Time Warner and AOL Sign Memorandum of Understanding Regarding Open Access

(March 1, 2000) Time Warner and AOL signed a nonbinding Memorandum of Understanding stating that they will provide open access to competing ISPs to their broadband cable systems.

The Memorandum is not a binding legal document. However, it states that "It is the intention of the parties to enter into as quickly as possible a binding definitive agreement to provide broadband AOL service on Time Warner's cable systems, which will be used as a model for the commercial agreements that will be available to other ISPs."

It provides that "Consumers will not be required to purchase service from an ISP that is affiliated with AOL Time Warner in order to enjoy broadband Internet service over AOL Time Warner cable systems."

"AOL Time Warner will not place any fixed limit on the number of ISPs with which it will enter into commercial arrangements to provide broadband service to consumers."

"In addition, AOL Time Warner will operate its broadband cable systems in a manner that does not discriminate among ISP traffic based on affiliation with AOL Time Warner."

"AOL Time Warner will allow ISPs to provide video streaming. AOL Time Warner ... will not block or limit it."

The Memorandum is between only AOL and Time Warner. No third parties are either parties to or beneficiaries of the Memorandum. Also, the Memorandum is a statement of understanding, but not a binding contract. Finally, the Memorandum exempts Time Warner's contracts with Road Runner.

Specifically, the Memorandum states: "All of the foregoing is subject to all pre-existing obligations of Time Warner, including without limitation Time Warner's agreements with Serviceco, LLC (d/b/a Road Runner) and its fiduciary and other obligations to its partners."

The Memorandum received quick praise from several quarters. Federal Communications Commission Chairman William Kennard stated in a press release that "today's commitment by America Online and Time Warner to open their broadband networks is a welcome development."

Kennard continued: "I commend America Online and Time Warner for their leadership. It is imperative that Time Warner and other cable companies continue to listen to their customers and foster a robust ISP market. I will keep a close watch to determine if we can continue to forbear from regulation in this area."

The openNET Coalition, a group of independent Internet Service Providers, also praised the Memorandum. "Today AOL-Time Warner hit the fast forward button for open access," said Greg Simon of openNET. "We call on the cable industry to make the open access principles contained in the AOL-Time Warner Memorandum Of Understanding a national standard of open access to the cable network. We urge AOL-Time Warner to implement these principles in a deliberate and visible manner as quickly as possible so that consumers can have choice and begin enjoying competition over the AOL-Time Warner network this year.

"In addition, we will work with Internet service providers (ISPs and AOL-Time Warner) to ensure that the commercial negotiations are truly non-discriminatory and fair to all parties. We also will continue to work with government leaders to enact open access as a policy," said Simon.

GTE commended the Memorandum, and stated that it would seek access to AOL Time Warner cable facilities. "We're pleased that AOL and Time Warner have agreed to open their high-speed cable service to multiple ISPs. While their statement leaves some important areas unaddressed, GTE applauds it as an important step in the direction of open access," said GTE VP and General Counsel William Barr. "Among its most positive features are AOL Time Warner's commitment not to discriminate against unaffiliated ISPs; a promise not to limit customers' ability to watch streaming video; and a commitment to allow ISPs to have direct relationships with their broadband customers.

"This is a strong rebuke to the rest of the cable industry, which has refused to allow their customers to have the same choice of ISPs in the broadband world as they have today with 'dial-up' Internet access." said Barr. "Moreover, it stands in sharp contrast to the hollow statements made by AT&T, which have been so hedged by restrictions and caveats as to be meaningless. The rest of the cable industry should embrace these principles and work towards opening their networks to fulfill the promise of the 21st century Internet.