Mega-Merger Crowns Washington Global Telecom Hometown

If there was any doubt that Washington is the center of the telecom universe, the proposed merger of British Telecommunications PLC and MCI Communications Corp., announced earlier this week, should clear things up once and for all.

Concert -- BT and MCI's current combined company formed in 1994 when BT bought a 20 percent stake in MCI -- is based in Reston, Va. MCI's headquarters are in downtown Washington. London and Washington will be the bases for Concert PLC -- the name of the new empire -- and will undoubtedly attract even more telcos and data communications companies to the area.

As more businesses from every industry make global plans, they want a communications company that can be everywhere they are. In June, BT and MCI together began building the world's first global Internet backbone.

If the $21 billion merger goes through, the deal represents the biggest foreign purchase ever of a U.S. company, not to mention a home-grown enterprise. The combined revenue of the two companies would be about $42 billion; stock would be worth about $37 a share.

Bert Roberts, MCI's current CEO, and Iain Vallance, the chairman of British Telecom, would become co-chairmen of Concert. BT's CEO Peter Bonfield would be chief executive of the new company, and MCI's president, Gerald Taylor, would be president.

In fact, the merger would create such a powerhouse that the deal is expected to receive close scrutiny from the Federal Communications Commission, the Department of Justice and the British and European regulatory agencies.

No one is hoping for stricter analysis than AT&T. In a statement responding to the MCI announcement, AT&T's CEO Robert Allen said that because the United Kingdom telecom market is not yet fully open and British Telecom controls more than 90 percent of the local connections in the country, equal access does not exist.

Specifically, the FCC must find the merger to benefit the public. Under federal law, a foreign company cannot own more than 25 percent of a U.S. company that has wireless licenses unless the deal is in the public interest.

MCI should be rewarded for being more forward-looking, more daring, and getting to the global finish line first. When MCI was started in 1968 as MICOM, no one thought it stood a chance against AT&T. Now, AT&T, with its little-known president and its slow-moving style, seems destined to fall behind. In the past 28 years, MCI has consistently broken ground for telecom competition in the United States, which was nonexistent until MCI came along.

The battles between Sprint Corp., MCI and AT&T have set the stage for the new post-telecom reform era in which smaller companies such as WorldCom, Jackson, Miss., and LCI International in Herndon, Va., will succeed. It's certainly in the public interest to promote this kind of competition.

And for Washington, Concert is a coup.


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