WASHINGTON-The proposed merger of MCI Communications Corp. and British Telecommunications plc promises to bring plenty of cash and plenty of new services to the global telecommunications arena, but wireless subscribers to MCI’s paging and cellular operations here won’t notice much of a change for quite some time.
While it would seem to follow that MCI and BT wireless users would be able to roam freely in each other’s territory once the deal is completed some nine to 12 months from now, the companies have no plans to implement that perk at this time. BT and MCI today touch 43 million customers in more than 70 countries; in addition, BT has been courting Nippon Telegraph and Telephone Corp. in hopes of an additional partner to the BT/MCI marriage.
“We have no immediate plans for roaming,” said Whitey Bluestein, MCI’s vice president of wireless strategy and development. “We still haven’t gotten to that level of detail. Globally, we want to get there, and I believe that by the time this deal is consummated, we will be able to provide global coverage to our international travelling customers through BT’s agreements with other European carriers.”
The merger between the two telecommunications powerhouses, announced Nov. 3 in London, monetarily is the largest takeover of an American company by a foreign interest-$21 billion. BT Chairman Sir Iain Vallance and MCI Chairman Bert Roberts will co-chair the new entity, which reportedly will be called Concert. Both companies will continue to market their services under their own names domestically.
The companies’ three-year-old joint international wireline venture, called Concert Communications Services, may go a long way in smoothing the regulatory path the two must follow to consummate the transaction, including a probable public-interest waiver of the Federal Communications Commission’s 25-percent cap on foreign ownership.
Where the consuming public likely will see a marked increase in MCI’s wireless movement is in its renewed commitment to attack the $100 billion U.S. local exchange market. “BT’s cash infusion will give wireless another weapon to go after the LEC marketplace,” Bluestein said. The company regards its recently signed minutes-of-use contract with personal communications services hopeful NextWave Telecom Inc. as a major part of MCI’s forward-looking strategy. “The NextWave deal showed us that we could do wireless local loop and access at a low price,” he said.
Bluestein confirmed that no current MCI contracts with subscribers or with other wireless carriers will be jeopardized by a BT takeover. “There is no reason to believe that there will be any impact on existing relationships or on our wireless future,” Bluestein told RCR. “Because BT already is in mobility, we expect to be able to leverage that.”
From a wireless perspective, “BT got the beachhead it wanted to compete in the United States,” said Brad Branch of Deloitte & Touche in Atlanta. “There will be massive muscle in getting the LEC business going. With the minutes from NextWave, it could be a one-stop shopping deal for consumers.”
Branch is not as confidant as is Bluestein regarding the safety of MCI’s other current wireless contracts. “This isn’t about technology. It’s about marketing,” he said. “Whether these agreements are sustained depends on how profitable they are.”
Although merger plans had been in the works almost from the time BT and MCI began the Concert Communications Services venture in 1993, Bluestein cut short any thought that BT may have been behind MCI’s decision not to participate in any of the PCS block auctions.
“The merger had nothing to do with us not pursuing PCS licenses,” he said. “MCI made that decision two years ago, and BT did not influence that strategy. It was a home-grown deal.” In fact, Bluestein added, analysts and carriers who had questioned MCI’s attitude toward auctions at that time have come back today with congratulations for the company’s financial far-sightedness.
MCI’s founder and longtime wireless entrepreneur Jack Goeken noted that his former company “started with five people with $1,500 commitments” to grow today to one of the biggest transactions ever. “It just shows that you can do anything you want in America,” he said. Goeken, who currently is involved with the development of utilities-management services via the Internet, is looking forward to the advent of new competition. Because of his own plans to enter the local loop, Goeken has not ruled out a possible partnership with the new BT/MCI venture. “There are so many opportunities out there,” he said.
Goeken also downplayed naysayers like AT&T Corp. that charge BT and MCI with stifling competition. “As corporations get big, they lose their innovation,” he concluded. “Then the new guys come in. AT&T cried when MCI was allowed into the marketplace, saying they would lose money, even though today they are making more money than ever.”
