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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
| Report No. CC 98-26 | COMMON CARRIER ACTION | September 14, 1998 |
FCC Approves Merger of WorldCom and MCI
CC Docket No. 97-211)
The Commission today approved the transfer of communications licenses and authorizations from MCI Communications Corp. to WorldCom, Inc. subject to two conditions: MCI must complete divestiture of its Internet assets prior to the close of its merger with WorldCom, and the transfer of MCI's direct broadcast satellite (DBS) license to WorldCom is subject to the outcome of pending applications for review of the initial license grant to MCI. The Commission found that, with these conditions, the merger will serve the public interest.
In particular, the Commission found that WorldCom and MCI demonstrated that the merger is consistent with the "pro-competitive, de-regulatory" framework of the Telecommunications Act of 1996 and may produce tangible benefits to consumers. The Commission concluded that the merger will result in the combination of certain complementary assets, including MCI's national brand name, marketing expertise, and broad residential base, as well as WorldCom's extensive local exchange facilities, small and medium business customer base, and foreign networks. This combination of assets may enable the merged company to expand its operations and enter into new local telephone markets more quickly than either company could on its own.
In its public interest analysis, the Commission concluded that the merger may produce new choices and increased competition that will benefit consumers, including residential customers. The Commission expressly noted letters submitted by the chairmen of WorldCom and MCI that represent commitments not to abandon the residential long distance market, to augment their efforts in the residential local market, and to offer residential customers a total package of services including local, long distance, wireless, international, and Internet. The Commission stated that it expects parties to be forthright in their communications with the Commission and to take seriously commitments made in such communications. In this regard, the Commission noted that it will be monitoring MCI WorldCom's progress, along with the progress of other companies, as the combined firms bring their considerable assets and capabilities to bear in providing new choices to residential customers.
In today's decision, the Commission considered the competitive effects of the merger on the provision of telephone services: domestic long distance, international long distance, Internet, and local. In doing so, the Commission reached the following conclusions:
- The merger will likely have no anticompetitive effects on the market for domestic
long distance service. Although the merger combines the second and fourth
largest long distance companies, the Commission concluded that the trend toward
increased long distance competition is expected to continue in light of the
construction of new long distance networks.
- The merger will likely have no anticompetitive effects on the market for international
long distance service given the substantial amount of trans-oceanic cable being built each
year and the relative ease with which new firms can enter this market.
- The merger will likely have no anticompetitive effects on Internet transmission services
in light of the anticipated divestiture of MCI's Internet assets.
- The merger will likely have no anticompetitive effects on the market for local telephone
service given the continued dominance of incumbent local telephone companies and the
limited market entry of WorldCom and MCI to date. Indeed, the Commission found that
the merger will create a stronger local service competitor than either of the companies
would provide absent the merger.
Action by the Commission, September 14, 1998, by Memorandum Opinion and Order (FCC 98-225). Chairman Kennard, Commissioners Ness, Powell, and Tristani, with Commissioner Furchtgott-Roth concurring, Commissioner Tristani dissenting in part, and Commissioners Furchtgott-Roth, Powell, and Tristani issuing separate statements.
News media contact: Rochelle Cohen at (202) 418-0253.
Common Carrier Bureau contact: Michelle M. Carey at (202) 418-1557.
TTY: (202) 418-2555.