A top lawmaker suggested during hearings Tuesday that America Online may have to abandon its $1.25 billion partnership with Hughes Electronics and DirecTV if the Internet giant wants to enter the cable business with Time Warner. "In my opinion, you will have to sell (AOL's interest in) DirecTV. A cable company shouldn't have a stake in a direct competitor," Sen. Herb Kohl, a Wisconsin Democrat, said to AOL Chairman and CEO Steve Case. Kohl made his comments during a hearing before the Senate Judiciary Committee on AOL's proposed merger with Time Warner. Case testified before the panel. Last year, AOL paid $1.5 billion to enter a partnership with DirecTV and its parent, Hughes Electronics. Under the deal, DirecTV will become the first platform to launch AOL TV. The AOL stake also involves Hughes' Spaceway broadband platform. On Tuesday, AOL and Time Warner unveiled plans to allow open access to cable lines, pledging to give consumers a choice of Internet providers. The move may help the two companies, which are planning to merge under a $135 billion deal, ease concerns among regulators, competitors and consumer groups. "Choice, competition and innovation have been the factors driving the Internet's explosive growth to date," Case said. "Now, with this framework, we are poised to make it easier, more attractive and more affordable than ever for consumers to sign up for high-speed, always-on Internet service."

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Northpoint Responds to SBCA Letter

Northpoint issued a response to a letter from the Satellite Broadcasting and Communications Association and others urging the Federal Communications Commission to delay authorizing the company's controversial spectrum sharing plan. The satellite companies have concerns about potential interference that could be caused by Northpoint's sharing of the spectrum allocated for DBS. In its response, Northpoint said that its system tests in Washington yielded no harmful interference. The company also said, "no further testing is needed" because a "lack of harmful interference has already been confirmed by third parties including Lucent Technologies and the FCC itself." Northpoint also called on the SBCA to, "act as an honest broker to resolve the current misunderstanding between satellite operators and Northpoint." SBCA, SkyBridge, Boeing, DirecTV, EchoStar, Galaxy Latin America, GE Americom, Loral Space and Communications, PanAmSat and Pegasus all signed the letter to the FCC asking for rigorous and independent testing of Northpoint's plan to operate in the DBS spectrum.

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DirecTV Comments On Sat Rules

This week, DirecTV submitted comments to the Federal Communications Commission on network non-duplication, syndicated exclusivity and sports blackout rules for satellite. In its comments, the DBS provider said "any non-duplication, syndicated exclusivity or sports blackout regulations that the commission imposes on the satellite industry must remain true to both the letter and the spirit of the Satellite Home Viewer Act. "A wholesale imposition on the satellite industry of the program exclusivity rules applicable to the cable industry will neither fulfill the commission's statutory mandate nor realize Congress' goal of improved multichannel competition." DirecTV said the commission should maintain "zones of exclusivity" similar to cable's rules. "But the satellite regulations should require that failing within the relevant zone of exclusivity be ascertained by means of an electronic file specifying the affected zip codes rather than by community units," the company said. The DBS provider also said sports blackouts shouldn't apply to satellite transmission of network signals, and the notification for sports blackouts of nationally-distributed superstations should be lengthened. Network non-duplication laws allow a local station to protect its distribution rights for network programming, while syndicated program exclusivity allows a station to protect its exclusive distribution rights for syndicated shows. Sports blackouts are aimed at protecting distribution rights to a local sporting event.

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EchoStar Adds Sacramento

As expected, EchoStar added local channels for the Sacramento area this week. Stations included in the Sacramento package are KXTV-ABC, KOVR-CBS, KCRA-NBC and KTXL-FOX. There are 16 counties in the greater Sacramento-Stockton-Modesto area eligible for the signals. With the addition of Sacramento, DISH Network now offers local channels via satellite in 24 cities. The local channel package sells for $4.99 a month. For a dollar extra subscribers can get a national PBS feed.

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DISH Partners With Real Estate Company

Real estate giant RE/MAX International and EchoStar Communications will offer new homeowners a free satellite system if they buy or sell a home through the company. Homeowners who participate in the program can receive a free DISH Network DISH 500 system, installation and a month of free programming with a one-year commitment to America's Top 100 package and a premium movie package. The offer is available to RE/MAX homebuyers and sellers beginning April 1. The deal runs through Feb. 28. The offer is also available to RE/MAX sales associates and staff until June 30.

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COMP WATCH: Microsoft Buys Peach Networks

Microsoft Buys Peach Networks - Microsoft said Tuesday that it will buy Israel's Peach Networks, which delivers Internet services over cable. The deal will allow the company to deploy its interactive TV service through digital set-top boxes. AT&T Appoints Two - AT&T Broadband appointed Joseph W. Bagan as senior vice president and chief information officer and Judi Boyett as senior vice president of media services. Bagan will be responsible for the strategy and execution of information systems and technology plans. Heady will oversee advertising sales strategies and functions.