Verizon and MCI Team Up for Next-Generation Services

HostReview.com
Monday, August 29, 2005; 12:38 PM

The combination of Verizon Communications Inc. (www.verizon.com) and MCI, Inc. (www.mci.com) "will decisively benefit the public interest" both companies told the Federal Communications Commission today in their written response to comments filed with the agency by certain industry competitors and other interests earlier this month.

Verizon and MCI's joint FCC filing says the combination will benefit the public "by creating a strong new competitor for enterprise customers nationwide, enhancing investment in the nation's critical infrastructure, and establishing the nation's most advanced broadband platform, capable of delivering next-generation multimedia services in markets across the country."

Noting that "profound changes in technology have brought about a convergence among wireline, voice, data, cable, wireless and satellite providers" that has "shattered the divisions between local and long distance and voice and data," the joint comments state that "robust competition in all segments of the broad communications marketplace will not be harmed by this combination."

That is certainly the case in the competitive large enterprise market. "The combined company will be just one among many other competitors in what is widely recognized as the most competitive segment of the industry," the Verizon-MCI comments state.

The FCC filing says MCI has only limited local fiber facilities in Verizon's in-region service areas, and that "in virtually every area where they do exist there are already other competing carriers with comparable facilities, and in every location competing carriers are clearly capable of deploying facilities given that MCI itself did so."

Mass market competition in Verizon's territory is "particularly intense," with cable telephony already offered to 23 million households, the filing states. Wireless carriers are "competing with wireline carriers for both lines and, even more significantly, for minutes of use."

Verizon and MCI contend there is no credible claim that their combination will harm competition for Internet backbone or related services. Verizon currently has a "minor backbone" and "the combined firm would carry less than 10 percent of North American Internet traffic, which would make it only the fourth largest carrier of Internet traffic, in the middle of seven backbone providers of larger or comparable size."

With more than $71 billion in annual revenues, Verizon Communications Inc. (NYSE:VZ) is one of the world's leading providers of communications services. Verizon has a diverse work force of 212,000 in four business units: Domestic Telecom provides customers based in 28 states with wireline and other telecommunications services, including broadband.