FCC rejects Earthlink request for AT&T-Comcast documents

The FCC has rejected a motion filed by Earthlink and the Consumer Federation of America (CFA) that would have required AT&T and Comcast to enter into the public record documents related to two Internet service provider (ISP) agreements the companies had negotiated with AOL Time Warner (AOLTW) subsidiary America Online (AOL).

According to the order issued by the commission, AOLTW had entered into a three-year non-exclusive agreement through which AOL broadband service would be made available on AT&T-Comcast cable systems. If the merger does not close by March 1, 2003, AT&T and AOLTW would enter into a “substantially identical” agreement that would call for AT&T to provision AOLTW high-speed Internet services over its cable systems. AT&T and Comcast had asked the FCC to review these documents at the U.S. Department of Justice before determining their relevance because of their commercial sensitivity.

However, Earthlink and the CFA argued that the FCC could not adequately fulfill its public interest analysis obligations related to the merger under sections 214 and 310 of the Telecom Act without placing these documents into the public record and reviewing the subsequent commentary.

Earthlink and the CFA believe the agreement needs to be on public record to determine whether it would reduce unaffiliated ISP access to AT&T-Comcast facilities and whether AT&T-Comcast would have unfair bargaining power over ISPs should the merger be approved.

The FCC rejected the motion, noting that the AOL ISP agreement has no relevance to the merger, largely because it would survive regardless of whether the merger is consummated. In addition, the FCC said that since no rules or policies currently exist to govern whether ISPs should have access to cable systems, or to define the terms of that access, Earthlink’s and the CFA’s concerns are moot.

The commission also said that if the terms of the AOL ISP agreement are less than favorable “from the perspective of an ISP,” it could be because AOLTW is trying to protect its own cable assets and not because of any “market power” put forth by a combined AT&T-Comcast. Under terms of a previous Federal Trade Commission consent decree, should AOL enter into an ISP agreement with any of the top five multiple service operators, it is required to provide other unaffiliated ISPs access to its cable platform under the same terms and conditions.

Finally, the commission said that the D.C. Circuit has firmly established that the FCC is “fully capable of determining which documents are relevant to its decision-making.”

CFA Director of Research Mark Cooper called the AOL ISP agreement “brutally anti-competitive” and said that it is what the merger fight is about. “To say that this document is not relevant is similar to [recently resigned SEC Chairman] Harvey Pitt saying that the accounting troubles of William Webster were irrelevant to his oversight of the SEC’s accounting committee,” Cooper said.

Dave Baker, vice president of law and public policy for Earthlink said in a prepared statement that if AOL purposely paid more than they should have to prop up access to their own cable system, then it, AT&T and Comcast are guilty of collusion.

“If this agreement is the best the nation's biggest ISP can negotiate, it just goes to show the market power and control the cable companies exert,” Baker said.

In a dissenting opinion, FCC Commissioner Michael Copps said that the agreements should have been entered into the public record, but under a protective order that would have preserved the confidentiality of the information.

“The public interest is best served when government actions and processes are conducted to the maximum extent possible, in the sunshine,” Copps said.