The MCI inevitability

Qwest Communications' decision to abandon its pursuit of MCI comes as no real surprise. MCI's Board of Directors had made it quite clear that it was only going to accept Qwest's money if forced to. In its announcement this morning that it was taking Verizon's latest offer, even though it fell short of what Qwest had offered, the board made its most compelling case yet, citing the lack of confidence its business customers had in a combined MCI-Qwest as a driving factor in its decision.

Try as he might, Qwest CEO Richard Notebaert could not overcome the industry perception that acquiring MCI was an act of desperation from a company that is more than $14 billion in debt, has not been able to compete nationally for business customers and serves a local region that is less attractive than any other former Bell company, in terms of major business customers.

By contrast, the Verizon-MCI combo was seen as a worth adversary for a combined SBC-AT&T, given Verizon's ownership of wireless assets, its initiatives in local premises fiber and advanced services, and its primo local service territory.

With MCI-Verizon now looking like a done deal --barring and MCI stockholder revolt--it's time to consider what the rest of the industry needs to do to prepare for battle with two behemoths.

It's fun to ponder prospects--BellSouth and Sprint? Qwest and a cable provider?--but this is not a game for business customers trying to make choices that will impact their bottom line in years to come. The U.S. seems to be marching toward a duopoly in the residential market. Is there one coming for business as well?

E-mail me at CWilson3@primediabusiness.com.