MCI Communications
| Company type | Public |
|---|---|
| Industry | Telecommunications |
| Founded | October 3, 1963 in Washington, D.C., United States |
| Founder | John D. Goeken |
| Defunct | September 15, 1998 |
| Fate | Acquired by WorldCom |
| Headquarters | Washington, D.C. , United States |
Area served | United States, international |
Key people | William G. McGowan (investor and board member), Vint Cerf (leader) |
| Products | Long-distance telephone service, MCI Mail, MCI.net, voice, data, telex transmissions, fax services |
| Parent | WorldCom (from 1998) |
MCI Communications Corporation—initially known as Microwave Communications, Inc.—was a prominent American telecom firm based in Washington, D.C., ranking as the nation's second-largest long-distance service provider at its peak.
MCI was instrumental in driving regulatory reforms that dismantled the Bell System monopoly, thereby fostering competition within the U.S. telephone sector. The company introduced groundbreaking services such as MCI Mail in 1983, one of the earliest electronic mail systems, and MCI.net, which became a vital segment of the Internet’s core infrastructure. In 1998, MCI was acquired by WorldCom.
Founding
Established on October 3, 1963, under the name Microwave Communications, Inc. by John D. Goeken—its inaugural president—MCI’s initial objective was to construct microwave radio relay links between Chicago, Illinois, and St. Louis, Missouri. These relay systems targeted specialized markets like trucking and shipping firms that lacked dedicated communication networks. The company also sought to offer voice, data, and computer communications services to enterprises unable to afford AT&T’s TELPAK offerings.
Following Federal Communications Commission (FCC) hearings held from February through April 1967, MCI’s application received a favorable recommendation. A landmark FCC decision in 1968—the Carterfone ruling—declared AT&T’s prohibitions on private two-way radio devices unlawful, thereby opening the market to non-Bell equipment and encouraging innovation within the industry.
In 1968, investor William G. McGowan made a substantial capital infusion into MCI, enabling debt repayment and creating financial reserves. He joined the board and helped establish Microwave Communications of America, Inc (MICOM) on August 8, 1968, as a holding entity designed to facilitate nationwide expansion of microwave relay infrastructure.
Licensing and build-out
On October 28, 1968, with Hyrum Rex Lee joining the FCC as Commissioner, MCI submitted various proposals including a low-cost educational television network aimed at demonstrating greater responsiveness than AT&T. The President's Task Force on Communication Policy recommended allowing specialized common carriers unrestricted access to the private line market.
The FCC voted 4-to-3 on August 14, 1969, to grant MCI a license for constructing microwave relay stations connecting Chicago and St. Louis. Despite AT&T’s appeals being denied and subsequent civil litigation in the United States courts of appeals, MCI proceeded by creating subsidiaries and applying for relay links between major U.S. cities; from September 1969 through February 1971, it established fifteen regional carriers.
In July 1969, MICOM took an ownership interest in Interdata to develop a relay network between New York City and Washington, D.C.. Data transmission services commenced sales on January 1, 1972. To finance infrastructure growth, MICOM initiated private stock sales in May 1971 and reorganized into MCI Communications in July by consolidating regional carriers.
MCI went public on June 22, 1972, listing on NASDAQ under the ticker MCIC. Early in 1971, MCI partnered with Lockheed Missiles to create a joint venture focused on satellite communications as a Specialized Common Carrier; Comsat joined in 1972 forming CML Satellite Corp. MCI divested its interest to IBM in 1974; IBM later acquired full ownership and sold it back to MCI in 1986 for $376 million in stock.
Confronted with obstruction from Illinois Bell, which declined to interconnect an interstate circuit, MCI filed an antitrust lawsuit against AT&T in January 1974. A jury awarded $1.8 billion in damages to MCI in 1980 (later reduced), significantly influencing the breakup of the Bell System.
After the Carterfone ruling in 1975, MCI entered switched voice telecommunications competition against AT&T by deploying its own microwave infrastructure alongside leased lines. By 1977, it operated switches manufactured by Danray.
In 1982, MCI launched a high-profile advertising campaign highlighting cost savings compared to AT&T. That year it acquired Western Union International's cable systems and telegraph rights from Xerox for $185 million and rebranded as MCI International with headquarters in Westchester County, New York.
On September 27, 1983—under leadership of Vint Cerf—a company founder—MCI introduced MCI Mail, an early email service utilizing the CCITT X.25 protocol. That same year saw a record $1.1 billion hybrid securities financing led by Michael Milken and Drexel Burnham Lambert.
In 1984, MCI implemented single-mode optical fiber technology (MAFOS), produced by Siecor between New York City and Washington D.C., establishing new industry benchmarks.
The acquisition of RCA Global from General Electric occurred in 1987; concurrently MCI collaborated with IBM and Merit Network to develop NSFNET—a high-speed TCP/IP telecommunications network foundational to today’s Internet. By linking MCI Mail with NSFNET in 1989—the first commercial email service integration—MCI played a strategic role in early global Internet infrastructure development. Its commercial Internet service, MCI.net, was eventually sold to Cable & Wireless during its merger with Worldcom in 1998.
Purchasing Telecom*USA in 1990 elevated MCI to become the second-largest U.S. telecom provider with over 46,000 miles of fiber-optic network and more than fifty services spanning over one hundred fifty countries including voice, data, telex transmissions, MCI Mail, and fax.
In March 1991, MCI introduced the Friends & Family plan offering discounted calling rates within groups of up to twenty members. In 1993 it launched "1-800-COLLECT", a collect call service featuring well-known endorsers such as Alyssa Milano; this service was divested in 2016.
In 1995 MCI collaborated with News Corporation on American Sky Broadcasting satellite TV project; however, it never launched commercially and its assets were sold to EchoStar by 1999.
British Telecom purchased a twenty percent stake in MCI for $4.3 billion in October 1994. The following year saw introduction of 1-800-MUSIC-NOW, a brief telephone and online music retail venture.
This era marked significant growth through regulatory approvals for licensing expansions; acquisitions such as Western Union International and Telecom*USA; pioneering satellite communication projects; and foundational Internet infrastructure contributions—all substantially increasing MCI’s market presence and competitive positioning within telecommunications.
Purchase by WorldCom
In November 1996, BT proposed a $22 billion offer to purchase the outstanding shares of MCI. The following October, GTE (currently integrated into Verizon) presented a $28 billion cash bid. Ultimately, WorldCom outbid both competitors with a $34.7 billion stock proposal, which MCI approved on November 10, 1997. The transaction was finalized on September 15, 1998, leading to the formation of the combined company named MCI WorldCom. The "MCI" brand was discontinued two years later.
After WorldCom became embroiled in a significant accounting scandal, it filed for bankruptcy protection in 2002 and reemerged as MCI Inc. in 2003. Throughout the reorganization process, numerous executive positions were reclaimed by former MCI leadership, reflecting a deliberate strategy to regain market standing and improve financial health.