(FORTUNE Magazine) – Bernie Ebbers' audacious gambit to buy MCI, a company three times the size of his WorldCom, is about more than Jonah trying to swallow the whale. This deal, along with others it has overshadowed, shows how much the telecom industry has been swallowed by the Internet. Control of the pipes that carry data is the name of the game--perhaps to the point where customers are left on the sidelines.

Even before MCI accepted WorldCom's offer, a clear sign of an about-face in the telecom business had come--not from a merger but from a split, as U.S. West announced it would sell its cable-TV operations. That move forever kills the idea that cable companies are natural allies of local telephone companies. Not long ago, communications executives were betting that the telephone and cable industries would converge, each type of network evolving to look more like the other. That never happened; the convergence proved too costly.

Then came the Net, and telecom executives changed their focus. Shelving plans to invade each other's markets, telephone and cable companies are racing to offer high-speed data services. Phone companies are introducing a new technology called ADSL (asynchronous digital subscriber line) that permits fast Internet access over ordinary copper phone lines. In Phoenix this fall, US West introduced the first commercial service. Cable companies are investing in special modems that do the same over cable systems.

But the boldest data play belongs to Ebbers, who, you can argue, is trying to buy the pipes that run the Internet. If he succeeds, the cozy collegial atmosphere that exists among Internet service providers will be gone. As of now, any ISP can send traffic onto the Net without a fee at a variety of public entry points. But so many little providers are using these gangways that they have become chokepoints. To avoid them, the dozen biggest Internet companies have so-called private peering agreements to carry one another's traffic over their own data networks for free.

These arrangements assume that Internet companies will hand off traffic to one another in roughly equal volumes. But the WorldCom deal means that three of the biggest data networks--MCI's, WorldCom subsidiary UUNet's, and a network WorldCom recently bought from America Online--will all be under Ebbers' control, giving him an estimated 40% of the Internet backbone, the high-speed network that carries data around the country. Ebbers will be able to rely less on the others, while the others will need him more, which may mean more money for him.

Ebbers argues that worrying about the peering agreements is absurd. "We think that people who use the Net ought to pay at least a little bit for it," he says. MCI-WorldCom's Internet presence is sure to draw Justice Department scrutiny, but regulators may decide that Ebbers doesn't have crushing market power. After all, other companies, notably GTE, are building high-speed data networks. Willkie Farr & Gallagher attorney Philip Verveer, who helped prosecute the AT&T antitrust case, says WorldCom wouldn't have a lock on the Internet transport business since the factors of production (routers, fiber) are readily available.

Ebbers doesn't want to stop at the border. WorldCom is building a high-speed data network in Europe, and, with Britain's Cable & Wireless, it is laying its own trans-Atlantic fiber-optic cable, which will let the company carry traffic to Europe without leasing circuits from anyone else. That could make WorldCom the low-cost international data carrier. "If you buy off on the models of the consulting gurus, the Internet is growing so fast that data traffic will dwarf voice traffic," Ebbers says. "There's going to be a tremendous demand for bandwidth."

So Ebbers wants to own as many of the pipes as he can. But will he be able to fill them? He may have hurt himself by backpedaling from Concert, the joint venture between British Telecom and MCI that sells worldwide telecom services to multi-national customers. (The MCI-WorldCom deal will allow BT to buy back MCI's stake in the venture.) This service has enormous appeal to business customers and is MCI's only differentiation from AT&T and Sprint, argues telecom analyst David Goodtree of Forrester Research. "MCI WorldCom will lose multinational customers, kit and kaboodle," he says. MCI says it will still distribute Concert services, but BT may sell them through other telecom companies.

For now, Ebbers' main worry is keeping WorldCom's stock price from falling any lower. It has sunk 25% from its recent high, to around $30--close to the minimum price at which its offer for MCI will be worth $51 a share. For every dollar WorldCom falls below $29?, the value of its bid for MCI declines by $1.75 a share. A few more dollars, and it will be within range of GTE's cash offer, said to be $45 to $46 a share. Says GTE Chairman Chuck Lee: "For GTE shareholders, $51 per share is too much, but we certainly haven't precluded other options."