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NET CHARGES LOOM AS WORLDCOM IS GRABS FOR 60% OF BACKBONE

US telecoms giant WorldCom Inc, whose aggressive take-over strategy will give it control of 60% of the internet (CI No 3,260), is likely to introduce a per-byte charge to users. This controversial move was signaled by chief operating officer John Sidgmore, who said: a 45Mbps video link, and a 64Kbps link can cost the same amount, that means that the internet is going to have to become usage based. While the US Department of Justice is currently probing WorldCom’s planned $37bn take-over of MCI Corp, Sidgmore said he does not believe that its powerful position on the internet backbone will present an anti-trust problem. He does, however, see WorldCom as primarily an internet company and forecast that by 2003 only 1% of communications bandwidth will carry voice traffic, and make up a correspondingly small proportion of communications revenue. Sidgmore predicts the first commercially significant business telecoms service to cross over to the internet will be faxing, as fax traffic makes up 50% of international phone calls and fax over IP is considerably cheaper. This gives WorldCom a considerable advantage and Sidgmore predicts that 50% of international telecoms companies revenues are in jeopardy. WorldCom’s Internet division UUNet has already launched a fax over IP service (CI No 3,200), at around a 45% discount to phone-based faxing. The most desirable asset of its latest acquisition MCI, according to Sidgmore, is its 25,000 mile US fiber network that will boosts WorldCom’s network to a total 45,000 miles, nearly equal to AT&T Corp’s 50,000 miles. MCI will also double its Metropolitan Area Network city coverage from 52 to 96 US cities. Sidgmore predicts WorldCom’s 1997 annualized revenues of $7.6bn will increase in 1998 to $32bn revenues when MCI is added on top of the acquisitions of Brooks Fiber Properties Inc, AN Communications Inc and CompuServe Corp’s Network Services businesses.

Blistering attack

He was confident that WorldCom’s 33% a year growth rate would be maintained. AN and CNS will be combined with UUNet when the acquisitions are completed in March and then, on clearance of the MCI deal, the managed network services and internet application hosting expertise moved into MCI’s Systems integration Business, Systemhouse. Meanhile, WorldCom Inc is to launch a blistering attack on the European market early next year with a service that will offer a standard charge for calls throughout the continent, irrespective of distance. The move, far more in accord with the vision of business customers than that of traditional national telecos, will add considerably to the competitive pressures in a market struggling to come to terms with deregulation. WorldCom claims to have got well ahead of the competition in Europe by using Metropolitan Area Networks built by MFS communications, before telecoms deregulation forced monopoly operators to open their markets up. It has existing networks in London, Paris, Frankfurt, Stockholm, Amsterdam and Brussels, and in spring 1998 are going to be linked up with another fiber loop called Ulysses, to the 30Gbps trans-Atlantic Gemini cable (CI No 3,300), tying Europe directly into its US fiber network. Fiber networks are to be built in other European cities, and linked up to the loop in later extensions in 1998 and 1999, with the investment costing it over $1bn. WorldCom is planning its new European services starting in the spring of 1998, including direct international telecoms, Asynchronous Transfer Mode and Frame Relay services.

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CBR Staff Writer

CBR Online legacy content.