MCI WorldCom to launch consumer Internet service
By Jessica Hall Thursday January 28, 11:16 pm Eastern Time
NEW YORK, Jan 28 (Reuters) - MCI WorldCom Inc.(Nasdaq:WCOM - news), the No. 2 U.S. long distancecompany, plans to launch its own consumer Internet service, sources familiar with the situation said.
Just four months ago, MCI Communications Corp. was forced to sell its Internet business to gain regulatory approval for its acquisition by WorldCom Inc.
MCI WorldCom declined to comment. The company is expected to announce the new Internet service in about a week, though the timing
could change, sources said.
Consumers will be able to buy the Internet service separately or buy a package of services, including Internet access and long distance service, sources said. Details on pricing and brand name were not
immediately available.
Last year, to satisfy U.S. and European regulators' concerns that the combined MCI WorldCom would dominate the Internet business, MCI Communications agreed to sell its wholesale and retail Internet businesses to Britain's Cable & Wireless Plc (quote from Yahoo! UK & Ireland: CW.L) for $1.75 billion.
WorldCom was allowed to keep its fast-growing UUNet subsidiary, which also provides Internet services, but to businesses rather than consumers. Jackson, Miss.-based WorldCom completed its $40 billion acquisition of MCI in September 1998.
MCI WorldCom's new Internet service will target consumers and fill in part of the gap created by MCI's divested Internet business.
Since MCI WorldCom developed the new Internet service internally, the company will not face the same kind of regulatory scrutiny that it would if it had bought an outside company, analysts said.
MCI WorldCom's Internet service will be an attractive product for customers who want to get all of their communications services from one company, analysts said.
''It will be tough (for MCI WorldCom) to start over from scratch, but companies need to have a product like that -- a bundle of services -- to compete,'' said Gary Arlen, president of Arlen Communications, a Bethesda, Md.-based research company.
A Yankee Group survey of technologically advanced families showed that 81 percent of those households would prefer to get some or all of their communications services from a single company.
MCI WorldCom already offers MCI One, a package of services that includes long distance, wireless and calling card services.
On Wednesday, MCI WorldCom's chief rival, AT&T Corp. (NYSE:T - news), introduced a new plan called AT&T Personal Network, which combines long distance, wireless and calling card services. Packages including Internet service are also available.
Phone companies, however, remain distant competitors in the Internet business behind industry leader America Online Inc. (NYSE:AOL - news). AOL has 15 million subscribers -- about 10 times the amount of its next closest rival, analysts said.
Some phone companies, such as Sprint Corp. (NYSE:FON - news), have been more successful partnering with Internet companies than trying to offer the service on their own. Sprint, the No. 3 U.S. long distance company, and EarthLink Network Inc. (Nasdaq:ELNK - news) last year combined their Internet access operations in a joint venture.
AT&T, meanwhile, may sell its Internet business to Internet service provider AtHome Corp. (Nasdaq:ATHM - news) in exchange for about $1 billion in AtHome stock. AT&T would have even greater control of At Home after it completed its proposed purchase of Tele-Communications Inc. (Nasdaq:TCOMA - news), AtHome's largest shareholder. |
