EPI: MCI WorldCom-Sprint Merger Would Stifle Telecom Progress

The proposed merger of Sprint Corp. and MCI WorldCom would greatly stunt competition and harm consumer interests, according to a new report by the Economic Policy Institute.

“MCI WorldCom’s Sprint Toward Monopoly: An Analysis of the Proposed Telecommunications Merger” finds consumers would be hurt by the loss of competition, not only in the long distance and Internet backbone markets, but in the emerging broad set of industries that transport voice, data and video.

Authors Steve Pociask and Jack Ruttner, top officers at the economic consulting firm of Joel Popkin & Co., point out that while “some mergers offer consumers a better, cheaper and wider selection of services, others may slow, if not completely halt, competition.”

Based on criteria developed by the Department of Justice and the Federal Communication Commission, the studies assessed the proposed merger, concluding that the already extremely concentrated markets in long distance and Internet backbone will become tighter if the proposed merger takes place. “Increased concentration will only intensify the anti-competitive effects” in both these markets, it said.

Policy makers and regulators should reject this merger and do more to remove barriers to entry in the wholesale data and long-distance market, particularly those facing the regional Bell companies, the report urged.