FCC wants more facts before merger approval
In a surprise move, the Federal Communications Commission requests more information about Internet holdings before it considers the multibillion-dollar merger between MCI WorldCom and Sprint.
The move likely won't hold up the review of the record $129 billion merger, but will force the two companies to work hard to appease two fronts in Washington, D.C. MCI WorldCom and Sprint had hoped to discuss issues concerning their Internet backbone holdings with the Justice Department (DOJ) first, and then offer a complete deal for approval to the FCC.
"We are going to respond to this request as quickly as we can," said James Fisher, a Sprint spokesman. "The plan was to have a discussion with the DOJ on that issue."
The two long-distance giants announced their merger plans in early October. The deal will create a solid competitor to AT&T in the long-distance market, as well as giving MCI WorldCom a badly needed wireless phone business.
But the two companies together control a large chunk of the Internet backbone, the network through which most information travels when shuttled across the public Net. Most analysts expect that they'll have to sell off part of those assets to win approval for the deal. MCI was similarly required to sell its Internet assets when it merged with WorldCom.
In their application to the FCC, the two companies wound up barely mentioning the effect of the firms' combined Net assets, however.
"A description of the impact of the proposed merger on the Internet market is relevant to our public interest analysis," FCC general counsel Christopher Wright wrote today. When the merger first came under review, the Commission specifically said it would have to look at the backbone issue closely, Wright added.
The merger has been shadowed by a lot of skepticism. Chairman William Kennard called the deal a "surrender" shortly after it was announced, and promised intense scrutiny of its effects on consumers. Earlier this week, a memo from one of the agency's head researchers was leaked to the Washington Post, calling the merger "intolerable."
Fisher said the companies would likely have the requested information ready within the next two or three weeks.
"In terms of the overall timeline, this won't be a significant change," he said.