MCI WorldCom said Thursday it's launching a new consumer Internet service through an alliance with America Online's CompuServe unit.
The service, called MCI WorldCom Internet, replaces the business that MCI was forced to sell off last year to gain regulatory approval of its merger with WorldCom.
Under its agreement with CompuServe, MCI (WCOM) will sell the new Net service to its long-distance customers and plans to handle the marketing and billing ends of the business. CompuServe will be in charge of the content -- setting up an MCI portal, posting news, and hosting email and chat.
"I think the simple way for describing what's going on is, 'We're back,'" said Vint Cerf, senior vice president for MCI WorldCom Internet Architecture and Technology. Cerf said MCI's return to the Net depends largely on the company's UUNet business -- which will provide the backbone for the new ISP.
Last July, to satisfy US and European regulators' concerns that a combined MCI and WorldCom would dominate the Internet, MCI agreed to sell its Net assets to Britain's Cable & Wireless for US$1.75 billion. But WorldCom got to keep its fast-growing UUNet subsidiary, which also offers Internet services.
MCI says it will provide 150 hours of online access for $16.95 to $19.95 a month -- about what competing ISPs are charging. There's a catch: You have to be an MCI long-distance customer to get the lowest fees.
Neither CompuServe nor MCI disclosed financial terms of the agreement.
MCI said it won't be able to offer Net services to business customers because of restrictions laid out by US and European regulators. However, the company said the restrictions didn't apply to the consumer Internet service business.
Legal experts didn't see the new service posing antitrust threats, saying it would just add more competition to the ISP business.
"The divestiture by MCI and WorldCom simply assured that there will be no control by the two entities over that service," said John Ross, who heads the Communications Industry Committee of the American Bar Association's Antitrust Section. "It didn't prevent them from creating a new service of their own and re-entering the field."
