IM AOL, hear me roar

Because of the flimsy and arguably useless nature of the interoperability condition the FCC attached to its recent merger approval, AOL Time Warner will continue its dominance over the instant messaging market, according to competitors and industry analysts.

While competitors asked regulators to force AOL Time Warner to make its IM platform and estimated 140 million users interoperable immediately, the FCC tied its interoperability mandate to the offering of advanced IM services such as streaming video over its vast cable network. If AOL Time Warner does offer advanced IM services, one competitor must receive cable line access immediately and an additional two within six months.

But some question whether the FCC's condition will serve any purpose, claiming it is rooted in a hypothetical future that may never arrive.

“If you look solely at the instant messaging sector, AOL came out pretty whole on this one,” said Steve Vonder Haar, an analyst for The Yankee Group. “The FCC ruling really did little to slow the development of a budding juggernaut.”

Indeed, AOL Time Warner has no time table to offer advanced IM services. Theoretically, the company could continue offering its proprietary text-based services indefinitely, according to PalTalk founder and CEO Jason Katz. Simultaneously, the company could use that time to develop its own technologically advanced IM services behind closed doors while its already-monstrous user base proliferates, he said.

Echoing this sentiment was Alex Diamandis, vice president of alliance marketing for Odigo and a member of IMUnified, a coalition of IM companies advocating interoperability and an IM industry standard.

“When the FCC starts talking about advanced IM as a trigger for AOL to come to the interoperability table, it's kind of laughable because I don't think they're going to come up with any advanced IM anytime soon,” Diamandis said. “Every day they wait is another day that their network gets stronger and new users come to the table.”

Part of AOL Time Warner's reticence toward opening its IM user database and cable lines is that it would lose customers to more sophisticated IM technologies, Katz said. Many AOL users do not know that rival IM products even exist, he said.

“AOL has been fabulous at getting users who have never used a computer to sign on and use the Internet, and they've convinced them that AOL is the Internet,” Katz said. “If they open it up, suddenly it would be like opening all of their eyes, and they would be in a lot of trouble because there are a lot of better things out there.”

AOL Time Warner could not be reached for comment.

In addition to not requiring AOL Time Warner to interoperate immediately, the FCC mandate to open its user database and cable lines is lifted after five years' time.

“This is going to be the litmus test of what kind of player AOL is going to be—Are they going to be a good guy or a bad guy?” Vonder Haar said. “If they want to play it patiently, they can essentially own the dial tone for online video conferencing.”

AOL maintained it favors interoperability but has security and privacy concerns that must be addressed before it will cooperate. While analysts said AOL's concerns are justified, they also said the Internet provider's security claims are also a smokescreen designed to sidestep interoperability.

“What's the greater harm—having a few security risks over the short-haul or setting the stage for the development of another communications monopoly?” Vonder Haar said. “If you look at all the pieces, they have broadband access, names and IDs, and a market that's increasingly equipped with microphones and cameras.… They have a chance to create a significant new communications market.”

A common protocol is needed for the IM market to develop and reach its full potential, said Frank Chu, senior vice president and general manager of HearMe Technology Products. As with e-mail in the 1990s, the future of IM technology depends on the adoption of an industrywide standard.

“Instant messaging is one of those fundamental technologies that is not an end to itself but a building block for revolutionary applications,” Chu said. “This is exactly the kind of communications tool that needs to be standardized and used by everybody as a foundation.”