The Federal Communications Commission Thursday night approved
the merger of Time Warner Inc. and America Online -- the largest in
US history -- but added conditions designed to help foster
competition, especially with AOL's popular instant messaging
Along with the blessing, the FCC voted 3-2 to impose
restrictions on how the instant messaging platform would be made
available to competitors, especially as the service is used to
expand other media offerings such as video streaming over broadband
connections enabled by cable connections. Approximately 140 million
people use one or another form of instant messaging technology at
Calling the FCC's internal debate "robust" and emphasizing the
"minimally intrusive" nature of its restrictions, FCC chairman
William Kennard told reporters today that these conditions were
"all about preserving the open culture of the Internet."
However, the commissioners voted 3-2 to place restrictions on
the merged company's instant messaging (IM) system when it operates
over Time Warner's cable lines and that rival ISPs must have access
to the firms cable pipeline.
"The FCC has never been faced with such a major deal before,
especially one combining both traditional and new technologic
issues," said Kennard. "This is truly a convergence merger."
The FCC's approval was the final regulatory hurdle necessary for
the creation of a new media giant that combines AOL's 26 million
subscribers with Time Warner's vast media properties. That includes
cable channels, about 20 million cable television subscribers,
magazines and even record companies to name a few. The deal's value
is now estimated at about $103 billion. The merged company
possesses combined revenues totaling more than $30 billion a
Comparing the potential monopoly of instant messaging to that of
earlier telephone monopolies, Kennard told reporters today that new
IM technology must be allowed to develop in a "competitive
"All we're doing here is representing the industry's commitment
to interoperability among instant messaging services and holding
them to it," said Kennard.
Given AOL time Warner's likely domination in the potentially
competitive business of new IM services, especially advanced
IM-based high-speed applications such as videoconferenceing,
conditions to prevent merger-specific harm are merited, the ruling
"We don't know when AOL will decide to marry its Instant
Messaging assets with its cable assets, but when they do we know
that consumers will be protected," said Kennard.
In addition, the order placed restrictions on AOL's relationship
with AT&T Corp., which has major cable holdings as well.
"AOL Time Warner shall be prohibited from entering into any
agreement with AT&T, tacit or otherwise, that gives any AOL
Time Warner ISP exclusive access to any AT&T cable system for
the purpose of offering high-speed Internet access service," the
FCC order said. The newly merged company is also prohibited from
entering into any agreement "that affects AT&T's ability to
offer any rates, terms or conditions of access to ISPs that are not
affiliated with AOL Time Warner."
The approval follows the blessing by the Federal Trade
Commission in December which also imposed conditions that AOL-Time
Warner open its high-speed cable lines to competitors. But the
FCC's order contained more information and concerns about the
company's instant messaging platform, whose popularity and growth
could be the groundwork for many new forms of e-mail and file
Consumer groups sounded fairly pleased with the terms of the FCC
approval, noting that regulatory authorities were focused on
fostering healthy competition between other major competitors of
AOL Time Warner.
But clearly, a new era of media has dawned between an old
economy, traditional media company and a major Internet player;
major competitors have no choice but to adjust their strategies in
order to compete with the behemoth.
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