Merger update: Kennard rips MCI/Sprint deal

By David Rohde
Network World Fusion, 10/05/99

The road ahead for the MCI WorldCom/Sprint merger in Washington is not going to be so easy after all.

Federal Communications Commission Chairman William Kennard, avoiding the usual formula that regulators will "carefully examine" each merger, is mincing no words. He says he doesn't like the sound of MCI and Sprint together.

"Competition has produced a price war in the long-distance market. This merger appears to be a surrender," Kennard says. "How can this be good for consumers?"

Kennard didn't go so far as to say he would actually vote against the merger. Instead, he says: "The parties will bear a heavy burden to show how consumers would be better off."

Kennard had previously warned that he wasn't thrilled about the prospect of reviewing another merger, but aides had put out the word that MCI/Sprint could squeak by if Sprint sells its Internet backbone. Now other parties are holding Kennard to his previous word.

Among those are the Communications Workers of America, which previously battled against MCI WorldCom on various fronts. The industry's largest labor union CWA says: "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."

CWA recalled that Cable & Wireless had sued MCI WorldCom, claiming broken promises in a spin-off of the legacy MCI backbone to Cable & Wireless in a maneuver to win regulatory approval. The union also complained that Sprint had robbed its local telephone operations in smaller markets around the country of resources in favor of its national wireless buildout. These problems "would only be exacerbated by MCI WorldCom's control," the CWA says.

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