MCI has duly sold off its Internet backbone to Cable & Wireless to clear the path for its proposed $38 billion merger with Worldcom.
Cable & Wireless will pay $625 million in cash for the network.
The European Commission last week demanded that either MCI or Worldcom should sell off their respective Internet interests to prevent the merged organisation from monopolising the Web. The US Justice Department also indicated concerns of a monopoly.
However rivals slammed the deal as being only a partial sale. According to a Cable & Wireless statement MCI will retain links to the backbone operation following the sale.
?MCI will provide the underlying telecommunications transport services supporting the Cable & Wireless backbone and will provide additional services as required by Cable & Wireless,? suggests the statement.
Earlier this month US telco GTE tried block the merger by slapping a lawsuit against Worldcom and MCI. It claims the combined force would control between 40 and 60 per cent of the US Internet backbone market.
A GTE spokesperson believes MCI has sold only part of its Internet operation in an attempt to throw regulators off the scent.
Said the spokesperson: "A partial sale doesn?t remotely address our antitrust lawsuit. It doesn?t eliminate the threat of Internet dominance posed by the merger."
A MCI representative rejected the claims. "We?re selling 100 per cent - all of it. They [US and EC regulators] had some problems with the deal so we removed the hurdles,? said the MCI spokesperson
MCI claims regulators decided to investigate the merger after hearing scare stories circulated by the company?s rivals.
"A disinformation campaign was lodged by our competitors, namely GTE," said the spokesperson.
The spokesperson also claimed GTE is using the issue of Internet dominance to divert attention away from its real concern - the local US telephony market where GTE is strong. She believes GTE is threatened by MCI?s attempts to move into this area.
?We feel the issue of the Internet backbone is a red herring and the real issue is local service," she continued.
David Neil, vice president of industry analysts Gartner Group believes that the sell off goes some way to reduce fears of an Internet monopoly. ?It will reduce the threat but there will always be a threat from any large organisation attempting to capture marketshare,? he said.
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