AOL Time Warner on Monday must give federal regulators a progress report detailing efforts to open its instant messaging networks to rivals, the first such filing required as a condition of the company's January merger.
In advance of the report, the company on Friday said it is close to announcing a partner for testing links between its leading AOL Instant Messenger (AIM) service and other IM networks. As part of the test, AOL will use one of the proposed technologies submitted as a standard to the Internet Engineering Task Force (IETF), an AOL spokesman added.
The filing to the Federal Communications Commission marks the latest chapter in an ongoing saga over creating a common language for IM services to communicate--a fight that has pitted some of the technology's largest competitors against each other in a bitter battle over control of one the fastest-growing technologies on the Net.
Although interoperability a year ago was viewed through the lens of AOL's resistance to open its networks to competitors, today the landscape has vastly changed. Critics that lobbied to force AOL's cooperation are now increasingly staking out their own independent territories.
Lack of interoperability continues to hamper IM development. But analysts say it is not the make-or-break issue for deep-pocket newcomers to the business, such as Microsoft, that many had once assumed it was.
"Interoperability represents excuses more than anything else," said Jeff Pulver, a telecommunications entrepreneur and organizer of the annual Presence & Instant Messaging conference. "We're at a point right now where interoperability is a nice thing to have but not a reason why people use (IM) or don't use it."
Nevertheless, the stakes remain high for all of the companies involved--none more so than for AOL, whose dominance in IM has for years been undisputed. The company now faces potent threats from competitors that have sought to take IM beyond its roots as a simple chat tool.
IM networks were originally designed to let consumers know when their friends and colleagues were available online to trade short text messages, but now the technology points to a range of new applications.
Both Microsoft and Yahoo continue to trail AOL in the size of their IM networks by a substantial margin. But both are promising advanced IM features that go well beyond what AOL offers.
Microsoft, for example, is highlighting new IM capabilities built on top of its new Windows XP operating system scheduled for release this fall, including videoconferencing and document collaboration tools. Yahoo also recently unveiled a videoconferencing feature in its latest version of Yahoo Messenger.
Politics and interoperability
The FCC filing comes almost one year after AOL executives told FCC commissioners they would have an interoperability system ready to test by now. Despite these assurances, the FCC decided to attach regulatory conditions on AOL's IM services as part of its merger approval, including filing "progress reports" every 180 days since the closing of the deal.
AOL's treatment of competitors has drawn scrutiny in part because of its aggressive territoriality over IM, a service that it helped develop. Only after AOL signed up millions of people for its AIM and ICQ services did companies such as Yahoo and Microsoft see its potential. But AOL then decided that it would not allow competitors to communicate freely with its IM networks.
During the merger review, a number of AOL's staunchest competitors banded together to lobby regulators and create their own interoperability standard. Dubbed IMUnified, the coalition comprised Microsoft, Yahoo, Excite@Home, AT&T and two now-defunct CMGI companies.
The coalition portrayed AOL as a monopolist in IM market share and aggressively asked regulators to force AOL to open its network to grow the market. As a result of their efforts, IMUnified ended up convincing the FCC to attach a condition for merger approval, but not one that satisfied IMUnified's objectives.
The condition stated that interoperability would become mandatory once AOL implements "advanced, IM-based high-speed services (AIHS) applications." Competitors criticized the condition as toothless, because AOL can avoid launching any high-speed applications to avoid forced interoperability.
The IMUnified coalition originally stated it would launch by the end of 2000, but it remains in a holding pattern. Recently, Microsoft has begun questioning whether interoperability can be beneficial without AOL's participation.
"Both business and technology issues in IMUnified are holding it back," Greg Sullivan, lead product manager for Windows, said in a recent interview.
AOL may no longer be the only one to watch when it comes to IM, however.
Despite its participation in IMUnified, Microsoft has increasingly taken matters into its own hands on IM. The company has said it envisions IM as a key component of a major company overhaul, dubbed .Net, that aims to switch its focus from a PC operating systems maker to a network services provider.
One of the first developments planned as a part of this transition is a project code-named HailStorm, which would tie together Microsoft's Passport authentication and Messenger services to provide online access to shared documents, calendars and other files from anywhere on any device.
Though most companies state that interoperability is inevitable, it seems less necessary for the bigger players like AOL and Microsoft. Interoperability would only add girth to existing giants.
"Interoperability is certainly not needed and certainly not stopping growth of any one product or trend," Pulver said.