MCI Communications

MCI Communications
Name	MCI Communications
Type	Public
Industry	Telecommunications
Fate	Acquired
Founded	1963
Founder	William G. McGowan
Defunct	2006
Headquarters	Washington, D.C.
Key people	William G. McGowan, S. Wallace Williamson
Products	Long-distance telephone service, data network services, Internet backbone

MCI Communications was an American telecommunications carrier founded in 1963 that grew into a major provider of long-distance voice, data, and Internet services, competing with AT&T Corporation and influencing deregulation and competition in the United States telecommunications sector. The company expanded through litigation, regulatory advocacy, and acquisitions to offer services across North America and internationally, before being acquired in the early 2000s. Its operations intersected with notable figures, corporations, and regulatory bodies in late 20th-century communications history.

History

MCI emerged in the 1960s under William G. McGowan and pursued litigation against AT&T Corporation culminating in prolonged antitrust and regulatory contests involving the United States Department of Justice, the Federal Communications Commission, and district and appellate courts. During the 1970s and 1980s MCI expanded its footprint through alliances with firms like Sierra Pacific Resources and attracted investment from entities associated with Saul Steinberg and other financiers. The company's competitive role grew after landmark actions that paralleled the breakup of AT&T Corporation and decisions by the United States Court of Appeals for the District of Columbia Circuit. MCI's leadership engaged with regulators such as William E. Kennard and legislators during the passage debates leading to the Telecommunications Act of 1996.

Services and Products

MCI provided long-distance voice services, private line and virtual private network offerings to corporate clients including multinational firms that also used services from IBM, AT&T Corporation, and Sprint Corporation. The company developed packet-switched data services and operated an Internet backbone used by providers similar to UUNET Technologies and ANS Network. MCI marketed managed data center services and frame relay networks competing with offerings from Bell Atlantic, Pacific Bell, and GTE Corporation. It also offered enterprise managed voice and conferencing services that were used by organizations such as McDonald's Corporation and financial institutions like Citigroup.

Corporate Structure and Ownership

The firm was publicly traded and governed by a board that included executives with backgrounds at General Electric and Chase Manhattan Bank. Major shareholders over time included institutional investors and conglomerates similar to Seagram and investor groups related to Saul Steinberg. Executive leadership changed through CEOs and chairs who had professional ties to AT&T Corporation alumni and finance executives from Goldman Sachs and Morgan Stanley. Its corporate headquarters in Washington, D.C. served as a hub for regulatory lobbying and interactions with lawmakers from the United States Congress.

Major Acquisitions and Mergers

MCI pursued numerous acquisitions to broaden services, including purchases of data service providers and exchanges comparable to deals with UUNET Technologies and regional carriers similar to Sprint Corporation's acquisitions. In the 1990s it acquired Internet service and enterprise networking firms to build a nationwide backbone that paralleled consolidations seen with WorldCom and Verizon Communications. Ultimately MCI became the target of a major takeover bid culminating in acquisition talks involving firms akin to WorldCom and shareholder negotiations overseen by financial advisers from Goldman Sachs and Morgan Stanley.

Regulatory and Legal Issues

Litigation against AT&T Corporation and subsequent antitrust cases placed the company at the center of United States Department of Justice enforcement actions and regulatory proceedings at the Federal Communications Commission. The firm engaged in rate disputes and interconnection hearings with regional Bell operating companies including Bell Atlantic and Pacific Telesis, led to testimony before committees of the United States House of Representatives and the United States Senate, and intersected with policy debates around the Telecommunications Act of 1996. It faced shareholder litigation and regulatory scrutiny in the context of mergers and accounting practices during an era that also involved probes into firms like WorldCom.

Network Infrastructure and Technology

MCI deployed fiber-optic long-haul networks that interconnected with metropolitan networks owned by entities such as Level 3 Communications and regional carriers. The company invested in SONET and DWDM transmission systems and built Points of Presence that connected to backbone exchanges similar to those used by UUNET Technologies and ANS Network. Its packet-switched services used technologies comparable to frame relay and ATM, and it developed IP transit capacity that became part of the broader Internet backbone infrastructure used by content providers and ISPs including early customers like Comcast and AOL.

Legacy and Impact on Telecommunications

The company's legal challenges and competitive entry helped catalyze the diversification of long-distance markets and influenced regulatory reform associated with the breakup of AT&T Corporation and the passage of the Telecommunications Act of 1996. Its networking investments contributed to the growth of the commercial Internet backbone alongside firms such as UUNET Technologies and ANS Network, affecting carriers including Verizon Communications and Sprint Corporation. Alumni from the company moved to leadership roles at major technology and telecom firms, and its corporate actions remain cited in discussions of antitrust, deregulation, and consolidation exemplified by later events involving WorldCom and Verizon Communications.

Category:Defunct telecommunications companies of the United States