Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, January 5, 1994 TAG: 9401050277
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Long
The high-capacity long-distance cable, already installed in about half the MCI system, was described by the company as the nation's first transcontinental information superhighway.
Using fiber-optic technology known as SONET, it moves data 15 times faster than any other wire technology now available, said Bert Roberts, MCI chairman and chief executive officer.
But American Telephone and Telegraph, the nation's largest long-distance company, says its network already has the capacity to offer such service.
And Sprint, in third place, said MCI was just playing catch-up. "We continue to have the most modern network and remain as the only 100 percent digital, fiber-optic long-distance carrier," said William Esrey, Sprint chairman and CEO. "MCI is very good at packaging announcements that make mountains out of molehills," he said.
As businesses expand their cross-country voice and data communications into video, the load on phone wires increases. MCI's upgrade will enable its business clients to do more with imaging, multimedia and video-on-demand, said Roberts.
MCI will announce new products and services as the system is completed, but the full story on how the new cable will be used will be determined by the customers, he said.
The National Science Foundation, for example, was the first user of MCI's upgraded New York-Los Angeles route. The foundation's computer network is the fastest and most powerful of the commercial, university and government computer networks known collectively as the Internet.
The science foundation's network carries a volume of information each month that approximately equals the holdings of the Library of Congress, said Vinton Cerf, president of the Internet Society. "MCI's announcement indicates the potential to carry more than 50 times that much traffic," he said.
As the company that led the legal battle that broke up AT&T 10 years ago, Washington-based MCI remains a fierce second-place competitor.
Its foray into local service could be a threat to the regional Bell companies that sprang from the old AT&T. Under the divestiture agreement, the seven Bells were given regions of the country where they have monopoly control over local phone service.
To complete long-distance calls, companies such as AT&T and MCI must pay the regional companies 40 to 45 cents on every dollar's worth of long-distance charges.
The long-distance companies have long complained that these charges are excessive. But the local phone companies say they need the money in order to provide service to the poorest neighborhoods.
When word leaked last week that MCI was considering local service, Ronald Stowe, vice president of Pacific Telesis, the regional Bell in California and Nevada, predicted "long-distance carriers will come into the most economically desirable local markets, leave the rest behind, and destroy the existing system that provides for low-cost residential service for all Americans."
Roberts acknowledged that MCI's local service is designed to get around the Bells' charges and that it would skim off businesses that are the heaviest phone users. The first customers likely would be those already using MCI long-distance service, he said.
MCI would continue to pay into a fund to support universal access, but Roberts said he does not think the Bells should continue to control the money.
Legislation pending in Congress and rhetoric from the White House are helping to pave the way for MCI's plan. Government officials say they want competition at all telecommunications levels in order to bring consumer prices down and speed development of new technologies that could create more jobs and help businesses communicate more effectively.
MCI will install its local switching technology first in the nation's 20 largest cities and already has it under construction in Atlanta, where it is to be completed by midyear. Installation in New York, Washington, Los Angeles, Dallas and Boston will soon begin, said Roberts.
Other than the Northern Virginia suburbs of Washington, the company said it did not have plans to provide local service in any other Virginia markets.
Eventually, the service will be extended to residential users, probably through partnerships with other companies, such as cable TV providers, Roberts said.
Staff writer Greg Edwards contributed to this story.
\ MCI COMMUNICATIONS CORP.\ \ MCI is the second-largest U.S. provider of long-distance telephone service. It sells voice and data communication services to residential and business customers.
\ The company's headquarters is in Washington, D.C. It has offices in 55 countries.
\ Total revenue last year was in excess of $12 billion.\ \ Source: The company
by CNB