Consumer Groups Unhappy with AOL TW

WASHINGTON — Several consumer groups have asked the Federal Trade Commission to investigate the refusal of AOL Time Warner Inc. cable systems to carry advertisements for competing high-speed Internet service offered by telephone companies.

“This refusal appears to be a violation of both the letter and spirit of the consent decree” by which the FTC approved America Online’s acquisition of Time Warner, said the letter from Consumers Union, the Consumer Federation of America, the Media Access Project and the Center for Digital Democracy.

An FTC spokesman couldn’t confirm that the agency had received the letter, which was sent late Friday.

The letter was prompted by a New York Times article detailing AOL-Time Warner’s (AOL) refusal to carry ads from Verizon Communications Inc. (VZ) for its digital-subscriber-line modems which compete with cable broadband by providing high-speed Internet access through telephone lines. Small Internet-service providers have also complained that other cable systems have refused to accept ads promoting their DSL service.

AOL spokeswoman Kathy McKiernan said it is standard media practice not to accept advertising from direct competitors. “There is nothing in our agreement with the government that touches this issue whatsoever,” she added.

Concerned that AOL would cease supporting DSL once it took over the nation’s No. 2 cable provider behind AT&T Corp., the FTC required AOL “to market and promote its DSL services” on comparable terms in markets where AOL broadband cable was available.

In another move, the four consumer groups dropped out of a coalition organized to fight the Baby Bells’ effort to win passage of the so-called Tauzin-Dingell bill that would lift regulations governing the companies’ ability to provide high-speed data services across state lines. The coalition included AT&T (T), whose decision last week to raise rates for its basic long-distance rates spurred the consumer groups into leaving the coalition.

“A fight between duopolies doesn’t get us anywhere,” said Gene Kimmelman, a lobbyist for Consumers Union.