More of the bond purchases:
06:44 PM ET 03/29/99
MCI WorldCom bought bonds of fixed wireless firms
NEW YORK, March 29 (Reuters) - MCI WorldCom Inc. ,
the No. 2 U.S. long distance company, recently spent about $200
million to $300 million to buy bonds of several small wireless
cable companies, sources familiar with the situation said
Monday.
The move is seen as a step by MCI WorldCom toward gaining
access to the cable companies' so-called fixed wireless
technology. This technology would allow MCI WorldCom to bypass
the local phone companies' networks and to directly connect its
national communications network to its customers, sources and
analysts said.
MCI WorldCom last week purchased bonds and equity issued by
CAI Wireless Systems Inc. and bonds issued by CS
Wireless, People's Choice TV Corp. and Wireless One
Inc., sources said.
MCI WorldCom purchased the bonds and stock from Merrill
Lynch and Moore Capital. MCI WorldCom and Merrill Lynch
declined to comment. Moore Capital could not be immediately
reached for comment.
The cable companies control wireless spectrum called MMDS
(multichannel multipoint distribution service), which uses
microwave frequencies to provide television service.
Technological difficulties and production problems hobbled
the wireless cable industry's efforts to successfully compete
against the traditional cable television providers.
While many of these companies filed for bankruptcy, their
wireless spectrum is still valuable to long distance companies
such as MCI WorldCom, which are searching for ways to directly
connect to their customers, analysts said.
MCI WorldCom could use the wireless technology as the
so-called "last mile" to bridge the gap between its long
distance communications network and its customers. The Baby
Bell phone companies control the connections directly into
homes and businesses.
If MCI WorldCom controlled the wireless licenses, it could
bypass the Baby Bell's local networks and avoid the costly
access fees it must pay the local phone companies.
MCI WorldCom's purchase of the bonds was first reported on
cable television stations CNBC.
Shares of MCI WorldCom gained $2.625 to $92.50 on Nasdaq.
(( Jessica Hall, New York newsroom 212-859-1729))
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