Copyright 1999 Federal News Service, Inc.
Federal News Service
NOVEMBER 4, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
1079 words
HEADLINE: PREPARED TESTIMONY OF
BERNARD
J. EBBERS
PRESIDENT & CHIEF EXECUTIVE OFFICER
MCI WORLDCOM
BEFORE THE SENATE COMMITTEE ON THE JUDICIARY
SUBJECT -
"THE MCIWORLDCOM-SPRINT MERGER:
A COMPETITIVE REVIEW"
BODY:
Thank you. I appreciate the
opportunity to come and speak to you today.
In the changing world of
telecommunications marketplace, the question facing us is simple: Can
competitive long distance providers survive to fight against the Bell and cable
monopolies? The MCI WorldCom/Sprint merger is the answer to that question, and
that answer is YES.
Consider what the recent months have brought. First, a
dramatic decrease in the price of traditional long distance service. Second, the
explosive growth of wireless telephony that has eliminated the artificial
distinction between local and long distance calling. Third, the megaBells are
edging closer to entry into the long distance market. Fourth, we see a growing
demand for broadband capacity from both residential and business customers.
Our conclusion is that the separate market for long distance, created by the
divestiture of AT&T, is eroding; that successful competitors like ourselves
need to be able to fulfill all of a customer's needs for wireless and wireline;
and that strong competitors must be able to effectively bring broadband Internet
access and services all the way to a customer's home or business.In other words,
the telecommunications industry of the future requires that a company be able to
provide a comprehensive suite of services, broadband capabilities and, to the
maximum extent possible, to reach the customer directly.
The broadband
battle is basically about the last mile. And in the world of the last mile, two
titans are emerging. One is an old titan reborn through local cable facilities -
AT&T. The other, ironically, is the offspring of that company - the Bell
Operating Companies. The new megaBells have maintained their hold over local
markets, are already major wireless providers, and have moved swiftly to
leverage those local assets towards becoming providers of the full range of
voice and data services. And they're not even in long distance yet. AT&T,
meanwhile, has chosen to buy up the other last-mile -- cable -- and is seeking
to dominate the provision of highspeed Internet access and bundle it with its
own wireless, local and long distance services.
Faced with these trends, MCI
WorldCom had a tough choice to make. We could have left residential customers to
the Bells and big cable, but that would have been bad for those consumers and
bad for us. We could have merged with a Bell in order to gain the advantage of
controlling that critical last mile of copper wire into every home. Or, we could
get stronger, and even more competitive. You now know what choice we made. MCI
WorldCom and Sprint decided to join forces as the single best hope for a strong
and effective alternative to the megaBells and the emerging AT&T cable
monopoly.We know how to do this. Both MCI WorldCom and Sprint were born outside
of the Bell system and share an entrepreneurial spirit that has contributed to
rapid growth and success. Dedicated to opening markets to competition, both our
companies have focused on delivering benefits to customers: lower prices,
innovation and higher quality services.
And we'll be able to do all of this
more efficiently. Over the next five years, the merged company will realize cost
savings of $9.7 billion in operating costs and $5.2 billion in capital
expenditures. These cost savings not only allow the new company to compete
aggressively in both the business and consumer markets but also will enable us
to aggressively invest in new technologies such as broadband access and next
generation wireless. We'll be serving 44 million customers and growing; we'll
have local network facilities in more than 2500 markets nationwide; we'll have
more than 4 million PCS subscribers and 1.7 million paging and advanced
messaging customers; we'll be 135,000 employees strong; we'll have a market
value ranking us among the top companies in the world. And that world, as we
know, is becoming smaller. Our competitors overseas, spurred by mounting
competition on their home turf, are making acquisitions, joint ventures and
aggressive international investments in key markets around the world - ours
included. The combined, complimentary strengths of MCI WorldCom and Sprint will
make us uniquely equipped to develop and market the communication products and
services consumers need and want most: data, Internet, wireless, local, long
distance, and international. Together, we will have the capital, proven
marketing strength and end-to-end, state-of-the-art networks to compete more
effectively against the international incumbent carriers. Our self-reliant,
facilities-based global strategy positions us well to fully serve the rapidly
growing global telecom market -- a market valued at $1 trillion by the year
2002. Our new company will have the people and the technology required to bring
innovative services and the benefits of competition to residential and business
consumers across America and around the world.
Here in the United States, we
can already see hints that this combination will accelerate broadband
deployment in competition with Bell DSL and AT&T cable modems. MCI
WorldCom is breaking through in local markets in New York State, already
providing over 160,000 residential customers there with two things they've never
had before: choice and low, flat-rated service. Sprint is going forward with the
introduction of its Integrated On-Demand Network (ION) in Kansas City, Seattle,
Denver, and eventually, in local markets across the country. MCI WorldCom will
be collocated in 1500 central offices for DSL by the end of this year and 2000
by next year. We have both invested heavily in a fixed wireless technology known
as MMDS that will allow us to get to customers who are beyond the reach of DSL,
usually in predominantly rural areas. With these MMDS and DSL assets, combined
with the Sprint ION networks and local facilities; we're in a very strong
position to bring consumers -- both urban and rural -- the broadband they need
and want.
Some regulators have reacted to the news of a MCI WorldCom -
Sprint merger by raising a yellow flag of caution. That's their job. We look
forward to demonstrating, and we will, that this merger is pro- competitive in
all markets, including long distance. That debate will benefit everybody,
because it will help governmental officials and consumers alike to understand
the best way to advance the cause of telecommunications competition in the next
century.
Thank you.
END
LOAD-DATE: November
9, 1999 
