MCI, Sprint Defend Merger Plan

SAN MATEO (03/20/2000) - MCI WorldCom Inc. and Sprint Corp. today filed comments with the U.S. Federal Communications Commission (FCC), refuting competitors' claims that their planned merger is anticompetitive.

Arguments posed in joint reply comments to the FCC focused on both the long-distance market -- now teaming with emerging carriers -- and the combined market power of the two companies' Internet backbone business.

On the consumer side, MCI WorldCom and Sprint made the case that when it comes to long distance, just about every American has a choice between three or more facilities-based carriers and many more resellers.

"There are not just emerging carriers in the marketplace, but ample proof that those carriers are meeting with a successful reception from consumers," said Jonathan Sellet, chief policy counsel at MCI WorldCom.

When pressed on the alternatives for business customers, both companies argued to the FCC in the comments that there are "seven to eight" carriers that offer a full suite of services, including voice, ATM, frame relay, and virtual private networking.

Sellet singled out Qwest, Cable & Wireless, GTE, and Broadwing as full-service competitors to Sprint and MCI WorldCom in the business market.

Level 3 Communications and Williams are also not far behind, Sellet added. He noted that the FCC asks merging companies to look out two years when evaluating a competitive landscape.

In defending the companies' combined Internet backbone assets, Sprint Senior Vice President for Federal External Affairs Vonya McCann invoked the major roles market conditions and new technologies are playing.

Specifically, McCann said that given the fact that there are now nearly 6,500 ISPs (Internet service providers), the combined companies would immediately lose business if they tried to use their market presence to jack up prices.

The new comments to the FCC also addressed critics of the merger who have argued that a combined MCI WorldCom-Sprint might jeopardize the Internet traffic of competitors.

The two companies could use their market dominance to degrade service of their competitors, those critics have said.

But McCann referenced advances in peering and other networking technology, which would allow ISPs to simply jet traffic around any access points with degraded connections.

The companies acknowledged that they will try to hang on to the Internet backbone assets of each unless regulators order otherwise. Many industry watchers and executives within the two companies have speculated, however, that Sprint's backbone business will have to go.

The Federal Communications Commission in Washington, D.C. is at http://www.fcc.gov/. Sprint Corp. in Kansas City, Missouri, is at http://www.sprint.com/. MCI WorldCom Inc. is in Clinton, Mississippi, is at http://www.wcom.com/.

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