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Nader and Bahr: Proposed WorldCom/MCI Merger Would Hurt Consumers, Create Internet Monopoly
The proposed WorldCom/MCI merger should be rejected because it would allow the combined company to wield monopoly control over essential Internet backbone services, consumer advocate Ralph Nader and Morton Bahr, president of the Communications Workers of America, declared today at a symposium of top Internet experts.
"The Federal Communications Commission and the Department of Justice need to stop this merger cold, so consumers can benefit from competition, rather than suffer unnecessarily from monopoly," Nader said. "The merger would hurt consumers in many ways, and would offer them no benefits whatsoever." Nader warned that the companies want to impose new usage-based pricing on backbone services, which could give them the power to eliminate small Internet service providers (ISPs).
Bahr said: "Because the merged company would also own some of the largest ISPs, it would be able to use this bottleneck control in a discriminatory fashion to favor its own ISPs through cross-subsidies, predatory pricing or other practices."
"After the merger, WorldCom will control more than 60 percent of the Internet, which is the key to the communications infrastructure. Virtually the entire Internet backbone will be controlled by just two providers, with Sprint running a distant second behind WorldCom. This is not healthy competition. Regulators have only a brief window of opportunity to prevent the concentration of ownership of the Internet from falling into the hands of a single owner," Bahr said. "This deal is anti-competitive and violates federal antitrust standards," he added.
The merged company would control more than 60 percent of the Internet backbone, eliminating each other as a major competitor and creating one dominant Internet backbone provider, they said. National Internet backbones, which connect all consumers and Internet service providers to the Internet, are the core of the Internet infrastructure.
Bahr and Nader opened the "WorldCom/MCI Merger: Is the Internet at Risk?" symposium. The conference was co-sponsored by the Consumer Project on Technology and CWA.
The conference brought together leading Internet experts, including some who helped develop the Internet, as well as software creators, Internet service providers and academic experts, who looked at the anti-competitive impact of the proposed WorldCom/MCI merger.
In recent days, the U.S. Dept. of Justice has widened its antitrust probe of the proposed merger; the FCC has extended its comment period on it; and the European Commission has launched a detailed investigation of the combined companies' market share of the Internet backbone.
"WorldCom and MCI have both said they want to impose new usage-based pricing on Internet backbone services," Nader said. "This did not happen in the competitive market, but experts say it will be more likely once a single firm wields far more control over the Internet's backbone. WorldCom is already being accused of a number of anti-competitive practices in Internet peering, and this would give WorldCom even more power to eliminate small ISPs who now compete with WorldCom."
"The Federal Communications Commission and the Department of Justice need to stop this merger cold, so consumers can benefit from competition, rather than suffer unnecessarily from monopoly," Nader said. "The merger would hurt consumers in many ways, and would offer them no benefits whatsoever." Nader warned that the companies want to impose new usage-based pricing on backbone services, which could give them the power to eliminate small Internet service providers (ISPs).
Bahr said: "Because the merged company would also own some of the largest ISPs, it would be able to use this bottleneck control in a discriminatory fashion to favor its own ISPs through cross-subsidies, predatory pricing or other practices."
"After the merger, WorldCom will control more than 60 percent of the Internet, which is the key to the communications infrastructure. Virtually the entire Internet backbone will be controlled by just two providers, with Sprint running a distant second behind WorldCom. This is not healthy competition. Regulators have only a brief window of opportunity to prevent the concentration of ownership of the Internet from falling into the hands of a single owner," Bahr said. "This deal is anti-competitive and violates federal antitrust standards," he added.
The merged company would control more than 60 percent of the Internet backbone, eliminating each other as a major competitor and creating one dominant Internet backbone provider, they said. National Internet backbones, which connect all consumers and Internet service providers to the Internet, are the core of the Internet infrastructure.
Bahr and Nader opened the "WorldCom/MCI Merger: Is the Internet at Risk?" symposium. The conference was co-sponsored by the Consumer Project on Technology and CWA.
The conference brought together leading Internet experts, including some who helped develop the Internet, as well as software creators, Internet service providers and academic experts, who looked at the anti-competitive impact of the proposed WorldCom/MCI merger.
In recent days, the U.S. Dept. of Justice has widened its antitrust probe of the proposed merger; the FCC has extended its comment period on it; and the European Commission has launched a detailed investigation of the combined companies' market share of the Internet backbone.
"WorldCom and MCI have both said they want to impose new usage-based pricing on Internet backbone services," Nader said. "This did not happen in the competitive market, but experts say it will be more likely once a single firm wields far more control over the Internet's backbone. WorldCom is already being accused of a number of anti-competitive practices in Internet peering, and this would give WorldCom even more power to eliminate small ISPs who now compete with WorldCom."