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July 27, 2000


Re: En Banc Hearing, Applications of America Online, Inc. and Time Warner, Inc. for Transfers of Control (CS Doc. No. 00-30)

We are on the threshold of a new era. Today's hearing provides the Commission with an invaluable opportunity to better comprehend the rapidly converging communications marketplace and the effects of these changes on the American public. Major mergers such as the one we will discuss today have the potential to fundamentally reshape the communications landscape.

The proposed merger of America Online with Time Warner has drawn an enormous amount of attention from the public at large. Much of this attention derives from two factors: First, as the largest merger ever before this Commission -- indeed one of the largest mergers in history -- the combination of AOL and Time Warner is significant in its scale and undoubtedly would have profound effects on the marketplace. The size of the transaction, however, while historic, need not by itself lead to intervention by this Commission. Big is not necessarily bad, unless it leads to anticompetitive behavior harmful to industry or consumers.

Second, commenters in this proceeding have raised a plethora of intriguing topics related to the dynamic technologies and services provided by the merging parties. These range from more traditional communications policy issues, such as cable carriage of broadcast signals and access to vertically integrated video programming providers, to relatively new issues, such as interactive television and the interoperability of Instant Messaging.

I believe our biggest challenge will be to maintain a disciplined focus as we digest the issues before us. Given a marketplace that is in fundamental transition, we must exercise our authority with caution. To that end, just as in any other transaction before the Commission, we must ask the following questions:

A large number of commenters have alleged that there are potential harms from this merger that will frustrate the Commission's ability to fulfill its statutory obligations. Among other things, some have identified potential harms related to the control of conduit, control of content and applications, and the web of interrelationships between providers of these infrastructures and services.

Each of these potential harms must be examined through the prism of the core communications policies of the Commission, such as fostering competition among multiple broadband platforms and video providers, deployment of advanced services to all Americans, diversity of content, and product and service innovation. And in each instance, we should ask ourselves whether the potential harms are caused by or exacerbated by the merger of these parties.

An issue that does not implicate such fundamental concerns of the Commission, no matter how timely or interesting it may be, or is not merger specific, should not effect our decision whether to grant, condition, or deny, the merger application.

The purpose of this hearing, like other en banc hearings held over the past several years addressing major mergers, is to hear directly from the parties and provide an immediate opportunity for parties to respond to contrary views from the public. The decisions we make in this proceeding should be appropriately limited to our jurisdiction but must be informed by the broadest possible understanding of the markets and consumer interests at stake. To that end, I look forward to a vigorous debate responsive to issues raised by parties, and responsive to the interests of the American public.

Finally, whatever we decide in this proceeding, we should do so expeditiously. We do not serve the public interest by prolonging the merger review process unnecessarily and casting a pallor of uncertainty over an entire industry. Thus, I would urge us to complete our deliberations in a thoughtful, but punctual manner.