Ralph Nader Statement at Worldcom/MCI merger workshop

[James Love <love@cptech.org>]

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Info-Policy-Notes | News from Consumer Project on Technology
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March 13, 1998


FMI: Ralph Nader <ralph@esssential.org> 202..387.8030
James Love <love@cptech.org> http://www.cptech.org, 202.387.8030
http://www.essential.org/antitrust/worldcom/worldcom.html

                   Statement of Ralph Nader 
             at Workshop on Worldcom/MCI Merger
                Mayflower Hotel, Washington, DC
                        March 13, 1998 

        Thank you for attending today's seminar on the Worldcom/MCI
merger.  We would like to thank Debbie Goldman of the Communications
Workers of America (CWA) and other officials of this union for their
fine efforts in organizing today's event.

        The Worldcom MCI merger is anticompetitive, and should be
stopped.  Two years ago the industry and its allies in Congress promised
consumers a new era of competition in telecommunications.  Today we are
seeing a wave of mergers which are designed to avoid such competition.

        Worldcom and MCI are very important competitors in long distance
telephone service.  Fillings in the current FCC proceeding indicate that
Worldcom has played an important role in providing service to discount
resellers, who have pushed long distance rates down.  This merger will
hurt consumers by reducing competition in that market. 
Telecommunications networks are growing, but demand is also growing.   A
merger such as this one not only limits today's level of competition,
but inevitably leads to demands for other mergers.  What's next, a
merger between Sprint and Quest?  Between AT&T and Sprint?

        In this market, there are no benefits to huge mergers such as
Worldcom/MCI.  We prefer to see Worldcom challenge MCI head on for
markets, rather than simply merge with the big three. 

        In the Internet market the problems are even more obvious. 
While experts disagree on how to measure market share for Internet
backbone markets, there are many who say the merger will give Worldcom
and MCI control over 40 to 60 percent of Internet backbone traffic. 
Today Worldcom and MCI are two of the largest competitors in the
Internet backbone market.  After the merger Worldcom and MCI will become
the AT&T of Internet backbone traffic.  Why would we want this to
happen?   And what types of anticompetitive practices could we expect
from a new entity with this much market share?  

        We have heard from many smaller Internet Service Providers that
Worldcom is currently engaged in discrimination against new Internet
entrants, denying them the ability to enter into important peering
agreements and forcing new anticompetitive terms on those who do peer
with Worldcom.  Worldcom is also ushering in a new era of secrecy
agreements which stifle debate and dissent on policies that are
fundamental to the future of the Internet.  We will hear more about this
from Dave Holub, Brian Bartholomew  and other conference participants.  

        Bill Schrader, the founder and CEO of PSInet, has told us that
Worldcom and MCI hope to follow the merger with new demands for pricing
by the byte for Internet backbone traffic.  The best model for Internet
pricing is not one set by a telephone company that gains monopoly power
in Internet backbone markets, but rather one that evolves from the
actions of hundreds or thousands of ISPs, seeking to attract customers
in a competitive environment.

        The Internet is too important to society for us to permit a
single firm to exercise too much control.  This merger should be
stopped. 

                  --- # --

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