Washington, D.C., November 17, 1999 - The merger of MCI
WorldCom and Sprint will create a strengthened competitor that can
crack open local markets and bring voice and broadband services to
residences and businesses, the companies told the FCC today in a joint
application for approval of the merger.
"Our filing today demonstrates that this merger is in the
public interest, will not reduce competition and will provide
substantial consumer benefits," said Michael H. Salsbury, general
counsel of MCI WorldCom.
"The telecommunications market is changing in a radical way as
old notions of 'long distance' and 'local' fall by the
wayside," said Richard Devlin, general counsel of Sprint. "We
are meeting competitors in the world of 'all distance' service.
That means consumer choice for all services, at all distances, all of
the time."
The companies announced their agreement to merge last month. The
application to the FCC is a key step toward completion of the merger,
which the companies expect in the second half of next year.
The application includes a "brief" and several affidavits
by company officers and outside experts. It lays out the companies'
belief that the merger will be in the public interest because it
creates a strong third force to compete with AT&T and
mega-Bells.
"By combining the companies' local assets and technical and
entrepreneurial skills, the new WorldCom will be far better positioned
to crack open the BOCs' lock on access to customers in order to
compete in all markets nationwide, most especially the market for
'all distance' service," says the application.
The application addresses squarely the issue of concentration in the
traditional but rapidly evolving "long distance" market.
Today's "long distance" market is characterized by
vigorous competition among more than 600 providers, 20 of which have
revenues of more than $100 million and eight of which have annual
revenues exceeding $1 billion, said the companies.
Competition in "long distance" is further assured, said
the companies, because of the massive deployment of long distance
capacity in the hands of emerging carriers. The application notes that
in the last three years, more than 62 million miles of new fiber optic
cable has been laid, 71 percent of which was added by emerging
carriers.
For example, Qwest has reported that the currently lit portion of
its network has sufficient capacity to handle the current combined
traffic of AT&T, MCI WorldCom and Sprint, said the application
affidavit of economists Stanley Besen and Steven Brenner.
Competition in "long distance" and "any
distance" will increase dramatically as the Bell operating
companies enter the long distance market in their regions, says the
application. Bell Atlantic has predicted it will take 26 percent share
of the long distance market in New York, where its 271 application is
in final stages, the application says.
"No evaluation of the state of competition of long distance
services at the time this merger will close can be accurate unless it
accounts for this fundamental change," says the application.
Other points made in the application:
Broadband and Wireless
The merger will create a company that can effectively compete in
advanced broadband and wireless services.
"The only question is whether tomorrow's broadband to
residential users will be supplied competitively, or will be controlled
by the traditional telephone and cable incumbents," said the
application. With AT&T blocking access to its monopoly cable plant
and the Bells trying to limit competitive access to "digital
subscriber loop" facilities, the merged MCI WorldCom-Sprint will
offer a third choice for broadband, the companies said.
One way the merged MCI WorldCom and Sprint will be able to more
effectively deploy advanced services is by combining their
complementary MMDS wireless assets in order to provide a national
broadband service, the companies said. When those assets are combined
with DSL and MCI WorldCom's fiber rings in 102 cities, the joint
assets will create an independent broadband network reaching residences
and businesses across the country.
Combining Sprint's PCS business with MCI WorldCom's SkyTel
paging operations will make the new WorldCom a stronger provider of
"all distance" services, the companies said.
A Stronger International Competitor
The combined company's overseas operations will promote an
important U.S. presence in the global marketplace while strengthening
its domestic assets and operations, said the companies. "The
proposed merger will promote competition in the U.S. and around the
world by strengthening the new company's ability to leverage its
international telecommunications assets to more readily expand and
enhance its service offerings on a global basis," they said.
About MCI WorldCom
MCI WorldCom (NASDAQ: WCOM) is a global leader in communications
services with 1998 revenues of more than $30 billion and operations in
more than 65 countries. MCI WorldCom's global networks provide
high-capacity connectivity to more than 45,000 buildings worldwide. MCI
WorldCom and Sprint have announced an agreement to merge, which the
companies expect to close in the second half of 2000, following
regulatory and shareholder approvals. The new company will be called
WorldCom. For more information go to http://www.wcom.com.
About Sprint
Sprint is a global communications company - at the forefront of
integrating long distance, local and wireless communications services.
Sprint built and operates the United States' first nationwide
all-digital, fiber-optic network and is a leader in advanced data
communications services. Sprint has $17 billion in annual revenues and
serves more than 20 million business and residential customers. Sprint
is traded on the NYSE under FON and PCS. For the latest updates on
Sprint, check http://www.sprint.com.
