MCI Communications Corp is intent on turning telecommunications regulations in the US upside down with its move into the local loop. The company will wage the biggest war possible with the regulators to get the market opened said Bert Roberts, MCI chairman and chief executive at the launch of MCI Metro (CI No 2,325). Metro, […]
MCI Communications Corp is intent on turning telecommunications regulations in the US upside down with its move into the local loop. The company will wage the biggest war possible with the regulators to get the market opened said Bert Roberts, MCI chairman and chief executive at the launch of MCI Metro (CI No 2,325). Metro, the $2,000m investment to wire up 20 US cities suffers from the problem that only four states – New York, Massachusetts, Illinois and Washington will actually let it operate publicly in the local loop at present. In the others it will be forced to sell the Metro service to business customers as a private connection to the MCI long distance network. One of our primary charters is to change these laws and regulations said Gary Parson, Metro’s chief, before he and his boss launched into a description of how the Baby Bells still collect 99.6% of telecommunications access money in the US. The Bells, of course would dearly like to get their hands on long-distance routes and so we can look forward to many months of regulator-wooing as MCI and the Bells start playing ‘my playing field is more level that your playing field’ games. Roberts acknowledged on CNBC-TV that the total $20,000m plan would have a downward effect on earnings, but did not expect a major impact on the bottom line. Reuter reports him telling the financial TV channel that MCI would probably raise cash through the debt markets this year, encouraged by the relatively low US interest rates and MCI’s gearing, which remains in the low 30s. The pay-off in terms of reduced local access payments should come in 1995 or 1996, and the potential savings are considerable: Roberts claims that 45% of MCI revenues are currently spent on paying access costs. Not content to keep the Metro access to its own customers, MCI will further bait the Bells by making the service available to the other long distance carriers: We will charge AT&T the same favourable rates as MCI would get says Roberts. Though initially starting in Atlanta, the company intends to start work in the other 20 metropolitan areas, including New York, Los Angeles, Washington and Dallas this year, with some being completed next year. Together these 20 account for 40% of the business volume on the MCI network. After that, the company says that it intends to push out into some of the 200 other cities covered by its Western Union properties and conduits.