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A dispute over how to best ensure open access to cable systems remains the primary stumbling block to winning Federal Trade Commission approval for America Online Inc.’s acquisition of Time Warner Inc. Sources familiar with the talks said lawyers for the government and the companies are still meeting to resolve the open access issue with the goal of wrapping up a deal by week’s end. That agreement would then go to the five FTC commissioners for approval. One source said the commissioners expect to vote in two to three weeks. Few details are known about the negotiations, but two sources Monday said the government and the companies are working on a detailed consent decree that would spell out exactly how and when AOL would allow other Internet service providers access to the Time Warner cable systems. It also would include language on how AOL could charge rivals for this access. Interactive television has ceased to be a major issue in the negotiations, two sources said. Both said the FTC would likely insist on language in the consent decree which would, in effect, bar AOL from discriminating against rival interactive television providers that reach consumers via Time Warner cable systems. But they said the government would not insist on the same specifics on open access for interactive television as for Internet service. How AOL charges for open access has become a big issue in recent days. Officials from Earthlink Network Inc. visited Washington last week to complain that their company couldn’t afford the rates AOL was considering charging for access. Their complaint was that AOL reportedly wanted 75% of the monthly membership fee paid by the customer and 25% of the advertising dollars raised by the ISP. A Time Warner spokesman declined to comment on the Earthlink reports, but said the company is committed to providing consumers with the choices they want at terms competing ISPs will find acceptable. “Nothing in our conversations should be taken as a final proposition,” the spokesman said. “From our end, we are committed to continuing our conversations.” AOL’s stock got a boost Monday from Lehman Brothers Inc. analyst Holly Becker, who said in a research note that she expects the Time Warner acquisition to win regulatory approval without any unexpected concessions. She also predicted that AOL would report solid earnings Oct. 18. AOL’s stock closed at $55.16 Monday, up $1.51, or 2.8%. Last January AOL agreed to exchange 1.5 of its shares for each Time Warner share. As of yesterday’s mid-day trading price, the deal was valued at $109 billion. Copyright (c)2000 TDD, LLC. All rights reserved.

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