Before the Federal Communications Commission Washington, D
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842 Order ¶ 151 (“[W]e find that the area of our concern is ‘NPD [Names and Presence Directory] services’ – interactive communication services which . . . depend on an NPD for real-time communication between and among users. . . . A more precise definition of the relevant market is not necessary here, where the Commission can accurately assess the competitive impact of the merger without such a detailed analysis.”). 843 Media Metrix, a widely regarded Internet traffic measurement consultancy, reported in a November 2000 press release that although AOL Instant Messenger is still the dominant IM application in the Internet space, "Yahoo! Messenger and MSN Messenger Service each have accumulated approximately half the number of users as AOL Instant Messenger and have become the fastest growing instant-messaging applications in terms of overall users." See Press Release, Media Metrix, Yahoo! Messenger and MSN Messenger Service Are Fastest Growing Instant-Messaging Applications In The U.S. (Nov. 16, 2000) [available on the World Wide Web at 844 Microsoft, one of the two significant IM competitors, "dismissed" the Media Metrix IM findings. See FTC Prepares Vote On AOL-TW Deal, Critics Seek More Conditions, Communications Daily, Dec. 12, 2000. 845 Order ¶ 175. 846 See Carl Shapiro & Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy 174-76 (1999). 847 Id. at 187; see also William J. Kolasky, Network Effects: A Contrarian View, 7 Geo. Mason L. Rev. 577, 577 (1999). 848 Order ¶ 175. 849 To be clear, I do not dispute that the IM market could tip at some undetermined point in the future. But as I describe in greater detail, the underlying facts are inconclusive as to whether tipping has occurred, particularly with respect to the future hypothetical services contemplated by the Majority’s IM condition. 850 Presumably, no IM condition would be needed if it is demonstrated, as I do below, that it is still quite possible that market forces will enable some competing firm to prevent AOL from becoming a dominant provider of the advanced IM services contemplated by the majority's condition. 851 Kolasky at 577. 852 Shapiro & Varian at 174-77. 853 See Press Release, Media Metrix, Yahoo! Messenger and MSN Messenger Service Are Fastest Growing Instant-Messaging Applications In The U.S. (Nov. 16, 2000) (Launched in 1999, both Yahoo!'s and MSN's IM product offerings have become the "fastest growing instant-messaging applications in terms of overall users" over the period of August 1999 to August 2000) [available on the World Wide Web at 854 Id 855 See, e.g., Yahoo! Companion (on-line description of Yahoo! content and feature on browser) (visited Jan. 11, 2001) [available on the World Wide Web at 856 I am fond of recording bold technology predictions about the various industries over which the Commission has jurisdiction that, over time, proved generally overstated or absolutely incorrect and off the mark. For example, the New York Times, on the occasion of the 1939 World's Fair and the introduction of the black-and-white television, predicted that television "will never be a serious competitor for radio because people must sit and keep their eyes glued on a screen; the average American family hasn't time for it." And, in 1876, a Western Union internal memorandum forecasted that "[t]his 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." Many of these failed technology predictions are now compiled in The Experts Speak. See Christopher Cerf & Victor Navasky, in The Experts Speak: The Definitive Compendium of Authoritative Misinformation 225-231 (Villard 1998). 857 Kolasky at 579. 858 According to Media Metrix, over 30% of both AIM and ICQ users already use at least one other IM or chat application. See Press Release, Media Metrix, Yahoo! Messenger and MSN Messenger Service Are Fastest Growing Instant-Messaging Applications In The U.S. (Nov. 16, 2000). See also id (“Instant-messaging applications are proving to be very popular with consumers . . . But their different features and lack of interoperability cause users, especially heavy users, to adopt more than one brand in order to keep in touch with all their friend and colleagues.”). If the costs or difficulties of using multiple IM services were truly significant, presumably people would have begun to focus on only one IM provider, rather than continuing to use more than one. 859 See, e.g., Ex Parte Letter to Deborah Lathen, Chief, Cable Services Bureau, Federal Communications Commission, from George Vradenburg III, Senior Vice President, Global and Strategic Policy, America Online, Inc. (Sept. 29, 2000) at 1, 7-8 ("AOL is committed to pursuing industry-wide IM interoperability for the benefit of consumers, not competitors.") 860 Id. at 7-8. 861 See, e.g., Unsolicited Bulk E-mail (on-line statement of AOL's anti-spamming policy) (visited Jan. 11, 2001) [available on the World Wide Web at 862 For example, my discussion with my colleagues leads me to conclude that even the Majority would acknowledge there would have been many security problems associated with mandating immediate interoperability for text-based IM. For example, if AOL had to publish its operating protocols and accept and deliver all outside IM messages, hackers and users of unscrupulous IM providers would be able to masquerade as other users. AOL IM users would receive messages from people that they think are their buddies, but in fact are advertisements, spam, or possibly even messages from predators. Also, AOL users could find that hackers have been sending false messages in their names, creating its own set of problems. AOL today deals with these issues chiefly by using live monitors, to whom its users can report problems. It is not clear that AOL would be able to do this with messages that come from outside its system. 863 See In the Matter of Amendment of Section 64.702 of the Commission’s Rules and Regulations, 77 FCC 2d 384, 428-40 (1980) (Computer II). 864 See, e.g., Remarks of William E. Kennard, Chairman, Federal Communications Commission Before the Summer 2000 Session of the National Association of Regulatory Utility Commissioners (July 24, 2000) ("[p]erhaps the FCC's most important decision—we decided to leave the Internet unregulated"); Remarks of Chairman Kennard Before the National Press Club, Telecommunications @ the Millennium: The Telecom Act At Four (Feb. 8, 2000) ("The Commission wisely withheld regulation of most advanced services. Similarly, we refused to apply legacy-style regulations to the new service of cable access to the Internet, relying instead on market incentives to keep multiple paths open to the Internet."); Remarks of Susan Ness, Commissioner, Federal Communications Commission Before the IRTS, The Net Effects on Communications Policy (or how the Internet and Convergence are Revamping Regulatory Regimes) (June 7, 2000) (in reference to technological developments, "[t]he FCC's policies of fostering competition, while taking a hands-off approach to the Internet and information services, have facilitated many of these changes"). 865 In the Matter of Federal-State Joint Board on Universal Service, CC Docket No. 96-45, FCC 98-67, Report to Congress (rel. Apr. 10, 1998) (Statement of Michael K. Powell, Commissioner, Federal Communications, concurring) [available on the World Wide Web at 866 Order ¶ 128. 867 I believe the record demonstrates this condition should have been mandatory. See Report and Order at Paras.169-70; 192 (identifying open protocol approach to achieving interoperability). 868 Tim Berners-Lee, Weaving the Web, at 132 (Harper Business Books 1999). 869 See Report and Order at Paras. 10; 134-35 (describing markets, defining IM services and NPD). 870 See Report and Order at Paras. 176-81; see also Steadman v. SEC, 450 U.S. 91 (1981) (affirming agency action on a preponderance of the evidence standard). 871 See Report and Order at Paras. 27-46 (Time Warner and AOL assets). 872 See Report and Order at Paras 27-46 (assets); 128-45 (defining and describing instant messaging; advanced IM-based high speed services; Names and Presence database). 873 See Report and Order at Para. 8, n.12. 874 Some observers put the total number of registered IM service users under AOL’s control at over 150 million. Tribal Voice Comments at 1-2 (120 million); Julia Angwin, Instant Messaging Services at AOL Quietly Linked, Wall St. J., Oct. 26, 2000, at B-1, B-4 (138 million); Jim Lynch, Instant Messaging Roundup, MSNBC Technology, Aug. 18, 2000, at http://www.msnbc.com/news/447786.asp (visited Aug. 28, 2000) (more than 150 million users); Nick Wingfield, Changing Chat, Wall St. J., Sept. 18, 2000, at R-28 (154 million registered users). 875 IM Interoperability: The Need for Minimum Safeguards at 2, White Paper filed herein (“First IM White Paper”) under Letter from Ross Bagully, President and CEO, Tribal Voice, and Margaret Heffernan, President and CEO, iCast, to Magalie Roman Salas, Secretary, FCC, dated Sept. 5, 2000 (“Tribal Voice and iCast Sept. 5 Ex Parte”); Nick Wingfield, Changing Chat, Wall St. J., Sept. 18, 2000, at R-28. 876 See Report and Order at n.376 (defining “essential input”). 877 See, e.g., Letter from Karen B. Possner, Vice President – Strategic Policy, BellSouth Corp., to Magalie Roman Salas, Secretary, FCC, dated Oct. 10, 2000, Attachment (BellSouth’s Views on the Effect of the Proposed America Online-Time Warner Merger on Instant Messaging and Related Capabilities) at 1. 878 See, e.g., George Gilder, Telecosm: How Infinite Bandwidth Will Revolutionize Our World 252 (2000); Francois Bar et al., Access and Innovation Policy for the Third-Generation Internet, Telecommunications Policy, July-Aug. 2000, at 7. 879 IM-based services are relatively new but have shown enormous growth in popularity in recent years. Their key characteristics are the capabilities to detect whether other users of the system (whose names are kept in a Names and Presence Database) are present online and to exchange messages with them in real time. These features are predicted to have vast potential as a “platform” for the development of additional applications in the future, particularly as users obtain high-speed Internet access. 880 See Report and Order at para. 170. AOL contends it currently cannot adequately protect its customers’ privacy and security. 881 See, e.g., Andrew Watson, Predatory Pricing in the Software Industry, 23 Rutgers L. Rec. 1 (1998) (citing David S. Evans and Richard Schmalensee, A Guide to the Antitrust Economics of Networks, 10 Spring Antitrust 36, 36-37 (1996)). 882 See Report and Order at n.368. 883 iCast Comments at 1; Disney July 25 Ex Parte at 27-28; Aaron Pressman, Microsoft Messenger Finds Its Voice at 2, The Standard, July 20, 2000. 885 See, e.g., Confidential Appendix IV-B-2, Note 5; Tribal Voice Aug. 8 Ex Parte at 1-2; see also White Paper on Instant Messaging, at 3 (Filed September 5, 2000). 886 White Paper on Instant Messaging, at 11 (Filed September 5, 2000). 887 See Report and Order at Paras. 168-70 (rejecting AOL contentions). 888 But see Report and Order at n.425: “Ultimately, new technology may overcome the dominant provider’s power, as the telephone did to the telegraph and airplanes and automobiles did to railroads. Many years can pass, however, before a new technology appears with enough advantages to overcome the entrenched one. That technology, too, may be deployed by the dominant incumbent, who will deploy it slower than a new entrant would. Finally, some technologies persist for very long times, such as the QWERTY keyboard.” 889 See Associated Press v. United States, 326 U.S. 1, 20 (1945); see also Associated Press v. NLRB, 301 U.S. 103, 128 (1937) (Noting that the A.P.'s activities “involve[d] the constant use of channels of interstate and foreign communication,” and concluding its operations “amount[ed] to commercial intercourse, and such intercourse is commerce within the meaning of the Constitution.”). 890 This Agency has previously defined tipping as “the tendency for a [service] with an initial edge over incompatible, rival systems to become an industry standard and thus achieve market dominance.” The service with the edge can attain a monopoly position, with its rivals relegated to a fringe position. AT&T Corp., British Telecom.,PLC, VLT Co. L.L.C., Violet License Co. LLC, and TNV [Bahamas] Ltd., For Grant of Section 214 Authority, Modification of Authorizations and Assignment of Licenses in Connection With the Proposed Joint Venture Between AT&T Corp. and British Telecommunications, plc, IB Docket No. 98-212, SES-ASG-19981110-01654 (30), SES-ASG-19981110-01655 (2), Memorandum Opinion and Order, 14 FCC Rcd 19140, 19167 ¶ 54 (1999) (footnote omitted); see also Stan J. Liebowitz and Stephen E. Margolis, Winners, Losers and Microsoft at 138 (1999) (“Tipping occurs when a product subject to increasing returns generates sufficient momentum in market share that its domination of the market becomes inevitable.”). 891 See, e.g., Report and Order at n.368 (noting the majority expressed no opinion on “tipping”); see also Paras.175-176. Tipping has occurred before in the entertainment and communications markets. In the mid-1980s, the consumer videocassette recorder/player market tipped in favor of VHS and against Betamax. In the local telephone business, it appears that tipping occurred shortly before 1910, when the Bell companies and the independents with whom it interconnected attained a significantly larger number of telephone customers than the independent telephone companies with whom Bell companies refused to interconnect. In both cases, after tipping the market was dominated by one standard or network. 892 See Lawrence Lessig, Cable Blackmail, The Standard, Nov. 14, 1999. 893 See Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 §§ 1, 230 (b)(1, 2), 47 U.S.C. §§ 151, 230 (b)(1, 2). See also WorldCom-MCI Order, 13 FCC Rcd at 18103-04 ¶ 142 (reviewing competitive effects of merger on provision of Internet backbone services). 894 See Weaving the Web, at 35; see also id. at 99 (“The international phone system offers a decent analogy. The reason we can plug in a telephone pretty much anywhere in the world is because industry agreed on certain standard interfaces. * * * The phone system defines what it has to, but then leaves how it is used up to the devices.”). 895 The Internet protocols necessary to achieve interoperability for such services as email, are called the Transmission Control Program/Internetworking Protocol (“TCP/IP”). These protocols are open and non-proprietary. The open protocols utilized on the Internet are routinely recognized as the historical key to its openness and rapid growth. Since commercialization of the Internet has begun in earnest, there is a threat that the Internet will fragment into a digital archipelago of closed networks the communications between which are controlled by private entities. 896 47 U.S.C. § 230(b)(1)-(2). 897 47 U.S.C. § 157; see also id. § 1 (FCC was created “so as to make available, so far as possible, to all people of the United States . . . a rapid, efficient, Nationwide, and world-wide wire and radio communication service with adequate facilities at reasonable charges”). Congress defined “advanced telecommunications capability” as “high-speed, switched, broadband telecommunications capability.” 47 U.S.C. § 157. 898 See, e.g., Second Inquiry Concerning the Deployment of Advanced Telecommunications Capability Pursuant to Section 706 of the Telecommunications Act of 1996, CC Docket No. 98-146, Second Report, FCC 00-290 (rel. Aug. 21, 2000) at ¶ 3 (“Second 706 Report”) (noting that “[w]ith advanced telecommunications capability consumers can take advantage of advanced services that allow residential and business consumers to create and access content, sophisticated applications, and high-bandwidth services”). 899 See, e.g., 47 U.S.C. §§ 533(f), 548; 47 C.F.R. §§ 76.503, 76.504, 76.1000-76.1004; AT&T-MediaOne Order, 15 FCC Rcd at 9835 ¶ 38. 900 47 U.S.C. § 521(4). 901 47 U.S.C. § 523(a). 902 Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622, 663 (1994) (quoting United States v. Midwest Video Corp., 406 U.S. 649, 668 n.27 (1972)). 903 Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622, 663 (1994); see also id., 512 U.S. at 657 (“[T]he potential for abuse of this private power over a central avenue of communication cannot be overlooked.”); Review of the Commission’s Regulations Governing Television Broadcasting: Television Satellite Stations Review of Policy and Rules, 14 FCC Rcd 12903, 12910-916 (1999); see also Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 390 (1969) (“It is the purpose of the First Amendment to preserve an uninhibited marketplace of ideas in which truth will ultimately prevail, rather than to countenance monopolization of that market, whether it be by the Government itself of a private licensee.”); see also, e.g., 47 U.S.C. § 257(b) (noting that one of the “policies and purposes” of the Communications Act is to “favor[] diversity of media voices”); id. § 601 (codifying findings and policy underlying Cable Television Consumer Protection and Competition Act of 1992) (“There is a substantial governmental and First Amendment interest in promoting a diversity of views provided through multiple technology media.”); AT&T-MediaOne Order, 15 FCC Rcd at 9818-20 Paras. 3-5 (considering proposed merger’s effects on “diversity and competition” in video programming and its effects on “openness and diversity of broadband Internet content”). 904 See Report and Order, at Paras. 191-95. 905 See e.g United States v. Microsoft, 87 F.Supp.2d 30 (D.C.) 906 See infra nn.36-37; see also, e.g., United States v. AT&T, 524 F. Supp. 1336 (D.D.C. 1981) (detailing the discrimination of the Bell System local telephone companies against their competitors in terminal equipment, long distance, and other products and services for which access to local lines was necessary). Similar concerns also underlie the provisions concerning “program access” by cable television companies (Communications Act § 628, 47 U.S.C. § 548) and Bell re-entry into interexchange service (Communications Act §§ 271-72, 47 U.S.C. §§271-72). See also James W. Olson and Lawrence J. Spiwak, Can Short-Term Limits on Strategic Vertical Restraints Improve Long-Term Cable Industry Market Performance?, 13 Cardozo Arts & Ent. L.J. 283 (1995). 907 See, e.g., Report and Order at Para. 186. To continue Congress’ goal of achieving vibrant competition in high speed services, we avoided the calls for a one size fits all traditional rulemaking on interoperable Internet communications networks. If the Commission had allowed the inevitable time delay that arises in a general rulemaking, the outcome would have come so late in the day as to be meaningless. 908 Compare Dissenting Statement of Commissioner M. Powell at 13. a.909 See, e.g., Amendment of Sections 64.702 of the Commission's Rules and Regulations (Third Computer Inquiry), 104 F.C.C.2d 958 (1986) (Report and Order)(requiring AT&T, the long-distance monopolist, to open its basic network facilities to enhanced service providers); See also id. at 1006(mandating an "Open Network Architecture" that would "permit all users of the basic network ... to interconnect to specific basic network functions and interfaces on an unbundled and 'equal access' basis."); Amendment of Sections 64.702 of the Commissions Rules and Regulations (Third Computer Inquiry), 104 F.C.C.2d 958, 1022 (1986) (Report and Order)(noting the Open Network Architecture would permit the agency to “rely on interconnective technology, rather than external regulations, to minimize the competitive and efficiency dangers of bottleneck control.”)Directory: Bureaus -> Cable -> Orders -> 2001 Bureaus -> News news media Information 202 / 418-0500 Bureaus -> Sbc communications inc. And bellsouth corporation seek fcc consent to transfer control of, or assign, licenses to joint venture Bureaus -> News news media Information 202 / 418-0500 Bureaus -> Appendix a carriers Receiving Preliminary Extensions Until September 30, 2001 to Comply with calea section 103 Requirements Carrier Name trs number Bureaus -> I. statutory framework Bureaus -> Federal Communications Commission da 99-2778 2001 -> Federal Communications Commission fcc 01-22 Orders -> Report and order Download 1.22 Mb. Share with your friends:
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