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Monday, February 14, 2005


The New Telecom Wars

From PRNewswire , "Verizon Communications
Inc. (NYSE: VZ) and MCI, Inc. (Nasdaq: MCIP) today announced that Verizon has agreed to acquire MCI for $4.8 billion in equity and $488 million in cash." Verizon Chairman and CEO Ivan Seidenberg stated that his company's goal is to increase it's services to large businesses, their goal being the major provider in that market. Another key to the acquisition is MCI's efficiency, which Verizon aims at implementing in the near future.

The largest reason, one that was underplayed in the press release is MCI's Voice over Internet Protocol, or VoIP, network. Over the next five years, personal communication will likely trend more towards VoIP, straying away from the still relatively unreliable (by many standards) wireless phone. VoIP, by using a digital signal, provides better quality for a smaller price. Verizon now has a strong backbone in this burgeoning market, and assuming it's marketing strategy stays steady, Verizon is poised to dominate this market.


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