WorldCom’s new flat-rate bundled phone plan could have significan...
WorldCom’s new flat-rate bundled phone plan could have significant regulatory impact by giving more credence to unbundled network element platform (UNE-P) as means of entering markets, said Legg Mason in report. “If reasonably successful in attracting local residential customers…
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using UNE-P discounts, [WorldCom] will raise the political costs of Bell-backed efforts to restrict that market entry path,” said report. Other significance of plan introduced April 15 (CD April 16 p6), said Legg Mason: (1) It could expand WorldCom’s subscriber base enough to put pressure on rivals in local and long distance markets which could “cut into telco profit margins and also reduce the residential telephony opportunity for cable operators.” (2) “By intensifying local and long distance competition, the initiative will raise additional complications for Bell-IXC [interexchange company] mergers.” Legg Mason said bundled offering is “risky” but smart strategy because it has “potential to solidify MCI’s relationship with residential customers and build support for favorable regulation.” It’s risky because it’s based on UNE-P and thus its success “depends on the outcome of key proceedings” such as triennial UNE review underway now at FCC, report said.