News Alert from Reuters via Quote.com
Topic: (NASDAQ:MCIC) Mci Communications Corp, (NYSE:T) At&T Corp,
Quote.com News Item #5218397
Headline: INTERVIEW - MCI (NASDAQ:MCIC) to add to local investments
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By Jessica Hall
NEW YORK, Jan 28 (Reuters) - MCI Communications Corp will
continue to invest in the local telephone market and plans to
spend about $600 million to strengthen its local facilities in
1998, said Ray Allieri, MCI's senior vice president of local
services.
MCI, the nation's second-largest long distance company, has
already spent about $2 billion to build its own local telephone
facilities in 31 markets. The company declined to comment on
when it will break even on those investments.
MCI may divert the new spending into expanding the capacity
of its existing markets before adding any new markets, Allieri
said in a telephone interview.
"We'll look at our expected volumes in existing
markets....what we haven't finalized is what, if any, new
markets we might add," Allieri said.
Last week, MCI said it would focus its local market efforts
on its own facilities instead of reselling service from the
Baby Bells.
MCI contends that under the current regulatory environment,
it is not economical to resell local phone service since the
fees it must pay the Baby Bells are often close to or greater
than the prices retail customers pay for the service.
MCI's rival AT&T Corp (NYSE:T) also recently said it would
halt its efforts to resell local phone service. Analysts
estimate AT&T lost an estimated $1.50 to $2 a month for each
subscriber it added.
MCI also lost money in resale.
"We haven't talked about the specific numbers, but we would
agree that we were losing money on every customer that we
sold," Allieri said.
MCI said it is "frustrated" by the lack of competition that
has developed since the passage of the 1996 Telecommunications
Act.
Since the Act's passage there has been much debate and
finger-pointing, but limited new competition. A key provision
of the Telecom Act has also been ruled unconstitutional, but
that ruling is expected to be quickly appealed.
The long distance companies contend that the Baby Bells
have not opened their markets to competition. The Bell
companies have said their markets are open but the long
distance companies are not anxious to get into the local phone
market.
Until the local market is fully open to competition, MCI
said it will continue to focus on facilities-based services.
"There's only a certain appetite among our shareholders for
us to able to absorb losses. ... We're about at the end of our
capacity to increase those losses unless we saw that there was
more light at the end of the tunnel and a shorter time to
recover those losses," Allieri said.
Copyright 1998, Reuters News Service |
