08/19 - FCC OKs video for AOL instant messaging - East Valley Tribune: Business

08/19 - FCC OKs video for AOL instant messaging

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Posted: Tuesday, August 19, 2003 2:40 pm | Updated: 2:12 pm, Thu Oct 6, 2011.

The Federal Communications Commission will let AOL Time Warner Inc. add videoconferencing to its popular instant-messaging software, lifting a restriction imposed in 2001 as a condition of the mega-merger of America Online and Time Warner.

The Republican-dominated FCC voted 3-2 to approve the change, with the two Democrats dissenting, said an FCC official who spoke on condition of anonymity. The vote should be made public soon, the official said.

FCC spokesman David Fiske declined to comment.

When the government conditionally approved the AOL-Time Warner merger, it limited AOL's ability to include advanced services in its instant-message software.

The restriction was to intended to force AOL to open its instant-messaging network so customers of rival services, such as those from Microsoft Corp. and Yahoo! Inc., could send messages to AOL users. AOL has amassed a huge instant-messaging service by making it available not only for its Internet subscribers but also to everyone else, who can download it for free.

Although AOL has said it would work to make its messaging service "interoperable" with rival platforms, company officials say they still have technical and security concerns.

AOL asked the FCC in April to lift the limits, noting that its market share among instant-message services had fallen from roughly 65 percent in early 2001 to 58.5 percent, which it said indicated it was no longer "dominant" in the category. Microsoft had 22.2 percent, and Yahoo had 18.3 percent, according to figures AOL supplied to the FCC.

AOL Time Warner spokeswoman Tricia Primrose said she would not comment until the FCC decision was officially announced, though she said "we think we made a compelling case" to the FCC.

FCC Chairman Michael Powell opposed the restriction as a commissioner in 2001, saying the agency was "restricting AOL's incentives to innovate" and "favoring competitors." Powell's father, Secretary of State Colin Powell, resigned from AOL's board the same day the merger was approved.

Yahoo and Microsoft's MSN network already let users with Web cameras on their computers send video instant messages to each other for free. Apple Computer Inc. also recently rolled out a videoconferencing service called iChat AV.

Yahoo spokeswoman Mary Osako said her company considers its service popular, and counted 10.5 million video-messaging users in June.

A Microsoft spokeswoman was not immediately available for comment.

Even if video instant messaging is free, it could be important for its providers because it doesn't work well on slow dial-up connections - possibly giving consumers another reason to upgrade to faster, more expensive broadband services.

Phil Leigh, an analyst with Raymond James & Associates, said AOL was at an unfair disadvantage not to be able to offer a service that MSN and Yahoo have, especially as AOL finds itself losing Internet subscribers "and doesn't have the market force that was originally feared."

AOL Time Warner shares rose 39 cents, or 2.5 percent, to close at $16.00 on the New York Stock Exchange.

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