The US Federal Communications Commission, (FCC) has approved the multi-billion dollar merger of America Online and Time Warner.

FCC chairman William Kennard made the announcement late yesterday evening in Washington.

Kennard described the AOL-Time Warner merger as a "marriage of old and new media" which raised new challenges for policy making.

$94 billion deal The FCC's approval of the deal, valued at $94 billion, comes with conditions designed to protect consumers from the large and potentially monopolistic company that AOL-Time Warner could become.

The conditions relate to three main areas: the issue of openness in the high-speed Internet access market; ensuring a good level of competition in the market for instant messaging services; and the terms of existing business ties between AT&T and Time Warner.

Kennard said: "This is clearly a merger of convergence which could bring benefits to consumers through the creation of new products and services."

Balance He added that he believed the FCC had struck the right balance between protecting market and consumer interests, and not imposing too many conditions on the merger.

Kennard said the approval of the merger was a unanimous decision by the FCC commissioners, although two commissioners wanted no conditions imposed on the deal.

AOL and Time Warner announced their plan to merge on January 10, 2000. The marriage will create an Internet and entertainment powerhouse boasting 119-million paying subscribers around the world, made up of AOL's online members and subscribers to Time Warner's cable services, magazines and other media.

High-speed access On the issue of high-speed Internet access, Kennard said the conditions imposed by the FCC go "a bit further" than those applied by its colleagues at the US Federal Trade Commission (FTC), which granted its own approval to the merger on December 14, 2000. The FCC has "plugged some of the holes" left by the FTC's conditions he said.

The Federal Trade Commission enforces a variety of federal antitrust and consumer protection laws by ensuring that there is a free, competitive market.

Kennard listed four conditions aimed at giving competing independent ISPs (Internet service providers) who are using AOL-Time Warner's cable platform a fair chance in the broadband services market.

First, AOL must ensure that competing ISPs can control the first screen that pops up on a consumer's computer, Kennard said. Secondly, there must be a direct billing relationship between independent ISPs and their customers. Thirdly, rival ISPs who use AOL-Time Warner's cable platform must be guaranteed an equal level of performance as AOL Time Warner's ISP affiliates. Kennard added: "We want to ensure that these contracts are fair, and that the FCC can review them."