WPC 2BJb&X#|xCourierCourierCourier BoldCourier ObliqueCourier Bold ObliqueHelveticaHelvetica BoldHelvetica ObliqueHelvetica Bold ObliqueHelvetica NarrowHelvetica Narrow BoldHelvetica Narrow ObliqueHelvetica Narrow Bold ObliqueTimesTimes BoldTimes ItalicTimes Bold ItalicNew Century SchoolbookNew Century Schoolbook BoldNew Century Schoolbook ItalicNew Century Schoolbook Bold ItalicITC Bookman LightITC Bookman Light ItalicITC Bookman DemiITC Bookman Demi ItalicPalatinoPalatino BoldPalatino ItalicPalatino Bold ItalicSymbolITC Zapf DingbatsITC Zapf Chancery Medium ItalicAvant Garde Gothic BookITC Avant Garde GothicITC Avant Garde Gothic BookITC Avant Garde Gothic Book ObliqueITC Avant Garde Gothic DemiITC Avant Garde Gothic Demi ObliqueAlgerianArial SuperArialArial NarrowAvantGardeKino MTScriptImpactModernDesdemonaColonna MTBraggadocioBook AntiquaBookmanTimes New RomanRomanImpactCentury SchoolbookMatura MT Script CapitalsZapf ChanceryWP DefaultsWP Defaults` hp x (#%'0*,.8135@8:#Xx PT6UXP#X` hp x (#%'0*,.8135@8:. v WorldCom respectfully submits that, as has been the case with the series of other acquisitions by WorldCom in recent years, telecommunications customers, shareholders, and the general public will realize substantial benefits from a merger between MCI and WorldCom.h  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee Remarks of Commissioner Susan Ness Before the Joint Meeting of the NARUC Communications and International Relations Committees, San Francisco, California (July 23, 1997) at 7, where the Commissioner said: Mergers, as you know, can be procompetitive or anticompetitive. Procompetitive mergers put together companies that can bring an increased level of competition to the marketplace. An example would be the merger of MFS and LDDS. The substantial public interest benefits of the proposed transactions are discussed, infra, in Section III. h This transaction will achieve a significant milestone in the history of the telecommunications industry, by bringing together two pioneering companies in competitive long distance, local, international, and advanced data services. WorldCom and MCI share similar entrepreneurial legacies and experiences in newly competitive markets. They have a common history of innovation, agility, and growth, and they share a mutual vision of the future. Indeed, these two companies are the paradigms for the American entrepreneurial spirit. By complementing the operating and management expertise of WorldCom with the skills and experience of MCI, the merger of MCI and WorldCom will create one of the worlds leading telecommunications carriers (particularly in the fastest-growing segments of the global telecommunications industry) with the combined expertise to meet the expanding and diverse needs of sophisticated business and residential customers. The combination of advanced fiber-based local city networks, high capacity transoceanic cables, and state-of-the-art global long distance and data networks well position the combined company to become a pre-eminent provider of advanced one-stop-shopping telecommunications services. The contribution of WorldComs domestic local networks,  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee, e.g., New Paradigm Resources Group, Inc. & Connecticut Research, 1997 Annual Report on Local Telecommunications Competition at 438-50 ( Paradigm Report).  with an established, facilities-based presence in over 50 U.S. metropolitan areas, will greatly accelerate MCIs local services entry strategy and result in significant savings, efficiencies, and economies of scale and scope for the combined company. By creating a more effective and multi-faceted carrier in the local exchange sector, the proposed merger will significantly enhance competitive choice for U.S. telecommunications customers, and advance, further than perhaps any other initiative, realization of the underlying intent of Congress and the Commission in implementing the Telecommunications Act of 1996.    2. A Two-Step FCC Approval Process is the Appropriate Procedure for the Commission to Address the Offer and Subsequent Merger Transaction.    The Offer and proposed subsequent merger (the Merger and, collectively with the Offer, the Transactions) will enable WorldCom to acquire the entire equity interest in MCI. Because MCI directly and indirectly holds numerous cable landing licenses  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee  An Act Relating to the Landing and Operation of Submarine Cables in the United States, 47 U.S. C.  34 - 39 (the Cable Landing License Act).  and Title II and Title III radio licenses and authorizations issued by the Commission (the MCI Authorizations),  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эMCI holds authorizations for international wireline facilities, and a variety of wireless facilities, including point-to-point microwave stations, earth station licenses, private telephone maintenance radio service licenses, private business radio licenses, private aircraft stations licenses, and an 800 MHZ air-ground radiotelephone license . . . used to provide voice and video services. . . . [as well as] submarine cable landing licenses and a direct broadcast satellite (DBS) license. In the Matter of The Merger of MCI Communications Corporation and British Telecommunications plc, Memorandum Opinion and Order, GN Dkt. No. 96-245, FCC 97-302 at  21 (rel. Sept. 24, 1997) ( BT/MCI Order) While WorldCom has attempted to obtain from the Commissions public records a complete list of these authorizations, see Exhibit IV.C, Transferee is unable at this time to confirm that this listing represents a full compilation of the numerous authorizations and their respective licensees since MCIs Board of Directors has not endorsed the Exchange Offer and MCIs management has not participated in or reviewed the license compilation in Exhibit IV.C. Transferee respectfully requests, therefore, that the Commission deem these Applications to encompass all authorizations held by MCI or its subsidiaries. In the case of several MCI licenses, it should be noted that Transferee has not requested transfers of control for two public coast stations whose applications for transfer of control from MCI to a third party, Globe Wireless, Inc., were granted in May 1997. See Applications of Globe Wireless, Inc. For Public Coast Stations KPH and WCC, Memorandum Opinion and Order, FCC File Nos. 878286 and 878287, 12 FCC Rcd. 6002 (1997). The Applicants presume that these transactions were consummated, given the MCI request for dismissal of the corresponding applications for transfer of the authorizations to BT.  consummation of the Transactions is subject to, among other things, prior Commission approval of the applications, filed concurrently herewith, for transfer of control of MCI to WorldCom. As the Commission is aware, there is currently pending a proposed acquisition by British Telecommunications plc ( BT) of MCI (the BT-MCI Acquisition),c  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee BT/MCI Order, supra note 5, at  1. c which has been endorsed by the Board of Directors of MCI. The WorldCom Offer is competing with the BT-MCI Acquisition and is, at this time, therefore, what is colloquially termed a hostile tender offer.  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эPursuant to the terms of the Exchange Offer, WorldCom has announced its intent to purchase all of MCIs issued and outstanding common voting stock, including those shares held by BT, together with the associated poison pill rights. The Offer is governed by, among other things, the tender offer rules of the Securities and Exchange Commission ( SEC) pursuant to Section 14(D) of the Securities and Exchange Act of 1934, as amended (the Exchange Act). A Form S-4 Registration Statement is being filed with the SEC in connection with the Offer. See supra note 1.      a.The Transaction Contemplates Use of an Interim Voting Trust Arrangement to Complete the Exchange Offer Pending Commission Approval of the Transfer of Control to WorldCom.    The effectuation of the Transactions is expected to be conducted in accordance with procedures applied in previous situations involving tender offers for the shares of communications firms regulated by the Commission. Subject to receipt of the Commissions approval of the Request for Special Temporary AuthorityS  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee infra Section II. S ( STA) and of the Step I transfer applications associated with that request   ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee infra Section I.B and the applications contained in Volume II of this Consolidated Application.  included in this Consolidated Application, as shares of stock of MCI are tendered, they will be placed into an interim voting trusto   ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee infra Sections I.B and II.C and Exhibit IV.A. o (the Voting Trust) under the control of an independent trustee, Professor Howard A. White,a   ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee infra Section II. B and Exhibit IV.B. a under a Voting Trust Agreement.`   ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee infra Section II.C and Exhibit IV.A. ` If the Offer is completed, following Commission approval of the related Step II transfer of control applications,   ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee infra Section I.B and the applications contained in Volume III of this Consolidated Application.  the Voting Trust will be terminated and the tendered MCI shares will be transferred to WorldCom. Upon such transfer, a wholly owned subsidiary of WorldCom, TC Investments Corp., will merge into and with MCI. MCI, as the surviving company following the Merger, will become a wholly owned subsidiary of WorldCom. In the event that the Offer is not completed, the Trustee will sell the tendered stock to third parties pursuant to the terms of the Voting Trust Agreement, and the Voting Trust will terminate.    b.Use of a Voting Trust Permits Timely and Orderly Completion of the Exchange Offer in a Manner Fully Consistent with Commission Procedures.    Subject to Commission approval and issuance of the STA requested herein, the Voting Trust has been established and an independent trustee appointed in accordance with the provisions of Section 218 of the Delaware General Corporation Law and the provisions of the Commissions Policy Statement on Tender Offers and Proxy Contests  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эTender Offers and Proxy Contests, Policy Statement, 59 Rad. Reg. 2d (P & F) 1536 (1986) ( Policy Statement), appeal dismissed sub nom. Office of Communications of the United Church of Christ v. FCC, 826 F.2d. 101 (D.C. Cir. 1987). See, generally, Stephen F. Sewell, Hostile Tender Offers for Corporations Holding Licenses Issued by the Federal Communications Commission, 49 Fed. Comm. L.J. 167 (1996).  to facilitate the timely and orderly receipt of and payment for the tendered MCI shares (the Shares).Y  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эThe provisions of the Voting Trust are discussed, infra, in Section II.C. A copy of the Voting Trust Agreement is attached as Exhibit IV.A. In the Commissions Policy Statement, the Commission recognized that the use of voting trust agreements conforming to the standards of the Policy Statement and related decisions provides an appropriate mechanism to facilitate tender offer transactions and accommodate the various laws and regulations relating to transactions of this type. Policy Statement, supra note 14, at 1567. Y Pursuant to two-step transfer procedures specifically tailored by the Commission to address the special need for expedited processing in the context of hostile tender offers, WorldCom is herein requesting Special Temporary Authority from the Commission for an interim transfer of MCI shares to an independent voting trustee empowered to receive and vote the Shares until, among other prescribed events, the Commission completes action on the applications for transfer of control of MCI to WorldCom. Given the extreme time sensitivity of this transaction and the need to harmonize these procedures with the requirements of various federal securities laws, WorldCom respectfully requests, as has been the case in other tender offer proceedings,  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эThis procedure has been used in other case involving hostile tender offers. See, e.g.,  CNCA Acquisition Corp., Memorandum Opinion and Order, 3 FCC Rcd. ( Viacom) 6088 (1988) ( CNCA); Viacom, Inc., Memorandum Opinion and Order, 8 FCC Rcd. 8439 (1993) and QVC Network, Inc., Memorandum Opinion and Order, 8 FCC Rcd. 8485 (1993) ( QVC) (approving simultaneously the STA requests of competing offerors).  expeditious Commission review of the first step of this transfer arrangement.  `  ` hp x (#%'0*,.8135@8:`  B.Description of the Consolidated Applications.   ` hp x (#%'0*,.8135@8: WorldCom hereby seeks authority from the Commission for transfer of control of MCI from MCIs current shareholders to WorldCom.W  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эThe applications submitted in this Consolidated Application are filed pursuant to Sections 63.18(e)(5) of the Commissions Rules with respect to the Section 214 authorizations; pursuant to the Cable Landing License Act and Sections 1.767 and 63.18(e)(5) with respect to the submarine cable landing licenses; and pursuant to Sections 21.39, 22.137, 25.118, 80.29, 87.31, 90.75, 90.79, 90.81, 90.153, and 100.80 with respect to the radio authorizations. 47 C.F.R.  1.767, 63.18(e)(5), 87.31, 90.75, 90.79, 90.81, 90.153, and 100.80 (1996). W A two-step transfer of control is required in this instance because routine processing of a single-step transfer of control application may substantially delay and thereby prejudice prosecution of WorldComs hostile tender offer. In particular, in the absence of a two-step transfer process, third parties would be afforded a protracted period to erect barriers to the Offer and otherwise interfere with the ability of MCI shareholders to make an informed decision. This would be contrary to the underpinnings of the securities laws, which are predicated on competitive neutrality.  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эPolicy Statement, supra note 14, at 1555 (citing Edgar v. MITE Corp., 457 US 624, 633 and note 9 (1982)).  Special Temporary Authority is therefore requested for a temporary, interim transfer of MCI shares to an independent voting trustee, Professor Howard A. White of the St. Johns University School of Law ( Trustee and, collectively with WorldCom, the Applicants),  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эProfessor Whites qualifications to serve in this position are demonstrated, infra, in Section II.B; see also Exhibit IV.B.  who will receive and vote the shares of MCI stock tendered in response to the Offer, pursuant to the terms of the Voting Trust, see Exhibit IV.A, pending approval by the Commission of the applications for transfer of control of MCI to WorldCom. This Consolidated Application therefore includes the following discrete sections:  `  ` hp x (#%'0*,.8135@8:`  (1)Applications requesting Commission approval of a proposed interim transfer of shares from the shareholders of MCI to the Trustee (the Step I Applications);^  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эThe Commission has previously waived the requirement of the transferors signatures being affixed to transfer applications and has rejected arguments for dismissal of applications based on their contingent nature resulting from the uncertainties attending consummation of tender offers. Applications of Continental Tel. Corp., Memorandum Opinion and Order, 41 F.C.C.2d 957 at  7 (1973). The Applicants respectfully request that the Commission similarly waive the transferor signature requirement in the context of the Step I applications. ^   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (2) A request for Special Temporary Authority (the STA Request) for the first Step I" set of transfer applications from the shareholders of MCI to the Trustee to be considered on an expedited basis pursuant to the Commissions Policy Statement on Tender Offers and Proxy Contests; and   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (3) A second, Step II" set of transfer applications requesting authority for a transfer of control of MCI from the Trustee to WorldCom (the Step II Applications, and, collectively with the Step I Applications and the STA Request, the Applications ).   ` hp x (#%'0*,.8135@8: A separate filing fee is being submitted for each of the three applications associated with each radio license and with the Section 214 transfer of control application. Volume I, in addition to the STA Request, includes general background information relating to all of the Applications, including a discussion of the public interest benefits of the proposed transaction and the relevant public interest factors governing use of the voting trust arrangement. Volume II contains the Step I Applications pertaining to the interim transfer of stock from MCIs current shareholders to the Trustee. Volume III contains the Step II Applications for the proposed transfers from the Trustee to WorldComJ  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эApplicants request that any STA granted in response to this Request and the Applications be deemed to cover all licenses and authorizations issued to MCI or any of its direct and indirect subsidiaries, regardless of whether such licenses or authorizations have been listed herein. J and the ownership information exhibits with respect to MCI and WorldCom.  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эThe enclosed computer diskette contains the text of the entire Consolidated Application, except for FCC Forms 159, 703, and 704. (The exhibits to those forms are included.)  II.REQUEST FOR SPECIAL TEMPORARY AUTHORITY   A.In Reviewing this Request, the Commission Should Follow the Procedures Established in the FCC Policy Statement to Avoid Unnecessary Processing Delays in the Context of Tender Offers and Proxy Contests.      1.Use of These Two-Step Procedures Achieves the Policy Statements Objectives of Maintaining FCC Neutrality and Accommodating Other Federal Laws Intended to Protect Shareholder Rights.     The proposed transaction has been structured to comply with the special procedures established by the Commission for processing applications for transfer of control in the context of tender offers and proxy contests. See generally, Policy Statement. In order to accommodate the objectives of the securities laws (including the Williams Act and the Securities Exchange Act)M  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#э15 U.S.C.  78n (1994). M without foreclosing execution of the Commissions mandate to review proposed transfers of control of its licensees under the public interest standard, the Commission -- over a decade ago -- established specially-tailored procedures that grant expeditiously Special Temporary Authority to an interim voting trustee, who may consummate a tender offer for the target firm pending the Commissions review of the offerors transfer application. The Commission has long recognized that time is of the essence in the context of hostile tender offers. In particular, it has found that expedited processing procedures are required in order to ensure that the Commission can remain neutral as to the outcome of the control contest and that the Commissions procedures are not manipulated so as to advantage one contestant over the other or, as a practical matter, preclude the use of tender offers to obtain control of communications companies.  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эPolicy Statement, supra note 14, at 1539-40, 1570; Rogers Communications, Inc., Memorandum Opinion and Order, 9 FCC Rcd. 7350, 7355 at  12 (1994) ( Rogers); L.P. Media, Inc. and G. William Miller, Trustee, Memorandum Opinion and Order, 102 F.C.C.2d 1276 at  12 (1985) ( L.P. Media); CNCA, 3 FCC Rcd. at 6090. See also Edgar v. MITE, 457 US 624, 633 (1982) (construing the Securities Exchange Act of 1934, as amended by the Williams Act, 15 U.S.C.  78n (d) - (f), as intended to ensure governmental neutrality in tender offer situations).  In this regard, the Chief of the Commissions Mass Media Bureau recently stated that, [n]eutrality demands that the Commissions actions not favor any party in the contest for corporate control inherent in hostile tender offer proceedings.  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эLetter from Roy J. Stewart, Chief, MM, to Thomas J. Hutton, Esq., counsel to ITT Corporation, DA 97-1872 (Aug. 28, 1997).  Moreover, the Commission has found, as a general matter, that tender offers present precisely the extraordinary circumstances warranting issuance of STAs even in contexts where grant of STAs is normally restricted.  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эIn Rogers, reviewing cases in which STAs had been authorized in tender offer situations in analyzing the scope of its authority to grant STAs under Section 309(f) of the Communications Act, the Commission noted that it had found in L.P. Media that it is the circumstances presented by the tender offer itself that are extraordinary, because of the need for expedition to permit shareholders to consider the tender offer. Rogers, supra note 24, at 7354 (citing L.P.Media, 102 F.C.C. 2d 1216, 1285 (1985)). In the Policy Statement, supra note 14, at 1539, the Commission expressly found that Section 309(f) authorizes the FCC to issue STAs to enable operation of a station by a transferee.  The Policy Statement provides for public participation in this abbreviated first step process by allowing a brief period for interested parties to file informal comments or objections in connection with the proposed transfer of shares to the trustee.i  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эPolicy Statement, supra note 14, at 1563 n. 124. i    2.The Commission Has Explicitly Held that the Policy Statement and Related Procedures are Applicable to All Commission-Regulated Services.    Although the issuance of the Policy Statement was initially prompted by a number of contested proceedings involving broadcast station licensees, the Commission has explicitly stated that the expedited procedures would be applicable in all situations involving a tender offer of a communications company.  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эId. at 1569 n.147 and cases cited therein; see also CNCA, 3 FCC Rcd. 6088 (cellular radio authorizations); Rogers, 9 FCC Rcd. 7350 (CARS licenses).  Since issuing the Policy Statement, the Commission has applied the tender offer policies in cases involving common carrier Cable Antenna Relay Stations ( CARS) and cellular radio authorizations.  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эRogers, 9 FCC Rcd. 7350 (CARS authorizations); CNCA, 3 FCC Rcd. 6088 (cellular radio licenses).  Given the underlying ameliorative policies and express language of the Policy Statement, it is also appropriate to apply these procedures to the multiple Direct Broadcast Satellite, common carrier, and private radio authorizations that are the subject of the instant Applications. Because the inherent nature of a tender offer makes time of the essence, there will be irreparable harm to MCI and WorldCom shareholders if the tender offer is subjected to protracted delay or regulatory gamesmanship by third parties.  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee, e.g., Rogers, 9 FCC Rcd. at  22-24 (finding it appropriate to apply the two-step voting trust and STA procedures to applications for transfer of control of a CARS licensee in the context even of a once-hostile tender offer that had become a friendly tender offer); L.P. Media, 102 F.C.C.2d 1276 (decision issued before the adoption of the Policy Statement applying these procedures to broadcast applications).  It is also entirely consistent with the Policy Statement to apply the expedited two-step procedures in the context of the transfer of control of the Section 214 international authorizations and submarine cable licenses held by MCI and its subsidiaries. In many cases involving transfers of control to common carriers already holding Section 214 international authorizations, and especially when, as here, there are no controlling foreign ownership or dominant carrier considerations,  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эWorldCom and its subsidiaries have already been found non-dominant on all routes to destination countries in which they have affiliate carriers. See, e.g., WorldCom, Inc., File No. I-T-C-97-008, Order Authorization and Certificate, DA 97-1102 (Chief, Telecom. Div., Intl Bur., June 5, 1997) (declaring WorldCom non-dominant on the U.S.-Israel route).  the International Bureau has granted STAs under Section 309(f) of the Communications Act, 47 U.S.C.  309(f), and Section 63.04 of the Commissions Rules, 47 C.F.R. 63.04, to permit transactions to close pending final action on the proposed transfer of control, even in contexts where no independent voting trustees were involved and where no extraordinary, time-sensitive factors were implicated.   ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee, e.g., International Bureau Speeds Processing Through the Expanded Use of Grant Stamp and Status Conferences, Public Notice, Report No. IN 95-12 (Jun. 6, 1995) (establishing grant stamp procedures for issuance of STAs with respect to Section 214 authorizations); see also Telemarketing Corporation of Louisiana, Memorandum Opinion, and Order, 5 FCC Rcd. 7263, 7263 at  6 n.5 (1990) (noting the prior grant of an STA with respect to the subject transfer of control); TMC Communications, Inc., Memorandum Opinion and Order, 5 FCC Rcd. 2466, 2466 at  1 n.1 (1990) (noting the prior grant of an STA with respect to the subject transfer of control).  An STA is particularly appropriate in the case of a Section 214 transfer of control application since, unlike an application for transfer of control of a Title III radio licensee, it is not generally considered a restricted proceeding, presumably because it does not involve a license for a unique facility.8!  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эMoreover, it is common procedure, as demonstrated in the processing procedures applied to the applications filed in connection with the proposed acquisition of MCI by BT, for related proceedings involving transfers of multiple authorizations to be handled in a single, consolidated proceeding, rather than being subjected to duplicative processing under different sets of procedures. See BT/MCI Order, supra note 5, at 1; see also MCI Communications Corporation and British Telecommunications plc Seek FCC Consent for Proposed Transfer of Control, Public Notice, GN docket No. 96-245, DA 96- 2079 at 1-2 (Dec. 10, 1996) (consolidating the various applications under the Cable Landing License Act and Sections 214(a) and 310(d) of the Commissions Rules for administrative convenience and as non-restricted proceedings and noting that Section 214 proceedings are non-restricted even if formally opposed although the filing of oppositions makes Section 310(d) and cable landing license proceedings restricted). 8 Given this precedent, it is entirely appropriate for the Commission to apply the Policy Statements two-step processing procedures to all the applications for transfer of control of MCI Authorizations on a consolidated basis.    3. These Applications Comply with the Policy Statements Processing Procedures and Requirements.     As described above, the Applicants are proceeding under the Commissions two-step transfer of control procedures in order to pursue the Offer on an expedited basis consistent with the regulatory requirements of other government agencies. With respect to the first step, the Applicants request an expedited grant of Special Temporary Authority for a temporary, interim transfer of the Shares from the shareholders of MCI to an independent voting trustee, Professor Howard A. White of St. Johns University School of Law ( Trustee). Grant of the requested authority would permit the Trustee to accept, hold, and vote the tendered shares of MCI stock pending Commission action on the Step II Applications to transfer control of MCI and its licensee subsidiaries to WorldCom. As demonstrated below, the terms of the Voting Trust are consistent with applicable Commission requirements,d"  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эThe Commission reviews trust instruments to ensure that the offeror is restricted from exercising direct or indirect control over the licensee from the time the tender offer is consummated until all requisite regulatory approvals are obtained, the trustee is effectively insulated from the offerors influence, and the trustees obligation as a temporary caretaker charged with preserving the nature and character of the corporation is properly delineated. Rogers, 9 FCC Rcd. at 7364, citing Policy Statement, supra note 14 at 1578-81. d and the Trustee has the requisite qualifications and independence to perform the duties and obligations entrusted to him in the Voting Trust in accordance with well established Commission policies.#  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#э"In reviewing requests for special temporary authorizations in the context of tender offers, the Commission confines its examination to the trust instrument, the proposed trustees qualifications and, if challenged, the offerors ability to finance the tender offer. Rogers, 9 FCC Rcd. at 7355, citing Macfadden Acquisition Corp., Memorandum Opinion and Order, 104 F.C.C.2d 545, 565-66 (1986).  In the instant situation, delay due to regulatory review of the proposed transfer of control could cause irrevocable harm to the shareholders of both MCI and WorldCom by denying MCI shareholders an opportunity for simultaneous consideration of the competing revised BT acquisition proposal terms and the WorldCom Offer.$  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эA Registration Statement describing the terms of the Offer is being filed on this date with the SEC and could become effective in as little as 45 days. Similarly, the waiting period under the Hart-Scott-Rodino Act may possibly be satisfied in 30 days from the date of filing. The Commission has not viewed the pendency of such parallel proceedings as a basis for denying the use of the expedited STA processing procedures requested here. Policy Statement, supra note 14 at 1560 ( delays not attributable to [FCC] procedures are beyond the scope of [the FCCs] regulatory concern); Rogers, 9 FCC Rcd. at 7363; CNCA, 3 FCC Rcd. 6089-90 at  16.  Use of the STA and voting trust mechanism will prevent unnecessary harm to WorldCom and MCIs shareholders without prejudicing the outcome of the Commissions consideration of the transfer of control to WorldCom.%  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эPolicy Statement, supra note 14 at  45; see, e.g., JB Acquisition Corp, 60 Rad. Reg. 2d (P & F) 1095, 1098 (1986) ( where a competing offer already exists, . . . the second offeror must be promptly empowered to present its offer to the shareholders.); Viacom, 8 FCC Rcd. 8439 and QVC, 8 FCC Rcd. 8485 (approving simultaneously the STA requests of competing offerors; Eugene McCarthy, Memorandum Opinion and Order, 60 Rad. Reg. 2d (P & F) 1207 (1986) and Macfadden Acquisition Corp., 60 Rad. Reg. 2d (P & F) 872 (approving STA requests of competing offerors).  The Applicants expressly acknowledge that grant of the requested STA would be without prejudice to any future Commission decision on the application for transfer of control to the Transferee. B.The Trustee is Eminently Qualified to Serve in that Capacity.  Professor Howard A. White, a tenured professor at St. Johns University School of Law with extensive experience in communications law and the telecommunications industry generally, has agreed to serve as the independent Trustee and the proposed Step I transferee under the requested Special Temporary Authority.z&  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эProfessor Whites curriculum vitae is attached as Exhibit IV.B. z  Professor White is a U.S. citizen and has never been convicted of a felony by a federal or state court. He has no business or familial relationships with WorldCom, MCI, or any of their subsidiaries, or with their or their subsidiaries officers, directors, principals, or partners. He owns no stock in either WorldCom or MCI, and he will have no beneficial interest in the tendered shares of MCI stock held in the Voting Trust. At St. Johns University, Professor White teaches courses in communications law and electronic media, administrative law, and professional ethics. Prior to commencing his current position at St. Johns University School of Law, Professor White served as Executive Vice President and General Counsel of ITT Communications and Information Services, Inc., where he was responsible for, among other things, regulatory and legal compliance and overall direction and execution of the companys legal and regulatory strategy. He also held prior legal positions with COMSAT and in private practice. He served with the FCC from 1962 to 1966, where his last position was as Assistant Chief of the Common Carrier Bureau. In these positions, he gained experience with the issues and regulatory procedures related to a number of regulated telecommunications services, including common carrier regulation generally; satellite, microwave, and mobile radio services; and domestic and international facilities-based carrier services. He also had administrative and managerial, as well as supervisory, responsibilities. Prior to receiving his law degree, Professor White was employed as an electrical engineer. In addition to his law degree, Professor White also holds a Masters Degree in Public Administration. Professor Whites public service also includes past service as a Presidential appointee to the Board of Directors of the Corporation for Public Broadcasting and service as a Director of National Public Radio. Since 1989, he has also served as a member of the Visiting Committee of the University of Miami School of Communications, an uncompensated position. As an experienced business executive, legal practitioner, and professor in the field of communications law, Professor White is familiar with the objectives and requirements of the Policy Statement and with the responsibilities of an interim voting trustee during a tender offer. Review of Professor Whites credentials demonstrates that he is fully qualified to serve as the Trustee and to execute his responsibilities and obligations thereunder. The Commission should therefore approve the selection of Professor White as Trustee and grant the STA and Step I Applications in an expeditious manner.     C.The Terms and Conditions of the Voting Trust Fully Conform to the Commissions Requirements.     This Consolidated Application requests, inter alia, special temporary authority for an interim transfer of control of the holders of the MCI Authorizations to an independent voting trustee. The interim authority would permit the Trustee to acquire, hold, and, subject to certain limitations, vote the Shares pursuant to the terms of a Voting Trust Agreement dated September 30, 1997 (the Trust Agreement, attached hereto as Exhibit A), pending Commission consideration of the Transfer Applications filed concurrently herewith. The Trust Agreement satisfies Commission requirements intended to ensure the independence of an interim trustee pending Commission action on the applications for transfer of control in the context of a tender offer. In ensuring the Trustees independence, the Trust Agreement provides in pertinent part that the Trustee shall vote the Shares only as summarized below:  `  ` hp x (#%'0*,.8135@8:` (1)in any manner necessary, as he in his sole discretion determines, to cause himself or his nominees to become members of the Board of Directors of MCI (the MCI Board) during the term of the Trust Agreement, except that the aggregate of all directors so elected shall not constitute a majority of the MCI Board (unless and until the Transfer Applications have been granted by the FCC); no director so elected may be a partner, officer, employee, director, shareholder, or affiliate of WorldCom or have any business or familial relationship (as defined in the Policy Statement) with WorldCom or any officer, employee, shareholder, or affiliate of WorldCom; and all directors so elected are subject to the same restrictions on communications as the Trustee;   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (2) in any manner necessary to remove and replace any director or officer of MCI who resigns, or who opposes, impedes, or impairs the effectuation of the Transactions or any obligations of MCI with respect thereto, or is wasting corporate assets or otherwise acting in a manner inconsistent with such directors fiduciary responsibilities, provided that no director so elected may be a partner, officer, employee, director, shareholder, or affiliate of WorldCom or have any business or familial relationship (as defined in the Policy Statement) with WorldCom or any officer, employee, shareholder, or affiliate of WorldCom; and all directors so elected are subject to the same restrictions on communications as the Trustee;;   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (3) for any proposal necessary to effect (or consistent with the effectuation of) the Transactions or any obligations of MCI with respect thereto;   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (4) in opposition to any proposal inconsistent with the consummation of the Transactions or any obligations of MCI with respect thereto; and   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (5) in all other respects, to maintain the present management and operations of MCI and its FCC licensee subsidiary corporations.   ` hp x (#%'0*,.8135@8: The Trust Agreement further provides that:  `  ` hp x (#%'0*,.8135@8:` (1) the Trustee may not be a partner, officer, employee, director, shareholder, or affiliate, or have a business or familial relationship with, WorldCom;   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (2) the Trustee may communicate with, and provide reports to, WorldCom concerning the implementation of the Transactions and the management and operations of MCI and its direct and indirect licensee subsidiaries, provided that all communications are in writing;  ` ` hp x (#%'0*,.8135@8:   `  ` hp x (#%'0*,.8135@8:` (3) neither WorldCom, nor any of its officers, directors, employees, partners, shareholders, or affiliates is permitted to communicate with the Trustee regarding the operation or management of MCI or its direct and indirect licensee subsidiaries, but WorldCom may communicate with the Trustee regarding the transfer of the stock of MCI or other information pertaining to the mechanics of implementing the Transactions, including requiring the Trustee to grant a security interest in the Shares to secure loans to the extent the proceeds thereof will be used directly or indirectly in connection with the acquisition of the Shares and the voting rights remain with the Trustee, provided that all communications are in writing;   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (4) the Trustee shall have no authority to sell, transfer, assign, pledge, or otherwise dispose of or encumber the Shares, except to the extent otherwise specifically provided in the Trust Agreement;   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (5) WorldCom shall not directly or indirectly influence the actions of the Trustee during the pendency of the Transfer Applications, except as expressly permitted by the terms of the Trust Agreement;   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (6) the Trust shall be irrevocable during the pendency of the Transfer Applications; and   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (7) no person other than the Trustee shall have any voting rights in respect of the Shares so long as the Trust Agreement is in effect.   ` hp x (#%'0*,.8135@8: Under the terms of the Voting Trust, the Trustee is required to transfer the Shares to WorldCom when:  `  ` hp x (#%'0*,.8135@8:` (1) the Commission has granted the Step II Applications and that grant has become effective, following receipt of written certification from WorldCom that it has obtained all other federal, state, and foreign regulatory approvals which, if not obtained in connection with the Transactions, would have a material adverse effect on MCIs or WorldComs business, operations, assets, liabilities, financial condition, or results of operations; or   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (2) at such other time that there has been a determination by the Trustee that the delivery and transfer of the Shares to WorldCom would not violate the Communications Act of 1934, as amended (the Communications Act) or the rules and regulations of the FCC and the State Regulatory Agencies that have issued licenses, permits, and authorizations to MCI (directly or indirectly) or other regulatory agencies of competent jurisdiction.   ` hp x (#%'0*,.8135@8: The Trustee must sell the Shares as soon as practicable to one or more third parties in such manner as will maximize the proceeds to WorldCom if:  `  ` hp x (#%'0*,.8135@8:` (1) the FCC issues an order denying the Step II Applications that is no longer subject to administrative or judicial review;   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (2) WorldCom notifies the Trustee in writing during the pendency of the Step II Applications that it desires to sell the Shares and the Trustee fails to disprove such decision to sell; (3) WorldCom informs the Trustee in writing that it has withdrawn the Step II Applications; or   ` hp x (#%'0*,.8135@8:  `  ` hp x (#%'0*,.8135@8:` (4) any other circumstances occur under which the Trustee is required by law to sell the Shares.   ` hp x (#%'0*,.8135@8:Review of the terms and conditions specified in the Trust Agreement thus demonstrates that the Trust Agreement conforms to the requirements specified in the Policy Statement and subsequent Commission decisionsN'  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee supra notes 34-35. N to ensure the independence of the trustee. By the terms of the Trust Agreement, the Transferee is precluded from influencing the Trustees actions with respect to the business and operations of MCI, and the Trustee can take only certain very specific and prescribed actions with respect to the Shares. While the Trustee can exercise the right to vote the Shares when necessary to promote consummation of the Offer and the related transactions, or to prevent malfeasance by officers or directors of MCI, the Trustee is generally obligated to support the existing management and preserve MCIs existing operations. If Shares need to be sold due to termination of the Offer or for other reasons, the Trustee controls their disposition, consistent with his fiduciary obligations. In sum, as required by Commission policies, the Trust Agreement effectively circumscribes the role of the Trustee to that of a caretaker of MCIs business. Therefore, because the Trust Agreement fully satisfies Commission requirements, and the Trustee is himself eminently qualified to serve in that capacity, the Commission should grant the requested STA and the Step I Applications expeditiously in order to maintain the Commissions neutrality, accommodate the objectives and policies of the SEC and the securities laws, and permit the Offer to go forward without delay during the pendency of the Step II Applications. The Applicants acknowledge that the grant of the requested STA and of the Step I Applications is made without prejudice to Commission consideration of the Step II Applications.    D.Conclusion: The Commission Should Promptly Grant the Requested STA and Interim Transfer to the Independent Trustee.     WorldComs hostile tender Offer for MCIs stock is precisely the kind of transaction that the Policy Statement addresses. Because of the concurrent competing offer proposing the acquisition of MCI by BT (which is supported by the MCI Board), and the need promptly to present WorldComs Offer to MCIs shareholders so that they can evaluate its merits simultaneously with those of the BT-MCI Acquisition, avoidance of unnecessary administrative delay and regulatory gamesmanship by third parties is essential to preserve the Commissions neutrality. In particular, unnecessary delays, in this instance, would unfairly provide certain parties opportunities to erect barriers to the Offer, contrary to the policies underlying relevant securities regulation. While the reported cases under the Policy Statement do not appear to have addressed situations involving all the types of FCC Authorizations held by MCI, the governing principles and underlying policy objectives are the same. The Commission has stated that the Policy Statement and the procedures specified therein are to be applied with respect to all services and types of communications companies within its jurisdiction. It is therefore appropriate for the Commission to utilize consistently these expedited procedures for all of MCIs authorizations. With respect to the instant situation, WorldCom respectfully submits that the Commissions requirements for grant of the STA and the Step I Applications are satisfied and that their prompt grant would further the public interest. Use of an interim voting trust arrangement to permit the Offer to proceed without unnecessary delay that could prejudice its success is consistent with Commission policies and procedures codified in the Policy Statement and compatible with other federal laws. The terms of the Voting Trust Agreement conform to Commission requirements intended to ensure the independence of a voting trustee during the pendency of applications for transfer of control to WorldCom. The Trustee selected by WorldCom is fully qualified to hold that position and fulfill his responsibilities under the Trust Agreement.  Therefore, the Commission should expeditiously grant the STA Request and approve the Step I Applications requesting grant of authority for an interim transfer of control of MCI to the Trustee.    III.THE PUBLIC INTEREST BENEFITS OF THE TRANSACTIONS ARE SUBSTANTIAL AND PERSUASIVE.      A.The Merger of MCI and WorldCom Furthers the Public Interest Because it Will Enhance Competition in Multiple Sectors of the Telecommunications Industry.     Pursuant to Sections 214(a) and 310(d) of the Communications Act, the Commission must review the FCC Applications to determine that transfers of the subject licenses and authorizations would promote the public interest, convenience, and necessity.^(  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эBT/MCI Order, supra note 5, at  2. ^ It is well understood that this standard is to be so construed as to secure for the public the broad aims of the Communications Act.)  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эWestern Union Division, Commercial Telegraphers Union, A.F. of L. v. United States, 87 F. Supp. 324, 335 (D.D.C.), affd, 338 U.S. 864 (1949). See also FCC v. RCA Communications, Inc., 346 U.S. 86, 93-95 (1953). In analyzing the merits of a transfer of control application, the Commission must review the proposed transaction on its individual merits , without consideration of alternative transactions or applications. See, e.g., Application of Continental Tel. Corp., Memorandum Opinion and Order, 41 F.C.C. 2d 957, 958 (1973); Viacom, 8 FCC Rcd. 8439 and QVC, 8 FCC Rcd. 8485 (approving simultaneously the STA requests of competing offerors); Eugene McCarthy, 60 Rad. Reg. 2d (P & F) 1207, and Macfadden Acquisition Corp., 60 Rad. Reg. 2d (P & F) 872 (approving STA requests of competing offerors).  In its recent decision approving the merger of Bell Atlantic and NYNEX, the Commission refined the standards to be used under this expansive public interest test in evaluating proposed mergers between telecommunications carriers.*  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эIn Re Application of NYNEX Corp., Transferor, and Bell Atlantic Corp., Transferee, for Consent to Transfer Control of NYNEX Corporation and its subsidiaries, Memorandum Opinion and Order, File No. NSD-L-96-10, FCC 97-286 (rel. Aug. 14, 1997) ( BA/NYNEX Order) at  37 - 42. This analytical framework was also applied in the Commissions recent decision approving the proposed acquisition of MCI by BT. BT/MCI Order, supra note 5, at  33-42.  As explained by Chairman Hundt in recent Congressional testimony, the Commission must independently determine whether the proposed merger will enhance competition, or whether it will slow the arrival of competitive markets and deregulation. @+  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эReed E. Hundt, Testimony on the 1996 Telecommunications Act: An Anti-trust Perspective, Before the Subcommittee on Antitrust, Business Rights and Competition of the Committee on the Judiciary of the U.S. Senate, Sept. 17, 1997 ( Hundt Testimony) at 2. @ This evaluation generally involves a balancing of the potential competitive benefits in one or more market segments against the potential competitive detriments in one or more other market sectors.,  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эIn addition to its jurisdiction pursuant to Titles II and III of the Communications Act to review transfers of control of licenses and authorizations to determine whether the transfer serves the public convenience and necessity, the Commission also has jurisdiction under Sections 7 and 11 of the Clayton Act to review the competitive impact of such transfers. As the Commission has previously held, however, this authority is largely duplicative, since the Commissions public interest authority under the Communications Act to consider the impact of the proposed transfer on competition is sufficient to address the competitive issues raised by . . . proposed merger[s]. BT/MCI Order, supra note 5, at  28 and nn.43-44.  Significantly, however, as Chairman Hundt explained,  `  ` hp x (#%'0*,.8135@8:` Mergers and other consolidations can be a potent competitive force. The synergies that result from combining assets may create from two small less efficient firms a large, more efficient one. The effect can be actually to deconcentrate the market, as the newly created and newly enabled merged firm wins market share from incumbent market leaders.]-  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эHundt Testimony, supra note 43, at 6. ]   ` hp x (#%'0*,.8135@8: The proposed merger between WorldCom and MCI is intended to capture just such synergies, efficiencies, and economies. By combining the intellectual energy, capital, management skills, and expertise of WorldCom and MCI, two pioneering and entrepreneurial telecommunications companies, the merger will promote achievement of what the Commission has identified as the overriding goal of the Telecommunications Act of 1996: to open all telecommunications markets to competition..  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эBT/MCI Order, supra note 5, at  6; see also Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56; Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, First Report and Order, FCC Docket No. 96-98, FCC 96-325, at  4 (Aug. 8, 1996) ( Local Competition Order) (noting the importance of local competition not only in providing economical and innovative services to customers, but also in preventing incumbents from impeding competition through bottleneck control of facilities). See also Remarks of FCC Commissioner Rachelle B. Chong [Before the Conference on] Bridging Digital Technologies and Regulatory Paradigms, Interesting Times at the FCC, Berkeley, California (June 27, 1997) at 5, voicing the opinion that the Act allows for communications players to seek out new business opportunities and develop synergies with others in order to better compete.  Evaluated under the applicable Commission review standards, the competitive benefits of the proposed Merger, particularly for local, interexchange, and international services, are substantial, while there are no adverse effects. Most of the activities of WorldCom and MCI are complementary rather than directly competitive. In addition, significantly, neither WorldCom nor MCI controls any bottleneck facilities or incumbent carrier network, or has market power in any telecommunications service.*/  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эCf. BT/MCI Order, supra note 5, at  188 (finding BT to have near monopoly control over local access services in the U.K. which it had leveraged to maintain high market shares of the intercity and international services sectors). * The industry segment in which their combined market shares will be largest -- long distance services -- is the sector that is the most competitive and has virtually no barriers to entry. Further, the Commissions own statistics demonstrate that the proposed combined companys market share will be less than half that of AT&T.T0  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee, e.g., J. Bender, Industry Analysis Div., Com. Car. Bur., FCC, Long Distance Market Shares, 1997 ( IXC Shares Report) at 4, 16, 24; AT&Ts share of presubscribed lines is 63%, as compared to a total of 18% for a combined MCI -WorldCom. Id. at 4. T Rather than being a case in which there is a significant likelihood that a combination would eliminate or retard competition, this is clearly a case in which the results will be only pro-competitive.k1  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эCf. BA/NYNEX Order, supra note 5, at  48. k Review of the overall impact of the merger on competition, therefore, demonstrates that approval of the Transfer Applications would further the public interest and should be granted expeditiously.2  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSignificantly, the Commission has already approved the proposed acquisition by BT of MCI, a transaction resulting in a combination larger in scope than that proposed here, and one involving a dominant carrier in one of the worlds largest telecommunications markets. See BT/MCI Order, supra note 5, at  19-20. Grant of the transaction proposed here will avoid the anti-competitive consequences of the BT-MCI Acquisition identified by the Commission. See, e.g., id. at  202. Moreover, it generates additional pro-competitive benefits resulting from the WorldCom-MCI merger itself, particularly in the market segments -- U.S. local, interexchange, and international seamless services -- in which the Commission anticipated benefits from the proposed BT-MCI acquisition that would counter-balance the competitive harm anticipated to result from that acquisition. Id. at  132.     B.The Pro-competitive Merger of WorldCom and MCI Will Result in Substantial Enhancement of Local, Interexchange, and International Competition.      1.Numerous Synergies, Efficiencies, and Economies Will be Achieved Through the Merger of WorldCom and MCI.    WorldCom has initiated its tender Offer to bring substantial benefits to the public, telecommunications customers, and its shareholders from the combination of MCI and WorldCom to create a pre-eminent provider of one-stop-shopping advanced communications services. The combination of MCI and WorldCom will produce an efficient and well positioned competitor in the fastest growing segments of the global market, such as local services and advanced data services, with the combined expertise and capital to meet the expanding and increasingly diversified needs of sophisticated business and residential customers. In many ways, the merger will advance the broad aims of the Communications Act, which include, among other things, the implementation of Congress pro-competitive, de-regulatory national policy framework for telecommunications, preserving and advancing universal service, and accelerat[ing] . . . private sector deployment of advanced telecommunications and information technologies and services.3  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эBT/MCI Order, supra note 5, at 3, citing BA/NYNEX Order, supra note 42, at  2, citing H.R. Rep. No. 104-458 at 1 (1996), and 47 U.S.C.  254 (1997) (interior quotation marks omitted). While both MCI and WorldCom each have a larger presence in the domestic interexchange market than BT, their combined market shares are less than half that of AT&T alone. See supra note 48. This market segment, which was opened to competition long before intrastate and overseas markets, is already highly competitive, with more than 800 alternative providers and few entry barriers of any kind, and, in addition, it is the focus for U.S. market entry by the incumbent local exchange carriers and overseas carriers. The proposed business combination will not only increase competition in the interexchange market, it will promote competition in the far more concentrated local facilities and overseas markets. Cf. BT/MCI Order, supra note 5, at  152; see also IXC Shares Report at 4; Frost & Sullivan, U.S. Long-Distance Service and Reseller Markets - Domestic, Network Status, and International Markets at 1, 2 (Oct. 1996).  Approval of the proposed Transactions will enhance competitiona4  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эBA/NYNEX Order, supra note 42, at  2. a by increasing the resources, facilities, and personnel available to the combined company and allowing it to take optimal advantage of operational synergies, cost savings,5  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSubstantial synergies are expected to be realized by combining the long distance and local operations of MCI and WorldCom to achieve better utilization of the combined network and other operational savings. Significantly, development of local facilities-based services is particularly capital-intensive, and the proposed merger will allow both parties to optimize their networks.  and complementary service offerings. In combination, WorldCom and MCI can create a new-generation telecommunications provider that can grow and thrive in the increasingly competitive domestic and international telecommunications marketplace. MCI has built a well-deserved reputation as a vigorous competitor in domestic interexchange services.r6  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эMCI is the second largest U.S. long distance carrier providing domestic voice and data services primarily by fiber and terrestrial digital microwave facilities and international services primarily by submarine cable systems, satellites, and leased international facilities. BT/MCI Order, supra note 5, at  19. r WorldCom, which has successfully grown from a regional reseller of long distance services into a facilities-based carrier with an expanding international presence, similarly is a long distance innovator and has had a special focus on developing state-of-the-art business services, such as new broadband and advanced data services. The two carriers have had similar innovative and entrepreneurial approaches to telecommunications services, with MCI having been the first competitor to penetrate successfully the domestic long distance market and WorldCom having been the leading carrier in opening local services and advanced data services to competition.  With the remaining legal and regulatory barriers to entry being dismantled, both the U.S. and overseas telecommunications markets have the potential to become more competitive. In the United States, both domestic and foreign-affiliated firms, large and small, are entering all industry segments, including both resold and facilities-based local services, at a pace that is accelerating daily. The number of authorized interstate carriers is in the hundreds.h7  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#э Frost & Sullivan, supra note 51, at 1. h GTE and other local exchange carriers are successfully entering the long distance market. The former Bell Operating Companies, which can now offer long distance services out of regionM8  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#э47 U.S.C.  271 (b) (2). M and certain prescribed long distance services in region,9  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#э47 U.S.C.  271(b)(3); 271(g) (permitting RBOC provision of in-region incidental interLATA services such as audio and video programming and commercial mobile radio services).  expect soon to offer long distance services more broadly in their service territories. Further, implementation of the World Trade Organizations Agreement on Basic Telecommunications Services ( WTO Agreement) will afford the worlds largest international carriers increased access to the entire U.S. telecommunications market in a matter of months.:  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee International Settlement Rates, Report and Order, IB Docket No. 96-261, FCC 97-280 at  9-12 (Aug. 18, 1997) ( Benchmarks Order).  In this dynamic and competitive marketplace, WorldCom believes that the proposed Merger will enhance competition and continue the long-standing record of success and innovation that have been hallmarks of both MCI and WorldCom. As the Commission has recognized, even with the passage of the pro-competitive 1996 Telecommunications Act and the WTO, significant barriers to entry into domestic and international telecommunications services remain, and  `  ` hp x (#%'0*,.8135@8:` [e]ntrants must still attract capital, and amass and retain the technical, operational, financial and marketing skills necessary to operate as a telecommunications provider. For mass market services, entrants will have to invest in establishing brand name recognition and, even more important, a mass market reputation for providing high quality telecommunications services.a;  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эBA/NYNEX Order, supra note 42, at  6. a   ` hp x (#%'0*,.8135@8: Combining their complementary resources will better enable WorldCom and MCI to build a well-positioned, full-services carrier that will be a worldwide, not just domestic, leader in the provision of advanced telecommunications services.    2.Local Services Competition Will be Particularly Enhanced from the Merger of WorldCom and MCI.    Of particular importance, by consolidating WorldComs management skills and experience with MCIs sales and marketing expertise, the proposed Merger will significantly enhance the combined companys ability to compete in the least competitive segment of the domestic telecommunications industry: local exchange services. The Merger will result in a combined company that is far better positioned to compete against the powerful and monopolistic incumbents and promote deconcentration of the local services sector.a<  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эCf. Hundt Testimony, supra note 43, at 6. a This critical industry segment is still overwhelmingly dominated by the incumbent local exchange carriers, whose ratepayer-financed ubiquitous networks give them substantial market power and a tremendous cost advantage over their new entrant competitors in serving new customers.d=  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эAmeritech Michigan, Memorandum Opinion and Order, CC Docket No. 97- 137 at  12 (Aug. 19, 1997) ( Ameritech Section 271 Order) (denying Ameritechs Section 271" market entry petition). Incumbent local exchange carriers already control about ten times as many fiber miles as the exchange carriers. J. Kraushaar, Industry Analysis Div., Com. Car. Bur., FCC, Fiber Deployment Update End of Year 1996 at 26, 39 ( Fiber Report) (ILEC fiber miles in excess of 12.3 million; CLEC fiber miles approximately 1.3 million). d As Chairman Hundt recently reported to Congress, local competition is particularly important now because our local networks need to evolve to adapt to the countrys growing data needs.]>  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эHundt Testimony, supra note 43, at 4. ] The greater resources available to the combined company as a result of the merger will allow it to pursue local competition and interconnection opportunities even more aggressively. In combination, WorldCom and MCI will thus expand consumer choice and accelerate the introduction of new broadband and advanced data communications services and products. The public can particularly benefit from the combined companys enhancement of real competition in the local services sector, both in the U.S. and abroad. WorldCom has already become a prominent and highly-regarded carrier in this segment,f?  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee Paradigm Study, supra note 3, at 435 - 52. f but even the combined local market share of MCI and WorldCom is still dwarfed by the respective shares of the incumbent local exchange carriers, who have ubiquitous networks reaching virtually every U.S. home and business, giving them still near, if not absolute, monopolies. WorldComs established presence as a local facilities-based provider in more than 50 domestic markets, however, should help jumpstart MCIs local services entry strategy and will result in significant savings for the combined company.@  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эCf. "BT likely to keep MCI deal terms, Financial Times, at 1, August 19, 1997 (citing MCIs report of losses of $800 million in local services expansion costs).  By linking WorldComs local facilities to MCIs long distance customer base, the combined company will substantially enhance its effectiveness in competing with the incumbent local exchange carriers.rA  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эCf. BT/MCI Order, supra note 5, at  88 - 89. r As the Commission recognized in the Interconnection Order, eliminating the incumbents market power inherent in control of local bottleneck facilities is essential to ensuring full competition in all segments of the telecommunications industry:  `  ` hp x (#%'0*,.8135@8:` [T]he opening of one of the last monopoly bottleneck strongholds in telecommunications -- the local exchange and exchange access markets -- to competition is intended to pave the way for enhanced competition in all telecommunications markets, by allowing all providers to enter all markets.iB  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эLocal Competition Order, supra note 46 at  4. i   ` hp x (#%'0*,.8135@8: Creating a more effective competitor for local services will also accelerate the introduction of new broadband and other advanced data services and products, enhancing choices for U.S. customers and helping to realize the statutory goals of the Telecommunications Act of 1996. WorldCom expects that the marketplace will respond favorably to the combined entity and its expanded range of services, enabling it to attract and, through reduced churn, retain significant numbers of new customers.    3.Substantial Enhancement of International Services Competition Will Likely Result from the Merger of WorldCom and MCI.    The WorldCom-MCI Merger will also enhance the ability of these U.S.-based carriers to penetrate formerly closed overseas markets and take advantage of the opportunities abroad that the U.S. government so strongly advocated in achieving the WTO Agreement. Combining WorldComs pan-European Ulysses fiber network and city networks in key European cities with MCIs international operations will create a leading alternative provider of telecommunications services in deregulating European and Asian markets. As pioneers in the industry, WorldCom and MCI have complementary skills in competing in such markets, and combining their expertise will permit them to develop effective solutions to meet the increasingly diverse and complex telecommunications needs of multinationals, governments, other business entities, and customers. Moreover, as the Commission has recognized, [a]n important purpose of the WTO Basic Telecom[munications] Agreement is to enable carriers to provide international service on an end-to-end basis.qC  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эBT/MCI Order, supra note 5, at  4 (citation omitted). q WorldCom has already demonstrated its ability to make significant contributions to emerging European competition, both by providing end-to-end services to multinational businesses, and by developing innovative telecommunications infrastructure projects, such as the Gemini Submarine Cable System across the North Atlantic and the Ulysses pan-European fiber optic system. These projects offer both U.S.-based and overseas end-users the high quality, cost-effective services they require and have come to depend on from WorldCom in the U.S. The Merger of WorldCom and MCI will lead to expanded offerings of such seamless international services, thereby enhancing the emerging competition in a service in which consumers currently have few options.D  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эCf. BT/MCI Order, supra note 5, at  130 (finding the only providers of such services to be the Concert, WorldPartners, and Global One alliances).  By providing the innovative services and high capacity facilities that end-users are increasingly demanding, WorldCom has already established itself as an industry leader in advocating and demonstrating the benefits of competition abroad even in countries where competitive opportunities have been extremely restricted. The proposed WorldCom-MCI Merger will provide WorldCom with additional facilities and resources to accelerate its expansion into international markets now that international opportunities are increasing and WorldCom is beginning to compete with the large incumbent carriers to capture those opportunities. As the Commission has recognized, U.S. consumers benefit from fully competitive world markets in the form of new and better services at lower prices, and promoting the success of U.S.-based carriers in entering markets abroad will have measurable and substantial benefits for consumers in the U.S.E  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эMarket Entry and Regulation of Foreign-Affiliated Entities, Report and Order, 11 FCC Rcd. 3873, 3877 (1995) ( Market Entry Order), recon. pending ( establishing an effectively competitive global communications market could result in reduced rates, increased quality, and new innovative services for U.S. consumers, including the availability of global communications services.). The Commission clarified that the Commissions regulatory focus is on routes between the U.S. and foreign countries, including the U.S. end of global, seamless network services, Id. at 3877-78. The Commission has recognized that competition in such services requires significant resources, which must extend throughout the world. BT/MCI Order, supra note 5, at 130. See also Benchmarks Order, supra note 58, at  3, 7; Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, IB Docket 97-142, Order and Notice of Proposed Rulemaking, FCC 97-195 (rel. June 4, 1997) ( Foreign Participation Notice) .  WorldCom has long supported the U.S. governments successful efforts to achieve the WTO Agreement because of the favorable market-opening opportunities it creates in formerly-closed international markets. Yet, WorldCom, which is long-accustomed to battling the incumbent local exchange carriers in the U.S., does not underestimate the substantial resources and facilities required to be successful in overseas markets where competition is still little more than embryonic . By combining with MCI, WorldCom believes that it will be able to be a more aggressive and successful competitor and can ensure that the public can receive the substantial benefits of effective competition in both U.S. local and international markets that have for too long been closed.F  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee BT/MCI Order, supra note 5, at  127 (strengthening the position of a competitor to the local exchange carriers likely to enhance competition in this relevant market).  Approval of the Merger will therefore advance the Commissions objective of benefitting U.S. telecommunications consumers by promoting competition worldwide.G  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee, e.g., BT/MCI Order, supra note 5, at  209; Local Competition Order, supra note 46; Market Entry Order, 11 FCC Rcd. 3873.    C.The Merger Will Accelerate Competition Without Raising Any of the Competitive Concerns Sometimes Raised by Mergers Involving Carriers with Market Power.    In discussing the Commissions recent approval of the Bell Atlantic/NYNEX merger, which involved two of the largest telecommunications providers in the New York metropolitan area, Chairman Hundt noted that although the combination of two of a small number of the most significant participants in any relevant market raises concerns under [the Commissions] public interest analysis, . . . the public interest standard requires the Commission to balance this anti-competitive effect against other pro-competitive effects that the transaction might entail in other market.]H  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эHundt Testimony, supra note 43, at 8. ] In that decision, competitive benefits throughout the merged companies service territories, resulting from numerous commitments agreed to by the parties as a condition to approval, were found to outweigh potential anti-competitive effects in the New York local market.cI  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эBA/NYNEX Order, supra note 42, at  178. c The case for approval of the instant business combination is significantly stronger, for there are no specific anti-competitive concerns, such as enhancement of a partys existing market power, to be overcome.     1.The Merger Will Accelerate the Development of Competition by Creating a Leading and Innovative Provider of Integrated One-Stop Shopping For Communications Services.    In the instant context, neither WorldCom nor MCI is a dominant carrier in any telecommunications market. Moreover, the revenue shares of both WorldCom and MCI are minimal in the sector on which their capital investment and expansion programs primarily focus: local services (both domestic and international). It is beyond dispute that these markets are populated by incumbents of long-standing with substantial capital resources, ubiquitous infrastructure, and control of bottleneck facilities. The Commission has repeatedly recognized the public interest benefits of improved access to capital that can fuel investment in state-of-the-art infrastructure that leads to economic growth and job formation in the U.S. economy and facilitates competition among U.S. carriers both at home and abroad.J  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSprint Corporation, Declaratory Ruling and Order, DA 96-1560, File No. ISP-96-003 at  12 (Chief Intl Bur. Sept. 18, 1996) (permitting increased foreign ownership of Sprint).  With respect to enhancing the level of competition in this market segment in particular, WorldComs experience in local competition initiatives makes a WorldCom-MCI Merger considerably more likely than the previously-approved acquisition of MCI by BT to enhance the level of competition in this highly concentrated sector. kK  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee BT/MCI Order, supra note 5, at  209-11. k The combination of WorldCom and MCI can bring to local services the critical mass of resources necessary to become, in Chairman Hundts terminology, the potent competitive force required to deconcentrate the market.hL  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee Hundt Testimony, supra note 43, at 6.  h Thus, in several significant ways the proposed Merger will generate substantial additional competitive pressure on the local telecommunications market.    2.MCI and WorldComs Lack of Market Power Avoids Anti- Competitive Concerns.   Significantly, unlike the participants to the mergers involving the Bell Operating Companies and the acquisition of MCI by BT recently approved by the Commission, neither WorldCom nor MCI controls bottleneck facilities. This eliminates a key concern that the Commission weighs heavily, and negatively, in its cost-benefit merger analysis.M  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee BA/NYNEX Order, supra note 42, at  37 ( [W]e evaluate the effects of the merger on competition in the relevant market, such as whether the merger is likely to result in either unilateral or coordinated effects that enhance or maintain the market power of the merging parties.). See also id. at  2; BT/MCI Order, supra note 5, at  3 n.8.  Nor is the proposed Merger likely to have any significant adverse impact on the Commissions ability to enforce its regulatory oversight responsibilities, given WorldCom and MCIs lack of market power and foreign affiliation. The Merger is similarly unlikely to increase the likelihood of coordinated action among other industry players because the long distance industry, rather than being highly concentrated, epitomizes the competitive marketplace.eN  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee BA/NYNEX Order, supra note 5, at  45. e Further, in contrast to the local services market, where there is scarcely any competition,MO  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эRemarks of Reed E. Hundt Before the American Enterprise Institute, The Light at the End of the Tunnel vs. The Fog: Deregulation vs. The Legal Culture, Washington, D.C., August 14, 1997 (, AEI Speech) at 1. M and new entrants have collective traffic shares of between one and two percent,AP  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эId. at 3. A the long distance sector, in which WorldCom and MCI have had the longest operating experience, is the most open of all to competition, and the segment with the fewest entry barriers.Q  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee, e.g., Ameritech Section 271 Order, supra note 60, at  16, where the Commission recognized that there is a substantially competitive market for interstate interexchange services; and at  17, finding that BOC entry into the long distance market is likely to be much easier than entry by potential competitors into the local market[.]  The former Bell Operating Companies and large foreign-affiliated carriers are expected soon to enter this sector and to become vigorous competitors as a result of the opportunities available as a result of deregulation under the Telecommunications Act of 1996 and the WTO Agreement. Further, no precluded competitor who has previously been deterred or prevented by regulatory barriers from entering the marketR  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эSee BT/MCI Order, supra note 5, at  36 n.65 (citing the BA/NYNEX Order, supra note 42, at  60 and explaining that precluded competitors are the firms most likely to have entered the relevant markets, but, until recently had been prevented or deterred from market participation by barriers that the 1996 Act seek[s] to lower).  is being removed from the market by the Merger at a time when barriers that previously had precluded its entry are being removed. Thus, the expected pro-competitive public interest benefits of the proposed Transactions far outweigh any conceivable potential detriments.    D.Conclusion: The Commission Should Promptly Approve the Applications Because the Merger of WorldCom and MCI Will Enhance Competition and Otherwise Further the Public Interest.   By strengthening the ability of MCI and WorldCom to compete in all sectors of the U.S. and international markets, the proposed merger will enhance competition in both the U.S. and world markets. This is especially the case for the local exchanges currently controlled by incumbent monopoly carriers. The strategic partnership of WorldCom and MCI will advance the public interest by providing the capital, facilities, and human resources essential to the continued provision to the public of state-of-the-art telecommunications services at competitive prices. The pro-competitive benefits to be achieved from a WorldCom-MCI Merger are substantial, and they not only equal, but greatly exceed, those expected to be derived from the acquisition by BT of MCI previously approved by the Commission. At the same time, no lessening of competition in telecommunications services can be expected to result from consummation of the Transactions.S  ` hp x (#%'0*,.8135@8:#Xx PT6UXP#эCf. BT/MCI Order, supra note 5, at  176-77 (finding the proposed BT-MCI merger likely to increase BTs ability and incentives to use its market power in an anti-competitive manner).  For all of the foregoing reasons, the Commission should promptly grant the STA Application to permit WorldCom to complete the Offer and, upon conclusion of the appropriate public notice period, approve the Applications to transfer of control of MCI to WorldCom. Respectfully submitted,   JAndrew D. Lipman Catherine R. SloanJean L. Kiddoo Robert S. Koppel  Helen E. Disenhaus   WORLDCOM, INC.SWIDLER & BERLIN, CHTD.   1120 Connecticut Ave., N.W.3000 K Street, N.W., Suite 300 Washington, D.C. 20036Washington, D.C. 20007 (202) 776-1550(202) 424-7500  Dated:October 1 , 1997