WCOM Merger News Update URL:
worldcom-merger.com
On October 5, 1999, MCI WorldCom and Sprint announced a merger agreement that would create the preeminent global communications company for the 21st century.
The combined assets of the two companies will enable the new company ? to be called WorldCom ? to be a complete competitor, offering the full range of "all-distance" products and services consumers are demanding. The company also will be an effective competitor against the huge monopoly local phone companies, AT&T and its cable networks, and against massive foreign competitors.
Driven by competition in long distance and "all-distance" markets, the new company will lead with product and service innovation, as well as greater simplicity. Most importantly, customers will reap the benefits of economies of scale, a more robust set of products and services, and another choice for broadband access.
A Complete Competitor
The combined company will provide a full range of services to residential and business customers on its own end-to-end, state-of-the-art global network. WorldCom will be a leader in the fastest growing areas of global communications services, offering innovative broadband; local, long distance, and international "all-distance" service; as well as nationwide digital wireless voice and data services combined in the packages that businesses and consumers are demanding.
MCI WorldCom?s fiber networks in 102 metropolitan areas and its "multichannel multipoint distribution service" (MMDS) operations will combine with Sprint?s MMDS operations and 18-state local telephone division to form a sizeable national footprint. These combined facilities will enable the new WorldCom to bring broadband services directly to consumers, bypassing monopoly cable and Bell company connections. Sprint?s nationwide all-digital PCS wireless network and MCI WorldCom?s SkyTel paging assets will give the combined company a competitive suite of advanced wireless products and services.
MCI WorldCom?s Internet backbone and its extensive international presence, along with the innovative Sprint "Integrated On-Demand" (ION) services, top off the requirements for the new WorldCom to become a complete competitor with more power to innovate.
An Effective Competitor
Domestic and global telecommunications markets alike are undergoing dramatic change. AT&T has made enormous investments in wireless and cable to provide local access to businesses and consumers as a part of a bundle of products and services. Bell Atlantic has begun competing aggressively to provide long distance service in New York, paving the way for Bell long distance service in other states. Bell companies have said they plan to take 25-30 percent of the long distance market in states where they provide local and long distance bundles. Global competitors such as Vodaphone/Airtouch and Concert are competing in the United States. Wireless and Internet competition is growing by leaps and bounds.
In this new arena, the new WorldCom ? strengthened to compete with the assets of both companies ? will be able to:
Ensure strong competition remains in long distance as monopoly Bell companies bring their market power into this arena.
Compete against foreign-based global competitors.
Stimulate competition where it really counts ? in direct access to homes and businesses.
Offer better quality and value through more innovative bundles of "all-distance" services.
Compete effectively against local phone monopolies.
Leading in Product Innovation
MCI WorldCom and Sprint share a common competitive heritage. Unlike the Bell companies, AT&T and the cable companies, MCI WorldCom and Sprint have built their businesses without the benefit of captive customer monopolies, delivering lower prices, innovation and customer service. These competitive innovations will continue in the traditional long distance market and in the broader all-distance market.
The merged WorldCom will have about 30 percent of the traditional long distance market, compared to about 50 percent for AT&T. Meanwhile, most long distance market share growth is being generated by new competitors. Today, 19 Fortune 500 companies provide long distance service. The Bell companies are moving aggressively to enter additional markets. Additionally, Excel and other telecom companies are offering long distance at rates as low as 3 cents a minute. Qwest ? which is acquiring U S WEST ? is offering 5 cents a minute, and long distance is free with a service offered by Broadpoint.
This competition ensures continued lower prices and innovation in long distance, while the new WorldCom?s ability to compete in the new "all-distance" market assures innovation there as well.
By leveraging complementary assets, new wireless and DSL access technologies, the two companies? creative technical know-how and our proven marketing expertise, the new WorldCom will deliver new all-inclusive, one-stop bundles and individual services that will deliver all the convenience, simplicity and value that consumers want.
Benefits to our Customers
The big winners in the MCI WorldCom merger with Sprint will be our customers.
Consumers and businesses will have the choice of a third route of communication from the home or office, bypassing the cable or Bell Company connections. They will have the choice of buying an individual service like competitive long distance or a value-filled bundle of services that many consumers see as a solution for savings and simplicity.
Most importantly, though, is the expansion of the benefit consumers have enjoyed throughout the long distance wars of the last decade: choice itself. Consumers have learned that competition brings lower prices, better services and even more choices. The MCI WorldCom-Sprint merger was conceived to ensure competition across the ever-changing landscape of telecommunications remains healthy and robust. |
