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Witness the birth of a giant.
Even before the ink was dry on the Federal Communications Commission approval decree, America Online Inc. and Time Warner Inc. sealed the union announced a year ago almost to the day. Aside from creating the largest multimedia company on the planet, the merger will also have an impact on the broadband landscape.
The $103 billion merger-downgraded from the initial $165 billion value thanks to this fall's disastrous tech stock tumble-welds AOL's 24 million Internet subscriber base to Time Warner's vast film, music and cable network assets.
Not that the approval came scot-free. The commission did add three major conditions to those already required by the Federal Trade Commission, including:
* that Time Warner Cable systems allow competing Internet service provides access to high-speed cable modem service. Further, those ISPs must be allowed a "first-screen" contact with customers, rather than having to access Time Warner portals first. They must also be allowed a direct billing relationship with customers, access to the systems' technology features including caching; and must be given fair carriage contracts.
* that the AOL-Time Warner instant messaging network on the high-speed cable plant must be made compatible for one competitor immediately and then two more competitors within six months of AOL-Time Warner's own high-speed instant messaging service launch. This only affects future applications and not AOL's narrowband Instant Messenger or ICQ services.
* and, that AOL-Time Warner must not enter any pacts with AT&T Corp. that would make it the exclusive ISP on AT&T's cable modem platform.
Of the three conditions, the instant messaging provision may prove the most notable. FCC Commissioner Gloria Tristani withheld her vote until it was added, but some question whether it will create a competitive messaging environment.
"The instant messaging appears noteworthy mostly because the FCC took a hands-off approach to the current service," points out Michael Harris, president of the Kinetic Strategies Inc. analyst firm. "They basically addressed a service that isn't even in existence right now. So instant messaging really is a toothless tiger."
The Microsoft Corp.-backed Instant Messaging Unified Coalition, which has lobbied for open access to AOL's instant messaging system, has not issued a statement as yet concerning the FCC requirement.
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