MCI Europe to Invest in Ethernet

LONDON -- Global IP Carriers -- MCI Inc. (Nasdaq: WCOEQ, MCWEQ) is planning network investments and partnerships with major IT services firms to strengthen its customer base in Europe now that it has escaped bankruptcy, says the carrier's European managing director, Andrew MacLeod (see MCI Starts a New Chapter).

MacLeod says MCI's aim is to "replicate the stuff that's on the LAN and put it on the WAN. We're going to be investing in new systems" that will allow network and services to convergence.

That includes equipment for the provisioning of Ethernet services, which are becoming "more important" in Europe just now, he told Light Reading at the Global IP Carriers conference in London today (see Europeans Go Crazy for Ethernet Services, Cogent Adds to Euro Empire, and Czechs Check Out Metro Ethernet). They're important enough for at least one U.K. Ethernet service provider operator to claim that it poached customers from MCI while the global carrier was in Chapter 11 (see Exponential-e: What Yipes Wasn't).

MacLeod claims MCI hasn't lost many customers in the past few years, and "we haven't lost any of our major customers," though he admits some of the bigger accounts have gone elsewhere to source new services.

That makes MCI different from some of the other carriers that hit hard times, according to MacLeod. MCI entered Chapter 11 because of the fraud issues, not because the business was flagging, he says, while Global Crossing, which also recently re-emerged, went under because "it just wasn't generating the cash."

He also manages a dig at Viatel Holding (Bermuda) Ltd., which is back in business with new funding and run by former MCI Europe executive Lucy Woods. "It's extraordinary that anyone can raise $57 million when you have no customers," he snipes (see Viatel Completes $52M Round).

MacLeod, conversely, claims to have 150,000 customers in Europe, and a business that generated $3 billion in revenues in 2002.

So what's the plan now? Macleod says the new investments will include outlay on the sorts of network management, measurement, and provisioning systems more commonly used on enterprise LANs. OSS missed out during the bubble years when money was thrown at network infrastructure, says the MCI man. Many of the OSS systems in carrier networks today were developed in-house and need replacing, and it's a major issue. "There isn't a telco I know of that doesn't have OSS restructuring in its 'Top Three Things to Do' list." (See MCI in OSS Chaos.)

Another goal is to develop stronger partnerships with IT services companies so that MCI can play a role in the increasingly converged IT/communications services space, a market that BT Group plc (NYSE: BTY; London: BTA) is keen to crack (see BT Launches Outsourcing Offensive and BT Guns for IT Services Cash).

But MCI won't be targeting the ICT (information communications technology) market in the same way as BT. "Those IT services firms are our customers, and we're going to work with them, not compete with them." Not that BT has made a bad decision, he adds. "If I had 10,000 IT staff, like BT has with its Syntegra unit, then maybe I'd have done exactly the same thing. But I have a networks business."

— Ray "Never Convicted" Le Maistre, International Editor, Boardwatch

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