MCI's 'Creative Routing'
The company formerly known as WorldCom, which is emerging from bankruptcy for defrauding its investors out of billions of dollars, has launched a managed content delivery service today, whereby it plans to take over the network delivery mechanisms of an entire corporation's data.
However, MCI finds itself again being accused of fraud. This time several MCI competitors are accusing the carrier of defrauding them out of millions of dollars in access charges.
AT&T Corp. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), and SBC Communications Inc. (NYSE: SBC) have filed lawsuits against MCI for collaborating with small local phone companies to reroute phone traffic, making long-distance calls appear to be local phone calls, to avoid having to pay steeper access fees to its competitors. The process is known in the industry as "laundering calls."
MCI declined to comment on the charges, preferring instead to talk to Boardwatch about its new managed enterprise content delivery service.
Following in the footsteps of Akamai, NaviSite (Nasdaq: NAVI), and other content delivery service providers, MCI wants to perform some “creative routing” to host copies of a corporations files physically closer to its users to cut down on bandwidth consumption. The idea being that these organizations no longer need to pass multiple copies of the same file around between offices (see MCI Offers Managed Content Service).
It’s a tried-and-tested service, analysts say. But plenty think MCI is a day late and a dollar short offering it and note that it might have trouble convincing its customers it is a trustworthy partner.
Routing content, or phone calls for that matter, in creative ways, appears to be something MCI is quite good at.
”MCI has turned ‘least-cost routing’ into an art form… With their volumes of traffic, hundreds of its switches would have to be programmed for this kind of routing… You would need the chief engineering officer involved,” says a former MCI engineer who declined to be named.
Given the magnitude of this case, analysts believe MCI might have trouble selling anything right now. “There are lots of issues wrapped up with MCI… There’s lots of worry about them. Enterprises are trying to trim their costs too, but at what cost,” says Carrie Lewis, senior analyst at Yankee Group.
MCI itself admits the market for streaming broadcast content is pretty much sewn up. “The major U.S. broadcasters use satellite links to push content to their affiliates… They are wedded to satellite technology… It will take time to change the way they do business,” says Ethan Fox, product manager for emerging services at MCI.
However, the company believes its entrenched position with the U.S. government will be its first port of call for this service. “Distance learning for the military is a good application for this one,” Fox says.
— Jo Maitland, Senior Editor, Boardwatch