21st

The Net becomes WorldCom's fiefdom


Scott Rosenberg
October 9, 1997 11:00PM (UTC)

When the dust settles from the latest round of telecommunications mergers, the heart of the Internet will be owned by two or three companies -- and the price of access is likely to rise. So where are the headlines?

The biggest deal in this picture is the move by WorldCom, the upstart Mississippi-based firm headed by Bernard Ebbers, to purchase MCI, a much larger company, for $30 billion in stock. Media coverage of the takeover bid tended toward the stunned and adulatory: Ebbers was a "cowboy" showing off his "buccaneering" instincts in an "audacious" maneuver -- "not bad for a little old country boy from Mississippi." Most of the coverage portrayed Ebbers and WorldCom as swashbuckling outsiders who leapt in from the backwoods to challenge the pinstriped drones at AT&T. Few publications laid out the depressing implications these "cowboy" moves could have for Joe Average Net User.

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This past June, when we first reported on the looming consolidation in the Net backbone business, there were roughly five major players: Sprint, MCI, BBN (now owned by GTE), ANS (America Online's backbone subsidiary) and UUNET. Last month WorldCom, which already owned UUNET, acquired both ANS and CompuServe's networking business. If WorldCom adds MCI's heavy-duty backbone to its already formidable Net infrastructure, experts figure it will own a staggering 57 to 60 percent of Internet traffic.

Time, Newsweek and Business Week all mentioned the Internet-domination issue only in passing, preferring to focus more on the robber-baron allure of Ebbers' and WorldCom's rise-to-world-domination saga. CNet ran an article that pointed out, "It's the Internet, stupid," but failed to deal with the implications for Net pricing. Wired News' lengthy analysis raised the specter of monopoly but only glanced at the possibility of price increases ("some price downside") for everyday users. Only the Wall Street Journal, in a weirdly schizophrenic pair of articles, fully explored what WorldCom's MCI takeover really means to the Net.

On the day of the deal, the Journal ran a tough article on the front page of its Marketplace section headlined, "Would WorldCom-MCI Deal Lift Tolls on Net?" Echoing Salon's June coverage, the story pointed out that WorldCom and UUNET have already cast themselves as the heavies in the Net monopolization story by "beginning to charge small Internet-access providers for the right to link up to its network." The story went on to point out that the more WorldCom controls the Net backbone, the more easily it can jack up rates to smaller providers -- dooming the flat-rate pricing that has helped the Net grow so fast and reach so many people.

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Then, on Monday, the Journal's op-ed page ran a magnificently bombastic piece by telecom "visionary" George Gilder. Gilder wrote: "Welcome to the reign of King Bernie ... Mr. Ebbers is a fiber baron and an Internet emperor." So Gilder thinks too much power is being concentrated in Ebbers' hands? Quite the opposite: "Mr. Ebbers will be the salvation of the Internet ... Like John D. Rockefeller and Michael Milken before him, Mr. Ebbers has shown the magic of entrepreneurial vision and guts ... He is a hero of the dimensions of Rockefeller and Mr. Milken."

In Gilder's worldview, it's okay for the Internet to have an "emperor" because only Ebbers can "build a net that can bear the burdens of continued exponential traffic growth." Gee, whatever happened to the idea that the Internet is a "network of networks" that derives its strength and flexibility from the involvement and competition of a vast array of companies? Gilder, like many libertarians, pays lip service to the ideal of free competition -- but he's much more enthralled by the Ayn Randian spectacle of titanic bosses with deep pockets squashing the competition and dramatically building monopolistic empires.

In the meantime, yesterday's New York Times brings unsurprising news of more mergers -- this time, talks between AT&T and GTE, whose BBN subsidiary owns one of the last Net backbones not already gobbled up by WorldCom. If AT&T and GTE consummate that deal, the Internet will be pretty much in the hands of that new giant, WorldCom and Sprint. Maybe three companies is enough to constitute competition and keep the Justice Department's antitrust lawyers at bay; after all, three's been a high enough number for Detroit all these years. But don't be surprised when your local Net service provider turns around next year or the year after and jacks up its rates -- or closes its doors. It looks like sooner or later, we'll all be doing business with Emperor Ebbers.

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A footnote: Some aspects of the Net, at least, still remain outside of WorldCom's control. The company has a Web site, of course, featuring corporate puffery like "Jordan's Home Court," where pitchman Michael Jordan, "the most incredibly talented coolest basketball superstar who has ever existed in the whole history of this great big universe," tells you he uses WorldCom and asks you to join the team. The funny thing is, WorldCom's Web site isn't at www.worldcom.com; that address is owned by a firm called Interliant. To get to Ebbers' page, you've got to type www.wcom.com instead.


Scott Rosenberg

Salon co-founder Scott Rosenberg is director of MediaBugs.org. He is the author of "Say Everything" and Dreaming in Code and blogs at Wordyard.com.

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