AOL Time Warner's Anti-Competitive Ad Stance Toward ISPs

Is an unspoken policy refusing ad sales to rivals anti-competitive? It is when the naysayer is media monolith AOL Time Warner and the policy could affect all ISPs offering high-speed services in Road Runner territory.

by Jim Wagner ISP-Lists Managing Editor [June 8, 2001]

AOL Time Warner has landed in hot water over its advertising tactics, again—this time refusing to run cable TV spots for a rival Internet service provider promoting its digital subscriber line (DSL) services.

Many ISPs owners claim that they endured this type of content-carriage discrimination when Time Warner was in charge of its cable network. But few expected that American Online would maintain Time Warner's advertising sales bias. After all, conditions applied by the Federal Communications Commission and Federal Trade Commission required that the merged empires come under routine regulatory review—the first of which is already scheduled for August.

Even though refusing to sell airtime to a rival service is not illegal, it could be be anti-competitive, which makes it a difficult business proposition to wrangle. After all, we're not talking about an official doctrine, this is a whisper in a back office with a nod and a wink reply—an unspoken sales policy designed to keep rival high-speed services providers from advertising to AOL Time Warner's captive cable audience.

Wile E. Coyote
AOL Time Warner contends that an independent ISP offering DSL service is a direct threat to its Road Runner cable modem program. Does this mean it's no deal when it comes to carriage of rival broadband service providers advertisements on anything AOL Time Warner transports via cable—not just the content providers it owns? Suffice to say, you would wait a long time to see a non-AOL commercial on the Warner Bros. Network or CNN.

According to one Wisconsin-based ISP, that's exactly the case—and then some. Infinity Technologies, a local dialup and DSL provider in the greater Green Bay area tried to buy airtime from the local cable network. The ad campaign wasn't even a standard commercial and AOL Time Warner does not own the media property. Infinity wanted to place a ticker-type message at the bottom of the screen on the Weather Channel.

But Infinity was repeatedly rebuffed by local Time Warner Cable sales staff each time it tried to secure the ad run. According to Infinity, its series of queries demanding an explanation from AOL Time Warner were met with silence—until one morning a rejection notice finally arrived via fax.

Time Warner's Green Bay Sales Manager, Paul Capell, informed Infinity Chief Executive Officer Dennis Challe, that the advertisements would not run on the cable network because Infinity competes with its parent company's Road Runner cable modem service.

Talk about local area networks?
Mike Luftman, Time Warner spokesperson, said that the corporate office does not dictate local advertising policy, leaving all decisions regarding advertising to local or regional offices. Of course, no one from AOL Time Warner's Green Bay office would comment on Challe's claim.

Infinity's Challe said he was confused by AOL Time Warner's actions because its ads were tailored to capture business DSL customers, not residential users, like Road Runner's target market.

"It's not like we were trying to take any of their customers," Challe said. "We just wanted to run a spot promoting our business services on the ticker that runs at the bottom of the Weather Channel. I don't know why they thought that would compete with Road Runner."

No case of cash-and-carry
We acquired a copy of the conversation between an broadband ISP and a local Time Warner Cable sales representative that substantiates Infinity's claim that AOL Time Warner's consistently refuses to carry what it considers to be rival broadband advertisements. [Listen to MP3 File] or [Download .wav file]

We respect the right of the recording's owner to remain anonymous, since the firm is currently negotiating shared cable access terms with AOL Time Warner. Therefore, we edited the recording only to remove any information that could identify the ISP or the Time Warner Cable sales representative. We can tell you that Infinity played no role in securing a copy of the recording, from which select excerpts follow:

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