MCI WorldCom-Sprint Merger Would Be Anti-Competitive in Long Distance, Internet and Global Markets,

The Communications Workers of America issued the following statement on the proposed MCI WorldCom acquisition of Sprint Corp. CWA represents several thousand workers at Sprint local telephone locations, and some 630,000 members overall in telecommunications, broadcast and print media, information technology and other fields.

When the FCC approved the MCI and WorldCom merger last year, Chairman William Kennard stated that the industry was "just a merger away from undue concentration." This would be that merger.

MCI WorldCom proposes to buy up one of its two main competitors in long distance and grab control of 37 percent of the market (based on long distance revenue), just behind AT&T with 43 percent. There would be no other significant competitor in long distance, with all others having no more than 2 percent market share.

Such concentration far surpasses the Justice Department's permitted market concentration levels, and it fails any common sense test for what would be considered healthy competition.

This proposed deal also would combine the largest and second largest Internet backbone providers, giving MCI WorldCom-Sprint dominance over two-thirds of the long-haul Internet market. Last year, under similar circumstances when MCI and WorldCom were joining forces, the Justice Department and the European Union - at the urging of Sprint and others - required MCI to sell its entire Internet business to Cable & Wireless.

However, the actions of MCI WorldCom make it clear that such a remedy would not be appropriate in this case, and should not be considered by regulators, in view of the circumstances behind the lawsuit filed this year against MCI by Cable & Wireless. Cable & Wireless alleges at least 10 serious breaches of agreement regarding the transfer of the Internet business.

The Communications International, based in Geneva and representing telecom unions worldwide, also has charged that MCI WorldCom violated terms of its agreement with the European Commission concerning divestiture of the MCI Internet backbone. The CI wrote to the EC yesterday to express the view that an MCI WorldCom-Sprint merger poses great concern to Europe. At present, 85 percent of all intra-European Internet traffic travels through the MCI WorldCom network access point in Washington, D.C. Sprint is the only other provider in direct control of another network access point for Europe, located in New Jersey.

The proposed merger also poses anti-competitive issues in other areas such as Brazil, where MCI has control of Embratel, Brazil's long distance carrier, and Sprint owns 25 percent of Intelig, the company that is being developed to compete with Embratel.

The proposed merger also threatens service quality and labor relations at Sprint's local telephone operations in 18 states. MCI WorldCom has demonstrated a focus on global business markets and a complete lack of interest in providing local telephone service. Sprint already has a terrible service quality record, ranking second from worst among 14 local phone companies in customer satisfaction according to J.D. Powers (survey released Aug. 4, 1999). The service problems, stemming from Sprint's failure to provide needed resources to the "cash cow" local phone operations, while expanding in wireless and other areas, would only be exacerbated by MCI WorldCom's control.

The proposed MCI WorldCom-Sprint deal clearly violates anti-trust standards as well as the intent of the Telecommunications Act of 1996. It's a bad deal for the public and for the industry overall, and it should be promptly rejected.

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See the attached statement by Communications International, which represents some 4.5 million telecommunications and postal workers worldwide.




Communications International
38 avenue du Lignon CH 1219 LE LIGNON/GENEVE
Tel. (4122) 979 20 20 Fax (4122) 796 39 75
Email: ci@union-network.org
Press Release
Date: 5 October, 1999

DON'T LET SPRINT WRIGGLE OUT

Communications International General Secretary, Philip Bowyer, commenting on the Financial Times report of 4 October 1999, that the Sprint board was considering a take-over offer from WorldCom/MCI, said today;

"In May 1998, Communications International, as an interested party, took part in the European Commission hearing on the merger of MCI/WorldCom merger.

We objected to the merger on the grounds that the new company would dominate the Internet backbone market.

One of the most prominent participants in those hearings, also objecting, was Sprint at the time the third largest operator in this market. The Commission agreed with us. It should now order Sprint out of the market as a condition of the proposed merger with MCI/WorldCom.

One lesson to be learnt from the last occasion is to insist that Sprint withdraws fully and immediately. MCI/WorldCom has wasted months trying to find a way around the decision."

Mr Bowyer said that Communications International had already written to the Commission expressing these views.

FOR MORE INFORMATION: Phone Philip Bowyer or Neil Anderson, Communications International (022) 979 2020 Geneva. Fax (022) 796 3975 email: neil.anderson@union-network.org

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