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WorldCom sees no antitrust snags

A key executive of WorldCom predicts that the complex deal splitting up CompuServe will survive antitrust scrutiny by the Justice Department.

SAN FRANCISCO--A key executive of WorldCom (WCOM) predicted today that the complex deal splitting up CompuServe (CSRV) will survive antitrust scrutiny by the Justice Department.

"I don't expect any significant concerns about the network side," said John Sidgmore, The selling of CompuServe WorldCom vice chairman and chief executive of its Internet operation, UUNet Technologies, referring to WorldCom's acquisition of both CompuServe's network and ANS Communications, America Online's (AOL) network division.

"The online service side may have more questions," Sidgmore told CNET's NEWS.COM after his keynote today at the Gartner Group's Intranet+Extranet Expo, referring to the company trading CompuServe's consumer online service to AOL. AOL's visibility, size, record of customer complaints, and attention from state attorneys general make antitrust scrutiny more problematic, he added.

"Adding anything to AOL comes up with a big number because of where AOL starts," Sidgmore said. Like AOL, he argued that media companies and phone carriers are moving into the online market to make it more competitive, despite AOL's current dominance.

But if the Justice Department squelches the AOL-CompuServe part of the deal, Sidgmore said WorldCom probably won't operate the CompuServe online service because that would put WorldCom in competition with its customers.

"We have a lot of other options if that happens," he said, declining to elaborate.

Sidgmore also said WorldCom's strategic intent in the CompuServe deal has not been fully appreciated, saying that WorldCom gets two network companies and an extra $1 billion in Internet revenues, counting the value of its contract to provide network services to AOL.

"Obviously, we wanted the $1 billion in revenue, but we also wanted to get the network integration skills that CompuServe had," he added. "We wanted the CompuServe network people to put together seamless public Internet services and private intranet services. That is the heart of the deal."

More broadly, Sigdmore said quality of service guarantees will become more common because businesses demand them.

"We betting $2.5 billion on bandwidth this year," he said, referring to WorldCom's investment in its network.