MCI WorldCom continues MMDS spree with CAI talks

The race to buy up faltering multichannel multipoint distribution service companies is on. It all started a month ago when rumors surfaced that MCI WorldCom bought up debt of four MMDS players. The following week, Sprint purchased one of those players, People's Choice TV, whose subsidiary, Speed Choice, owns MMDS licenses. Most recently, MCI WorldCom entered negotiations last week to buy CAI Wireless.

Since the announcements, stock values of many MMDS players have risen dramatically, after some fell to less than $1 at the beginning of this year. The sudden spike could indicate that Sprint, MCI WorldCom and others will continue the buying spree.

Because the deal with CAI is still pending, MCI WorldCom officials would not comment. But a spokeswoman said the proposed purchase reflects a company strategy of using many different means to reach customers, including satellites, wireless and its own systems.

Although MCI WorldCom has not said that it will use the MMDS spectrum to deliver Internet access, it likely will. "An appropriate use of that spectrum would be for wireless high-speed Internet access, but it doesn't have to be limited to that," said David Reynolds, president and founder of AirDSL.com. MMDS spectrum also can be used for voice over Internet protocol, voice over asynchronous transfer mode and videoconferencing.

While MCI WorldCom may try to buy two of the other companies of which it purportedly bought bond issues, PCTV is out of the running. MCI WorldCom can earn a return on its investment in PCTV but won't score control of PCTV's MMDS licenses.

CAI owns MMDS licenses in 14 markets, mostly in the Northeast. It also owns 94% of CS Wireless Systems, an MMDS operator in Plano, Texas.

CAI officials could not be reached for comment.