The problem is that a fleet that is using TS will always be at an advantage therefore in game communication should be good enough that fleets that are not on TS do not have a crippling disadvantage. Also game is greatly speed up so flag signals are not feasible.
Historically battles were fought in a line for at least 3 reasons relevant here, to provide a way for admiral orders to actually be relayed, to have the ability to disengage in an orderly manner and to not fully commit to battle. Nelson at the battle of Trafalgar decided to engage in a decisive battle, he therefore ordered all his ships to paint their hulls in a distinctive pattern to avoid friendly fire. Painting your hull in that way is not much different than having a easy to understand digital representation while allowing players to customize their ship appearance to their taste. After all since losing a ship by necessity in a game is not as devastating as in real life so decisive battles will be common.
So in my opinion text messaging inside the instance is a must and there needs to be some kind of clear way to recognize friendly ships.