Federal Communications Commission Chairman William E. Kennard raised doubts yesterday that a merger being explored by the nation's second- and third-largest long-distance telephone carriers, MCI WorldCom Inc. and Sprint Corp., could gain the required blessing of federal regulators.
At an afternoon technology conference in Washington, Kennard stressed that his commission would block any move it perceives as a threat to the roiling competition refashioning the telecommunications world.
"American consumers are enjoying the lowest long-distance rates in history," Kennard said. "That's a function of one thing: competition. We cannot allow any merger to happen in this industry that turns back the clock of competition."
Kennard said his comments were not aimed at any particular merger.
An MCI-Sprint fusion would confront regulators with a considerable calculation. The combined company would sport $35 billion in annual revenue and control 30 percent of the nation's long-distance market, second only to AT&T.
But some analysts have suggested that an MCI-Sprint merger could nonetheless gain FCC approval, because markets are growing ever more competitive, as local phone companies seek the right to expand into long-distance.
Kennard threw water on that theory.
"You don't hear me saying it's going to be fine," he said.
Kennard declined to amplify his comments. But a look back to his statements in September 1989, when the FCC approved the merger of MCI and WorldCom, could offer guidance on the prospects for a marriage of MCI and Sprint.
"Once this merger is consummated, the industry will again be poised just a merger away from undue concentration," Kennard said at the time. "I dare say that any subsequent merger--of this or similar magnitude--between long-distance firms in the near future should be judged quite differently than the merger before us today."
MCI and Sprint have declined to confirm their talks. Industry executives and analysts would at this point be surprised if the talks don't yield a deal. MCI has long been keen to fill a hole in its service offerings--wireless. Sprint offers Sprint PCS, a national digital cellular network.