WorldCom's fraud shouldn't discredit MCI's success

Public perception of Bernie Ebbers' and WorldCom's fraud is overshadowing an American legend.

Public perception of Bernie Ebbers' and WorldCom's fraud is overshadowing an American legend.

One can't help but feel a sense of justice, but also great disappointment, that MCI, perhaps the telecom industry's most effective contrarian voice, is in its final chapter. Much of the public's opinion of MCI and its legacy will be elevated just by contrasting the recent corporate greed exhibited by Ebbers & Co., with the public and consumer needs MCI has met over the past five decades.

While MCI fades from the landscape, a story the public needs to know is the influence that MCI has had on their lives and the nation's communications, marketing, and branding. For years to come, MCI's innovations in this area will provide textbook examples of ways that a company can change American life. MCI gave Americans new ideas as it opened new and niche markets.

MCI's humble beginnings started in 1968, when Bill McGowan joined forces with entrepreneur Jack Goeken, whose company, Microwave Communications, was planning to construct microwave towers to carry radio transmissions along Route 66 from Chicago to St. Louis. Goeken's idea was to sell communications services to truckers who needed to stay in touch with their dispatchers.

The company had bigger ambitions, however, and Goeken enlisted the services of McGowan, who was anxious to get into nationwide telephone service despite - or maybe because of - the fact that the world's largest and most powerful company controlled the entire business. MCI was licensed by the Federal Communications Commission in 1969 and began services as MCI Communications in 1970. The antitrust lawsuit McGowan filed against AT&T eventually reshaped America's telecommunications.

My view comes from first-hand knowledge and involvement with MCI's pace-setting track record in telecommunications during the past 50 years. The public ought to gauge MCI for its impact on America. Its actions in dismantling AT&T's monopoly have proven to be good for the nation. In order to overcome the lobbying power of a monopoly, MCI had to take its message directly to consumers in order to push legislators to make change. The message was simple, yet powerful: Competition would be good for consumers and businesses and bring lower prices and better services for all.

MCI set up a new paradigm in terms of proactive media outreach and forced the government to rethink competition in other previously government-protected industries, including airlines, financial services, and electricity.

Shortly after equal-access long-distance service, MCI pulled a marketing coup when it introduced a new calling program, Friends & Family. In marketing terms, MCI used word- of-mouth and a social-theory-based model to provide incentives to customers to get their friends and family to sign up. The resulting calling circles also encouraged new customers to remain with MCI, even when a better deal was offered. Branding this within its network infrastructure was a first. In the process, MCI changed perceptions about competition forever.

When competition began to produce diminishing returns, MCI innovations branded dial-around access codes, such as 10-10-321. During the early 1980s, before you could choose your own carrier, MCI and others had to give out these numbers to customers in order for them to access and make calls on their networks. MCI later marketed these as standalone numbers and a new way for consumers to reap additional savings. The market for dial-around numbers grew into a multibillion-dollar business.

MCI trained an entire generation of executives on its competitive model, and the list of independent firms headed by its alumni helped launch niche industries, such as internet service providers, wireless companies, and networking and software companies.

One competitor that studied the MCI model was WorldCom, then the fourth largest long-distance company in the US. In November 1997, it announced its plan to take over MCI and told employees and investors that it would eliminate MCI's vanguard industry status by significantly reducing expenditures on marketing and communications. Wall Street applauded the move and awarded WorldCom with even higher share prices.

The disclosure of massive accounting frauds drove WorldCom into bankruptcy proceedings. Recognizing the value of MCI's brand, when WorldCom emerged from bankruptcy last year, it changed its name to MCI.

But the company is hardly the same. Despite Ebbers' conviction on fraud charges, the loss of MCI outweighs his punishment. I urge Americans to gauge MCI by the good name it acquired in the marketplace, rather than by the riches wrought by corporate greed.

  • Michael Lewis worked for MCI from 1994 to 1998 and is now senior strategist with OnMessage Communications.

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