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FCC Lifts AOL IM Limits
TypoNAM writes "'The Federal Communications Commission has agreed to lift restrictions that have barred AOL Time Warner from offering advanced instant messaging services including videoconferencing, according to a source familiar with the decision.'" A couple of years ago, the FCC made a big fuss about how it was watching out for the public interest in approving the AOL/TW merger.
Unaltered, unadulterated pure news.com.com fun:
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FCC lifts AOL messaging limits
By Declan McCullagh and Jim Hu
Staff Writer, CNET News.com
August 19, 2003, 12:10 PM PT
The Federal Communications Commission has agreed to lift restrictions that have barred AOL Time Warner from offering advanced instant messaging services including videoconferencing, according to a source familiar with the decision.
FCC commissioners voted in a nonpublic meeting to drop the restriction, imposed by the commission when it approved the merger between America Online and Time Warner in January 2001.
Reached at an industry conference in Aspen, Colo., Commissioner Kathleen Abernathy declined to comment on the vote, saying only that a decision will be released by the end of the week.
AOL spokeswoman Tricia Primrose declined to comment until the FCC makes the decision public.
"We think that we made a compelling case to the FCC," Primrose said in an e-mail. "We hope a decision will be out soon, and that we get a favorable result."
Relief from the ban would be a significant win for AOL Time Warner's America Online division. The world's largest Internet service has argued that the once-unshakable dominance of its AOL Instant Messenger program has been challenged by the rapid rise in popularity of IM programs from rivals such as Microsoft and Yahoo. Thus, AOL has claimed, the FCC's original reasoning for the ban is outdated, leaving AOL at a disadvantage against competitors.
In January 2001, the FCC ruled that the combination of AOL and Time Warner could pose problems for competitors trying to develop their own IM products. Regulators and rivals were concerned that combining AOL's leading Internet subscriber base with Time Warner's entertainment content and regional cable monopoly would create an unfair advantage in the market.
But the world AOL inhabits in 2003 is drastically different than the one it dominated in 2001. Back then, IM services from Yahoo and MSN were still in their infancy and dwarfed by AOL's seemingly insurmountable market-share lead. Rival IM services also lobbied the FCC aggressively to force AOL to open its servers and allow other IM products to interoperate with its product.
As it turned out, the lack of interoperability helped Microsoft and Yahoo make gains in market share faster. A spike in the popularity of instant messaging forced people to run multiple IM clients on their PCs simultaneously, allowing AOL, MSN and Yahoo to equally prosper.
With nothing to lose, Yahoo and MSN began competing more aggressively against AOL in a features war, launching high-bandwidth video features that AOL was barred from offering. These features have served as the cornerstone for AOL's argument for relief from the FCC's restrictions.
In April this year, AOL filed a petition to the FCC arguing that competition in IM services is alive and well. Backed up with market statistics showing MSN and Yahoo's growth since 2001, AOL argued that the FCC's original ruling was passe.
Although AOL's AIM and ICQ together make up the largest IM network, MSN and Yahoo are making strides. In March 2003, AIM had 31.9 million unique users while ICQ had 28.3 million, according to ComScore Media Metrix. MSN Messenger reached 23.1 million unique users while Yahoo Messenger reached 19 million. Both Microsoft and Yahoo launched IM clients with virtually zero market share.
Because of these gains, Microsoft and Yahoo have quieted their calls for interoperability. Their new reluctance to open their doors to one another stems in part from their push into selling IM bundled with security features to corporations. This nascent enterprise IM business has become a hot topic largely because AOL, MSN and Yahoo already have millions of business users who have downloaded their clients at work.
The vote was first reported by The Washington Post.
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