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Merged MCI/WorldCom Would Dominate the Internet And Stifle Telephone Competition, CWA Charges In Tod

WorldCom's proposed acquisition of MCI would give the company near monopoly control over the Internet backbone with the power to set prices and control access by service providers, the Communications Workers of America charged in urging the Federal Communications Commission to block the deal.

Violating the pro-competitive intent of the Telecommunications Act, the merger also would stifle local and long distance competition and retard the delivery of universal service, today's FCC filing states. In addition, by curbing MCI's planned investment in local network development, the merger would cut job growth in the industry by more than 75,000 jobs over the next four years, the union charged.

The merged MCI/WorldCom would have more than 63 percent ownership of the U.S. Internet backbone, according to CWA. "By eliminating each other as a major competitor and by creating one dominant Internet backbone provider, the merged entity would have the market power to exercise unilateral or concerted action to control the price of and potentially restrict access to the Internet," the union filing stated.

"Because the merged entity would also own some of the largest ISPs (Internet service providers)... (it) would be able to use this bottleneck control in discriminatory fashion, adopting pricing policies that favor interconnection with its own ISPs through cross-subsidies, predatory pricing, or other practices," the filing states.

Underscoring the significance of such domination of the Internet backbone, CWA pointed out that: "Many expect that the Internet's packet-switched data network will replace the public switched telephone network as the predominant communications infrastructure for voice, data and video."

The MCI/WorldCom business plan, together with statements from company officials, show that the merged company would target high-value business customers and pull back from facilities-based investment to serve residential customers, CWA charged. The merged entity would slash MCI's previously planned investment in local network development by $1.5 billion, according to the union.

MCI/WorldCom's business-targeted integration of local bypass and long distance-Internet capacity would have the effect both of driving up local phone rates for individual customers and diverting funds from the universal service program, CWA stated.

CWA President Morton Bahr also stated today: "This deal is anti-competitive as defined by the Telecommunications Act and the FCC's public interest guidelines. We believe it also violates federal anti-trust standards, and we'll make that argument to the Justice Department."

CWA is the nation's largest telecommunications union representing 650,000 members.

For a copy of the CWA filing, contact the CWA Communications Dept. at 202/434-1168.

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