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America Online Inc. and Time Warner Inc. get a chance Thursday to convince the Federal Communications Commission to approve their planned $350 billion merger. The agency will hold a public hearing to give the companies and their critics an opportunity to set the record straight. Expect debate to focus on whether a merged AOL-Time Warner would have so much clout that it could stifle competition for Internet and cable programming. And expect demands for open access, which is the right of programmers and others to distribute their product over AOL-Time Warner cable systems. FCC commissioners will listen, rather than espousing their views. Still, an audience filled with FCC experts will try to gauge how the commissioners are leaning, based on their questions. Though far from definitive, such scorekeeping will give a sense of whether the companies are ahead of their critics in these early chapters of the review process. While open access is expected to occupy Thursday’s FCC hearing, the issue appears dead on Capitol Hill. Before the start of a hearing last week on bills to require cable companies to open their lines to all Internet service providers, Henry J. Hyde, R-Ill., chairman of the House Committee on the Judiciary, said he has no plans to pass the legislation. “I do not believe we have enough support within the committee to move forward on these bills today,” Hyde said. “However, I remain open to the idea if sufficient support develops.” That must have been good news to FCC Chairman William Kennard, who testified later that day against both bills. Kennard objected in particular to proposals that would let Baby Bells carry data long-distance over their lines. Supporters argue this would bring high-speed Web access to rural areas, but Kennard said it ran counter to the Telecommunications Act of 1996. That act bars Baby Bells from offering long-distance voice or data service until they open their local markets to competition. Kennard’s argument: because 90 percent of long-distance business is data, lifting the restriction on long-distance data transmission would destroy any incentive for regional phone monopolies to open local calling to competition. So far, it looks as though he will get his wish. Deutsche Telekom’s bid for VoiceStream Wireless Corp. is unlikely to encounter opposition from the Baby Bells. Washington, D.C.-based United States Telecom Association president Roy M. Neel said in a briefing Thursday that he has no problem with state-owned foreign companies buying U.S.-based telecom providers. “I personally don’t see national security concerns,” said Neel, who will leave USTA on Sept. 1 to join the Gore presidential campaign. Sen. Fritz Hollings, D-S.C., has introduced legislation that would bar state-owned foreign companies from buying U.S. telecom assets. The senator wrote to the FCC that such sales threaten national security by putting key U.S. assets in the hands of a foreign government. Hollings said he was compelled to act because of news reports that Deutsche Telekom was seeking to buy U.S. telecommunication assets. The German government owns 57 percent of Deutsche Telekom. Yet, Neel’s comments indicate little support in the U.S. telecom industry for keeping Deutsche out. Neel, in fact, even suggested that purchases of U.S. communications assets by a company more than 25 percent owned by a foreign government should no longer require an FCC waiver. “The basis for those rules on telecom assets may be shrinking or disappearing,” he said. Copyright �2000 TDD, LLC. All rights reserved.

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