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MCI Communications Corporation records

1849-1999 Majority of material found within 1968-1995
 Collection
Accession: 2225

Abstract

MCI Communications Corporation (MCI) was one of the largest telecommunications companies in the world. It was incorporated in Delaware in 1968 as Microwave Communications of America, Inc., to provide businesses with nationwide microwave telecommunications services at low prices. Being confronted by industry de facto monopoly AT&T in the interconnection of its lines to local facilities owned by AT&T affiliated regional Bell companies, MCI challenged the telecommunications giant with competitive long-distance telephone services, both in courts and at the marketplace. MCI-AT&T antitrust litigation (1974-1985) led to AT&T's divestiture of its regional carriers and changed the previously regulated telecommunications industry into a business open to competition. The collection documents all facets of MCI history from 1968 to the end of the 1990s, as well as changes in the American telecommunications regulatory policy, legislation, and public perception of the industry. Documents also include records of MCI's subsidiaries and their predecessors starting as early as 1849.

Dates

  • 1849-1999
  • Majority of material found within 1968-1995

Creator

Extent

726 Linear Feet

Historical Note

MCI Communications Corporation was one of the largest telecommunications companies in the world. It was the successor of Microwave Communications, Inc., a company organized in October 1963 in Joliet, Illinois, by John D. (Jack) Goeken (1930-2010). It was established to provide point-to-point private line microwave communications between Chicago and St. Louis to trackers and other small businesses along Route 66 at rates substantially lower than offered by American Telephone and Telegraph Company (AT&T). The company’s application with the Federal Communications Commission (FCC) for the microwave system construction was immediately opposed by AT&T, the dominant force in telecommunications in the United States at that time. After six years of hearings, oral arguments, and lobbying efforts from both sides, on August 13, 1969, the FCC granted Microwave Communications construction permission, thereby opening an era of competitive telecommunication industry.

William G. McGowan (1927-1992), an industry investor and entrepreneur, joined the company in 1968. He had a different vision of the company’s future and believed that it should aspire to more than providing low-cost telecommunications services for small businesses. McGowan proposed participation in the construction of a nationwide common carrier communications system. Microwave Communications of America, Inc. (MICOM) was incorporated in Delaware on August 8, 1968, for the purpose of sponsoring the development of affiliated regional companies with local financing. Goeken was MICOM president, with McGowan as chairman and CEO. Goeken eventually resigned in August 1974 due to his dissatisfaction with company strategy. By March 1971, all regional companies had filed for construction permits with the FCC for their sections of the planned nationwide network. MICOM changed its name to MCI Communications Corporation, Inc. (MCI) in July 1971 due, in part, to concerns with negative connotations of the word “microwave.” In August 1972, MCI acquired Interdata Communications, Inc., a firm that controlled a New York-Washington microwave route. All of MCI’s regional carriers merged into MCI Telecommunications Corporation (MCIT) as a long-distance communications subsidiary of MCI in February 1973.

MCI’s 1969 victory over AT&T started a long fight in legislative, legal, and regulatory fields for shaping a new telecommunications industry. Governed by the Communications Act of 1934, telecommunications traditionally was a highly regulated monopolistic industry, with AT&T and its affiliated regional Bell Companies dominating every aspect of electronic communications: local, long-distance and international voice and data transmission. This position gave AT&T control over local interconnection conditions and rates that it charged specialized common carriers, like MCI.

The issue of interconnection became a primary subject of the companies’ numerous disputes. As a result of the 1973-1974 MCI vs. AT&T case, Judge Clarence C. Newcomer (1923-2005) of the US District Court in Philadelphia ordered all Bell companies to provide MCI with customer connections (‘Newcomer Decision’). Execunet cases in the FCC and the US appellate court (1975-1977) granted MCI and other common carriers permission to offer unrestricted switched intercity communication service using Bell local interconnection facilities. In 1978, an interim settlement agreement was reached in MCI-AT&T negotiations of ENFIA (Exchange Network Facilities for Interstate Access) tariff, which provided for access charges on a sliding scale proportional to the revenues of the competing common carriers. As a result of antitrust litigation, industry conversion to equal access of regional Bell companies’ facilities had occurred by the mid-1980s. Although AT&T had divested its regional affiliates, it still had a huge financial advantage over its newly emerged competitors, and MCI managed to remain in competition due to its persistent opposition to Bell’s tariffs both in the courts and at the FCC.

The antitrust cases against AT&T brought by the US Department of Justice and by MCI in 1974 charged the industry giant with conspiracy to monopolize the interstate business and data communications telephone market in violation of the Sherman Antitrust Act. MCI also sought cash for damages caused by AT&T’s antitrust policies. The government’s case was settled in 1982, and the judgment changed the telecommunications industry landscape. AT&T was divested of its local Bell operating companies while keeping its long-distance division, research facility Bell Labs, and equipment manufacturer Western Electric. AT&T was also allowed to enter data processing, computer networking, and computer terminal sales fields. The divested local operating companies, reorganized as seven regional ‘Baby Bells,’ were ordered to provide only local telephone services and to offer the same network access on the same terms to all competing long-distance carriers including AT&T. The so-called equal access era in telecommunications, when customers for the first time were able to choose their long-distance provider, came into existence on January 1, 1984.

This watershed event in the history of telecommunications would not have materialized without MCI’s aggressive lobbying activities on Capitol Hill. The company withstood legislation proposed by AT&T in 1976, the Consumer Communications Reform Act (‘Bell Bill’), which represented an attempt to outlaw competition in long-distance service and customer-premises equipment. The National Association of Regulatory Utility Commissioners (NARUC), the Communications Workers of America (the largest Bell System union), and other organizations supported the bill. MCI played a leading role in founding and directing the Ad Hoc Committee for Competitive Telecommunications (ACCT), a pro-competition lobbying group, which acted even after the Bell Bill was rejected by the Congress in 1977, to provide a united opposition to the Bell System and to support further pro-competitive proposals at Congressional hearings.

From the very beginning, MCI faced the challenge of financial survival. To construct the nationwide microwave system, in June 1972, the company made an agreement with a consortium of banks led by the First National Bank of Chicago for a $64,000,000 line of credit. MCI’s equipment vendors guaranteed the loan -- a plan devised by MCI’s CFO Stanley B. Scheinman (1933-). The company’s initial public offering of three million common shares earned MCI over $30,000,000 in June 1972 and supported the construction of Chicago-New York and Chicago-Dallas routes in just one year. The company’s 1973 annual report stated that by the end of that year, MCI was going to serve nineteen cities of its proposed coast-to-coast network. Nevertheless, the company’s revenue did not exceed expenses for a long time, and during the first decade of its existence MCI, several times, found itself on the edge of bankruptcy. To generate profits, MCI launched Executive Network (Execunet) in 1975, an innovative service at a low price. It utilized a switching device WATS box that allowed customers to route long-distance calls over the least expensive available line, and combined with a shared private line service option, provided big savings to its subscribers. Within two months, revenues had surpassed expenses. AT&T claimed that MCI was not authorized to provide switched telecommunications, and Execunet was ceased for almost three years while MCI fought for it in the FCC and the appellate court. The final decision in the Execunet case issued in May 1978 opened switched services provision to all common carriers, which was an important issue in the pre-equal access environment.

Aggressive sales of Execunet in 1979 earned MCI $95,000,000 and allowed an expansion of its network to populous western markets of California, Colorado, and Arizona by purchasing a microwave system from Western Tele-Communications, Inc. (WTCI). The purchase completed MCI’s coast-to-coast network. At the same time, the company broadened its services in the Southwest, Midwest, upstate New York, and New England, adding new cities to the network and steadily increasing its revenue and profit. Together with successful public offerings of convertible preferred stock (December 1978 and September 1979), this allowed new MCI’s CFO Wayne English (1922-2013) to build a strategy for freeing MCI’s web of bank debt, and after the sale of 15% Subordinated Debentures in July 1980, the loan was paid off. MCI entered the decade of 1980s as a company “free to offer any intercity long-distance telecommunications service that it can devise” (1979 Annual Report).

Two important initiatives marked MCI’s development into a global full-range telecommunication services company in the 1980s -- entering the residential market and expansion of international services. In 1980, MCI started marketing its long-distance telephone service to residential customers and offered the American public competitive prices and services for the first time in the history of the telephone industry. Previously known only to the narrow circle of business executives, MCI had to present itself to millions of telephone owners as a company able to compete with AT&T. Becoming a vigorous marketer, MCI introduced sales techniques new to the industry: comparative and negative advertising, celebrity involvement, extensive telemarketing, local paper advertisements, marketing partnerships.

MCI’s novel marketing strategy was instrumental in shaping a competitive telecommunications industry and led to the financial success of the company’s first residential campaign (309% net income growth in 1982). The same marketing strategy helped MCI to expand its network and service offerings from 1984 to 1986, the time of equal access race for market share when the company’s tongue-in-cheek TV spots with Burt Lancaster, Merv Griffin, and Joan Rivers captured the imagination of the nation. During the residential advertising campaign of 1989, MCI aggressively targeted AT&T’s ‘Reach Out America’ discounted rates plan, and AT&T struck back with its own anti-MCI TV spots. In 1991 MCI brought another innovation to advertising its business when its ‘Friends & Family’ calling plan (personalized long-distance residential service with substantial discounts on calls to most often called friends and family members) for the first time introduced a recognizable brand, not just a price-oriented commodity for telecommunications products.

MCI’s involvement in international telecommunications began with the acquisition of international record carrier Western Union International from the Xerox Corporation and the formation of a subsidiary MCI International, Inc., in November 1982. MCI International became a holding company of Western Union International, which retained its existing telex business, and MCI International Telecommunications, created to break into the international voice market, which the FCC opened to full competition in December 1982. That same month MCI entered its first international contract with the Trans-Canada Telephone System for discounted long-distance voice service between the US and Canada, and in November 1983, it contracted with Telecom Australia.

Targeting European markets was a greater challenge for MCI. European telecommunications at that time were governed by ministries of posts, telephones, and telegraphs (PTTs) that traditionally had agreements with AT&T and did not want to change industry stability to the uncertainty of competitive offering. MCI first focused its efforts on the United Kingdom, whose intercity telephone system, a monopoly of British Telecom (BT), was scheduled to open to private competition. Under an October 1984 agreement with BT, reached after more than three years of negotiations, MCI began direct-dial service to the UK, breaking AT&T’s monopoly in this important field of telecommunications. By June 1985, MCI had expanded its overseas network to thirty countries and continued to target high-traffic countries for direct interconnection agreements. British Telecommunications once again played a role in MCI’s evolution into a company offering integrated global communications services when in spring of 1993, BT acquired a 20 percent interest in MCI (bought out in 1997 under MCI-WorldCom merged plan), and BT and MCI formed a joint venture, Concert, which in June 1996 introduced Concert InternetPlus, the first high-speed global Internet network.

To further pursue its goal of becoming a dominant international carrier, in May 1988, MCI acquired RCA Global Communications, Inc. (Globcom) from General Electric Company, with its major customer base in the Far East, including Japan. By the end of the year, MCI offered leased-line, voice, and electronic mail services in 146 countries, positioning it as the only full-service international carrier. Throughout the 1980s, MCI International restructured monopolistic foreign telecommunications markets into competitive ones, stimulating industry growth and making possible its transformation into a modern integrated global network.

MCI’s rapid progress in telecommunications markets was primarily due to its steady interest in emerging technologies. For instance, in the pre-equal access era, when trying to overcome Execunet service disadvantages, MCI sought technological solutions by enabling its customers to use rotary dialing phones (service was designed for tone phones only) and to avoid dialing twenty-two numbers for a long-distance connection. Among several customer premises devices used by MCI, the ‘ADVANTAGE’ mini-switch unit, which was also an automatic dialer, remained in use even after equal access implementation.

MCI tried to enter the information age as early as 1983 by the introduction of MCI Mail, a new data transmission service, which combined the speed of electronic messages with the flexibility of a land courier service. Being the first major company in the electronic mail market, MCI failed financially with this offering (because the public was not yet ready for communication via computer) and had to shrink its electronic mail operations in 1985. But MCI Mail did succeed in positioning the company as a potential industry leader in implementing innovative technologies. In 1988, the MCI Mail got a new life being enhanced with the innovative fax service allowing its users to send facsimile messages from their personal computers. In the 1990s, e-mail became a part of MCI’s portfolio of online services called NetworkMCI, together with Internet access, paging and fax services, and video conferencing.

MCI’s plans to become a major player in a rapidly developing and seemingly promising mobile phone business (paging and cellular phone communications) in the first half of the 1980s were also abandoned because of a lack of subscribers’ interest at that time and due to changes in regulatory rules. MCI Airsignal subsidiary, created in 1982 from a subsidiary of Xerox Corporation that MCI had acquired together with WUI to operate mobile phone business, was sold in 1986 to McCaw Communications Companies, Inc. Nevertheless, once again, the company’s management proved to have a distinct vision of the industry’s future. MCI returned to the cellular business in 1995 with the purchase of Nationwide Cellular Service, Inc., immediately following AT&T and Sprint PCS in delivering cellular services.

Another innovative technology MCI adopted was satellite communications systems. Even though it was in a very difficult financial situation while constructing its initial microwave network, the company invested in satellites in order to extend the network to the areas where the microwave system could not reach. Formed in 1971, MCI’s joint venture with Lockheed Aircraft Corporation (called MCI Lockheed Satellite Corporation) was one of the first companies to request domestic satellite communications authorization from the FCC. Sold in 1974 to IBM, the same satellite business, under the name Satellite Business Systems (SBS), was bought back by MCI in 1986. The purchase provided the extra capacity to MCI’s network, extended its large business accounts customer base (adding lucrative contracts with United Airlines, J. C. Penney, Hercules, Inc.), and, even more importantly, strengthened MCI’s competitive position by its association with the high-tech computer company. Several other purchases of satellite facilities helped MCI to meet constantly increasing demand for services: twenty-four satellite transponders from Hughes Communications in February 1983 (the largest satellite capacity purchase at that time); satellite earth complex in Andover, Maine, for voice, data, and television transmission across the Atlantic and Indian Oceans, bought by MCI International from a consortium comprised of AT&T, COMSAT, RCA Globcom, and WUI in October 1987; and Overseas Telecommunications, Inc. (OTI), a specialized provider of digital satellite communications services to twenty-seven countries worldwide in 1990-1991.

During the 1980s, when widespread public opposition to microwaves made it difficult to obtain zone approvals and frequency clearances for tower sites, MCI’s leading engineer Thomas L. Lemming (1924-2009) initiated the company’s switch to fiber optic transmission technology. MCI was the first company seriously engaged in the implementation of this technological innovation. In January 1983, it ordered more than 150,000 miles of fiber optic cable (the largest order at that time), and the first segment of the system, between Washington, DC and New York, became operational in March 1984. In January 1987, MCI’s coast-to-coast fiber-optic network, laid primarily along with railroad rights of way, began service. After the construction of the fiber optic link between Houston and Los Angeles in 1989, MCI became the owner of two complete transcontinental fiber-optic networks that carried a large volume of traffic at high speed and with high quality. MCI also was the second-largest US owner in the TAT-8, the first transatlantic fiber-optic telephone cable, a joint venture of twenty-nine telephone companies. The purchase of RCA Globcom in 1988 brought MCI additional capacities on transatlantic and transpacific fiber optic links. With the acquisition of Telecom*USA, the fourth-largest long-distance telephone company in the United States, in August 1990 (it was the largest merger in telecommunications history up to that time), MCI added 3,000 miles of fiber optic cable to its system in the Southeast and Midwest.

MCI established new standards for the telecommunications industry with the conversion of its entire network from analog to digital transmission in December 1991. Digital technology provided cleaner and faster transmission of voice and data without weakening over distance. This state-of-the-art modernized system integrated advanced switches and digital and fiber optic equipment into what was called by MCI an ‘intelligent network,’ compatible with other international networks. It allowed the company to create and market new services and attract new business partners in the last decade of the 20th century.

In June 1992, MCI’s chairman Bill McGowan, who had received a heart transplant in 1987, died of heart failure. Bert C. Roberts, Jr. (1942-), president and CEO who had been with MCI since 1972, became chairman. Gerald H. Taylor (1941-) was an MCI employee since 1969; he became the president and COO in 1994. Although MCI lost its long-time leader, a telecommunications industry pioneer, and a visionary, the company did not abandon its aggressive approach and continued to pursue the goal of being on the cutting edge of telecommunications technology and service and product marketing.

Positioning itself as a company ready to get into the information age ahead of its competitors and to offer customers integrated global voice, data, and networking services, MCI in 1993 developed the ‘networkMCI’ strategy that consisted of several components: the creation of a nationwide information superhighway, entry into local telecommunications, building a wireless network integrated with MCI’s products, and formation of global alliances in order to provide seamless services to multinational customers. Following this strategy, MCI used the highspeed SONET fiber optic technology to provide the National Science Foundation with its new information network NSFNET, a part of the rapidly growing Internet (1993). When President Bill Clinton signed the Telecommunications Act of 1996 on February 8, 1996, which declared local telecommunications available for competition, MCI was one of the first long-distance carriers to enter the marketplace using operating facilities in major metropolitan areas owned by its subsidiary MCImetro (created in 1994). To capture a share of the lucrative wireless telecommunications market, MCI in 1995 purchased Nationwide Cellular Service, Inc., the largest independent reseller of cellular services in the country, and made agreements with messaging companies SkyTel Corporation and Paging Network, Inc. MCI’s agreements with Stentor Alliance, representing Canadian telephone companies; BT, formerly British Telecommunication plc; and business venture AVANTEL, with Mexican Grupo Financiero Banamex-Accival (Banacci), in helped to shape international telecommunications in the early 1990s.

In the late 1990s, MCI sought a partner in order to increase capital, continue its marketing strength, and create a state-of-the-art network for more efficient competition with national and international carriers. After the cancellation of a proposed merger with British Telecommunications Corporation (BT), MCI entered a merger with the rapidly growing telecommunications firm WorldCom. The agreement completed on September 15, 1998, created MCI WorldCom, Inc., a company that provided local, long-distance, and international full range telecommunications services such as voice, data, Internet, and wireless. To separate its two distinct businesses, at the end of 2000, WorldCom, Inc., arranged two business groups under its umbrella: WorldCom group (high-growth data, Internet, hosting, and international businesses) and MCI group (high-cash flow consumer, small business, wholesale long-distance voice, and dial-up Internet access); and created two separately traded tracking stocks. The corporation received an SEC Inquiry in April 2002 regarding its capital expenditure accounting irregularities, and as a result of independent audits and financial investigation, filed for bankruptcy on July 21, 2002. Under the Plan of Reorganization filed by WorldCom, Inc. with the US Bankruptcy Court in April 2003, the company changed its brand name to MCI – “a name that stands for integrity, innovation and value” (Press Release, April 14, 2003). In 2006, Verizon Communications purchased the company and later integrated it into Verizon Business.

Scope and Contents

MCI Communications Corporation (MCI) records (inclusive dates 1849-1999, bulk 1968-1995) document the activities of MCI and its subsidiaries up to the time of MCI’s merger with WorldCom in 1998. Records reflect the company’s history and its involvement with the development of the American telecommunications industry and competition within the field, both in the United States and abroad.

Through its administrative, legal and regulatory files, industry-related press clippings, and files of the corporation’s most significant departments and business units, MCI records reveal the dynamics of telecommunications industry changes in the 1960s to the 1980s. There were emerging technical innovations such as satellite telecommunications, multiplex and fiber optic cable systems, computerized switching systems, high-speed data transmission, and wireless phone communications. The legislative and regulatory controversy regarding industry deregulation and AT&T’s divestiture of its local operating companies marked the end of AT&T’s monopoly in various fields of telecommunications. Equal access to interconnection facilities, which became available to all long-distance carriers after divestiture led to introduction of advertising and marketing to the telephone industry. MCI’s records document the company’s important role in initiating these changes, and in adopting new policies and technologies in order to stay competitive and to win a substantial share of telecommunications markets.

The MCI Communications Corporation started developing its corporate archives in 1992, and the records had been partially arranged and inventoried before their transfer to Hagley Museum and Library. The present arrangement preserves the preliminary structure of the collection. The collection has been divided into twenty series:

(There is a detailed description in the scope and content note for each series.)

Series I. Stockholders and Board of Directors records, 1906-1999 Series II. Chief Executive Officer records, 1939-1994 Series III. President and Chief Operating Officer records, 1958-1988 Series IV. Office of the Chief Strategy and Technology Officer records, 1983-1996 Series V. Regulation and Public Policy records, 1967-1986 Series VI. Regulatory Affairs records (Records of Kenneth A. Cox), 1939-1992 Series VII. Legal records, 1866-1992, bulk: 1968-1985 Series VIII. MCI Telecommunications Corporation Sales and Operations Administration records (Records of Bert C. Roberts, Jr.), 1971-1989 Series IX. Marketing and Sales records, 1971-1998, bulk: 1982-1987 Series X. Corporate Communications and Public Relations records, 1967-1996, bulk: 1980-1990 Series XI. Human Resources records, 1973-1996, bulk: 1980-1994 Series XII. Financial records, 1967-1994, bulk: 1971-1988 Series XIII. MCI Engineering Groups records, 1917-1993, bulk 1967-1993 Series XIV. Satellite Business Systems records, 1971-1990 Series XV. MCI International, Inc. records, 1912-1995 Series XVI. MCImetro, Inc., records, 1848-1995, bulk: 1910-1989 Series XVII. National Security Telecommunications Advisory Committee [NSTAC] records, 1968-1995, bulk: 1982-1992 Series XVIII. MCI Miscellaneous Subsidiaries, Divisions, and Business Units records, 1983-1989 Series XIX. Corporate History and the Records of the Corporate Archivist, 1934-1997, bulk: 1988-1994 Series XX. Artifacts, 1969-1995

Existence and Location of Copies

View selected items online in the Hagley Digital Archives.

Access Restrictions

25-year time seal from the date of creation due to privacy/security reasons. Litigators may not view the collection without approval.

Use Restriction

Donor/Depositor retains copyright. Permission to: copy, quote, and/or publish must be granted by the copyright holder.

Language of Materials

English


Additional Information

Additional Description

Provenance

On Deposit from WorldCom (Firm).

Separated Materials

MCI Communications Corporation photographs and audiovisual materials (Accession 2000.239), Audiovisual Collections and Digital Initiatives Department, Hagley Museum and Library.

Related Names

Creator

Finding Aid & Administrative Information

Title:
MCI Communications Corporation records
Status:
Author:
Tatyana Brun, Richard James, Ellen Felser Morfei, and Jennifer L. Andrews
Date:
2004
Description rules:
Describing Archives: A Content Standard
Language of description:
English
Script of description:
Latin

Revision Statements

  • 2020-2021: Encoded by Angela Schad and Ashley Williams

Repository Details

Repository Details

Part of the Manuscripts and Archives Repository

Contact:
PO Box 3630
Wilmington Delaware 19807 USA
302-658-2400