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Comments to the
Federal Communications Commission by the National Consumers League
concerning the MCI WorldCom and Sprint Proposed Transfer of Control
February 18, 2000
Magalie Roman Salas, Secretary
Federal Communications Commission
445 Twelfth Street, SW, TW-A325
Washington, DC 20554
RE: MCI WorldCom and Sprint
Proposed Transfer of Control
CC Docket 99-333
Dear Ms. Salas:
The National Consumers League
respectfully submits the enclosed comments in the matter cited above.
NCL is a private, nonprofit advocacy organization. Founded in 1899,
NCL's mission is to identify, protect, represent and advance the
economic and social interests of consumers and workers.
NCL urges the Federal
Communications Commission to reject the MCI WorldCom and Sprint proposed
transfer of control because it is not in the best interests of consumers
or workers and does not help to fulfill the promises of the 1996
Telecommunications Act.
Sincerely yours,
Susan Grant
Vice President, Public Policy
cc: International Transcription
Service, Inc.
Lauren Kravetz, FCC Wireless Telecommunications Bureau
Christopher Libertelli, FCC Common Carrier Bureau
Jim Bird, FCC Office of General Council
BEFORE THE
FEDERAL COMMUNICATIONS COMMISSION
In the Matter of: CC Docket 99-333
MCI WorldCom and Sprint
Proposed Transfer of Control
COMMENTS OF THE NATIONAL CONSUMERS
LEAGUE
The National Consumers League
opposes the MCI WorldCom and Sprint proposed transfer of control because
it is not in the best interests of consumers or workers and does not
help to fulfill the promises of the 1996 Telecommunications Act. NCL is
a private, nonprofit organization. Founded in 1899, its mission is to
identify, protect, represent and advance the economic and social
interests of consumers and workers.
In assessing the impact of mergers and acquisitions, NCL bases its
position on several core principles, including whether they will:
- enhance competition in the
relevant markets;
- avoid anticompetive
concentration in violation of federal law;
- offer consumers more choices
and better products or services;
- have a beneficial impact on
consumer prices for products or services;
- include a commitment to
universal access, design and service to accommodate all consumers,
regardless of geographic location, disability, race, income or other
potential barriers;
- provide equity in pricing and
choice for consumers without discrimination;
- incorporate the best
practices in marketing, dispute resolution and other consumer
protection measures;
- meet consumer demand for good
quality products and services and provide prompt customer service by
ensuring a sufficient number of adequately trained employees;
- cause no diminution of
current wage levels in the industry and ensure good wages, benefits
and working conditions for all employees;
- have a beneficial impact on
the quality and quantity of jobs of affected employees.
It is our view that the MCI
WorldCom and Sprint proposed transfer of control does not adequately
meet these basic tests.
Impact on Competition, Choice,
Price, Access and Equity
According to 1998 FCC statistics,
MCI WorldCom has 26 percent of the market share for long distance,
Sprint has 11 percent. With AT&T at 43 percent, the long distance market
is already too highly concentrated. The combination of MCI WorldCom and
Sprint would only exacerbate this problem, essentially resulting in two
long distance companies that will account for 80 percent of the market.
While in the future, other companies may make inroads in the current
juggernaut for control of the long distance market, robust competition
does not currently exist and will not be advanced by this proposal. NCL
is also concerned about the detrimental impact on competition in the
local service market if Sprint shifts its focus from that area.
In addition to their high market share as long distance service
providers, MCI WorldCom and Sprint are the largest and second largest
Internet backbone providers; combined they would account for
approximately two-thirds of the long-haul Internet market. NCL believes
that the Internet is an increasingly vital conduit for civil discourse,
education and trade. Ensuring that the Internet is accessible to all is
an important public policy goal.
Less competition in long distance, local and Internet services would
mean fewer choices and higher prices for consumers. It would reduce the
incentive for innovation and improving the services that are offered to
consumers. It would also result in less access to services and increase
the potential for lack of equity in price and choice for consumers.
These outcomes are unacceptable and run counter to the intent of the
1996 Telecommunications Act.
Impact on Marketing Practices, Compliant Resolution and Quality of
Service
Both MCI WorldCom and Sprint have been cited by state regulators for
engaging in "slamming," switching consumers' telephone services without
their consent. MCI WorldCom has also paid penalties to the FCC in
connection with slamming complaints. While MCI WorldCom and Sprint are
not alone in being accused of slamming, it is a serious concern.
Slamming is an anticompetitive practice that hurts not only consumers
but other telecommunications competitors. Some state agencies have
expressed frustration at the difficulty of resolving slamming or other
complaints with MCI WorldCom.
NCL was disappointed when MCI WorldCom led the successful effort in
federal court to delay implementation of the consumer liability
provisions in the FCC's anti-slamming rules last year. Considerable time
and energy is being spent on creating an alternative system to handle
slamming complaints. While that may be helpful, NCL would have preferred
to see both MCI WorldCom and Sprint take leadership roles in trying to
make the new rules work and stop the practice of slamming. Meanwhile,
slamming complaints to NCL's National Fraud Information Center, a
hotline for consumers to obtain advice and report telemarketing abuses,
have continued at the same high level because the profit motive has not
been eliminated.
NCL also notes that in the J.D Powers and Associates' 1999 Local
Telephone Service Satisfaction Study, released August 4, 1999, Sprint
ranked second to last among 14 local telephone companies in customer
satisfaction.
NCL believes that it is imperative for competitors in the
telecommunications market to uphold the highest standards for marketing
practices, dispute resolution and other consumer protection measures. It
is difficult to see how the MCI WorldCom and Sprint transfer of control
proposal would lead to improvements in these areas.
Impact on Workers
As NCL understands it, MCI
WorldCom laid off several thousand employees after the merger of the two
companies, despite assurances to the contrary. NCL is concerned about
the possible negative impact of the MCI WorldCom and Sprint transfer of
control proposal not only on the quantity of jobs, but on the quality of
jobs. Lack of adequate number of sufficiently trained empoyees to get
the work done and meet consumer demand for quality services and prompt
customer service results in unfair strain on the workers and poor
service for consumers.
In conclusion, NCL believes that the MCI WorldCom and Sprint proposal
should not be approved because it does not advance the goal of increased
competition in the telecommunications marketplace and does not ensure
consumers or workers of the benefits to which they are entitled. Thank
you very much for considering these comments.
Respectfully submitted,
Susan Grant
Vice President, Public Policy
National Consumers League
1701 K Street, NW, Suite 1200
Washington, DC 20006
(202) 835-3323
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