guides, Internet access services, and in local telephony.  These opponents have 
further alleged that this merger threatens to stymie other efforts this Commission is 
undertaking—such as to foster the development of multiple broadband platforms, or to promote 
small business involvement in the telecom sector—by raising entry barriers.  We look forward to 
hearing directly from those who hold these concerns.

We at the FCC believe that the heart and promise of the Internet since its inception has 
been openness. Indeed, the Internet’s open protocols as well as FCC decisions not to regulate the 
Internet and to open up access to the phone network have spurred the Internet’s amazing growth.
The World Wide Web has made once inaccessible information available to all and supplied local 
businesses with unfettered access to global markets. It has fostered an environment where 
everyone’s voice can be heard. 

I would hope that the proposed AOL-TW deal would only expand on this remarkable 
openness. I am very concerned about the issue of open access – so much so that we are opening a 
separate proceeding on the subject - and I very much want to hear what you have to say about it. 
We should also scrutinize closely what effect this merger would have in closing the Digital 
Divide and allowing ever more Americans entry into the Information Age. 

When it comes to openness, I do believe today’s review is a debate about means and not 
ends. Everyone here agrees that platforms should be open: It’s mainly a question of how we get 
there.
 
Finally, on the subject of openness, I want to mention that today’s FCC review differs 
from those of other agencies in one key respect: This hearing is specifically intended as a public 
proceeding.  During my tenure at the FCC, we have strived to open up these merger reviews and 
increase public input in the process. I believe it is imperative that the public gets this chance to 
listen to all the details and implications of the AOL-TW merger and to voice their hopes and 
concerns about such an important transaction.

I look forward to listening to and learning from the panelist’s views on all sides of the 
issue today, and I trust that all parties involved share my ultimate commitment to doing what’s 
best for the American consumer.


 

 
 


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