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Verizon To Acquire MCI For $6.7 Billion
An anonymous reader submits "Even after a last minute offer from Qwest Communications, MCI board members accepted a less lucrative offer from Verizon to be bought for $6.7 billion in cash, stock and dividends. The acquisition comes after Nextel Communications and Sprint Corp. partnered up in a $35 billion deal and SBC Communications Inc. and AT&T Corp. announced a $16 billion merger plan. So, what's next for the telecom industry?"
and in the darkness connect them
In Canada we had the following:
Telus purchased Clearnet
Rogers & Shaw swap regions so they each have cable monopoly in their region.
Rogers purchased Fido
Actually, they've been MCI for a long time. They only merged with WorldCom in 1997. They were MCI before that, they were MCI WorldCom from 1997 to 2000, and after the fraud scandal, they became MCI again.
The only time they didn't have MCI in their name was between 2000 and the fraud scandal, which was a pretty short time. So, yeah, they're scum, but they're not really hiding. They're hiding a little, because the scandal is usually associated with WorldCom's name, but if they really wanted to hide their past, they'd come up with a completely new name.
I support the Center for Consumer Freedom
The hot new board game from Parker Brothers hits the shelves: Telecom MONOPOLY
(It's never too late to join the Renaissance)
* SBC owns AT&T
* Verizon owns MCI
After the baby bells were broken up, we had this very nice period where briefly, though you may not have had a choice of local phone providers, you had a real and serious choice of long-distance phone providers. Anyone else suspect this era is about to end? I think we're about to quickly go to the point where your regional local-phone monopoly quickly becomes a regional long-distance phone monopoly.
Who wants to take bets on how many SBC customers will be using MCI in five years, or how many Verizon customers will be using AT&T?
After two more rounds of mergers, we'll have two companies left in each area. Each with strict but unwritten agreements not to compete in each others' areas. It's the same way Comcast/Time Warner do business in the Cable TV industry right now, anyways.
...that eventually, all of the US telecom companies will merge back into one. That single, surviving company will be known as "The Bell System" or, colloquially as "Ma Bell".
You heard it here first.
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What's next?!? The same thing we do every night, Pinky. try to Take OVer THE WORLD!
These opponents play to people's sense of outrage at the corporate scandals that rocked the business world last year, as well as to the breathtaking extent of the $11 billion accounting fraud at WorldCom. Their main claim is that allowing MCI to exit bankruptcy would allow it to profit from its "ill-gotten gains." Both justice and deterrence, they argue, require that MCI be dismembered, if not put to death.
Such claims understandably strike an emotional chord with America's scandal-weary public. Yet those claims are wrong all the same. Simply put, MCI retains no "ill-gotten gains" from the accounting fraud. Whatever short-term advantage the company might have gained has already been lost, many times over. In his opinion on the recent litigation between the SEC and MCI, Federal district court judge Jed Rakoff placed the liquidation value of the company at less than $6 billion. This value pales in comparison with the $200 billion by which WorldCom's equity has plunged.
In the overall scheme of things, there can be little doubt but that MCI would be in stronger shape today had the fraud never occurred, than it will be if it is allowed to emerge from bankruptcy.
While MCI's liquidation would be good for its rivals, it would be bad for the consuming public. It would reduce the choices available to many consumers of telecom services, force 20 million MCI customers to find new suppliers, and leave more of the telecom market under the control of the still relatively monopolistic Baby Bell companies. Local phone competition, which has finally started to deliver major savings to consumers in recent years, would take an especially big hit. Also wrong are claims that the liquidation of MCI is a means to secure justice and promote deterrence against such misdeeds in the future. Justice is served by punishing responsible individuals. So is deterrence. Neither is served by wreaking punishment indiscriminately on such innocent people as workers, investors, creditors, and customers.
To penalize an entire corporation for the misdeeds of some of its officials is to spread the resulting loss among all participants in the corporation. If corporate misdeeds are punished at the individual level, deterrence works as it is supposed to work. But if those misdeeds are punished at the corporate level, the deterrence effect is weakened and the injustice compounded.
It would be different if all participants within WorldCom had agreed to engage in fraudulent practice. But this is clearly not what happened. A few crooked executives engaged in fraudulent activity, and the practice was halted and made public when other individuals within the company became aware of it. To punish MCI wholesale would be to punish those innocent individuals and not the guilty wrongdoers.
It is easy to see why the entrenched incumbents are so keen to bring about MCI's demise. The likes of AT&T and the Baby Bells would rather feed on WorldCom's carcass than see it rejuvenated and have to compete with it for business. The public good, however, would be far better served if MCI receives a second chance instead of an early grave
and the same MCI that is the number 1 spammer according to the Spamhaus charts. Spamhaus also put out this article charging that MCI profits from spam. Verizon's getting all that.
"Ancillary does not mean you get to rule the world." --U.S. Circuit Judge Harry Edwards, speaking to the FCC's lawyer
MCI is currently the largest ISP allowing (and some consider supporting) spammers to use their bandwidth. Verizon is currently one of the most aggressive anti-spam ISPs. Some have argued they've gone to far blocking legit messages often but most of their users are happy about the spam control. How these two will mesh may be a very interesting chapter in the war on Spam.
If that happens, the telcos will have screwed themselves.
Why bother with a high-price telco with crappy services when you can get Vonage or Skype or any number of IP-based carriers that will be able to provide the same service cheaper and faster than traditional telcos.
You tend to see consolidation in dying industries - POTS is becoming a dying industry. Once VOIP starts really hitting the mainstream, that line of revenue will only continue to dry up.
Right now the money is in cellular service (where there's usually at least one local/regional company competing with the big boys - or at least there has been in my experience), and in VOIP. Either the telcos adapt or die.
As we've learned from both the dinosaurs and AOL/TimeWarner, sometimes being big and complex isn't a good thing from an evolutionary standpoint.
The three were about to merge, but their plans were thwarted when it was discovered that the world's supply of stupid committee-selected synthetic corporate names has finally been exhausted, so there would be no way to refer to the new conglomerate.
Well, now that a few of them have merged, they'll probably stabilize for a little while, and then start buying each other up again. Pretty soon, we'll be down to one company providing phone service.
Hey, wasn't there talk of TV over phone too? Maybe once all the companies merge, they could call themselves... American Telephone and Television? Or just AT&T for short. That has a nice ring to it. Ring! That's it, they can use a bell as their company logo! People can buy stock in it, and refer to "My Bell" phone company.
Three dits, four dits, two dits, dah!
Radio, radio, rah rah rah!
Why would a board approve a purchase for less money than a competing offer? Under-the-table payments to board members is the only plausible reason that comes to mind. Are there other explanations? Whatever the explanation is, I have a hard time seeing how "increasing shareholder value" comes in to it...
One of the things they look at is their own security; is the new company going to purge the board and replace them? Another is what they plan to do with the company; are they going to gut it and sell off the parts, making your options worthless? There's a lot more to a deal than just stock price. Maybe the board just doesn't like the attitude of the higher bidder. Money isn't *always* everything.
-- If god wanted me to have a sig, he'd have given me a sense of humor.
I think some folks either don't have a sense of humor and/or consider any attempt at humor off topic. Or, god forbid, we have Slashdotters who don't know about Tolkien.
No Nyarlathotep, No Chaos
Know Nyarlathotep, Know Chaos
The simple fact is, that long distance companies are a dying breed. Sure, plenty of people still have long distance, but more and more people are getting wise to the fact that you can simply use your cellphone to make a long distance call. Of course these companies are going to get bought out while they're still profitable. This coming off the heels of a year when wireless surpassed wireline in terms of customer base, and during a year when it's predicted the wireless minute usage will surpass wired minute useage.
The DeathStar was broken up into little pieces, but apparently the dark side of the Force is bringing them back together. Admiral Vonage and General Skype will lead the rebel alliance Help us, Obi-For-Wan-Wan, you're our only hope!
You'd rather they evaporated entirely, disabling one of the internet backbones, leaving 75 government agencies and much of the Fortune 1000 without phone and internet service, putting hundreds of thousands of people out of work, and completely destroying the investments of people taken in by the accounting fraud? Maybe the assets and obligations should go to some organization capable of managing them honestly?
This isn't really the same MCI that was involved in accounting fraud, because the individuals involved in the fraud aren't there any more. Even if they were, after being bought by Verizon, they wouldn't be in charge any more. The idea that a corporation is a legal entity with rights and responsibilities is a useful fiction in making the law function at all, but it doesn't actually make sense to talk about "the same MCI" from then to now.
I'm surprised at the knee-jerk alarm about this merger. Do you people really think that this is going to lead to monopoly?
Hardly. For one thing, there are still a ton of telecom providers out there... it'll be Verizon, AT&T, BellSouth, Qwest, and two dozen smaller regional carriers. All these mergers have accomplished is the undoing of the ill-considered 1986 telecom act, which said you couldn't do both long-distance and local telephony. Now the big guys do both.
But more importantly, there's more competition than ever before in the industry because of emerging technologies and the net. Voice over IP providers --including pure-play guys like Vonage, as well as all the cable companies-- are starting to compete with the phone companies. So AT&T and Verizon are going to have to stay competitively priced in order to keep from losing customers to those services.
And have you ever heard of cell phones? The wireline carriers can't crank up costs, because they're already losing people to their mobiles.
Not that it matters, but I'm a liberal and usually object to any conglomeration of corporate power. But it's silly to instantly panic at any sort of merger and assume it's a nightmare.
All these companies are doing is trying to stay alive in the face of killer new technology. The only people screwed here are the carriers themselves.
A: Cthulhu reforms 15 minutes later, except now Cthulhu is radioactive.
Q: So, what's next for the telecom industry?
A: It reforms 25 years later into Ma Bell, except now it controls everything.
Take a freakin' breather already.
It's called capitalism, and there's no time for that. Say what you will about capitalism, but it is almost the sole reason that the standard of living has risen so much in many countries over the last three centuries or so. This wave on consolidation has long been predicted, and its probably a good thing. Otherwise the telecom industry would end up fragmented and mostly bankrupty, much like today's airline industry.
All in the name of screwing the consumer over, I'd bet.
All in the name of surviving is more like it. These acquisitions should produce one or more of two things.
1) Lower costs for the companies involved, resulting in higher profits and better returns for the companies owners (largely public shareholders).
2) Lower costs or better services for their customers.
It is likely to be a combination of the two. This assumes, of course, that Verizon does the merger well, and that they did their due diligence to make sure this was a good idea in the first place. At the end of the day, remember that you can choose not to be a customer of any company, except, perhaps, those that are monopolies.
There is another reason.
MCI's largest cost is line cost (the cost of leasing lines from other carriers) and Verizon needs a data network. After the merger, MCI does not have to pay line costs to Verizon anymore and Verizon gets a data network. It's a win-win for both companies.
verizon is quite spammy as well, just not as bad as mci/worldfraud is
sbl listings for verizon
sbl listings for level 3, which verizon owns
Lawyers, MBA's, RIAA? A jedi fears not these things!
Say what you will about capitalism, but it is almost the sole reason that the standard of living has risen so much in many countries over the last three centuries or so.
There is no finer systerm for taking a society from an agrain to a post-industrial culture. However, I think most of the ills we are suffering these days arise from capitalism. Whether it's corporate conservatism (RIAA, DMCA, etc), monopoly and consolidation (Microsoft, mergers), or the rollarcoaster ride that is our economy (How many of you went poor ->millionaire->poor in a a year or two? How many of you have houses that have inflated 400% in the last year or two, and will likely loose all that and more in the next couple?), captalism is failing us every day.
I'm sure the European Aristocracy that the cultural and industrial revolutions of 1700's replaced were congratulating themselves how much they had improved their standard of living over the old days. But they couldn't see outside the limits of their (*gasp*) class, or how their own system had become rotten and evil. It's funny how despite what High School history teachers tell you, learning history never stops us from repeating it. Life is shifty and will disguise itself. Maybe it's time to revolt again.
It's called capitalism, and there's no time for that. This wave on consolidation has long been predicted, and its probably a good thing. In economics, as in most everything, we need to look at the evidence before having opinions. Time and time again economic studies show that mergers help neither the customers or the shareholders. http://www.globalchange.com/mergers.htm
::Sigh::
::sigh::
Good thing we broke up MA-Bell so we wouldn't have one company monopolising the entire phone system. Thank god we were smart enough to not break them up into smaller monopolies that ran different parts of the country and could get enough to buy up each other and eventually reform Brother-Bell, and Sister-Bell, which marginally compete.
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