AOL Shakes Regulatory IM Shackles

UPDATED Government regulators have taken the reins off AOL Time Warner's license to fully develop its AIM instant messenger client.

Advanced real time communication capabilities such as video conferencing have given AOL competitors a distinct advantage while the company has faced FCC restrictions following its merger with Time Warner.

A post merger AOL was blackballed due to its seemingly dominating stranglehold on the IM market, and fears that Time Warner's media content pooled with the world's largest ISP would create immense obstacles for companies looking to offer instant messaging capabilities.

Despite its early command, AOL's lead has since receded in the face of competition from Microsoft and Yahoo!. ComScore Media Metrix reports that Microsoft and Yahoo! IM networks stand at 23.1 million unique users and 19 million respectively, budding from their humble beginnings of virtually no representation. AOL and its ICQ subsidiary tally 60.2 million users.

AOL argued that the restrictions on rich IM features imposed in January 2001 were well past their sell-by date. The company cited shrinking market share as the basis of its argument and petitioned the FCC to reverse its ruling last April. This week, the legal wrangling culminated in a closed session vote, in favor of the online giant.

"We are pleased that the FCC lifted the restriction on AOL's ability to offer consumers advanced instant messaging services," AOL spokesperson Tricia Primrose told BetaNews. "The FCC clearly recognized that text-based instant messaging today is highly competitive."

Stakes have grown in the world of instant messaging as distributions peddle secure enterprise services to the corporate market, and calls for interoperability between clients have faded. While arch rivals Microsoft and AOL struck a $750 million accord to break down barriers between each service, little progress has followed the courtroom battles.

Versions of AIM 5.0 and beyond have been packaged with security features to encrypt conversations between parties. During the same timeframe, an alpha release of ICQ Light bridged together ICQ users with AOL members for the first time.

Other developments have included the introduction of AOL Communicator, a unified application encapsulating instant messaging with e-mail and contact management.

Microsoft and Yahoo! have taken the opportunity to update their IM clients with rich capabilities such as video and voice messaging. Microsoft has extended its instant messaging reach into business environments with the newly developed Microsoft Office Live Communications Server 2003.

Enhanced instant messaging capabilities are also rumored to be one tap for Longhorn, the next iteration of the Windows operating system due in 2005.

With the FCC ruling behind it, AOL is now free to take the gloves off and compete head to head with the feature-laden clients of its competition.

"This decision, which will allow AOL to fully compete in advanced IM services, will clearly benefit consumers through increased choice and innovation," said AOL's Primrose.