FCC Lifts AOL Bar on Video IMing

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AOL Time Warner Inc. may add real-time broadband video streaming to popular America Online instant-messaging services, as the Federal Communications Commission has voided a 2001 merger condition intended to spur competition in the IM space.

The FCC's three Republicans approved the removal. The two Democrats opposed it, arguing that AOL Time Warner failed to show the messaging market had changed enough from the time of the merger.

AOL Time Warner told the FCC its IM market share had fallen steadily, from 100% in June 1999 to 58.5% in February 2003.

FCC chairman Michael Powell, a Republican, said consumers would benefit from greater competition to the other IM leaders, Microsoft Corp. and Yahoo! Inc. Both have deployed advanced IM, including video chat.

"I marvel at the willingness of my dissenting colleagues to use the powerful levers of government to manipulate market outcomes in the complete absence of any actual harm to consumers," Powell said in a statement. He added that neither Microsoft nor Yahoo! sought a continuation of the ban.

In approving the merger of America Online Inc. and Time Warner Inc., the FCC banned advanced IM services over Time Warner Cable facilities without a "server-to-server" interoperability agreement with an IM rival. No such agreement has yet been reached.

Without interoperability, a Microsoft MSN Messenger user can't contact an AOL IM user directly, a concern Microsoft had raised with the FCC. Consumers cope with interoperability issues by using multiple IM platforms.

The advanced-IM ban would have lapsed automatically on Jan. 22, 2006.

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