Message Firms Threaten DoJ Action In AOL-IM Debate

The merger of America Online Inc. and Time Warner Inc. should not receive Federal Communications Commission approval until the FCC examines AOL's policy of making its Instant Messenger service incompatible with other companies' similar services, according to two companies experiencing the freeze-out.

Tribal Voice CEO Ross Bagully today told Newsbytes that instant messaging is a communications wave of the future, and that one company's attempts to make itself the dominant brand raises concerns similar to Microsoft Corp.'s dominance of the Windows operating system.

He said that AOL's refusal to allow interoperability could lead to legal action, up to and including a potential Justice Department complaint, adding that this issue shows a more abusive nature than Microsoft's Windows practices.

"We're sitting here looking at a DoJ case in the making," Bagully said. "That's not going to be good for AOL, it's not going to be good for the country, it's not going to be good for the taxpayer. We have an opportunity to forestall that now by making AOL realize that it has a responsibility to act in a more responsible fashion."

Online entertainment company iCAST and Tribal Voice, a messaging company, plan to file briefs with the FCC as early as next week to petition the agency to consider the "interoperability issue" before it rules on the merger.

AOL has sparked criticism from other companies that offer instant messaging services because the Dulles, Va.-based company has declined to make its own IM program interoperable with other systems.

A company spokesperson declined to comment, but said that AOL may issue a reaction if or when the briefs are filed.

The two companies initially broached the issue in a letter to Senate Communications Subcommittee Chairman Conrad Burns, R-Mont., and Senate Commerce Committee Ranking Democrat Ernest "Fritz" Hollings, D-SC, sent in March. The companies also issued a press statement April 11 urging AOL to "open up the company's instant messaging system."

A Burns spokesperson said that the senator is worried about the issue, and cites it as one of a number of concerns about the AOL-Time Warner merger, but does not know if that issue alone should halt the planned mega-acquisition.

Bagully said, however, that the issue is "enormous."

"What we're talking about is the next critical means of communication in this country," Bagully said. "Well over a billion instant messages are sent on a daily basis. It's growing by 3 million new users every month. We are nowhere near the saturation in this market."

Bagully added that a common messaging misperception is that it's only "kids having fun in chatrooms." However, he said, "It's just the opposite; it's clearly changing the way people communicate. This is where e-mail was four or five years ago," he said.

The letter to the senators said that the companies asking the Commerce Committee to examine the messaging situation took no particular stance on the merger, and that they were not asking for regulation.

The companies noted that AOL had promised to "fast-track its efforts to allow interoperability and open messaging," but that "AOL has done little to work with the industry to create an open standard."

The companies also said that all PowWow-based instant messaging applications are designed to operate together with AOL's IM service and Microsoft's MSN Messenger, but that AOL has "resisted supporting interoperability by blocking PowWow-based clients from this functionality."

"We encourage the committee to make its own assessment. We believe, however, the Committee will find that, despite its pledges when last year's public controversy erupted, AOL has done little to advance the prospects of industry-wide interoperability," said the letter, which was also sent to Committee Chairman John McCain, R-Ariz.

Signatories included CMGI, AT&T Corp., AltaVista, Excite At Home Inc., MSN.com and Prodigy Communications Corp., as well as iCAST and Tribal Voice.

"Interoperability of instant messaging services provides freedom of choice to consumers and is critical to the advancement of a next-generation multimedia Internet," said iCAST President Margaret Heffernan in the press statement, adding that "blocking compatibility among services inhibits its potential and is bad for everyone using the Web."

Bagully said that he has not heard from AOL, despite repeated attempts to contact the company. He said Heffernan did make contact, but was told "flat-out" that the company would not consider interoperability.

"We're talking about an environment parallel to AT&T pre-divestiture in '84," he said. "We're talking about an environment...(in which) not only do you have to use AT&T service if you want to call an AT&T customer, but you have to buy your telephone instrument from (the company) as well."

Reported by Newsbytes.com, http://www.newsbytes.com.