Federal Regulators Not on AOL’s BuddyList

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The Federal Communications Commission has finally allowed America Online andTime Warner to merge, but not before extracting a senseless concession. TheFCC was concerned about the free AOL Instant Messenger (AIM) chat tool,which allows real-time, faster-than-e-mail communication. While now usedmainly by flirting teens, the tool is seen as the future of Internetcommunications. Critics claim that AIM is a monopoly, which meritsregulating it out of AOL's hands.

America Online's dominance in messaging (64 million users) bothered FCCstaffers and, in particular, rivals like Microsoft and Yahoo. So AOL will berequired to make future enhanced versions of AIM "interoperable" withcompeting instant messenger tools. AOL critics believe chat tools shouldallow real time talk regardless of provider, the way e-mail or the telephonedoes.

But the real display of monopolistic behavior with respect to AIM is thecollusion between rivals and regulators at the FCC, a.k.a. "Fully CompetitorCompliant." More acceptance of access regulations, especially on the Bushadministration's watch, threatens to turn the Internet into a lazy publicutility. It also might kill the need to devise competing business models andrival networks that offer better features.

The newest AIM download -- free to consumers -- allows "buddy list" access fromany computer, online game support, file sharing and voice chat (bypassingthe phone company). But probably nothing frightens rivals as much as AIMMobile, which promises instant messaging to millions of AIM users viaweb-enabled wireless phones. America Online is extending a "monopoly" fromone platform to another, as Microsoft supposedly did by bundling InternetExplorer with Windows.

In response, AOL competitors such as Yahoo, Microsoft, AT&T and Excite@Homeformed a coalition called IMUnified. Their intent is to developinteroperability standards by which all their members will abide. Thecoalition apparently thinks that interoperability capabilities alreadyexist. Yet IMUnified members still are not interoperable with one another,and wouldn't be but for the rogue efforts of a few brazen software offeringslike OMNI, which boast access to AIM and other messengers.

If the coalition would demonstrate to the world that interoperability worksamong its members and is superior, AOL's refusal to participate will hurt itas users embrace the new standard. Downloading remains free, after all.

The IMUnified coalition's failure to follow its own script shows it isn'tinterested in an interoperability standard. It's interested in having AOL'scustomer base handed to it on a silver regulatory platter. So the IMUnifiedeffort is best understood as an attempt to mislead the public and tohumiliate America Online.

Like any business, America Online is uninterested in sharing its customerswith competitors, except in legitimate business deals. Undoubtedly AOL wouldprefer that users of rival products switch to AIM. That brings up the keyfraud in the IMUnified position, as well as the truth that AOL dares notutter. Ignored in all the posturing about standards is the fact that AOLalready has established a standard, and needs no further validation otherthan that already granted it by the choices of AIM downloaders. Only that,not the desires of competitors, is relevant. All producers under capitalismmust understand that they're on their own: AOL is not obliged to help othermessenger services succeed.

The FCC needs to realize that shoehorning competitors into AOL's system iscounterproductive for competition. Competing network business models are avirtue because consumer benefits depend upon battles that distinguishnetworks from one another.

For example, some companies who think "business chat" represents the futurehave aggressive plans to use instant messaging for real-time customerservice, workforce management and document/file sharing, while others thinkpeer-to-peer messaging that bypasses central servers will dominate. And somenote that chat clients of today are loaded with security problems and stillneed work. Such competing visions about what instant messaging should entailare crucial for generating advances. Plus they will help assure thatinteroperability emerges, but only when it makes sense and only in amarket-driven manner.

The idea that rivals should be handed access to a network they didn't helpcreate, merely on the basis of declaring themselves to be in the instantmessenger business, represents appalling corporate regulatory pork and anoverreach of government power.

And, if the situation were reversed, regulators would argue that everybodysharing a common network smacks of collusion and consumer exploitation. Gofigure.