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In the home of the future, Junior snaps on the television. "Welcome," chimes the AOLTV set. "You've got mail." He kicks back to watch Dawson's Creek on the WB Television Network, and its Jewel soundtrack catches his fancy. So he grabs the remote and in a few clicks, he's logged on to Shop@AOL, and the digital music downloads to the family PC in the den. That's where Dad is reading Sports Illustrated off a Time Warner Web tablet, swapping instant messages with Mom, who's 1000 miles away on a business trip but has her AOL Mobile Communicator clipped to her hip.

AOL Anywhere isn't just America Online Chair Steve Case's promotional slogan: It's a potential fact of life.

The merger of America Online and Time Warner creates a media heavyweight with tentacles that reach beyond 26 million AOL subscribers to include scores of magazines like Time and People; publishing houses like Little, Brown; millions of cable TV subscribers; and movie and music properties like New Line Cinema and the Atlantic recording label.

That scenario is upon us, as the Federal Communications Commission has removed the last regulatory hurdle to the merger of AOL and Time Warner. FCC Chair William Kennard called the $94 billion partnership a "marriage of old and new media" that raises new challenges for policy making.

Open Access (Sort Of)

The FCC imposed some last-minute concessions on the union, targeting topics that have concerned the industry, including broadband access and instant messaging.

It echoed the stance of the Federal Trade Commission, which required the merged company to open its cable networks to competition for broadband Internet access.

But the FCC did not impose a similar provision on AOL's instant messaging service, AOL Instant Messenger. The company can still block competing services from exchanging messages with AIM and ICQ, another messaging service AOL owns. But if AOL broadens AIM to support multimedia functions such as video, the FCC says, it must permit interaction between its service and its competitors. AOL already supports voice and audio functions in AIM.

Critics had hoped the FCC would force AOL to open its messaging network to competing services. In fact, the FCC extended its deadline for deliberations in December, to take a closer look at AOL's dominance of the instant messaging market.

The Next Monopoly?

The marriage of content generators and distributors scares those who are concerned that AOL-Time Warner will become a media and technology monster tightly controlling access to news and maintaining monopolistic power over the Internet, the nascent interactive TV, and technologies like instant messaging.

But others view the deal as a regulatory victory because the Federal Trade Commission forced the merged AOL and Time Warner to open its cable networks to competition for broadband Internet access. Representatives at the Center for Democracy and Technology consider AOL-Time Warner's concession to open access a move that sets the tone for others, keeping the Internet's architecture open.

Supporters also say AOL-Time Warner has the money and talent to create innovative ways to distribute music, movies, and news to customers.

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