Does big mean bad?

WorldCom entrepreneur Bernie Ebbers has been busy. Last week he:

* pulled another multibillion rabbit out of his magic stock hat,

* agreed to ship hard currency instead of stock to BT execs, thus assuring their support for the deal,

* signed up proven winner MCI Chairman Bert Roberts for a tour of duty with the new company,

* designated the new company MCI WorldCom, and

* announced that, with the MCI deal in his rearview mirror, he was now looking for new worlds to acquire.

By the time the tireless Ebbers has finished wielding his rubber checkbook, studying WorldCom's various components and antecedents will be as easy as following the biblical genealogies in the Book of Genesis. Ebbers would do well, however, to recall that even that auspicious creation subsequently and quickly was judged to be flawed by its creator.

When assessing Ebbers' new paradise, observers will be asking themselves many questions.

Antitrust. Remember last summer when AT&T was playing corporate footsie with SBC?

That possibility was strangled in the cradle, thanks in part to then-FCC Chairman Reed Hundt, because it was too big and involved an RHC. When Hundt rallied his troops, pointed north and led the charge, the enemy was due south. So it was in this memorable instance.

Already, some foes of real competition argue that the Justice Department should prohibit the merger because MCI WorldCom would be too big. Big equals bad, assert these economic moralists.

The DOJ is not the custodian of economic morality. Its responsibility in these matters begins and ends with enforcing antitrust laws. They, in turn, deal with economic competitiveness and choice.

There is a pernicious, persistent myth that the Bell System was divided because it was too big. Anything that big, the fable goes, must be a monopoly.

Not true. Nor is size the proper barometer.

The Bell System was monopolistic because it consciously minimized customer choice, fixed customer prices, and delayed or prevented the development and introduction of new technologies that would have broadened choice and reduced prices.

But today all telecom customers-particularly the customers of MCI's and WorldCom's various units-have many choices and many price options.

Nothing on the face of the earth can now stop the introduction of productive new technologies. Neither the price WorldCom will pay for MCI, nor the combined revenues of the two companies, add up to monopoly.

The competition will be between a limited number of heavyweights. Smaller companies will continue to provide the innovative spark that keeps the heavyweights customer-responsive. Some small innovators will grow and eventually join the heavyweight class.

In this respect, WorldCom is a mirror to the future.

Antitrust footnote. The FCC has developed a bad habit recently.

The chairman has felt obliged to volunteer his opinion of the antitrust implications of various business combinations. Antitrust is the responsibility of the DOJ, not the FCC, a nicety lost on regulatory czars who think the industry is their personal oyster. Hundt's totally inappropriate intervention in the SBC/AT&T talks is the shining example of an FCC chairman overly stimulated by the importance of his proper role.

Bill Kennard just replaced Hundt as chairman. Will Kennard use the occasion of the WorldCom/MCI deal to reverse this fairly new FCC fashion by quietly letting the DOJ handle the antitrust review without publically offering his personal, pre-emptive assistance? He should.

Brand. Viewed from the all-important perspective of brand management, WorldCom's acquisition of MCI is an unnatural act.

MCI has a dynamite brand, second best in the U.S. telecom market and with real equity in Europe. WorldCom lacks a brand.

Brand identity will be at the top of the agenda. The name of the new corporation will be the first item.

Here are the choices:

* Focus on WorldCom but keep MCI involved.

* Build on WorldCom, drop MCI.

* Build on MCI, drop WorldCom.

* Drop WorldCom and MCI and start all over again.

Free advice: Pick door number four.