Cable & Wireless buys MCI Internet

Fri May 29 17:18:44 UTC 1998

J.D. Falk [mailto:jdfalk at vix.com] wrote on Friday, May 29, 1998:
> God, this is all so DERANGED.
> 
>>	It would if MCI was selling off the entire Internet segment
>>	of the company.  Right now it looks like they're actually
>>	only selling a tiny chunk (probably the chunk that's got
>>	"Internet" in the name as opposed to "data services"), so
>>	it's pretty clearly just a token effort -- but it might
>>	work, leaving MCI Worldcom free to screw us all over.

ISP/C's objection to the MCI/WorldCom combination was stated as follows:

++++++++++
Worldcom's UUNet division has made recent changes in its peering and
pricing policies which lead us to be concerned about possible predatory
actions in this regard [if the merger is allowed]. Furthermore, Worldcom
has control of most of the peering points domestically through its MFS
division, while international peering points are controlled by
Worldcom's division of UUNet... If the merger is approved, we urge
strong consideration to the divestment of InternetMCI from the merger
equation.
...
[Additionally,] the extent of [MCI/WorldCom's] underlying [transmission]
capacity poses a reasonable threat to a broad spectrum of traditional
stratification in the telecommunications marketplace.
http://www.ispc.org/policy/filings/fcc19980320.shtml
++++++++++

I assume that their concerns stated in that first paragraph are
satisfied by MCI's action.  Commercial ISPs will be contracting with
C&W, not MCI/WorldCom, for wholesale access and peering.

The second concern is not addressed.  However, I regard it as without
merit.  The merger will not cause undue concentration of transmission
capability, given strong direct competitors (AT&T, Sprint) and numerous
upstarts (Level 3, Qwest, IXC, Williams, et. al.).

Any reaction from current MCI wholesalers or other ISPs?

Pete
______________________________________________________________________
Peter J. Farmer                    E-mail: pfarmer at strategies-u.com
Strategies Unlimited               Voice:  +1 650 941 3438
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