MCI WorldCom, AOL Expand Service Agreement
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MCI WorldCom Inc. and America Online Inc. Thursday announced the two firms extended their existing agreements for dial-up access services in the U.S. through the end of 2004.
MCI WorldCom (WCOM) subsidiary, UUNET, has been a key provider for the world's largest content provider for several years. Under the expanded relationship, UUNET will continue to buildout and manage a significant portion of AOL.net, as well as continue to provide America Online (AOL) with dial-up services over its national dial-up network.
John Sidgmore, MCI WorldCom vice chairman and UUNET chairman, said MCI WorldCom and America Online share a long history together.
"This new deal signals that UUNET has successfully met AOL's performance measures in the past and that AOL has continued faith in our performance for the long-term," Sidgmore said.
"As AOL has increased its subscriber base to more than 22 million members, UUNET has helped us meet our growing network demands," MacDonald said.
Financial terms of the deal were not disclosed. But the extension of the UUNET service plan to AOL means that MCI WorldCom maintains its rank as the largest dial-up service provider in the nation.
Consumer advocates argue that reducing three long-distance heavyweights to just two would be bad news for consumers. But MCI WorldCom and Sprint (FON) said that the math is wrong and that it doesn't reflect the hundreds of carriers competing on a regional basis.
In a recent filing with the FCC, the companies asserted that when the deal closes, 98 percent of U.S. consumers would have at least three long-distance carriers to choose from and 90 percent would have four.
Long distance competitive issues aside, the fact remains the merged companies would most likely be forced to spin off independent businesses to operate the UUNET backbone and Sprint's wireless nationwide wireless network.