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In approving the merger between America Online and Time Warner, the FCC seemed to say that it was requiring AOL to make its popular instant-messaging service compatible with messaging applications offered by rivals like Yahoo and Microsoft.
But an AOL spokeswoman said Friday that the Federal Communications Commission did no such thing.
AOL Time Warner is not required to change instant messaging as it currently stands," said Kathy McKiernan, referring to the company by its new name.
According to the FCC's ruling, AOL is only mandated to open up IM if it decides to offer what the FCC calls "advanced, IM-based high-speed services." The FCC defines this advanced service as one that may transmit or receive video images; in other words, video conferencing.
AOL (AOL) says it doesn't plan to offer these features any time soon. When asked if a version of instant messaging that offered video conferencing was in the works, McKiernan said, simply, "No." For the foreseeable future, then, one can expect AOL's instant messaging service to offer only text-based messaging -- meaning that one can also expect its services to be closed to competitors.
Many of AOL's competitors had hoped that the government would have gone further in its ruling, requiring AOL to open its current service. Open service would have allowed, for example, users of Yahoo's instant-messaging application to send messages to AOL users, and vice-versa; as it stands, AOL users can only communicate with other AOL users, and Yahoo users with other Yahoo users.
Deborah Lathen, chief of the cable services bureau at the FCC, said that the commission's decision not to require AOL to open text-based instant messaging was because "AOL's dominance in the instant-messaging field was based on AOL's own innovation and marketing skills."
"We said to AOL that we believe that interoperability is a good thing, but we will not mandate it unless you decide to leverage instant-messaging dominance into new fields that stifle competition," she said.
She added that the FCC has not made any determination on whether to classify instant messaging as a kind of indispensable medium for communication. In other words, dominating instant messaging isn't the same thing as dominating the broadcast airwaves or long-distance telephone lines.
Reacting to the FCC's approval of the merger, David Butler of the nonprofit group Consumers Union said that the government's conditions were as "good as we could have hoped for."
He said that while the provisions regarding instant messaging were weak, they were a good first step toward interoperability.
But one analyst warned that it was a mistake to think that the FCC's ruling would push AOL any closer toward opening IM. Bruce Kasrel, a senior analyst at Forrester Research, characterized the demand for video services over IM to be "very small," mostly because such services won't be of any usable quality for at least a few years.
"But the interesting thing," he said, "is that these requirements expire in five years. AOL can completely ignore that provision for five years, and on January 12th, 2006 -- boom! They can turn on the light switch and offer these services without having to make them open to others."
The FCC's Lathen said that this is an unrealistic possibility, given that AOL is facing tough competition from Yahoo and Microsoft. "It would be a pretty big risk to do that," she said.
Risky or not, though, it’s clear that AOL isn't rushing to open IM. McKiernan, the company's spokeswoman, said that AOL is dedicated to "open access," and to prove it, she cited a "memorandum of understanding" that AOL and Time Warner signed last June.
But that memo refers only to AOL's dedication to keeping its broadband cable services open to other Internet service providers. It says nothing about opening up instant messaging.
McKiernan said that interoperability was a goal of the company, but that there were specific technical difficulties that prevented it from implementing it right away.
AOL outlined those difficulties in a memo sent to the Internet Engineering Task Force last June, in which the company also drafted an architecture for IM interoperability.
Creating a unified IM system, AOL said in the draft, is a truly difficult task, one not to be undertaken without much thought. It said that if hacked together in an ad hoc fashion, such a system would put users' privacy and security at risk, and could leave IM as riddled with spam as e-mail.
"Imagine a world in which the hacker who used to simply send out pornographic spam can now send a pornographic IM directly to your child and have it pop up on their screen," AOL warned in a statement on interoperability.
In light of these concerns, said McKiernan, "There are very difficult technical issues here, but we have great people working on them."
But AOL's rivals are concerned that not enough people are working on the problem, and they're pursuing it not nearly as fast as they'd like.
"I view (the FCC's order) as a remedy that doesn't have a ton of teeth," said Bob Visse, the lead product manager of Microsoft's online service, MSN. "This is going to be a behemoth in the industry, and I think that at this point all of the rival companies will go back and reevaluate what is it that we're going to do with IM," he said.
Microsoft, Yahoo and several other instant-messaging rivals of AOL are joined in an effort called IMUnified, which is promoting a standard of IM interoperability. But Visse said that though the companies involved in that effort are rather powerful, they are no match for AOL's market dominance of IM.
"The one element that you have to consider is that if all companies outside of AOL decide to interoperate, they would have to do it under some open, published protocol," he said. "And what AOL could easily do is interoperate one way based on that protocol. It could allow AOL users to have access to ours, but not allow us access to AOL users."
A spokesman for Yahoo characterized AOL's closed system in more stark terms: "It's like only being allowed to send e-mail to other people who use the same e-mail client as you," he said.
But AOL rejects the claim that dominating IM is anywhere near the scale of dominating e-mail. It says that anyone is free to download its product, which is free, and that, in fact, the company does not make very much money from the service.
Forrester's Kasrel echoed this sentiment: "So they dominate the IM marketplace," he said. "Big deal. People can use AOL's instant messenger and still use Prodigy (as an ISP)."
But citing a recent Washington Post article, Visse, of MSN, said that there's definitely big money to be made in IM.
"You've got a very attractive demographic," he said, "that is typically giving you information about themselves. So there's a great demographic and psychographic -- so there's ad money in this today."
