FCC Sets Hearing on Time Warner/AOL Deal

FRAMINGHAM (06/29/2000) - The U.S. Federal Communications Commission (FCC) yesterday set plans to hold a July 27 hearing on the proposed $350-billion merger of America Online Inc. and Time Warner Inc. The decision came one day after the two companies filed a joint 50-page reply to a request for information on issues that include AOL's Instant Messenger online chat service.

Instant Messenger became a focus of the FCC's attention this spring, after rival instant messaging vendors complained that AOL was blocking their customers from chatting with AOL users. Microsoft and a group of 42 other technology vendors and Internet service providers asked the commission to take a close look at the proposed acquisition of New York-based Time Warner and require AOL to make Instant Messenger interoperable with other messaging services.

Antitrust enforcers at the FCC asked AOL in a June 9 letter to supply information about its activities in instant messaging, including work the company has done toward creating an interoperability standard In the joint reponse to the FCC with Time Warner, AOL said it continues to support efforts to create an open and interoperable standard that would let users exchange messages across different services. But, the company added, it has resisted attempts by other instant messaging vendors to access its network because of concerns that letting them in would jeopardize the security and privacy of AOL members and instant messaging users.

AOL said ensuring security and protecting the privacy of its users should remain the company's highest priority. But earlier this month, AOL noted, it submitted a proposed architectural design for a worldwide instant messaging system to the Internet Engineering Task Force -- a proposal that AOL claimed was a big step toward the development of protocols for enabling messaging services to interoperate.

But some critics labelled AOL's interoperability proposal as nothing more than an attempt to distract the FCC's inquiry. And Ross Bagully, CEO at Denver-based instant messaging vendor Tribal Voice Inc., yesterday dismissed AOL's response to the FCC as "another attempt to couch its efforts to dominate the IM marketplace by hyping security and privacy barriers to interoperability and open standards."

Tribal Voice is one of the 43 companies that asked the FCC to investigate AOL's instant messaging policies. In a statement, Bagully said AOL again blocked Tribal Voice's instant messaging users from communicating with users of Instant Messenger, even though Tribal Voice uses AOL's publicly published security and privacy protocols.

Gerald Levin, chairman and chief executive officer of Time Warner, and Steve Case, chairman and CEO of AOL, both are scheduled to attend this month's hearing before the FCC, an AOL spokeswoman said. The merger of the two companies must be approved by the commission before it can go through.

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