MCI Communications
Encyclopedia
MCI Communications Corp. was an American
telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T
monopoly of American telephony and ushered in the competitive long-distance telephone industry. It was headquartered in Washington, D.C.
Founded in 1963, it grew to be the second-largest long-distance provider in the U.S. It was purchased by WorldCom in 1998 and became MCI WorldCom, with the name afterwards being shortened to WorldCom in 2000. WorldCom's financial scandals and bankruptcy led that company to change its name in 2003 to MCI
. The MCI name disappeared in January 2006 after the company was bought by Verizon. As of May 2011 the MCI trademark is still maintained on MCI.com and on a sub-page of Verizon.com.
MCI was founded as Microwave Communications, Inc. on 3 October 1963 with John D. Goeken
being named the company's first president.
The initial business plan was for the company to build a series of microwave relay stations between Chicago, Illinois and St. Louis, Missouri
. The relay stations would then be used to interface with limited range two-way radios used by truckers along U.S. Route 66
or by barges on the Illinois Waterway
. The long distance communication service would then be marketed to shipping companies that were too small to build their own private relay systems. In addition to the radio relay services, MCI soon made plans to offer voice, computer information, and data communication services for business customers unable to afford AT&T's TELPAK service.
The fledgling business began a process of raising capital and submitting applications to the Federal Communications Commission
(FCC) for appropriate licenses. Hearings on Microwave Communications' initial application occurred between 13 February 1967 and 19 April 1967 resulted in a recommendation that the FCC approve MCI's application.
Another FCC ruling that would affect the company was the 26 June 1968 ruling in the Carterfone
case that deemed AT&T's rules prohibiting private two-way radio connections to a telephone network were illegal. AT&T quickly sought a reversal of the ruling, and when the FCC denied their request brought suit against the FCC in the U.S. Court of Appeals. The FCC's decision was upheld, thus creating a new industry: privately (non-Bell) manufactured devices could be connected to the telephone network as long as the manufacturer met interface standards.
In 1968 William G. McGowan
, an investor from New York with experience in raising venture capital, met with the board of Microwave Communications to discuss financing plans for the business. As a result of meetings in June and July, Microwave Communications of America, Inc (MICOM) was incorporated on 8 August 1968 as an umbrella corporation to help build a nationwide microwave relay system. McGowan also made an investment into the new corporation large enough to pay off all outstanding debts of the combined businesses and create a cash reserve. The investment also provided McGowan a stake in the company and a seat on the board.
became an FCC Commissioner in October 1968. Following Lee's joining of the commission, MCI began a series of submissions including a proposal for a low-cost educational television network designed to show MCI as being more flexible to public needs than AT&T. While MCI was performing this lobbying, the President's Task Force on Communication Policy issued a report recommending that specialized common carrier
s be allowed free access into the private line
business.
The FCC issued a final ruling on Docket 16509, MCI's licensing request, on 14 August 1969. By a decision of 4–3 MCI was licensed for operation. This ruling was quickly appealed by AT&T, and after a denial of the appeal by the commission AT&T filed a suit with the U.S. Court of Appeals to have the ruling overturned.
Following the FCC approval for MCI to begin building microwave relay stations between Chicago and St. Louis, Microwave Communications of America began to form subsidiary corporations and file applications with the FCC to create microwave relays between other city pairs. Between September 1969 and February 1971 fifteen new regional carriers were created allowing for interconnection between a number of major cities in the United States. In July 1969, MICOM also purchased an equity position
in Interdata, an independent regional carrier that was applying to build a microwave relay chain between New York City
and Washington, D.C.
MCI began selling data transmission services to paying customers on 1 January 1972.
To pay for the microwave transmission and relay equipment needed for build out, MICOM began a series of private stock offerings on May 1971. In July 1971 MICOM was restructured into MCI Communications, and the restructured company began the process of absorbing the regional carriers into a single corporation. MCI went public
on 22 June 1972, selling an initial offering of 3.3 million shares.
In the 1970s, Western Union
organized its cable systems properties and its right-of-way rights of its telegraph lines into a subsidiary called Western Union International, which was subsequently sold to Xerox
for their planned intra-city office network aspirations. In 1982, it sold this subsidiary to MCI Communications which renamed it to MCI International and moved its headquarters from New York City
to Westchester County, New York
.
In 1983, in conjunction with Michael Milken
and Drexel Burnham Lambert
, the company issued a $1.1 billion hybrid security
—at the time the largest debt financing in history. The financing allowed company management to put an extra $500 million in cash on their balance sheet
so that customers, suppliers, and investors would know they were financially strong. The immediate effect was that management no longer was forced to spend so much time raising capital. By 1990, MCI had become the nation’s second-largest telecommunications company, establishing a fiber-optic network spanning more than 46,000 miles. The company offered more than 50 services in more than 150 countries that included voice, data, and telex transmissions, MCI Mail
and MCI Fax.
lawsuit against AT&T in 1974, and eventually changed the telecommunications industry. On June 13, 1980, a jury in Chicago awarded MCI 1.8 billion dollars in damages to be paid by AT&T. The suit, coupled with the Department of Justice antitrust suit also brought against AT&T eventually led to the voluntary breakup of the Bell System
.
, now a part of Verizon, made a bid to purchase MCI for an all-cash purchase. While these offers were being considered by the MCI board, WorldCom, Inc. announced it was also interested in purchasing MCI and made a higher offer than either the BT or GTE offers. On November 10, 1997 in a stock-swap deal valued at US$34.7 billion, MCI accepted the buy-out from WorldCom. On September 15, 1998 the new company, MCI WorldCom, opened for business.
. One of MCI's early advertising success stories was to hire the same actors used in a previous AT&T commercial. As in the AT&T commercial, the woman actor was crying. In the AT&T version, when the husband asked why, the wife replied "he said he loved me" referring to the conversation just ended with a son who was in a distant part of the country. It was part of AT&T's very effective "Reach Out" ad strategy. In the MCI version, when the husband asked the wife why she was crying, she replied "I just received my phone bill"... after which an announcer's voice stated "You're not talking too much, you're just paying too much. MCI: The Nation's New Long Distance Telephone Company." The ads were created by Ally & Gargano.
Even before the competitive long distance market came into existence, MCI created (in late 1970) a subsidiary company named MCI Satellite, Inc. The idea was that satellites could provide 'long distance' service from anywhere to anywhere without having to build thousands of miles of terrestrial network facilities. In early 1971, MCI and Lockheed Missiles and Space Company created a joint venture named MCI Lockheed Satellite Corp. which was the first company to request FCC authorization as a Specialized Common Carrier using satellite based communications. A year later, MCI and Lockheed sought an additional source of funding and Comsat Corp. entered the venture which was renamed CML Satellite Corp. In need of cash, MCI sold its share of the venture to IBM Corporation in 1974 (Lockheed also subsequently sold its share to IBM). IBM and Comsat brought in Aetna Insurance Company as a third partner and renamed the company Satellite Business Systems (SBS)
. In a twist of fate, IBM, which years later became the sole owner of SBS sold the satellite subsidiary back to MCI in 1985, the $400 million "purchase price," in effect providing MCI with the financing it needed to continue its expansion.
In 1975, MCI began experimenting with offering switched voice telecommunications in direct competition with AT&T. Up to that point MCI sold point-to-point voice and data services using their microwave relay backbone. Starting with two Digital Tandem Switch (DTS) voice-switching systems designed specifically for them by the Collins Radio Company of Cedar Rapids, Iowa (later a division of Rockwell International
), MCI began offering competitive circuit-switched direct-dial services using a combination of their own microwave circuits and leased circuits from AT&T made available to them from the landmark Carterfone decision. One early customer was CNA Insurance in Chicago, served by one of the two Collins systems located at MCI's facilities on the 21st floor of Chicago's John Hancock building. The second Collins switch was located at MCI facilities in New York City and voice services sold to a variety of customers including RCA Global Communications under MCI's "Execunet" service banner. The experiment proved successful and a third switch was purchased from Danray Corporation (later purchased by Northern Telecommunications, now Nortel) and installed in the MCI Chicago facility alongside the Collins system. When GE later bought RCA and broke it up MCI purchased the RCA Global Communications division. Many more Danray switches were purchased and deployed at strategic points of their service area to become the first viable competitor to AT&T's long-distance voice services for businesses.
MCI was the first company to deploy Single Mode Fiber Optic Cable
(the standard had been Multi-mode
) which was manufactured by Siecor, a joint venture between Siemens Telecom and Corning Glass Company. Referred to as MAFOS (Mid-Atlantic Fiber Optic System) The fiber cable ran between New York City and Washington D.C. and was turned up for service in 1984. Eventually, Single Mode fiber became the standard for US Telecom carriers.
A later marketing
strategy employed by MCI was the Friends & Family plan, an early type of loyalty program
. In this program, customers would receive a reduced rate when both the caller and callee were MCI customers.
The company also introduced a dial-around collect calling service called "1-800-COLLECT". Actors Ed O'Neill
, Wayne Knight
, Mr. T
, and motorcycle racing legend Jeremy McGrath
starred in some of 1-800-COLLECT's commercials, but the most commonly used spokesperson ended up being the fictitious Eva Savealot, who was played by actress Alyssa Milano
.
In 1995, MCI introduced 1-800-MUSIC-NOW
, a short-lived telephone-based and online music store.
In the early 1980s, MCI developed a data network using the CCITT X.25
packet switching protocol and an electronic mail service called MCI Mail
. There were other commercially available electronic mail systems, such as IBM's Professional Office System (PROFs), but they didn't interface with each other until the development of the CCITT X.400
standard in 1984. During this time, Vint Cerf
(one of the developers of the TCP/IP protocol) was head of MCI Digital Information Services and led the effort to interconnect MCI Mail with the Internet; the first commercial e-mail service to do so.
In the mid-to-late 1980s MCI partnered with several universities and provided the high speed telecommunications links between their computer systems. This network, operated under the auspices of the National Science Foundation was called NSFNet
, used the TCP/IP protocol that had been developed by the U.S. Department of Defense ARPANet
and was the immediate forerunner to the Internet. From the early 90's on, MCI's network was an integral part of the global Internet backbone.
When MCI decided to go into the telecommunications business, they aquired a company called nationwide cellular, that aquired another chicago based company called Nova Cellular, which was run by president Roger Fischer, vice president bob sitars, installation manager Gilbert tumey, service manager steve molyneaux, and at the time installation tech myself George Fehringer. Nova cellular started in 1984. All we used to do was install car phones into cars. our name came to be from the phone that we mostly installed called the novatel car phone. These phones were about 2800.00 at the time, and at the time of install, we would have to have the customer sign lease papers. Now you can buy a cellular phone for as little as $11.00. Nova Cellular had 10 stores with the help of nationwide cellular in the chicagoland area. About 39 nationwide, Chicago, newyork, california, boston, and maryland. After nationwide cellular aquired novacellular, in id like to say 1986, they bought us a new building at 2000 york road, suite 119 in oakbrook. 5000 sqf. We stayed in that building for 2 years, and then cltv was moving into our building, so they paid for our move accross the hall into id like to say a 10000 sqf facility. suite 128. i (george Fehringer)was then made purchasing Manager/warehouse supervisor, Steve Molyneaux was made operations manager, Gilbert Tumey was our Finance Manager, and Robert Cascarano was our service manager. This is when we centralized all operations for Nationwide cellular to Oakbrook. all purchasing, and service, was controlled out of oakbrook il. Then Mci purchased us in I wanna say 1995. There was no stopping us then. Mci went gung hoe with nationwide cellular, and immediatately built a 2 story fulfillment center in the next building over. This fulfillment center was filling orders over the internet. Something that we have never done before. Harold Saving at the time, decided to retire, and we received a great general manager. Marty Johansen. This guy people used to strive to impress him, cause he was that kind of guy. He was a motivator. then around 1999 worldcom, and bernie ebbers purchased mci. thus being Mciworldcom. It was all down hill after that. bernie ebbers was such a micro manager, that he even got involved in how much coffee his company used. he is in jail for 25 years, and I dont have to say why. all of the dedicated employees lost their stock options and their 401k. it was like the little fish buying the big fish. bernie ebbers is responsible for destroying what mci had built. It was so sad how mci had folded, due to bernie ebbers incompetence. myself(George Fehringer) warehouse supervisor/purchasing manager at the time was forced to fire 46 dedicated employees. everyone lost their 401k to this jerk. there was a lot of crying every friday when i had to pencil out 10 employees, while at the same time we were transferring 46 million dollars of inventory from chicago to phoenix. a 22 year old kid with no more than 2 years experience took my job and experience of 17 years, for 3 times the salary cut. Phoenicx ended up closing a year later. While bernie with his extravagant lifestyle. All he was was an embezzler. its good that he is in jail for ruining so many peoples lives just so he can ride the rich and wild life. but some people may never recoup from what he has done. please mcicommunications had nothing to do with the worldcom scandle. it was all bernie ebbers doing.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T
American Telephone & Telegraph
AT&T Corp., originally American Telephone and Telegraph Company, is an American telecommunications company that provides voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agencies. AT&T is the oldest telecommunications company...
monopoly of American telephony and ushered in the competitive long-distance telephone industry. It was headquartered in Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
Founded in 1963, it grew to be the second-largest long-distance provider in the U.S. It was purchased by WorldCom in 1998 and became MCI WorldCom, with the name afterwards being shortened to WorldCom in 2000. WorldCom's financial scandals and bankruptcy led that company to change its name in 2003 to MCI
MCI Inc.
MCI, Inc. is an American telecommunications subsidiary of Verizon Communications that is headquartered in Ashburn, Virginia...
. The MCI name disappeared in January 2006 after the company was bought by Verizon. As of May 2011 the MCI trademark is still maintained on MCI.com and on a sub-page of Verizon.com.
Founding
John D. Goeken
John D. "Jack" Goeken was a prolific telecommunications entrepreneur. He was the original founder of Microwave Communications Inc., better known as MCI Inc.-Founding of MCI:...
being named the company's first president.
The initial business plan was for the company to build a series of microwave relay stations between Chicago, Illinois and St. Louis, Missouri
St. Louis, Missouri
St. Louis is an independent city on the eastern border of Missouri, United States. With a population of 319,294, it was the 58th-largest U.S. city at the 2010 U.S. Census. The Greater St...
. The relay stations would then be used to interface with limited range two-way radios used by truckers along U.S. Route 66
U.S. Route 66
U.S. Route 66 was a highway within the U.S. Highway System. One of the original U.S. highways, Route 66 was established on November 11, 1926 -- with road signs erected the following year...
or by barges on the Illinois Waterway
Illinois Waterway
The Illinois Waterway system consists of of water from the mouth of the Calumet River to the mouth of the Illinois River at Grafton, Illinois. It is a system of rivers, lakes, and canals which provide a shipping connection from the Great Lakes to the Gulf of Mexico via the Mississippi River. The...
. The long distance communication service would then be marketed to shipping companies that were too small to build their own private relay systems. In addition to the radio relay services, MCI soon made plans to offer voice, computer information, and data communication services for business customers unable to afford AT&T's TELPAK service.
The fledgling business began a process of raising capital and submitting applications to the Federal Communications Commission
Federal Communications Commission
The Federal Communications Commission is an independent agency of the United States government, created, Congressional statute , and with the majority of its commissioners appointed by the current President. The FCC works towards six goals in the areas of broadband, competition, the spectrum, the...
(FCC) for appropriate licenses. Hearings on Microwave Communications' initial application occurred between 13 February 1967 and 19 April 1967 resulted in a recommendation that the FCC approve MCI's application.
Another FCC ruling that would affect the company was the 26 June 1968 ruling in the Carterfone
Carterfone
The Carterfone is a device invented by Thomas Carter. It manually connects a two-way mobile radio system to the public switched telephone network , making it a direct predecessor to today's autopatch....
case that deemed AT&T's rules prohibiting private two-way radio connections to a telephone network were illegal. AT&T quickly sought a reversal of the ruling, and when the FCC denied their request brought suit against the FCC in the U.S. Court of Appeals. The FCC's decision was upheld, thus creating a new industry: privately (non-Bell) manufactured devices could be connected to the telephone network as long as the manufacturer met interface standards.
In 1968 William G. McGowan
William G. McGowan
William G. McGowan was an American entrepreneur, and founder and chairman of MCI Communications. His role as leader of MCI also caused him to play an important role in the breakup of AT&T while growing the startup company into a company that in 1991 had US$9.5 billion in revenues and controlled...
, an investor from New York with experience in raising venture capital, met with the board of Microwave Communications to discuss financing plans for the business. As a result of meetings in June and July, Microwave Communications of America, Inc (MICOM) was incorporated on 8 August 1968 as an umbrella corporation to help build a nationwide microwave relay system. McGowan also made an investment into the new corporation large enough to pay off all outstanding debts of the combined businesses and create a cash reserve. The investment also provided McGowan a stake in the company and a seat on the board.
Licensing and build out
Despite a 1967 recommendation that MCI's application be approved, final authorization for MCI to begin operations was delayed until after H. Rex LeeHyrum Rex Lee
Hyrum Rex Lee , usually called H. Rex Lee, was the Governor of American Samoa from May 24, 1961 to July 31, 1967 and from May 28, 1977 until January 3, 1978. He was the seventh appointed civilian Governor of American Samoa...
became an FCC Commissioner in October 1968. Following Lee's joining of the commission, MCI began a series of submissions including a proposal for a low-cost educational television network designed to show MCI as being more flexible to public needs than AT&T. While MCI was performing this lobbying, the President's Task Force on Communication Policy issued a report recommending that specialized common carrier
Common carrier
A common carrier in common-law countries is a person or company that transports goods or people for any person or company and that is responsible for any possible loss of the goods during transport...
s be allowed free access into the private line
Private line
In wired telephony, a private line or tie line is a service that involves dedicated circuits, private switching arrangements, and/or predefined transmission paths, whether virtual or physical, which provide communications between specific locations. Most private lines connect only two locations...
business.
The FCC issued a final ruling on Docket 16509, MCI's licensing request, on 14 August 1969. By a decision of 4–3 MCI was licensed for operation. This ruling was quickly appealed by AT&T, and after a denial of the appeal by the commission AT&T filed a suit with the U.S. Court of Appeals to have the ruling overturned.
Following the FCC approval for MCI to begin building microwave relay stations between Chicago and St. Louis, Microwave Communications of America began to form subsidiary corporations and file applications with the FCC to create microwave relays between other city pairs. Between September 1969 and February 1971 fifteen new regional carriers were created allowing for interconnection between a number of major cities in the United States. In July 1969, MICOM also purchased an equity position
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
in Interdata, an independent regional carrier that was applying to build a microwave relay chain between New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
and Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
MCI began selling data transmission services to paying customers on 1 January 1972.
To pay for the microwave transmission and relay equipment needed for build out, MICOM began a series of private stock offerings on May 1971. In July 1971 MICOM was restructured into MCI Communications, and the restructured company began the process of absorbing the regional carriers into a single corporation. MCI went public
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
on 22 June 1972, selling an initial offering of 3.3 million shares.
In the 1970s, Western Union
Western Union
The Western Union Company is a financial services and communications company based in the United States. Its North American headquarters is in Englewood, Colorado. Up until 2006, Western Union was the best-known U.S...
organized its cable systems properties and its right-of-way rights of its telegraph lines into a subsidiary called Western Union International, which was subsequently sold to Xerox
Xerox
Xerox Corporation is an American multinational document management corporation that produced and sells a range of color and black-and-white printers, multifunction systems, photo copiers, digital production printing presses, and related consulting services and supplies...
for their planned intra-city office network aspirations. In 1982, it sold this subsidiary to MCI Communications which renamed it to MCI International and moved its headquarters from New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
to Westchester County, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
.
In 1983, in conjunction with Michael Milken
Michael Milken
Michael Robert Milken is an American business magnate, financier, and philanthropist noted for his role in the development of the market for high-yield bonds during the 1970s and 1980s, for his 1990 guilty plea to felony charges for violating US securities laws, and for his funding of medical...
and Drexel Burnham Lambert
Drexel Burnham Lambert
Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the...
, the company issued a $1.1 billion hybrid security
Hybrid security
Hybrid securities are a broad group of securities that combine the elements of the two broader groups of securities, debt and equity.Hybrid securities pay a predictable rate of return or dividend until a certain date, at which point the holder has a number of options including converting the...
—at the time the largest debt financing in history. The financing allowed company management to put an extra $500 million in cash on their balance sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
so that customers, suppliers, and investors would know they were financially strong. The immediate effect was that management no longer was forced to spend so much time raising capital. By 1990, MCI had become the nation’s second-largest telecommunications company, establishing a fiber-optic network spanning more than 46,000 miles. The company offered more than 50 services in more than 150 countries that included voice, data, and telex transmissions, MCI Mail
MCI Mail
MCI Mail was a commercial email service that was operated by MCI Communications Corp. during the period 1983 - 2003. The service is widely credited with being the first commercial email service in the United States.-History:...
and MCI Fax.
Anti-trust suits
When it ran into problems competing with AT&T, which at the time had a government-supported monopoly in telephone service, it moved to Washington, D.C. to be close to federal regulators and lawmakers. MCI ordered interconnections from the local exchange carriers, which in most cases was a Bell Operating Company, owned by AT&T. The relationship between MCI and the Bell Operating companies were not that of a typical supplier and customer, as the local operating companies were generally reluctant to do business with a company that its parent was attempting to put out of business. In a decision that became a turning point in the competitive telecommunications industry, Illinois Bell disconnected MCI circuits for what MCI believed was no other reason than to restrain trade. MCI filed an antitrustAntitrust
The United States antitrust law is a body of laws that prohibits anti-competitive behavior and unfair business practices. Antitrust laws are intended to encourage competition in the marketplace. These competition laws make illegal certain practices deemed to hurt businesses or consumers or both,...
lawsuit against AT&T in 1974, and eventually changed the telecommunications industry. On June 13, 1980, a jury in Chicago awarded MCI 1.8 billion dollars in damages to be paid by AT&T. The suit, coupled with the Department of Justice antitrust suit also brought against AT&T eventually led to the voluntary breakup of the Bell System
Bell System
The Bell System was the American Bell Telephone Company and then, subsequently, AT&T led system which provided telephone services to much of the United States and Canada from 1877 to 1984, at various times as a monopoly. In 1984, the company was broken up into separate companies, by a U.S...
.
Merger offers
In 1991, British Telecommunications PLC purchased 20% of the company and later made an offer to purchase the rest in 1996. At the same time, GTEGTE
GTE Corporation, formerly General Telephone & Electronics Corporation was the largest independent telephone company in the United States during the days of the Bell System....
, now a part of Verizon, made a bid to purchase MCI for an all-cash purchase. While these offers were being considered by the MCI board, WorldCom, Inc. announced it was also interested in purchasing MCI and made a higher offer than either the BT or GTE offers. On November 10, 1997 in a stock-swap deal valued at US$34.7 billion, MCI accepted the buy-out from WorldCom. On September 15, 1998 the new company, MCI WorldCom, opened for business.
MCI innovations
After the opening of the long distance market in 1984, companies such as MCI and Sprint were able to compete for customers with AT&TAT&T
AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband and subscription television services...
. One of MCI's early advertising success stories was to hire the same actors used in a previous AT&T commercial. As in the AT&T commercial, the woman actor was crying. In the AT&T version, when the husband asked why, the wife replied "he said he loved me" referring to the conversation just ended with a son who was in a distant part of the country. It was part of AT&T's very effective "Reach Out" ad strategy. In the MCI version, when the husband asked the wife why she was crying, she replied "I just received my phone bill"... after which an announcer's voice stated "You're not talking too much, you're just paying too much. MCI: The Nation's New Long Distance Telephone Company." The ads were created by Ally & Gargano.
Even before the competitive long distance market came into existence, MCI created (in late 1970) a subsidiary company named MCI Satellite, Inc. The idea was that satellites could provide 'long distance' service from anywhere to anywhere without having to build thousands of miles of terrestrial network facilities. In early 1971, MCI and Lockheed Missiles and Space Company created a joint venture named MCI Lockheed Satellite Corp. which was the first company to request FCC authorization as a Specialized Common Carrier using satellite based communications. A year later, MCI and Lockheed sought an additional source of funding and Comsat Corp. entered the venture which was renamed CML Satellite Corp. In need of cash, MCI sold its share of the venture to IBM Corporation in 1974 (Lockheed also subsequently sold its share to IBM). IBM and Comsat brought in Aetna Insurance Company as a third partner and renamed the company Satellite Business Systems (SBS)
Satellite Business Systems
Satellite Business Systems, abbreviated as SBS, was a company founded by IBM, Aetna, Comsat , that provided private professional satellite communications through its SBS fleet of FSS geosynchronous satellites, and was the first company to do so.SBS was founded on December 15, 1975 by the...
. In a twist of fate, IBM, which years later became the sole owner of SBS sold the satellite subsidiary back to MCI in 1985, the $400 million "purchase price," in effect providing MCI with the financing it needed to continue its expansion.
In 1975, MCI began experimenting with offering switched voice telecommunications in direct competition with AT&T. Up to that point MCI sold point-to-point voice and data services using their microwave relay backbone. Starting with two Digital Tandem Switch (DTS) voice-switching systems designed specifically for them by the Collins Radio Company of Cedar Rapids, Iowa (later a division of Rockwell International
Rockwell International
Rockwell International was a major American manufacturing conglomerate in the latter half of the 20th century, involved in aircraft, the space industry, both defense-oriented and commercial electronics, automotive and truck components, printing presses, valves and meters, and industrial automation....
), MCI began offering competitive circuit-switched direct-dial services using a combination of their own microwave circuits and leased circuits from AT&T made available to them from the landmark Carterfone decision. One early customer was CNA Insurance in Chicago, served by one of the two Collins systems located at MCI's facilities on the 21st floor of Chicago's John Hancock building. The second Collins switch was located at MCI facilities in New York City and voice services sold to a variety of customers including RCA Global Communications under MCI's "Execunet" service banner. The experiment proved successful and a third switch was purchased from Danray Corporation (later purchased by Northern Telecommunications, now Nortel) and installed in the MCI Chicago facility alongside the Collins system. When GE later bought RCA and broke it up MCI purchased the RCA Global Communications division. Many more Danray switches were purchased and deployed at strategic points of their service area to become the first viable competitor to AT&T's long-distance voice services for businesses.
MCI was the first company to deploy Single Mode Fiber Optic Cable
Single-mode optical fiber
In fiber-optic communication, a single-mode optical fiber is an optical fiber designed to carry only a single ray of light . Modes are the possible solutions of the Helmholtz equation for waves, which is obtained by combining Maxwell's equations and the boundary conditions...
(the standard had been Multi-mode
Multi-mode optical fiber
Multi-mode optical fiber is a type of optical fiber mostly used for communication over short distances, such as within a building or on a campus...
) which was manufactured by Siecor, a joint venture between Siemens Telecom and Corning Glass Company. Referred to as MAFOS (Mid-Atlantic Fiber Optic System) The fiber cable ran between New York City and Washington D.C. and was turned up for service in 1984. Eventually, Single Mode fiber became the standard for US Telecom carriers.
A later marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
strategy employed by MCI was the Friends & Family plan, an early type of loyalty program
Relationship marketing
Relationship marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions....
. In this program, customers would receive a reduced rate when both the caller and callee were MCI customers.
The company also introduced a dial-around collect calling service called "1-800-COLLECT". Actors Ed O'Neill
Ed O'Neill
Edward Phillip "Ed" O'Neill, Jr. is an American actor. He is best known for his role as the main character, Al Bundy, on the Fox Network sitcom Married... with Children, for which he was nominated for two Golden Globes...
, Wayne Knight
Wayne Knight
Wayne Eliot Knight is an American actor, comedian, and voice actor perhaps best known for his role as Newman in the TV sitcom Seinfeld...
, Mr. T
Mr. T
Mr. T is an American actor known for his roles as B. A. Baracus in the 1980s television series The A-Team, as boxer Clubber Lang in the 1982 film Rocky III, and for his appearances as a professional wrestler. Mr. T is known for his trademark African Mandinka warrior hairstyle, his gold jewelry,...
, and motorcycle racing legend Jeremy McGrath
Jeremy McGrath
Jeremy McGrath is one of the most popular American Motocross/Supercross champions in the history of the sport. He was most active in the 1990s earning the title the "King of Supercross." His tricks during jumps on the supercross track, the most famous of which he called the "Nac Nac", helped spawn...
starred in some of 1-800-COLLECT's commercials, but the most commonly used spokesperson ended up being the fictitious Eva Savealot, who was played by actress Alyssa Milano
Alyssa Milano
Alyssa Jayne Milano is an American actress and former singer, known for her childhood role as Samantha Micelli in the sitcom Who's the Boss? and an eight-year stint as Phoebe Halliwell on the series Charmed. She was also a series regular on the original Melrose Place portraying the role of...
.
In 1995, MCI introduced 1-800-MUSIC-NOW
1-800-MUSIC-NOW
1-800 MUSIC NOW was a short-lived venture by MCI Communications to open a music store operated through automated telephone prompts. It also introduced one of the first ever serious attempts at an e-commerce music store...
, a short-lived telephone-based and online music store.
In the early 1980s, MCI developed a data network using the CCITT X.25
X.25
X.25 is an ITU-T standard protocol suite for packet switched wide area network communication. An X.25 WAN consists of packet-switching exchange nodes as the networking hardware, and leased lines, Plain old telephone service connections or ISDN connections as physical links...
packet switching protocol and an electronic mail service called MCI Mail
MCI Mail
MCI Mail was a commercial email service that was operated by MCI Communications Corp. during the period 1983 - 2003. The service is widely credited with being the first commercial email service in the United States.-History:...
. There were other commercially available electronic mail systems, such as IBM's Professional Office System (PROFs), but they didn't interface with each other until the development of the CCITT X.400
X.400
X.400 is a suite of ITU-T Recommendations that define standards for Data Communication Networks for Message Handling Systems — more commonly known as "email"....
standard in 1984. During this time, Vint Cerf
Vint Cerf
Vinton Gray "Vint" Cerf is an American computer scientist, who is recognized as one of "the fathers of the Internet", sharing this title with American computer scientist Bob Kahn...
(one of the developers of the TCP/IP protocol) was head of MCI Digital Information Services and led the effort to interconnect MCI Mail with the Internet; the first commercial e-mail service to do so.
In the mid-to-late 1980s MCI partnered with several universities and provided the high speed telecommunications links between their computer systems. This network, operated under the auspices of the National Science Foundation was called NSFNet
NSFNet
The National Science Foundation Network was a program of coordinated, evolving projects sponsored by the National Science Foundation beginning in 1985 to promote advanced research and education networking in the United States...
, used the TCP/IP protocol that had been developed by the U.S. Department of Defense ARPANet
ARPANET
The Advanced Research Projects Agency Network , was the world's first operational packet switching network and the core network of a set that came to compose the global Internet...
and was the immediate forerunner to the Internet. From the early 90's on, MCI's network was an integral part of the global Internet backbone.
External links
- MCI Inc. (April 12, 1997 and May 16, 1997 are functional links of the former MCI Communications)
- William G. McGowan's MCI, 1968 to 1991 (Online exhibit produced by the Hagley Library on the life of MCI CEO William McGowan)
When MCI decided to go into the telecommunications business, they aquired a company called nationwide cellular, that aquired another chicago based company called Nova Cellular, which was run by president Roger Fischer, vice president bob sitars, installation manager Gilbert tumey, service manager steve molyneaux, and at the time installation tech myself George Fehringer. Nova cellular started in 1984. All we used to do was install car phones into cars. our name came to be from the phone that we mostly installed called the novatel car phone. These phones were about 2800.00 at the time, and at the time of install, we would have to have the customer sign lease papers. Now you can buy a cellular phone for as little as $11.00. Nova Cellular had 10 stores with the help of nationwide cellular in the chicagoland area. About 39 nationwide, Chicago, newyork, california, boston, and maryland. After nationwide cellular aquired novacellular, in id like to say 1986, they bought us a new building at 2000 york road, suite 119 in oakbrook. 5000 sqf. We stayed in that building for 2 years, and then cltv was moving into our building, so they paid for our move accross the hall into id like to say a 10000 sqf facility. suite 128. i (george Fehringer)was then made purchasing Manager/warehouse supervisor, Steve Molyneaux was made operations manager, Gilbert Tumey was our Finance Manager, and Robert Cascarano was our service manager. This is when we centralized all operations for Nationwide cellular to Oakbrook. all purchasing, and service, was controlled out of oakbrook il. Then Mci purchased us in I wanna say 1995. There was no stopping us then. Mci went gung hoe with nationwide cellular, and immediatately built a 2 story fulfillment center in the next building over. This fulfillment center was filling orders over the internet. Something that we have never done before. Harold Saving at the time, decided to retire, and we received a great general manager. Marty Johansen. This guy people used to strive to impress him, cause he was that kind of guy. He was a motivator. then around 1999 worldcom, and bernie ebbers purchased mci. thus being Mciworldcom. It was all down hill after that. bernie ebbers was such a micro manager, that he even got involved in how much coffee his company used. he is in jail for 25 years, and I dont have to say why. all of the dedicated employees lost their stock options and their 401k. it was like the little fish buying the big fish. bernie ebbers is responsible for destroying what mci had built. It was so sad how mci had folded, due to bernie ebbers incompetence. myself(George Fehringer) warehouse supervisor/purchasing manager at the time was forced to fire 46 dedicated employees. everyone lost their 401k to this jerk. there was a lot of crying every friday when i had to pencil out 10 employees, while at the same time we were transferring 46 million dollars of inventory from chicago to phoenix. a 22 year old kid with no more than 2 years experience took my job and experience of 17 years, for 3 times the salary cut. Phoenicx ended up closing a year later. While bernie with his extravagant lifestyle. All he was was an embezzler. its good that he is in jail for ruining so many peoples lives just so he can ride the rich and wild life. but some people may never recoup from what he has done. please mcicommunications had nothing to do with the worldcom scandle. it was all bernie ebbers doing.