MCI WorldCom Vows to Compete for’All-Distance’ Market in New York

Posted: 03/2000

MCI WorldCom Vows to Compete for
‘All-Distance’ Market in New York
BY LIZ MONTALBANO

Although regulators have not approved the planned merger between MCI
WorldCom Inc. (www.wcom.com) and Sprint Corp. (www.sprint.com) yet, the former already pledges the
combined company will compete head-to-head with Bell Atlantic Corp. (www.bell-atl.com) in New York for the
"all-distance" service market.

Speaking at the National Press Club in Washington earlier this year, MCI President and
CEO Bernie Ebbers outlined a four-step course of action for the merged company. The first
step is to offer all-distance service in New York providing customers with a large block
of minutes that can be used for either local or domestic long-distance services.

The other three proposals are that the merged company will: step up competition for
infrequent callers by offering a nationwide product with no minimum usage or monthly fee;
implement open access wherever wholesale capacity is available in the design of its
broadband wireless network so customers have a choice of ISP; and accelerate deployment of
broadband wireless in rural and underserved areas.

While on the surface Ebbers’ proposals may seem like a commitment to spur competition
now that the first RBOC snared Section 271 approval in New York, Carl Garland, principal
analyst, network services for Current Analysis Inc. (www.currentanalysis.com), thinks his comments
are little more than preening for the judges, namely the FCC (www.fcc.gov).

"[MCI WorldCom’s] primary motive for issuing this bevy of long-distance and fixed
wireless promises is to secure FCC approval for its merger with Sprint," Garland
writes in a repoort on the announcement, called "MCI WorldCom Sucks It UP and Pledges
To Offer All Distance in New York."

"We suspect, however, that the FCC would have been much more impressed if Bernie
Ebbers had stepped up to the plate with actual ‘all-distance’ services and wholesale fixed
wireless contracts rather than post-merger promises."

Garland also sees the comments as MCI WorldCom begrudging the new kid on the
long-distance block in New York, and it can’t just tell him to take his ball and go home.

"MCI WorldCom is signaling that it is now resigned to Bell Atlantic’s new status
as a long-distance carrier in that state, and MCI WorldCom is willing to play ball,"
Garland writes.

However, this conflicts with other statements the company made recently that it would
never get its local resale agreements with Bell Atlantic to work in New York, Garland
says. "The position is consistent with Sprint’s more pragmatic approach to offering
resold local service in New York."

Still, none of this will matter if MCI WorldCom and Sprint don’t get the green light to
merge from the FCC.

Garland calls this a "chicken or the egg dilemma," since rather than focus
its attentions on its own local resale strategy in New York, MCI expects to inherit
Sprint’s local resale services in New York before the merger has been approved.

Until the FCC decides, Ebbers and Co.–and the industry–will have to wait and see if
they can make good on their intentions.