Saturday, February 12, 2005

MCI-Qwest Merger Talk

MCI has a major operation near our home and a family friend works for them, so I have been watching the proposed merger of MCI and Qwest with some greater than usual interest. VoIP Watch, a telecom blog, has some thoughts about MCI's potential purchase about which I both agree and disagree. I agree that MCI may be worth more for its parts than for the whole thing, given that some of the parts are not as valuable (an aging UUNet infrastructure, for one). On the other hand, MCI is in a unique situation, having shed most, if not all, of its debt via the bankruptcy process. Consequently, it may have value as a whole for that reason.

It is quite ironic that, 21 years after the breakup of AT&T, we are seeing the re-consolidation of the telecom industry. Generally, though I disapproved of the use of the courts to effectuate the dismembering of the AT&T monopoly, the resulting innovation and competition have been nothing short of spectacular. Let's hope re-consolidation does not unduly stifle continued gains in this sector.
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