MCI, Sprint, say merger plans won't affect FTS 2001

The federal government's FTS 2001 long-distance services contracts will not be affected by the proposed merger of MCI Worldcom Inc. and Sprint Communications. Co., L.P. for at least a year, according to spokesmen for MCI, Sprint and the General Services Administration.

MCI and Sprint both voiced their intentions to vigorously compete for government business under FTS 2001 until the merger is official.

MCI and Sprint, the sole FTS 2001 contractors, announced their merger plans on Tuesday. MCI will buy Sprint with a stock swap valued at $115 billion. However, "this merger still has to go through some hoops," said Dennis Fischer, commissioner of GSA's Federal Technology Service.

Both the Federal Communications Commission and the Justice Department have to approve the deal. A statement released Tuesday by FCC Chairman William E. Kennard said MCI and Sprint would have to show how long-distance consumers would be better off without competition from these companies.

Both MCI and Sprint recognize that the merger may not be completed until the second half of 2000. "In the meantime it's business as usual-head down, charge ahead," said Jerry Edgerton, MCI's senior vice president for government markets.

The eight-year FTS 2001 contract, which is less than a year old, was set up so the vendors would have to compete against each other for business. "Agencies for the most part have all selected whether they want MCI or Sprint," said Fischer. MCI and Sprint initially contracted for specific rates. But there is still new, long-term business for which to compete.

GSA wants to continue to offer its customers a choice of providers. Because of this, GSA's Metropolitan Area Acquisitions, contracts for local telecommunications services, could be poured into the long-distance mix. So far, AT&T Corp. is the major metropolitan area contractor.

"Our take on the landscape now is that we are not feeling threatened or challenged by this merger," said Fischer. "Here's another wrinkle. We'll work through it."

Fischer is concerned, however, that the FTS 2001 implementation is moving forward in varying degrees. Early adopters like the Defense Department are well on the way to complete implementation. The Pentagon has already moved over to FTS 2001 and all outlying bases will be implemented by December.

Other agencies, though, have been reluctant to make the shift while they contend with the Year 2000 issue. And beyond that, some agencies are simply resistant to change.

"We would love for the transition to have moved faster," said Fischer. "The entire community knows they have to transition. But transition is not easy and there is work involved. Everybody is moving, but some are doing it at different paces."

Some agency officials say it's the vendors who aren't moving quickly enough. "My concern is ... ensuring that Sprint and MCI meet their commitments to the agencies to ensure timely transition," said Bob Bubniak, associate deputy assistant secretary for telecommunications at the Department of Veterans Affairs and chairman of the Interagency Management Council, an agency committee for oversight of GSA's Federal Technology Service. "I'm hearing comments about the difficulty by vendors in meeting stated intervals to install service.

"There are too many unknowns as far as the merger is concerned," said Bubniak. "Executives in a situation like this have to play with the cards they're dealt."