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MCI's 'Creative Routing'

Would you hand over all your company’s data, these days considered the crown jewels of any organization, to MCI (Nasdaq: MCIT)?

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

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telebud 12/4/2012 | 11:42:36 PM
re: MCI's 'Creative Routing' Would you hand over all your companyGÇÖs data, these days considered the crown jewels of any organization?
Why not there are plenty of companies willing
to hand over their data ect...To INDIA.
MCI has more EXPERIENCE then ANY INDIA company
wanting to manage your data/ip Network.

But I am no MCI lover..at the same time.
I'd rather see an American company get it then
some foreign country. It's all about the Dollars.
What are you willing to pay for.
telebud 12/4/2012 | 11:42:35 PM
re: MCI's 'Creative Routing' what ever happened to CLEC'S???
skeptic 12/4/2012 | 11:42:35 PM
re: MCI's 'Creative Routing'
The only reason this has come to attention is
that the RBOCs want MCI shut down. No matter
how crooked MCI is, the RBOCs are worse and
the RBOCs with one less large competitor means
nothing good for most customers.

Would people trust their "crown jewels" with
MCI? Why not? As long as the price (and
service) is right. People care about outages,
not accounting.

wirespeed1010 12/4/2012 | 11:42:34 PM
re: MCI's 'Creative Routing' >>I'd rather see an American company get it then
some foreign country.<<

While we're at it, we should stop letting the Israeli-based company Amdocs handle all the records and billing data for nearly every phone call made in America.
nowhereman 12/4/2012 | 11:42:33 PM
re: MCI's 'Creative Routing' Can WorldCom/MCI be charged under the Racketeer Influenced and Corrupt Organizations (RICO) Act?

I found a reference on the Web to RICO but I don't understand the lawyerese:

http://usinfo.state.gov/usa/in...

The most relevant section appears to be number 1029, available here:

http://caselaw.lp.findlaw.com/...

If the SEC and FCC won't shut these guys down, can the Secret Service move in?

So far Ebbers has escaped justice - could we get him for acting as the "godfather" using the RICO Act? Capone never went to jail for murder, but they did get him for income tax fraud. Hard time is hard time.

The biggest phone phreaks who ever scammed Ma Bell turned out to be their largest competitor.

It's one thing to hijack a single phone line - these guys hijacked an entire phone company.

It would be hilarious except for the fact that half a million people have lost their jobs because of these frauds and their ilk.
telebud 12/4/2012 | 11:42:32 PM
re: MCI's 'Creative Routing'
"It's one thing to hijack a single phone line - these guys hijacked an entire phone company".

HIJACK?? No I think it was more like,hey guys
I got this Gold Mine here you can get RICH!!!
Just pay me xxx dollars and it's all yours.
So the suckers buy the mine and mine it for a
couple years and all they get is a shaft.
Or should I say THE SHAFT.

TelCoEngineer 12/4/2012 | 11:42:32 PM
re: MCI's 'Creative Routing' Just like the "fiber-swaps" that both carriers counted as revenue (and Qwest got busted for), this is common practice. Eveyone uses these opportunities, but only the ones with serious enemies and have opened a gap in the armor get nailed.

Every LD carrier of any size has "special routes" that the high cost traffic goes over to reduce access charges.

It comes in different forms. Old legacy Feature Group A's that don't carry ANI. PBX trunk loops to bury the ANI and make them look local. Out of state re-routes to avoid in-state charges, etc.

This does not mean that the executive team at MCI is anywhere near it. It does not take a monster engineering effort or even an approved project. It is just the way it is done.

As billy_fold says, the fees were exhorbidant. They make up over 1/2 the cost of an LD call in many cases. Kind of like the speed limit, everyone knows the rule is pretty silly, so they find ways around it.

In any case, the reduced access charges have reduced the need for this and I suspect the practice is not as prevalent as it once was.

If MCI is nailed for this, then every TAC manager and switch tech in the country is going down.
billy_fold 12/4/2012 | 11:42:32 PM
re: MCI's 'Creative Routing' I can almost understand the RBOCs complaining about this practice because it is money out of their pockets in the form of termination charges (even though these termination charges are IMHO exorbitant). But AT&T is not out any money except from competition; they want to see MCI shut down to reduce competition directly to them.

-billy
aswath 12/4/2012 | 11:42:30 PM
re: MCI's 'Creative Routing' billy_fold wrote: But AT&T is not out any money except from competition ...

Not according to an article in NYT. An excerpt: "MCI's other tactic, according to the accusations, was to route a domestic long-distance call to a company in Canada. In Canada, the call would eventually be routed to another long distance carrier like AT&T that would be misled to believe that the call originated in Canada. AT&T, rather than MCI, would then have to pay the access charge to SBC to complete the call."

Aswath
jgh 12/4/2012 | 11:42:27 PM
re: MCI's 'Creative Routing' One thing that is lost in all of these allegations was that both AT&T and Sprint were being hammered by the investment bank analysts as to why their profits were so much lower than Worldcom.
In repsonse to this, AT&T acquired cable conmpanies and spun off the wireless division. They couldn't generate the profits that Worldcom had and the stock was moving downward as th Worldcom's moved up.
Perhaps AT&T would have made the same moves, but the phony numbers from Worldcom caused these moves.
I am not shedding any tears for AT&T, but they and Sprint played by the rules and now Worldcom can come out of Chapter 11 debt free. There is something wrong with that. My solution, sell off UUNET and MCI and shut the rest of the comnpany down.
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