Telecommunications revolution MCI-British Telecom: $20.8 billion combination signifies intensifying global competition.

November 05, 1996

WAS THE American victory at Yorktown in vain? With the disclosure of British Telecom's $20.8 billion deal to take over MCI Communications, the upstart U.S. long-distance firm that has challenged once-impregnable AT&T, the British are coming. Just as they already have come with Dr. Pepper, Burger King and other brands long regarded in the same category as hot dogs, baseball and the Fourth of July.

This latest proposal, the largest trans-Atlantic transaction in history, is written in superlatives that inevitably will affect Americans consumers as they communicate with each other and the world. Passage last February of the most sweeping overhaul of telecommunications law in decades has changed the global competitive landscape in ways still hard to predict but sure to be fiercely contested.

Assuming the Federal Communications Commission approves, MCI will have BT's vast resources to push into local U.S. telephone markets now defended by the Baby Bells and coveted by AT&T. It will also give BT the entrepreneurial zip to invade the continental European markets after Jan. 1, 1988, and to make inroads in Asia and elsewhere. The combined company will be called "Concert."

This stunning union of what was once a stodgy British state monopoly now privatized, and MCI, a company that welcomed the creative chaos caused by the breakup of AT&T and the birth of the rebellious Baby Bells, may be the first of only a handful of "supercarriers" that will dominate worldwide communications. In this trans-national age, French Telecom and Deutsche Telekom may want to use their connection with the U.S. firm, Sprint, to compete. Spain's telephone company has its eyes on Latin America. AT&T, which in size is comparable to Concert, is eager to march into the British local market now dominated by BT.

The bottom line, for consumers, is whether the vast economies associated with fiber optics and other innovations will reduce the cost of telephone calls. That was the intent of Congress. It should be the intent of the FCC as it considers how telephones, television, cable TV and the Internet intermesh. The agency has to consider not only early savings for phone users but the viability of a sufficient number of competitive carriers for the long run.

Pub Date: 11/05/96

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