Concert Communications Services
| Company type | Joint venture |
|---|---|
| Industry | Telecommunications |
| Founded | June 1994 |
| Founder | BT Group, MCI Communications |
| Defunct | 2002 |
| Fate | Assets divided between BT and AT&T; operations absorbed into BT Global Services and AT&T |
| Successor | BT Global Services, AT&T (regional businesses) |
| Headquarters | Reston, Virginia , United States |
Area served | Worldwide (52 countries, 800+ cities) |
Key people | David Dorman (CEO from 1999) |
| Products | Global virtual network services, managed data services, application services, customer management services |
| Owner | Initially BT Group and MCI Communications; later BT Group and AT&T |
| Parent | Joint venture of BT Group and MCI Communications; later BT Group and AT&T |
Initial launch
Concert Communications Services was established in June 1994 as a $1 billion joint venture between BT Group and MCI Communications, with Portugal Telecom joining as a partner in 1997.
As the pioneering global provider offering multiservice, end-to-end telecommunications, Concert broke the longstanding global national telecom monopoly by delivering both international and domestic services. Its objective was to provide multinational corporations with seamless connectivity under a single provider. Unlike competitors such as FLAG and Global Crossing, which invested in physical cable infrastructure, Concert expanded swiftly by leasing bandwidth from national telecom operators.
After BT and MCI parted ways, Concert transformed into a joint venture between BT and AT&T in 1999. When this alliance dissolved in 2001, Concert’s assets were divided and absorbed into their respective regional businesses by 2002.
Business need for Concert
In 1992, Sir Iain Vallance initiated the SCOOP project at BT, later renamed Project Sovereign, aiming to reshape BT’s corporate culture and establish a competitive global business framework. The strategy encompassed:
- Creating a UK-centered, customer-oriented structure focused on targeted market sectors
- Delivering carrier-grade global services with full-route control to avoid reliance on national providers
Concert fulfilled the latter objective by serving as a global service orchestrator. Recognizing the impracticality and strategic risks of owning every market worldwide, Concert operated independently from BT to effectively address complex regulatory challenges at national, regional, and international levels.
The company headquartered its global operations in North America—the largest telecom market—selecting Reston, Virginia due to its proximity to Europe and its growing technology corridor. Beginning network development in 1993, Concert grew by acquiring capacity from other telecom providers rather than constructing its own physical infrastructure like competitors FLAG and COLT.
Concert with MCI
In June 1994, BT and MCI formed Concert Communications Services through a $1 billion joint venture aimed at delivering worldwide connectivity solutions for multinational corporations. To solidify the partnership and gain access to the North American market, BT took a 20% stake in MCI, while MCI obtained essential capital infusion. Concert sought to build an extensive suite of advanced telecommunications services accessible via networks owned by both partners and affiliates globally.
Concert’s service portfolio included:
- Global virtual network offerings — voice communications, switched data, and conferencing solutions
- Global managed data services — encompassing packet switching, frame relay, and adaptable bandwidth capabilities, integrating the former Tymnet network
- Global application services — such as messaging, electronic data interchange (EDI), e-mail, and videoconferencing
- Customer management services — including outsourced network management
By August 1995, Concert had secured roughly $700 million in contracts with a customer base of approximately 2,000 clients spanning 40 countries and 800 cities. Nevertheless, regulatory restrictions mandated that BT, Concert, and MCI operate as separate entities with independent boards of directors, sales teams, operational units, and billing systems. This fragmented organizational structure limited the ability to provide truly global services; notably, only the Customer Managed Service implemented with Dow Chemical achieved full deployment.
Concert plc
On 3 November 1996, British Telecom (BT) and MCI revealed plans to merge completely, creating Concert plc, a global telecom enterprise with headquarters in both London and Washington DC. In 1997, Portugal Telecom (PT) joined the partnership as a service distributor in Portugal, although it did not take an equity stake; BT and MCI held small shareholdings in PT.
The merger secured approval from the European Commission, the US Department of Justice, and the Federal Communications Commission. Nevertheless, after BT lowered its bid for MCI, Worldcom entered with a competing offer in October 1997, followed by GTE. MCI agreed to Worldcom’s proposal, prompting BT to withdraw and incur a $465 million termination fee.
In 1998, BT sold its MCI shares to Worldcom for £4.15 billion, realizing an exceptional pre-tax gain of £1.13 billion. Simultaneously, BT purchased MCI’s 24.9% stake in Concert Communications, thereby transforming Concert into a fully owned BT subsidiary. This strategic acquisition strengthened BT’s global telecommunications footprint and bolstered its growth potential.
Concert with AT&T
Following the acquisition of Concert, BT aimed to secure a new alliance to sustain its presence in the North American market. Although previous attempts at an AT&T/BT partnership had been blocked due to regulatory concerns over their dominant domestic positions, these barriers eased by 1996, opening the door for collaboration. However, cultural differences and managerial conflicts between these former monopolies impeded the partnership’s success from the beginning. Additionally, existing agreements with MCI customers complicated Concert’s sales efforts. After merging with AT&T, Concert concentrated on providing global services but was hampered by divided ownership interests, which undermined revenue growth and lowered management morale.
At its height, Concert operated a managed network encompassing more than 800 cities across 52 countries and was interconnected with roughly 240 other networks, extending its reach to about 1,300 cities in 130 countries. Despite ongoing customer growth, revenue expansion slowed down, leading to David Dorman’s appointment as CEO in 1999 to rejuvenate the company.
By late 2000, mounting tensions between BT and AT&T arose due to high debt levels and Concert’s annual losses amounting to $800 million, resulting in leadership turmoil. Viewing Concert as a strategic liability, AT&T negotiated a division in 2001: North American and East Asian operations were transferred to AT&T while BT retained the remaining global assets along with $400 million.
BT absorbed its remaining Concert operations into BT Ignite, which was later renamed BT Global Services, aligning this division with BT’s overarching strategy for delivering worldwide services and solutions.
External links
- WebbConsult.com – Telecoms history in the 1990s
- Le Monde – Towards a worldwide communications oligopoly?
- Biz Journal article on Concert's break-up
- BT Global Services – BT's solutions and products moved to BT Global Services division
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