Govt. Targets Set-Top Box Access In AOL Review

Both the Federal Trade Commission and the Federal
Communications Commission have expanded their review of the America
Online Inc. [NYSE:AOL] and Time Warner Inc. [NYSE:TWX] merger to
include set-top boxes, an integral part of accessing the Internet via
television sets.

According to the Wall Street Journal, both agencies have begun
studying the role of set-top boxes and interactive television as a
potential bottleneck in accessing the Internet, contending that if a
single company can control the boxes, they would also control what
goes through the cable TV line and is seen on the viewer's screen,
including such Internet-related features as e-commerce, e-mail and
instant messaging, as well as telephone service.

The agencies' interest in the technology surfaced after the two
companies told the FCC that any agreement to open their cable
lines to competing Internet service providers (ISPs) did not include
set-top boxes, although what regulators would do in relation to
such gateway devices is unclear as they are still in the initial
stages of development. According to the Journal, Time Warner Cable
did say, however, that it was "always willing to discuss business
arrangements with potential providers of any other services," despite
both companies stating in a written response to an FCC question on
rival ISPs offering interactive TV through its set-top boxes that
"set-top boxes were not contemplated" in any such pact.