State Panel Opposes Telecom Merger Mci Worldcom-Sprint Deal Bad For Consumers, Group Says

Allowing MCI WorldCom to merge with Sprint will result in higher telephone service prices for consumers, Washington state regulatory staff warned Monday.

Staff of the Washington Utilities and Transportation Commission urged their three-member commission to reject the proposed merger between the nation’s second- and third-largest long-distance telephone service providers.

The commission is expected to make a final decision this summer. The merger also is being reviewed by the Federal Communications Commission, the U.S. Department of Justice and other state commissions.

In a statement released after the staff recommendation was disclosed, MCI WorldCom spokeswoman Carolyn Berthelette noted regulators in seven other states, including Montana, have already consented to the deal.

“We remain confident that upon reviewing the full competitive and customer benefits offered by the merger the (Washington) commission will approve the transaction,” she said.

A Sprint spokesman said officials there expect commission approval once all the information has been submitted for member review.

The two companies bill their merger, announced in October and originally valued at $115 billion, as a “pro-consumer act” that will allow for accelerated expansion of high-speed Internet connections - delivered over Sprint’s wireless network - in rural and under-served areas.

But the WUTC staff, which acts as an independent party, noted there are only three “brand name” long-distance providers - AT&T, MCI WorldCom and Sprint. The combination of two of those companies “can reasonably be expected to result in higher prices and reduced innovation,” the WUTC staff said.

MCI WorldCom chief Bernard Ebbers disputed such claims earlier this year, noting that competition among some 600 long-distance carriers nationwide will help keep prices stable. Local Bell companies entering the long-distance business will only add fuel to that fire, Ebbers said.

The WUTC staff also expressed concern that price competition across the state, such as between Seattle and Yakima and between Longview and Bellingham, is not as robust as competition for calls to other states.

Spokesman Tim Sweeney said the presence of U S West Inc. enhances competition in the intrastate market, but that company cannot yet carry calls between states.

Earlier this month, the staff and attorneys for U S West and Qwest International Communications Inc. reached a settlement that will allow the two companies to merge in exchange for a rate freeze and guaranteed investment in new phone facilities.

That deal will not alter the U S West monopoly on service to the bulk of its Washington customers, he said.

By comparison, Sweeney said, “In this case we’re talking about eliminating a competitor.”

Mississippi-based MCI WorldCom is the nation’s No. 2 long-distance carrier, while Kansas-based Sprint is No. 3.

MCI WorldCom generated nearly $107 million from its long-distance services in Washington state in 1998, according to the WUTC. Sprint generated more than $43 million in long-distance revenues.

Staff writer Bert Caldwell contributed to this report.