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MCI, BT aim to conquer Net

The heads of both companies say their historic merger will make them the largest Internet carrier in the world.

SAN FRANCISCO--The heads of MCI Communications (MCIC) and British Telecommunications (BTY) said today that their historic merger will make them the largest Internet carrier in the world, shuttling an estimated 50 percent of the network's global traffic on its backbone.

At a press conference here today, Sir Iain Vallance, chairman of British Telecom, and Bert Roberts, chairman and chief executive officer of MCI, offered their views on everything from Internet telephones to a recent World Trade Organization pact that will open global telecommunications up to increased competition. The two will cochair Concert, the new company that is expected to result from the merger later this year.

Vallance and Roberts offered a brief progress report on the merger but provided scant details on any new products and services that might emerge from Concert due to a Securities Exchange Commission "quiet period."

"I'm happy to report that plans to tie the knot are proceeding as planned," Roberts said today.

Roberts said that Concert will be a serious player on the Internet, though he did not specify whether the company plans to ramp up its Internet access service for consumers. MCI runs a large part of the U.S. Internet backbone and primarily licenses Internet lines to businesses and other Internet service providers. AT&T has been much more aggressive in cracking the consumer Internet market with its WorldNet service.

Roberts noted that the companies are opposed to a proposal by U.S. regional Bell operating companies, such as Pacific Bell and Bell Atlantic, to levy charges on ISPs in order to pay for upgrades to the telecommunications network. "That would destroy the growth of the Internet," he said. He also expressed interest in Internet telephony, though he dismissed the idea that Internet phones will become serious competitors to regular telephones due to the poor quality of calls.

On the recent WTO pact, BT's Vallance said the companies supported the pact and hoped it would bring new international opportunities for Concert.

"I haven't read the small print [on the WTO pact], but in general terms our reaction is, 'That's great,'" he said. "There has been customer demand for globalization of telecommunications markets for some time now."

The combined BT-MCI will be one of the largest companies in the world, with annual revenues of $40.6 billion, 181,000 employees, and 43 million customers in 72 countries.