WASHINGTON-If allowed to merge, British Telecommunications plc and MCI Communications Corp. promised to jump start local competition, keep interconnection prices low and promote the use of wireless technology for both fixed and mobile global service, according to its application for a merger.
The joint company, which will be called Concert plc, told the Federal Communications Commission that it “will be a strong competitor in local, national and international markets with direct benefits to American consumers through service innovations, efficiencies and lower prices.”
MCI currently provides global long-distance service, local service in 34 U.S. cities and wireless services nationwide; BT covers Great Britain with the same services in addition to providing wireless services to customers in many other European countries. According to the document, “MCI will benefit from BT’s successful participation in the wireless business through BT’s interest in Cellnet, a U.K. cellular carrier, and through BT’s paging operations.”
A spokeswoman for MCI said the merger application will run the usual 80-day FCC comment-period course, and that all regulatory and legislative approvals for the merger should be concluded by fall.
The companies admit resale agreements probably will provide the foot in the door needed to enter many yet-unserved American markets; Concert plans, however, to spend some $700 million in 1997 alone to build local facilities. With BT’s experience in the competitive fixed wireless services in the United Kingdom, it is expected MCI could glean some expertise from its partner to add this service to its menu, perhaps targeting rural or high-cost areas first.
MCI and BT have been providing joint wireline services since 1993, when the idea for Concert first was formulated; the merger will only enhance those offerings and undoubtedly will lead to more. However, because MCI holds no wireless licenses, preferring instead to resell paging, cellular and personal communications services, it will not be able to promise its subscribers immediate global roaming. The second-largest U.S. long-distance carrier may be able to influence its minutes-of-use providers to think about international contracts in the future. BT, on the other hand, is a licensee and could provide its U.K. customers American service should they want it.
The merger document also pointed out that other U.S. carriers that hold many types of RF licenses would benefit from the merger because of favorable trade/roaming agreements.
“The commission previously has held that the U.K. imposes no restrictions on either foreign ownership of telecommunications service providers or foreign participation in the U.K. resale market or any other sector of the U.S. telecommunications market,” lawyers for both companies wrote. “Thus, there are no de jure restrictions on the holding of radio licenses for terrestrial microwave, air-to-ground radiotelephone or fixed satellite services in the U.K. by U.S. persons.”
As additional proof that the U.S./U.K. market would continue to be open-especially for wireless carriers-following regulatory approval of the formation of Concert plc, the companies wrote that the Radiocommunications Agency in Britain, which could be compared with the FCC, has been implementing many of the same programs in the United Kingdom as have been imposed or proposed here, including relocation of users to less-congested frequencies and requiring more spectrally efficient technologies.
Because of these similarities, the companies wrote, “there are no practical limitations on participation by U.S. companies in U.K. businesses that rely on … radio licenses.”
On a related subject, with interconnection charges in this country in somewhat of a flux due to upcoming appeals-court action early next year, BT and MCI attorneys were quick to point out to the FCC that BT’s rates were reasonable and pro-competitive when compared with interconnection costs in six countries: Australia, New Zealand, Sweden, the United Kingdom, Japan and the United States.
A February 1996 study prepared by Ovum Ltd., found that BT’s 1995 interconnection charges were the lowest of the six countries examined-“20 percent lower than the next best operator and nearly 80 percent lower than the most expensive operator.”
