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Merged MCI/WorldCom Would Control Internet, Stifle Competition, CWA Charges in FCC Filing
Concerns raised by CWA about the dangerous impact of the proposed takeover of MCI Communications Corp. by WorldCom Inc. are gaining attention and support, both in the United States and internationally.
In a filing to the Federal Communica-tions Commission, CWA urged the agency to block the deal, stressing that the merger would give the new company near monopoly control over the Internet backbone and citing adverse effects on local and long distance competition, universal access and jobs.
CWA President Morton Bahr termed the deal “anti-competitive as defined by the Telecommunications Act and the FCC’s public interest guidelines” and noted that the union will file documents with the U.S. Justice Dept. that prove the deal violates federal anti-trust standards.
The merged MCI/WorldCom would have more than 63-percent ownership and control of the U.S. Internet backbone, “with the market power to exercise unilateral or concerted action to control the price of and potentially restrict access to the Internet,” the CWA filing noted.
Because the merged company also would own some of the largest Internet service providers, “it would be able to use this bottleneck control in discriminatory fashion, adopting pricing policies that favor interconnection with its own Internet service providers through cross-subsidiaries, predatory pricing or other practices,” the filing states.
This mega-company has indicated it will target high-value business customers, cutting planned investments that would benefit both residential long-distance customers and development of the local network. In fact, a WorldCom business plan indicated that it would cut investment in the local network by $5.3 billion over four years, cut-ting job growth in the industry by more than 75,000 jobs, CWA pointed out.
This single-minded focus on business customers also would result in higher local phone rates for individual customers and a sharp drop in funds to the universal service program, the filing noted.
Others calling on the FCC to dismiss WorldCom’s application include consumer groups and other telecommunications companies. GTE Corp. pointed out that because WorldCom failed to include critical, required information on affected markets and participants in its filing, its application must be rejected, and in a highly unusual move, the FCC called for public comments on GTE’s motion. That comment period ends in late January.
CWA also raised its concerns with the California Public Utilities Commis-sion and the Virginia State Corporation Commission, the first of several initiatives seeking public review by the states. CWA called on California state authorities to reject WorldCom’s request for expedited review of its bid to take over MCI. The issue is an important one everywhere, but particularly in California, “where the explosive growth of the Internet has been a major factor driving the economy,” CWA pointed out in its PUC filing.
Because MCI and WorldCom are not regulated, the petitions filed with these and other state commissions are the only opportunity these states will have to determine whether this deal in the best interest of their citizens, CWA stressed.
The Texas AFL-CIO has gone on record opposing the merger, stressing that it would “significantly harm residential and small business customers in Texas.” Texas unions are calling on state and federal legislators to block the bid, as are unions, consumer groups and organizations in other states.
On the international scene, Philip Bowyer, general secretary of Communications International (formerly PTTI), and other member organizations of the worldwide federation representing some 5 million workers, are alerting the European Commission as to the adverse impact the merger would have on European telecom operators. A WorldCom-owned switching site in Washington, D.C. controls 60 percent of all worldwide traffic and 85 percent of all intra-European traffic on the Internet, analysts indicate. With the addition of the MCI backbone, WorldCom will be even more dominant, and able to control access, pricing and even traffic, experts agree.
In a filing to the Federal Communica-tions Commission, CWA urged the agency to block the deal, stressing that the merger would give the new company near monopoly control over the Internet backbone and citing adverse effects on local and long distance competition, universal access and jobs.
CWA President Morton Bahr termed the deal “anti-competitive as defined by the Telecommunications Act and the FCC’s public interest guidelines” and noted that the union will file documents with the U.S. Justice Dept. that prove the deal violates federal anti-trust standards.
The merged MCI/WorldCom would have more than 63-percent ownership and control of the U.S. Internet backbone, “with the market power to exercise unilateral or concerted action to control the price of and potentially restrict access to the Internet,” the CWA filing noted.
Because the merged company also would own some of the largest Internet service providers, “it would be able to use this bottleneck control in discriminatory fashion, adopting pricing policies that favor interconnection with its own Internet service providers through cross-subsidiaries, predatory pricing or other practices,” the filing states.
This mega-company has indicated it will target high-value business customers, cutting planned investments that would benefit both residential long-distance customers and development of the local network. In fact, a WorldCom business plan indicated that it would cut investment in the local network by $5.3 billion over four years, cut-ting job growth in the industry by more than 75,000 jobs, CWA pointed out.
This single-minded focus on business customers also would result in higher local phone rates for individual customers and a sharp drop in funds to the universal service program, the filing noted.
Others calling on the FCC to dismiss WorldCom’s application include consumer groups and other telecommunications companies. GTE Corp. pointed out that because WorldCom failed to include critical, required information on affected markets and participants in its filing, its application must be rejected, and in a highly unusual move, the FCC called for public comments on GTE’s motion. That comment period ends in late January.
CWA also raised its concerns with the California Public Utilities Commis-sion and the Virginia State Corporation Commission, the first of several initiatives seeking public review by the states. CWA called on California state authorities to reject WorldCom’s request for expedited review of its bid to take over MCI. The issue is an important one everywhere, but particularly in California, “where the explosive growth of the Internet has been a major factor driving the economy,” CWA pointed out in its PUC filing.
Because MCI and WorldCom are not regulated, the petitions filed with these and other state commissions are the only opportunity these states will have to determine whether this deal in the best interest of their citizens, CWA stressed.
The Texas AFL-CIO has gone on record opposing the merger, stressing that it would “significantly harm residential and small business customers in Texas.” Texas unions are calling on state and federal legislators to block the bid, as are unions, consumer groups and organizations in other states.
On the international scene, Philip Bowyer, general secretary of Communications International (formerly PTTI), and other member organizations of the worldwide federation representing some 5 million workers, are alerting the European Commission as to the adverse impact the merger would have on European telecom operators. A WorldCom-owned switching site in Washington, D.C. controls 60 percent of all worldwide traffic and 85 percent of all intra-European traffic on the Internet, analysts indicate. With the addition of the MCI backbone, WorldCom will be even more dominant, and able to control access, pricing and even traffic, experts agree.