David
Cassel
(destiny@cloud9.net)
Mon, 9 Oct 2000 09:29:00 -0800
S c a m m i n g t h e F T C
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Can AOL be trusted? Maybe not, according to recent information.
Time-Warner owns valuable cable television lines which in the future can
also offer high-speed internet access. In a proposed merger with
Time-Warner, AOL would acquire those cable lines, and with them the
ability to prevent other internet services from offering high speeds.
Government regulators expressed concerned, but AOL promised they'd allow
competitors to use the cable lines. However, the Washington Post reported
Friday that nearly forty internet services in Texas found there was a
catch. The Texas companies were told they'd be allowed to offer their
services on the cable lines, but only if they forfeited three-quarters of
their subscription fees to Time-Warner!
http://www.washingtonpost.com/wp-dyn/articles/A28372-2000Oct6.html
http://cbs.marketwatch.com/archive/20001008/news/current/twx.htx
http://dailynews.yahoo.com/h/nm/20001008/bs/timewarner_dc_3.html
Even more surprises lurked. Besides an additional $50,000 up-front fee --
which meant small services couldn't afford a place on the lines --
Time-Warner also demanded veto power over what appeared on the service's
start page! An attorney told the Washington Post the arrangement wasn't
open access, it was "a death sentence." And they're not the only ones.
Last week Earthlink complained they'd been hit with similar "unreasonable
and discriminatory" conditions. Jeff Chester, executive director at the
Center for Media Education, told CBS MarketWatch AOL had revealed their
true colors. "It's been known for some time that AOL-Time Warner's
supposed voluntary commitment to competition was meaningless. Now, it's
clear, it's out in the open, it's in front of policymakers, that the
so-called commitment to open access means that competitors are reduced to
vassals."
http://cbs.marketwatch.com/archive/20001002/news/current/media.htx
The Consumers Federation of America warned government regulators about AOL
in July. "The frailty of voluntary open access was made clear when AOL
was unwilling to allow its promises to be turned into obligations, as the
City of Los Angeles tried to do. Exclusionary contracts are still in
place."
http://www.consumersunion.org/telecom/cooperdc800.htm
Other internet services are concerned. "Without some sort of verifiable
guarantees for open access as the ISP industry sees it, we would oppose
this merger," says Kurt Rahn, Earthlink's Director of Corporate
Communications. "And we'd do what we felt necessary to get those
provisions included as part of the merger," he told AOL Watch last week.
"That's not to say that we oppose the merger outright, but we do feel that
this is where you draw the line in the sand. If it doesn't happen
here..." He paused. "It's gotta happen here."
"This is where we put the flag in the sand, and fight kicking and
screaming."
He adds that AOL's demands went even further. "In addition to problems
with the revenue split itself AOL Time-Warner wants to set the price of
our service. I can't think of another instance where a competitor sets
the price of another service." Friday a Walt Disney lawyer bluntly told
Congressmen that AOL's "stated strategy" was to "monopolize the field for
itself." Earthlink's Rahn says the negotiators for cable access have
remained firm on impossible conditions. "Not only can't you be profitable,
it's not even really a break-even proposition." This paints an ominous
picture for services in the future. "If the #2 ISP, with almost 5 million
people, has a problem with this, it's very unlikely that people who are
even smaller than us with even less negotiating leverage would get
anywhere either."
http://yahoo.cnet.com/news/0-1005-200-2948607.html
http://www.guardian.co.uk/newmedia/story/0,3605,346590,00.html
AOL already has a great deal of power. Recently it was reported that
WorldCom informed their customers they'd lose their internet service
unless they agreed to switch to AOL, and a Time-Warner chairman recently
hinted that AOL might someday offer high-speed DSL connections as well.
http://www.zdii.com/industry_list.asp?mode=news&doc_id=ZD2617919
But the biggest fight isn't over the cable lines; it's over the cable box
on top of the television. The boxes will receive the next generation of
services, yet AOL has carefully eliminated it from their promises.
Earthlink's Rahn remembers that when the FCC asked AOL about set-top
boxes, "AOL's answer was that set-top boxes weren't considered in their
Memorandum of Understanding." It's a crucial element for services of the
future, and AOL has already purchased the domain ShopAOLTV.com. "[W]hen
you hear about AOL's supposedly innocent iTV experiment," one Ziff-Davis
columnist warned, "just remember that this is AOL's beachhead -- the point
from which it intends to invade your living room and lock up you and your
family." He concludes with the question: "Are you going to let AOL take
over your television?
http://www.zdnet.com/anchordesk/stories/story/0,10738,2589806,00.html
Most users don't want AOL television offerings, according to one online
poll. Asked "When will you get AOLTV?" 95% of the respondents answered:
"As soon as I'm done laughing at such a ridiculous question--NEVER!"
Real-world statistics echo the sentiment. Fewer than 50,000 subscribers
have signed-up for AOL's high-speed offerings, according to a recent
article in the San Jose Mercury News. But if they didn't have a choice?
Last month one Congressman questioned whether AOL's promise that there
would be other services competing with them would prove real, or only
offer consumers "illusory choice."
http://cgi.zdnet.com/zdpoll/question.html?pollid=18343&action=a
http://www.thestreet.com/_yahoo/tech/internet/1100651.html
One AOL Watch reader said this fight gives new meaning to a recent call
from an AOL telemarketer. "First they force their way into my home by
purchasing my cable company -- now they are calling my house too." AOL
has 24 million home phone numbers, and they've already started using them
for free advertising. One Californian has discovered a way to strike
back. At StopJunkCalls.com, he reports that last month AOL agreed to pay
$5000 in fines for over 15 unsolicited phone calls. "They paid
it...kicking and screaming," Robert Arkow told AOL Watch -- and "they
never even attempted to apologize!" He believes it's the largest judgment
ever in California history against a telemarketer -- and he didn't even
hire a lawyer!
http://www.stopjunkcalls.com/
http://www.usatoday.com/life/cyber/tech/jk080300.htm
A recent development could spell even more legal problems for AOL. A
little-noticed clause in AOL's user agreement requires users to file any
lawsuits against them in the state of Virginia, but last month a
California judge ruled this was "unfair and unreasonable."
http://lists.essential.org/pipermail/ecommerce/2000q4/000254.html
http://www.cnetinvestor.com/yahoonews/newsitem-yahoo.asp?SYMBOL=N885856
Users have already found that AOL's call centers don't serve their
customers effectively. AOL promised 44 state attorneys general they'd
streamline cancellation procedures; instead, they instituted a policy of
hanging up on customers rather than connect them to a live operator during
busy periods! The practice was exposed by a series of articles in the
Boston Herald.
http://ispworld.com/bw/jul/Welcome_AOL_Hell.htm
http://www.BusinessToday.com/techpages/buy03142000.htm
http://www.bostonherald.com/bostonherald/lonw/aol03152000.htm
http://www.bostonherald.com/news/local_regional/buy06122000.htm
But the Herald uncovered an even more damning accusation. "Customers
calling to cancel memberships with AOL are frequently met with telephone
representatives who use deceptive tactics or blatantly lie to keep them
from leaving the Internet giant, a former employee alleged." Reporter
Robin Washington cited scripts provided by his source, as well as a
California class action attorney who argues that AOL knowingly allows the
misrepresentations. When read the script, a spokesperson for the Iowa
Attorney General called one line "an outright lie."
http://www.bostonherald.com/news/local_regional/buy07032000.htm
Instead of encouraging unbiased cancellation, AOL pays their employees a
bonus if they dissuade callers from cancelling. The Herald's story
prompted angry users to come forward with their own details on dishonest
AOL answers. "I greatly appreciated your article," one reader wrote on
the paper's message board, "having been told several days ago by an AOL
representative when I tried to cancel my account that AOL would refuse to
cancel the account unless I agreed to submit to a 5-10 minute, highly
detailed exit interview. When I refused, for both privacy and time
constraint reasons, the representative refused to cancel my account and I
was forced to hang up with my account active." Another poster claimed to
have been victimized by AOL's policy in another way. "I worked for AOL
for 3 months. I was fired because I did not keep a 50% saves rate for
account cancellation." It's been suggested that this is one reason why so
many subscribers report their AOL billing continues after they've
cancelled their accounts: AOL employees lying about the number of users
they'd convinced to stay. One poster on the message board identified
themselves as an AOL employee, then argued that "numerous people" who had
lied were caught and fired.
http://www.bostonherald.com/guestbook/rwashington/guestbook.html
http://www.aolwatch.org/list/0091.html
A controller at a South Carolina university, already upset AOL wouldn't
let him cancel online, says he experienced both problems. "Upon
contacting AOL by phone, and giving termination instructions, they
blatantly try to manipulate you into staying with AOL" -- and after
clearly instructing them to close his account, "AOL continued to bill me
and did not terminate my service." Dozens of former subscribers have
contacted AOL Watch complaining they'd been billed after cancelling their
accounts, and the billing problems may be much larger. One credit card
company calculates hundreds of thousands of credit card transactions may
have been processed without authorization. According to Reuters, a
lawsuit filed Monday charged AOL with breach of contract, fraudulent
misrepresentation, and even a pattern of "racketeering activity...for the
purpose of obtaining unauthorized monthly fee payments."
http://biz.yahoo.com/rf/001002/n02313008.html
The same day a 1997 case over unfair AOL charges came to the Supreme Court
-- but it ultimately offered the another sign that protections for
subscribers may be lacking. The court refused to review a federal judge's
decision that services like AOL aren't subject to a 1934 Act protecting
their privacy rights. For one CompuServe user, the lesson is clear. "I
can't imagine the customer service nightmare that the merger would
create."
http://wired.com/news/business/0,1367,39204,00.html
http://www.jameskeyser.com/csaol.htm
This policy of putting AOL's interests first apparently even extends to
other people's phone numbers. "Two years ago, I began to receive many
hang-up phone calls to one of my two business lines," remembers a New
Jersey technology vendor. "Upon more research, I discovered that the
hang-ups were AOL customers trying to get online." And in Virginia the
same thing was happening to James Donovan's design and construction firm.
"Two years ago we started receiving phone calls with no noise after
picking up." Using a combination of their carrier's call-return feature
and a reverse phone-number search, he was also able to determine that the
calls were coming from AOL's subscribers. And after doing some further
research, including a call to the Florida Utilities Commission, Donovan
told AOL Watch that "It turns out others in Florida are having the same
problem!"
Donovan says AOL told him they weren't responsible for this problem. His
conclusion? "They lie." Last week he told AOL Watch that "We feel we
have lost at least $5000 in phone bills and time spent on the matter, and
at least a fair amount for the aggravation." But faced with such a
powerful corporation, he felt he had to give up. "We did think of taking
them to court, but we don't have the funds to retain an attorney and at
this point have, as they hoped, given up and are planning on dropping the
number to cease the calls." The New Jersey business owner resorted to the
same strategy. "I changed the number.
"But occasionally, some AOL customer will dial the number manually and
call my new number..."
Even taking AOL to court doesn't guarantee a response. Last Monday when a
judge's assistant phoned AOL's lawyer to remind him of a court date that
day, "He told her he did not remember her calling him to inform him that
the pre-trial hearing was set..." plaintiff Erroll Trobee told AOL Watch,
"and he had a full schedule and could not make it over." Trobee says AOL
still isn't complying with a settlement agreed to for a breach-of-contract
suit from 1993. "In an effort to speed this process up, the Judge, who
presides over a circuit in Arkansas, moved the hearing to an adjoining
county so it would not be another two months before it could be heard!"
AOL's legal troubles don't end there. AOL has even run afoul of the
national advertising council in Brazil. Though 84% of Brazilians get
their internet connectivity from a service called UOL, AOL ran ads which
erroneously implied AOL was more popular.
http://www.zdnet.com/zdnn/stories/news/0,4586,2620334,00.html
AOL can be held accountable for their actions, according to one Oklahoma
customer who was billed for a product they didn't order. She complained
to Virginia's office of consumer affairs, and "Within a week, they
credited my account back!" Now she's continuing her fight -- on
principle. "I am still going through with the complaint against them
because AOL Shop Direct bullied me."
Users wonder why elected officials don't offer their assistance. One AOL
Watch reader asked in June: "Why is AOL not being investigated by the
government as a monopoly?" Another also blamed lax regulatory agencies.
"I hate AOL. I tell all my friends not to use AOL. But it's kind of hard
to avoid AOL when the FCC lets it run around playing PacMan with all of
its competitors!"
http://www.bostonherald.com/guestbook/rwashington/guestbook.html
But if AOL acquires Time-Warner, they'll want to do more than control the
start pages of other ISP's. Today already AOL actively discourages their
content partners from promoting any of AOL's competitors -- a fact which
AOL conceded to European officials investigating the proposed merger,
according to the Wall Street Journal. Tuesday Bloomberg news reported one
opponent of the merger said AOL even wanted to interfere with what users
saw on news sites. He told a Washington audience that during contract
negotiations, AOL had asked ABC News to remove links to non-AOL web sites.
If more than one out of every four visitors chose something other than
AOL's content, AOL had demanded the right to cancel the entire contract!
http://yahoo.cnet.com/news/0-1005-200-2926037.html
AOL also selects who's allowed to send e-mail to their subscribers.
The owner of a collectors shop tells AOL Watch they had their account
revoked after e-mailing customers. (And they also weren't immune from
other AOL problems. After cancelling their service, "In the first week we
received SIX calls to re-enlist... ") It may be a harbinger of the world
to come. A C|Net columnist noted that in April, AOL blocked some web
sites with their family filters, but not others. Children could view web
pages for the Republican party's site, but not the Democrats', and they
could pull up the web sites of conservative third-party candidates, but
not Ralph Nader's green party. Sites promoting gun ownership were also
available, but not gun safety sites. The online world is headed to a
future where AOL picks and chooses what users see. While AOL can argue
they mis-configured their filters, the incident reminds users AOL can
block any sites they choose. At one point, AOL even banned the Irish
language, according to one web page, and one AOL subscriber even alleges
that AOL has already begun changing the messages people leave on AOL
message boards.
http://www.news.com/Perspectives/Column/0,176,421,00.html
http://inac.org/IrishPeople/top/01_09_99/010999language.html
No one is safe, according to an AOL user subscribed to a mailing list of
prayers and Bible scriptures. He told AOL Watch last month the list's
operator announced that "AOL deleted his account because he was sending
'unsolicited junk email' to his subscribers." Attempting to advise AOL of
their mistake only revealed a corporation that was giant, unresponsive,
and error-prone. "Many of the members wrote to AOL, explaining that this
was an OPTIONAL mailing list," he told AOL Watch. "What we received in
return was the following..."
Dear Member,
Thank you for reporting the Terms of Service violation. We rely on
members like you to bring such breaches of conduct to our attention
so we can keep America Online fun for all members....
The problem was eventually resolved, but it highlights AOL's ongoing
practice of deciding which e-mail their users receive. Last September,
AOL blocked approximately 26,000 subscribers from receiving the AOL Watch
newsletter, and according to C|Net, AOL's policy appears to be blocking
automatically all messages sent to a high number of subscribers.
"Companies that send email...to AOL members said they usually have to
inform AOL not to block their mailings. Otherwise, many of these bulk
emails could be identified as unsolicited mail by AOL and blocked..."
http://www.aolwatch.org/list/0103.html
http://yahoo.cnet.com/news/0-1005-200-1923514.html
http://yahoo.cnet.com/news/0-1005-200-2405152.html
But AOL's own unsolicited e-mail can't be blocked. Subscribers now
complain AOL itself inserts unsolicited messages into their mailboxes --
even if they've told AOL not to! One recipient responded with an angry
e-mail to Steve Case, noting AOL also ignored his preferences when
displaying pop-up advertisements. "Why set Marketing Preferences when AOL
ignores them? Is AOL trying to drive away customers?" Keyword "Marketing
Preferences" allows users to de-activate the ads, but after a year, as one
user noted, "someone goes backs and switches them to yes." (AOL discards
the blocks after one year, requiring users to re-enter them.) "Come on,
Steve," one Salon columnist complained, "how much money do you need?"
http://www.salon.com/tech/log/1999/11/23/aol/index.html
One user said the dilemma was clear: "I am paying them to advertise to me
constantly." But it may get worse in the future. In August one Merrill
Lynch analyst predicted AOL 6.0 would allow AOL to e-mail even more
elaborate ads to subscribers. AOL has already registered the domain
YouveGotBulkMail.com.
http://news.cnet.com/news/0-1005-200-2528310.html
When it comes to pop-up ads, "AOL takes the position that people want
these advertisements," one attorney told an internet news site. "But we
just don't think that's true." A Florida judge has approved his class
action lawsuit against AOL because subscribers were billed for the time
spent looking, CNN reported in June.
http://www.internetnews.com/bus-news/article/0,,3_402581,00.html
http://www.cnn.com/2000/LAW/06/25/aol.lawsuit/index.html
Ironically, if the merger passes, CNN itself will be owned by AOL. In
fact, one online magazines warns the pending merger may already be
influencing coverage of its potential damage. "[T]elevision news isn't
about to do anything too critical as networks scurry for deals that will
put them within the walled garden of AOL Time Warner..." Sean Elder wrote
in a June article on Salon, "which is all the more reason that questions
such as open access need to be addressed now.
"You may not hear about them on that fat pipe that's going to bring you
your evening paper and favorite game show at the same time."
http://www.salonmagazine.com/business/feature/2000/06/14/aol/index.html
The New York Times noted that some Time-Warner company executives "have
been told not to wait until the merger is complete to find ways to work
with one another." Even though the U.S. government has yet to approve the
merger, the paper reports that CNN news is already being displayed on
AOL's Netcenter web site.
http://www.nytimes.com/library/tech/00/06/biztech/articles/24online.html
One film-maker told AOL Watch mergers could lead to a nightmare scenario
-- where suddenly a TV anchor announces that "the federal government
stated firmly that in no way does EOL's ownership of all utilities,
entertainment and communications represent a monopoly of any kind." They
used this vision for a short film, currently available online, depicting a
user suffering at the hands of "EOL" -- version 9.0. One viewer said the
film "has captured a world that will one day hold us hostage.."
http://www.ifilm.com/films.taf?film_id=420297
Users may have already gotten a taste of this total control from AOL's
stand-alone Instant Messenger product. Users find that after answering
yes to the question "Are you sure you want to end your session," the
software remains active in their system's tool bar. And users logging off
from AOL still find AOL seizes control of their system to download
software updates -- then, informs them that "AOL will now be restarted to
allow you to sign on." "I am essentially told, 'Not so fast, Buddy'," one
Washington Post columnist complained. "AOL then takes over my computer,
telling me, 'The files you need are now being downloaded and installed,'
and only when this process is complete does AOL return my computer to me.
"It swears it never extracts any info or peeks at my hard drive," Richard
Cohen writes, but his article concludes, "I don't trust it one bit. It's
not a charity, it's a business and some day it may sell what it knows."
In fact, a March article in the Wall Street Journal reported AOL's policy
"leaves it room to use some of its valuable data. Like many marketers, it
sells names and addresses of subscribers to junk-mailers." The Journal
also noted Time-Warner "has information on the reading and listening
habits of the 65 million households that receive its books, magazines and
CDs" -- and, that "somewhere within AOL's network is a computer containing
information about where individuals have gone within its service."
http://www.washingtonpost.com/wp-dyn/articles/A54075-2000Jul5.html
In fact, a July class action lawsuit accused AOL's Netscape software of
tracking which files users were downloading, then transmitting the
information back to AOL. Acknowledging the concerns, AOL quickly removed
the feature from their software. But AOL may have tipped their hand
Monday, according to Reuters. As a Senate panel considered stopping
services from gathering information about subscribers without their
permission, AOL objected. AOL favored a no-protection default; customers
who didn't want AOL to gather data about them would have to specifically
request it.
http://dailynews.yahoo.com/h/nm/20001003/tc/aol_privacy_dc_1.html
http://www.thestandard.net/article/display/0,1151,16622,00.html
Consumers may already be suffering. The Street reports estimates AOL
already controls 90% of instant messaging, but another disadvantage of
AOL's far-reaching control became apparent Friday when a technology
failure interrupted AOL messaging. In a world where one company dominates
a service, all users are affected by its technical problems -- and AOL has
a long history of serious privacy and security breaches. Some users still
remember the day in 1996 when the entire service went down for 19 hours,
but now AOL's mis-steps reach a wider audience. Just months after AOL
acquired ICQ, a Linux programmer discovered they could log onto any ICQ
account without a password, and an August C|Net article reported hackers
discovered a way to make AOL's ICQ messaging service e-mail them passwords
for accounts. In February, one user's ICQ account was even held for
ransom, and in August, AOL had to repair a security bug in their Netscape
browser which allowed malicious webmasters to display what was on a user's
hard drive!
http://www.thestreet.com/tech/internet/1098825.html
http://cbs.marketwatch.com/archive/20001006/news/current/aol.htx
http://www.aolwatch.org/hubris.htm
http://rootshell.com/archive-j457nxiqi3gq59dv/199808/icqpw.txt.html
http://news.cnet.com/news/0-1005-200-2652485.html
http://news.cnet.com/news/0-1005-200-1556634.html
http://www.msnbc.com/news/442891.asp
AOL has claimed that, rather than maintain a messaging monopoly, they're
looking forward to the day when competing messaging companies offer the
ability to reach AOL users. But one CBS MarketWatch columnist argued that
AOL "could be pretending just long enough to eat the competition." AOL
now insists that they need to work another year before they could even
propose a standard -- "all of which could simply give AOL time to tighten
its grip on the market," one finance web site noted, adding that after an
FCC hearing, AOL's messaging president "referred questions on the subject
to an AOL spokeswoman, who declined comment." Even the financial
community doubts AOL's excuses. "AOL is foot-dragging about developing a
standard because it wants to maintain its competitive advantage," one
analyst told Upside. But one critic accused AOL of deliberately hobbling
their competitors. "AOL's not controlling a standard. They're trying to
keep companies from building any kind of standard at all." Critics told
CBS MarketWatch AOL's ultimate plan was to create delays and prevent other
companies from offering messaging to AOL users for as long as three years!
http://cbs.marketwatch.com/archive/20000802/news/current/techwatch.htx
http://www.upside.com/News/39affca00_yahoo.html
http://www.thestreet.com/_yahoo/tech/internet/1019673.html
Even FCC Commissioner Gloria Tristani told Reuters she was skeptical of
AOL's guarantees. "To the extent that there are no firm deadlines or
timetables for open access or offering instant messaging interoperability,
no, I don't even know if you could call them promises...the statements
that 'Yes, we will do this sometime in the future'..." Last month
Prodigy's chief technology officer told C|NET that "they're clearly trying
to monopolize the space."
http://www.washingtonpost.com/wp-dyn/articles/A22776-2000Jun19.html
http://news.cnet.com/news/0-1005-200-2668662.html
AOL has argued that they can't let outside services message AOL customers
because of technical and security problems. There's just one problem with
that argument: AOL let's users of their ICQ service message AOL's AIM
customers, according to the Wall Street Journal (9/26/00). "The fact that
AOL has established virtual interoperability between its 138 million AIM
and ICQ members completely undermines AOL's argument to government
officials stressing the technical infeasibility of open communications,"
one AOL critic told Reuters. "AOL's attempts to keep this information
hidden is just one more example of its dominance of the market and its
attempts to keep its walls around its users." The Wall Street Journal
noted that AOL "has an interest in remaining closed for as long as
possible," and in the past, AOL has even implemented new technical
barriers as soon as their rivals messaged AOL's customers! "I would be
interested to see why they're doing the same thing they criticized
everyone else for doing," an AOL critic told C|Net.
http://news.cnet.com/news/0-1005-200-2871202.html
http://www.thestreet.com/_yahoo/tech/internet/1097101.html
http://dailynews.yahoo.com/h/nm/20000926/wr/aol_instantmessaging_dc_1.html
http://www.freeim.org/
AOL's earlier claims of security concerns infuriated one executive who
described an alternate interpretation to the Wall Street Journal
(9/22/00). "It's really like putting a wall around someone's office and
saying, 'No its not a jail, it's to make you safer.'" One sys-admin told
AOL Watch that AOL also prevents users from making a secure connection to
other networks with the IPSec security protocol. "I am totally baffled as
to why AOL would not 'forward' IPSec nor POP3 protocols -- just
forwarding, bypassing their internal network... What's their reasoning,
other than control?"
AOL may be tightening their grip on their networks to try to lock up the
wireless world of the future. Subscribers to wireless phone services have
already jumped 24.4 percent in the last year, researchers told Smart
Business magazine, and messaging is expected to be the "killer app,"
bringing customers to cellphones and handheld devices. (One report
estimated wireless messages will jump from 3 billion last December to 244
billion messages in 2004!) Time-Warner's CEO has said publicly that
messaging "was the hidden asset I saw in the deal," and one messaging firm
told The Street half of all future e-commerce profits could go to
companies behind messaging software. AOL has already announced messaging
plans for Motorola and RIM pagers, and one cellphone news site also warns
that "You can expect to see AOL's hugely popular instant messenger program
on a future Nokia model." AOL also substantially invested in handheld
manufacturer Cybiko to produce a wireless AOL access device.
http://www.zdnet.com/products/stories/reviews/0,4161,2609212,00.html
http://www.mediachannel.org/views/dissector/chairman.shtml
http://www.thestreet.com/tech/internet/972635.html
http://unstrung.com/server/display.php3?id=204&cat_id=5
Last month, as AOL struck a $120 million deal with Japanese
telecommunications giant NTT DoCoMo -- a pioneer in popularizing the
delivery of wireless content -- analysts warned Reuters that an inevitable
convergence is coming between today's internet services and wireless
services of the future. AOL has also struck deals with most of the
wireless service providers, including OmniSky, Sprint PCS, BellSouth, and
Arch Communications, and AOL executives have even discussed creating their
own AOL-branded mobile phone. AOL's spread doesn't end there. One recent
press release announced that AOL was "Expanding AOL Convenience To Every
Room of the House" by co-developing wireless devices with Gateway. The
web address Gateway.Net already points to a CompuServe address owned by
AOL. AOL has also struck deals with Palm to use AOL e-mail on Palm
devices -- and to offer one-tap access to AOL's Moviefone service from the
Palm's "applications" screen.
http://dailynews.yahoo.com/h/nm/20000926/wr/docomo_aol_dc_1.html
http://www.tegic.com/Articles/RCR3mar00.htm
http://technews.netscape.com/news/0-1004-200-2670046.html
http://www.allnetdevices.com/industry/news/2000/09/05/omnisky_att.html
http://www.zdnet.com/intweek/stories/news/0,4164,2457813,00.html
http://yahoo.cnet.com/news/0-1006-200-2759379.html
http://portal.compuserve.com/gatewaynet/menu/
There's no question that the ability to offer movie tickets, plus driving
directions from AOL's MapQuest service, will be compelling to mobile
consumers. Now regulators worry AOL will create "walled gardens" --
offering users an experience that prevents them from accessing anything
that isn't owned by AOL. Users "would have the impression they can find
whatever they want," European regulators warned, but at the same time,
"AOL's customers could be denied access to the mass content and to content
which competes too aggressively with AOL." Jeffrey Chester, the executive
director at the Center for Media Education, warned Cox News Services of
AOL's ultimate land-grab. "Instead of an Internet where everyone can
connect, they want to turn it into a private network where their content
will be featured and favored."
http://www.washingtonpost.com/wp-dyn/articles/A59393-2000Aug31.html
http://www.thenation.com/issue/001009/1009chester.shtml
If wireless networks become the internet of the future, AOL may get a
second chance to cordon traffic into an online environment where AOL owns
everything, deriving revenue from every single transaction and from every
single advertisement. A recent article in the Standard reports that AOL
already has approximately 40% of the online users in the United States --
and AOL has already announced plans to "extend the AOL experience beyond
the PC." This summer Time-Warner's CEO announced that "AOL's future is to
get on every platform possible"
http://199.97.97.16/contWriter/cnd7/2000/06/23/cndin/2526-0003-pat_nytimes.html
http://thestandard.net/article/display/0,1151,19121,00.html
http://www.fiercewireless.com/archives/weeklyreport/issue20.htm
http://www.zdii.com/industry_list.asp?mode=news&doc_id=ZD2617919
AOL's remain unapologetic about their control. AOL's vice president of
music programming recently described AOL members as a "captured audience,"
and gloated over the leverage it gave them. AOL's unchangeable welcome
screen, displayed to 24 million users when they sign on, "can be used to
drive people where we'd like them to go." In August AOL's ownership of
the WinAmp software allowed them to eliminate a search engine from the
software that might allow users to trade mp3 music files -- including
Time-Warner's music. One user says they've already experienced another
unpleasant result from AOL's vastly extended software empire. "When I
installed AOL software, it installed ICQ, AIM, and tons of other crap."
http://www.wired.com/news/business/0,1367,39019,00.html
http://www.upside.com/News/398f50560.html
http://www.upside.com/News/3991d26b0_yahoo.html
http://www.zdnet.com/zdnn/stories/news/0,4586,2613807,00.html
Just how much does AOL plan to grow? They've already registered over 2,572
domains, including eBayAOL.com, Gateway.net, AOL-Verio.com, AOL-Visa.com,
and AOLPalm.com. A complete list is online at
http://www.aol-files.com/articles/legal_aoldomains.html
including hybrids of familiar company names, like YahAOL.com,
AmericaOnlineMS.com, and MSAOL.org. The AOL-owned names raise tantalizing
questions about future plans. In December of 1999 AOL acquired Tegic,
makers of the T9 text-input software for handheld devices -- but in April,
they then registered the domains T9PalmPC.COM and T9PalmPilot.com.
AOL also invested $200 million in TiVo to incorporate anytime-viewing
capability into future offerings from their upcoming TV projects, but
mysteriously, AOL -- owners of the ICQ messaging service -- also
registered the domains TVICQ.com, TVICQ.net, and TVICQ.org. Meanwhile,
Time-Warner has already agreed to purchase 1 million more licenses for
self-installation software for cable internet connections.
http://news.cnet.com/news/0-1004-200-2897084.html
AOL even registered numerous permutations of the phrase "AOL RR
Friends.com" suggesting messaging over Time-Warner's Roadrunner cable
network.
Unintimidated by the FTC and FCC investigations, AOL has also registered
the domain YouveGotTimeWarner.com. AOL also controls household words
like Love.com and Helping.com, and their vast empire of online real estate
extends even into the world of religion, according to Keith McGrew, the
webmaster behind BlackChurchNetwork.com. Recently, he tried to buy the
same domain name ending with .org . "That's when I discovered it was
owned
by AOL."
It's not too late to establish boundaries on AOL's reach. European
regulators have already blocked one acquisition: Time-Warner's purchase
of the music label EMI. The president of the National Association of
Record Industry Professionals told Reuters that "I'm very glad the
EMI/Warner merger is off. Just imagine if 90 percent of the world's music
copyrights were under one roof, which would have been the case had the
EMI/Warner deal gone through.
"That's such an imbalance in the marketplace that it's frightening."
http://biz.yahoo.com/rf/001005/n05632425.html
But even without music, messaging, or internet access, AOL can still
dominate. Consumers Union, the publishers of Consumer Reports, told
Reuters that together the companies would control more than half the cable
lines in the U.S., and almost half of the most-watched cable channels.
One news outlet even reported that 3/4 of time spent watching cable would
be spent watching AOL Time-Warner programs. In June Dan Gillmor, a
technology columnist for the San Jose Mercury News, described a disturbing
example of mis-used control that had already occurred. "Time Warner,
quite a conglomerate in its own right, kicked Disney-owned channels --
including the ABC network -- off its cable systems." Consumers Union
called it "a brutal lesson in what negotiations look like when one side
has the power to pull the plug." Gillmor notes that, though negotiations
eventually restored the channels, the incident highlighted the danger of
allowing an already powerful Time-Warner to merge with AOL. "Why isn't
the Justice Department as interested in this as in Microsoft's treatment
of its customers?"
http://www.consumersunion.org/telecom/cooperdc800.htm
Gillmor concluded that Steve Case is part of a new breed who want to
control not just companies, but entire markets. "When they aggregate
enough power -- as they already have in some cases -- they will abuse it.
Monopolists do that. They always have, always will." And other
technology pundits agree. "Steve Case is reading directly from the
Microsoft Monopoly playbook," wrote ZDNet's Jesse Berst in September --
re-iterating his call for legally-enforceable checks on AOL. "The world
will be a better place if we all sue America Online," Jesse Berst wrote on
ZDNet in March. "As soon as possible." The San Jose Mercury News's
columnist isn't swayed by those who say the government shouldn't get
involved. "The mantra of competition says it'll all work out for the
best. The evidence from the past doesn't support this confidence."
Instead, he sees a world where control of the medium will have a real and
profound effect. "Maybe a million Web sites will bloom, but flowers tend
to wither when they're hidden from the sunlight." Citing a Reuters story,
Gillmor notes elsewhere that AOL "insists that no conditions are necessary
to protect consumers. Yeah, right."
http://www.zdnet.com/anchordesk/stories/story/0,10738,5020169,00.html
http://www.zdnet.com/anchordesk/stories/story/0,10738,2633722,00.html
http://weblog.mercurycenter.com/ejournal/2000/10/08
43 political cartoons have already appeared on newspaper editorial pages
about the potential merger -- and some consumers are already making their
voices heard. As Washington D.C. police officers looked on, several
prominent activists assembled outside an FCC hearing on the proposed
merger with Time-Warner.
http://biz.yahoo.com/fo/000929/mu3538.html
http://cagle.slate.msn.com/news/aol/
http://www.wired.com/news/politics/0,1283,37840,00.html
http://www.mccullagh.org/image/950-11/fcc-protest-1.html
http://www.mccullagh.org/theme/fcc-aol-protest.html
Ironically, even share-holders may not want AOL to acquire Time-Warner.
The merger was almost de-railed by a shareholders vote in June, according
to the Washington Post. (AOL needed 50 percent of the votes, and received
just 55 percent.) Today AOL's stock was within $8 of its one-year low,
and a columnist for the Financial Times wrote that the deal "has a dated
feel about it now that the bubble in internet stocks has burst... If this
deal were to stumble at the next regulatory hurdle, it might turn out to
be a blessing in disguise for Time Warner shareholders." But one web
columnist and AOL share-holder was cynical when they received their ballot
on the merger, interpreting its real message as a kind of gloat. "If
there were a chance in hell that you, the unruly individual investor,
could stop this deal, it would never have come to a ballot."
http://www.feedmag.com/daily/dy062100_master.html
http://www.thestandard.com/newsletters/NLdisplay/0,2936,100-1615,00.html
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT39O7R5TDC&live=true
But even now, it's hard to know how far AOL's influence extends, according
to the Washington Post. AOL has an 11-member Board of Directors, and the
son of one director is also one of the five FCC commissioners voting on
the merger! His father has $13.3 million worth of AOL stock affected by
the vote -- and the Post also reports that all five commissioners attended
a party at that Director's house in 1997. Where does the control of
powerful telecommunications companies end? Noting all the lobbyists
approaching the FCC, the Director's son responded to the Washington Post
"I think these guys have half the nation hired."
http://www.washingtonpost.com/wp-dyn/articles/A51362-2000Sep11.html
You can make a difference, says Jeff Chester, the executive director at
the Center for Media Education. "Having folks speak out now is essential
if they want to see an open, competitive, and democratic Net preserved."
Contact the U.S. officials who will vote on whether to approve AOL's
merger with Time-Warner at the following addresses.
rpitofsky@ftc.gov
santhony@ftc.gov
mthompson@ftc.gov
oswindle@ftc.gov
tleary@ftc.gov
Richard G. Parker,
Director of Bureau of Competition
202-326-3300
rparker@ftc.gov
Chairman William Kennard: (202) 418-1000
bkennard@fcc.gov
Commissioner Susan Ness: (202) 418-2100
sness@fcc.gov
Commissioner Harold Furchtgott-Roth: (202) 418-2000
hfurchtg@fcc.gov
Commissioner Michael Powell: (202) 418-2200
mpowell@fcc.gov
Commissioner Gloria Tristani: (202) 418-2300
gtristan@fcc.gov
What will the world look like if regulators simply rubber-stamp the AOL
Time-Warner merger? "You've got Big Brother-like control of an entire
delivery system, including the content..." warns Earthlink's Kurt Rahn,
"and that would affect a great number of people. Basically it destroys
consumer choice, and makes a mockery of it.
"You can't have a marketplace if there's only one store."
THE LAST LAUGH
As sponsors of a popular CBS TV show, AOL found their name in video clips
being downloaded from the site.
"Title: Big Brother
Author: America Online, Inc.
To counter concerns about their trustworthiness, AOL has already inserted
a professional actress into their television ads who announces, "I trust
AOL." But just to play it safe, AOL has also purchased the rights to the domain
AOL-lawsuits.com.
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