AOL-Time Warner defend merger plan

In defending their companies’ pending megamerger, officials at America Online Inc. and Time Warner Inc. recently dashed off a pair of missives to quash competitors’ outcry over the merger’s impact on interactive television (ITV) and instant messaging.

One letter of a pair dated Sept. 29 has AOL-Time Warner firing back at Walt Disney Co. and others for suggesting the merged company will shut its competitors out of evolving ITV plans.

In the second letter, AOL-Time Warner urges the U.S. Federal Communications Commission to toss aside competitors’ pleas for merger conditions related to AOL’s instant messaging business.

In its ITV letter, AOL-Time Warner provides the FCC with a snapshot of that “nascent” industry.

For instance, Microsoft has garnered approximately one million users for its WebTV services, which use a dial-in link to hook televisions into the Web. TiVo Systems Inc. and other electronics companies are also scrambling in this new space.

Other ITV players include Wink and RespondTV, which are looking at e-commerce possibilities for television (called t-commerce).

“In short, the ITV marketplace is a nascent and fluid one,” said AOL-Time Warner executives. “No one party can claim to know what the market will determine to be a successful interactive TV offering.”

But AOL is charging into the market with AOLTV, which lets viewers bookmark channels or programs, while including functionality such as e-mail and instant messaging exchange.

If the FCC were to weigh in on the emerging ITV industry, “obligations would constitute policy determinations of industrywide significance,” noted AOL-Time Warner officials. And so far there is no precedence or enabling legislation to back that kind of intervention, those company executives noted.

In turning to IM, AOL-Time Warner singled out Microsoft Corp. again, noting the software giant’s thriving IM product. AOL-Time Warner also makes the case that IM is an application rather than a platform that would be used to generate more applications.

Company officials also argued that the pending merger would not dampen AOL’s expressed interest in pursuing interoperability with competitors.

However, letter writer George Vradenburg, AOL’s senior vice-president of global and strategic policy also noted, “Consumer-oriented interoperability must recognize consumer interests in privacy, security, and ease-of-use and not be forced on one company at the expense of consumers by government action produced by strategic competitive lobbying.”

Vradenberg was also co-author of the ITV letter, along with Timothy Boggs, senior vice-president of global policy Time Warner.