Global Venture challenged: MCI WorldCom wants conditions on AT&T/BT venture

At least one major player is requesting that conditions be imposed on the proposed agreement between AT&T and BT-dubbed the Global Venture.

In comments to the FCC, MCI WorldCom urged the commission to "ensure that AT&T, the Global Venture and the Global Venture's subsidiaries are not the only carriers able to provide end-to-end broadband services on the U.S.-to-U.K. route."

The Global Venture stands to win much of the growing data traffic market because of its partners' domestic strength. The MCI half of MCI WorldCom knows only too well BT's power, being a former partner in the Concert operation.

What bothers MCI WorldCom is that AT&T and BT have not made enough information available regarding the interaction of their groups once the deal is done.

"We need to make sure that dominant-carrier rules apply in this case," said Sanford Reback, senior counsel of international affairs for MCI WorldCom. "There should be no favoring of AT&T in the U.K. The FCC has the power to do this."

It is the BT bottleneck that concerns MCI WorldCom, which is looking to establish itself as a world power in high-speed data transmission. The carrier acknowledges it needs local loop access to provide end-to-end service to its customers, and it fears BT will favor its U.S. Global Venture partner with deals MCI WorldCom cannot hope to match. The carrier referenced another pending megamerger-AT&T and cable powerhouse Tele-Communications Inc., as an example of how closed a network can be. AT&T has made no bones about calling TCI's network TCI's "private property," and that it won't be opened to competitors following the merger.

In its filing, MCI WorldCom says that when BT's control over local access in the U.K. is combined with AT&T's ability to offer broadband services directly to U.S. customers via TCI, the parties will be able to offer what no other carrier will be able to offer: end-to-end broadband services between the U.S. and the U.K.

Currently, BT controls access in the U.K., but it must cooperate with providers on the U.S. end to offer end-to-end broadband services to its customers. If the proposed joint venture is approved, the parties will be able to offer these end-to-end broadband services on their own network, and their need to cooperate with other providers on the U.S. end would be significantly reduced, MCI WorldCom charges.

Another concern is that BT might become less cooperative in granting access to its network in the United Kingdom.

"Nobody would know better than MCI what BT brings to the table and what areas are important for the FCC to look at. Competitors always find the weak link," said independent telecom analyst Jeffrey Kagan.

Although Kagan added that there probably is no reason why this deal won't close, he said the FCC should impose some conditions, restrictions and concessions on the venture. "There is a real potential [for problems] if there is no other way in [for competitors]," he said. "At the end of the day, customers need choice from a variety of vendors, and if this means that there needs to be some restrictions, then so be it."

However, FCC Commissioner Michael Powell has said that mandatory access may not be the best thing for an emerging broadband industry.

"For awhile, [using another carrier's facilities] may provide short-term retail benefits that people can celebrate, but they often come at a great cost to development of innovative alternatives," he said. "This industry has flourished, not just because of interconnectivity and openness, but because it was allowed to develop that paradigm free of government intervention."

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