WorldCom Urges FCC to Renew Competition Commitment

Clinton, Miss., April 5, 2002 -- WorldCom late yesterday urged the FCC to renew its flagging commitment to telecom competition as part of its "triennial review" of 1996 Telecommunications Act requirements. In comments filed with the FCC, WorldCom called on the Commission to resist unprecedented pressure from the Bell companies to limit the range of "unbundled network elements" (UNEs) that must be made available to competitors under federal law. WorldCom submitted the filing as part of the FCC's mandatory review of existing rules that require the Bells to open their networks to competitors.

"The FCC must not reward the Bells for six years of litigation and other stonewalling by relieving them of the obligations that could finally lead to making their markets competitive," said Michael H. Salsbury, WorldCom General Counsel. "The Commission has barely begun the difficult regulatory work required to open local markets, and any move to limit the Bells' unbundling obligations would reflect a continuing failure by the FCC to do the job Congress assigned to it - implementing the 1996 Telecom Act and opening local markets."

Telecom Act Needs Time to Work

In its comments, WorldCom demonstrates that incumbent local exchange carriers (LECs) continue to enjoy the advantages of monopoly control over local markets, six years after Congress passed sweeping telecom reform legislation. The company notes that the relatively more simple process of opening the long distance market took decades.

"FCC policies under the immediate past and current chairmen have resulted in further entrenchment of monopoly cable and telephone providers at the expense of competition," Salsbury said. "The Commission should not use this triennial review as an opportunity to prematurely declare victory and begin to dismantle the foundation upon which local competition will be built."

WorldCom notes that just as development of long distance competition in the 1980s depended on the availability of access to monopoly-controlled facilities then held by AT&T, development of local competition depends on access to incumbent LEC facilities through UNEs. The kind of "intermodal" competition - meaning among different delivery mechanisms such as wireless and satellite - touted by FCC Chairman Michael Powell does not yet exist in any meaningful way for business or residential customers and cannot constrain Bell market power. And even if such intermodal competition did exist, it still would not justify the FCC denying consumers the proven benefits of being able to choose among wireline competitors.

The only market where any competitor can provide service on par with the ILECs is the residential broadband market. But the presence of a single competitor - cable television - merely creates a duopoly, not workable competition, WorldCom says. History clearly shows that a duopoly offers neither lower prices nor protection from market power abuse of consumers.

"Intramodal" competition, on the other hand, if pursued rigorously and vigorously, will drive both investment and more robust competition, WorldCom says, noting that it has entered the local market using Bell UNEs in certain states where regulators have enforced the Telecom Act properly. And history disproves Bell claims that competitors using their network lack incentives to build their own facilities.

"If there is any lesson to be learned from the implosion of the competitive LECs, it is that any competitive company that wants to survive for the long term must build its network incrementally as it develops a customer base," WorldCom says. "Because companies prefer the control and flexibility that comes with owning their own facilities, they can be expected to build, rather than buy, as long as they earn a reasonable return on their investment."

ABOUT WORLDCOM, INC.

WorldCom, Inc. (NASDAQ: WCOM, MCIT), operating through WorldCom group and MCI group, is a pre-eminent global communications provider for the digital generation, operating in more than 65 countries with annualized revenues of $35 billion. With one of the most expansive, wholly-owned IP networks in the world, WorldCom provides innovative data and Internet services for businesses to communicate in today's market. For more information, go to http://www.worldcom.com/.