WorldCom Plans to Disconnect MCI’s Residential Customers

MCI Communications Corp. would jettison its approximately 20 million residential long-distance customers and focus solely on more profitable business customers if a proposed $30-billion buyout of MCI goes through, according to a top executive of the company that would make the purchase.

John Sidgmore, vice chairman of WorldCom Inc., said that the residential customers likely would be transferred to other long-distance companies, potentially including the regional Bell companies.

Under this scenario, calls would still be carried by WorldCom and MCI wires. But the job of setting rates, providing operators and billing the customers would belong to the other companies. The customer would never hear the MCI name or deal with the company.

WorldCom would “sell” MCI customers to other long-distance companies, who would pay for rights to serve established accounts. Because customers are legally guaranteed the right to choose their long-distance provider, they would not have to stay with the company to which they were moved.

Precisely when and how all this would occur is unclear: Even under the speediest scenario, WorldCom would have to wait until next year to buy MCI.

“We’re not saying [the end of residential service] is definitely going to happen on Day One,” Sidgmore said. Initially “we’re going to market to consumers just like MCI does. On the other hand, our strategy is not in the consumer business.”

WorldCom, based in Jackson, Miss., has long seen its specialty as “wholesaling” of telecommunications capacity. It operates high-capacity fiber-optic lines that it leases to more than 50 other long-distance companies, which use the lines to carry their calls. It sells long-distance service under its own name primarily to business customers.

Such a move would be a remarkable shift for Washington, D.C.-based MCI, which built much of its early business with a blitz of TV ads aimed at Americans fed up with the rates of AT&T; Corp. In recent years, it has taken on millions of customers through its “Friends and Family” discount program.

The shift would roil the nation’s annual $38 billion residential long-distance market by removing one of its largest players. At present the market is dominated by AT&T;, MCI and Sprint Corp. MCI today controls roughly 16% of it.