Verizon Snags MCI for $6.75 Billion
Cable Guy Alan Breznick, Cable/Video Practice Leader, Light Reading 2/14/2005
Cable operators lost another potential partner in the IP telephony business earlier today when Verizon Communications inked a deal to buy MCI for nearly $6.75 billion in stock and cash. In beating out Qwest Communications, Verizon locked up the rights to MCI's 14 million residential long-distance phone customers and more than 1 million corporate customers. But, more ominously for cable, the deal makes Verizon an even stronger telecom player and likely removes MCI as a possible provider of equipment, connectivity and provisioning services for future cable VoIP rollouts. Slightly more than a year ago, MCI and Sprint Corp. signed pacts to support Time Warner Cable's VoIP rollout in 31 markets across the U.S. But now MCI is slated to become part of Verizon, a direct cable competitor, while cable-friendly Sprint is merging with Nextel. Finally, AT&T Corp., another potential cable VoIP partner, is due to be swallowed up by SBC Communications, cable's other big telco rival. So, unless cable operators can swing deals with either T-Mobile or the new Nextel-Sprint combination, they may be on their own in rolling out VoIP nationwide. Could it be time for the cable industry to start its own phone venture?