FCC ON AOLTW MERGER: YOU’VE GOT PROBLEMS
The Federal Communications Commission asked that AOL provide data about its instant messaging software and its ownership interest in Hughes Electronics Corp. while requesting Time Warner's plans to deploy high-speed Internet, local telephone and digital cable services.
"We anticipate that additional requests will be forthcoming," To-Quyen Truong, Associate Chief of the FCC's Cable Services Bureau, said in a letter to lawyers for the world's largest Internet services provider and the cable operator.
He requested in the letter, which was made available on Monday, that the information be provided to the agency no later than June 30.
"This is a normal part of the process, and we look forward to responding to the commission's questions in an expeditious manner," said AOL spokeswoman Kathy McKiernan.
Specifically, the FCC asked AOL whether it is working with other Internet companies on drawing up standards to allow customers using various instant messaging programs to interact and, if not, what benefits this provides to AOL customers.
Instant messaging, a feature that allows Internet users to chat back and forth in real time, is one of the most popular functions on AOL. If various Internet companies are working together to establish standards, the FCC asked whether other instant-message providers are required to sign licensing agreements that include payments to AOL for access to its customers and vice-versa.
Competitors to AOL's instant messaging software include Microsoft's Instant Messaging, Yahoo!'s Yahoo IM and CMGI's Tribal Voice.
The request follows planned petition drives by CMGI and others to force AOL to make its instant messaging software interoperable with other messaging software.
The FCC also asked for copies of documents "discussing actual or proposed terms for any and all licensing agreements that AOL has entered, negotiated or otherwise discussed with alternative IM providers for access to each other's customers," according to the letter.
At the same time, the regulators demanded information about Time Warner's past, present and future roll-out plans for digital cable, local telephone and high-speed Internet services, including how much it plans to invest and the number of homes and subscribers it now serves and plans to serve.
Additionally, the agency asked the two companies to outline stakes and voting rights they hold in any company providing telephone service, including local or long-distance and circuit-switched or packet-switched service.
Shares of AOL were down 1 15/16 to 52 7/8, while shares of Time Warner were down 2 9/16 to 78 1/4.
In related news, the Brussels-based European Commission will decide by June 14 whether it will investigate possible antitrust concerns surrounding the proposed Time Warner-EMI merger, an EC spokeswoman said.
The combination of Time Warner and EMI's music businesses could create the world's largest music group.
Five Norwegian publishing companies have filed complaints with the European Union about the proposed merger, alleging it would create a $20 billion entity that could wield too much control over the European music publishing market.
Composers in the five Scandinavian countries filed a formal objection to the Warner Music/EMI deal last week, saying the new group would control upward of 50% of music publishing in Sweden and 70% in Finland.
The EC have set a separate deadline—June 19—by which to determine whether or not it will investigate the AOL-Time Warner merger. The two investigations could delay completion of that deal until the fourth quarter of this year.
