IP: AOL says, "Never mind..."

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: Matt Oristano <Matt () Oristano net>
Date: Wed, 24 Jul 2002 12:26:08 -0400
To: farber () cis upenn edu
Subject: AOL says, "Never mind..."

AOL Curbs IM Interoperability Plans

Jul 24, 2002 (NewsFactor.com via COMTEX) -- AOL (NYSE: AOL) has told the
Federal Communications Commission (FCC) that it will pull back from plans
to offer server-to-server interoperability between AOL Instant Messenger
and other messaging services.

Citing technical difficulties and market dynamics, the company indicated in
a letter to the FCC that it was forced to change course. AOL also pledged
to provide interoperabilityability in other ways rather than directly at
the server level, as previously promised.

According to Nielsen//NetRatings (Nasdaq: NTRT), AOL is the clear market
leader in instant messaging. In May, more than 41 million consumers used
one of the four largest IM networks -- AOL's AIM, ICQ, MSN Messenger and
Yahoo! (Nasdaq: YHOO) Messenger.

Research firm Gartner (NYSE: IT) has estimated that there are now more than
100 million IM users worldwide, and that IM will be used more often than
e-mail in a few years.

Apple Accepted

It seems that nearly every week, a new IM initiative pops up or existing IM
services are expanded. Last week, at Macworld New York, Apple (Nasdaq:
AAPL) took the wraps off a tool called iChat, which will let Apple's
customers and AOL users exchange instant messages with each other.

During his keynote speech at MacWorld, Apple CEO Steve Jobs boasted that
Apple was the first company to be invited into the AOL Instant Messenger
fold.

And Brian Croll, Apple's senior director of software product marketing,
told the E-Commerce Times that iChat "is compatible with the whole AIM
network."

In fact, Croll said, Apple has built myriad features around its IM effort,
including conversation bubbles and "cartoon stuff." In addition, the
technology takes advantage of Mac drag-and-drop and other features.

FCC Concerns

The FCC has been watching AOL's IM plans carefully since the company
announced it would purchase Time Warner for US$106.2 billion in 2000.

At that time, the commission required AOL to level the IM playing field by
finding a way to link its IM service with other service providers'
offerings so that users of different Internet service providers (ISPs)
could chat easily.

The company is required to report to the commission on the progress of its
server-to-server interoperability efforts every six months. From the
get-go, AOL acknowledged the difficulties of providing such
interoperability.

Technical Challenges

Its first report to the commission outlined technical challenges in
protecting privacy , network performance and security.

The company noted in January that different IM services offer different,
unique features and that "the protocol usedol used internally by each IM
service will be unique." Server-to-server interoperability would allow
messages to be translated between protocols.

At that time, AOL reported that it had created a prototype gateway and had
completed a limited trial between AIM and the Lotus Sametime service.

While the company was able to move text messages back and forth between
services, it warned that the test was "narrow" in scope and that the
prototype was not designed to scale up to accommodate the message volumes
found in the real world.

In its latest missive to the FCC, AOL said it had curbed its
server-to-server efforts in favor of other initiatives.



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