MCI Communications Corp. surprised the industry when it opted not to participate in the 1994 government auction of new wireless licenses.
But while MCI’s competitors were giving billions of dollars to the U.S. treasury for that market opportunity, MCI was cracking a deal to buy the nation’s largest cellular reseller for $190 million.
MCI also quietly worked out a resale contract with the nation’s largest paging operator. The $13 billion long-distance carrier said its intention to enter the wireless business by reselling service is working as planned.
“With competition in wireless, there is excess capacity,” said Chris Mannella, MCI vice president of brand marketing. “Excess capacity means we can buy it at wholesale, sell it at retail and have it be profitable.”
MCI continues that strategy with its latest move into 20 additional cellular markets, including Atlanta, Detroit and Miami.
The company now markets cellular in 10 major markets, scattered from New York to San Diego, covering about 25 percent of the U.S. population. MCI claims 400,000 analog cellular customers. It started with 275,000 cellular subscribers after its purchase of Nationwide Cellular Service Inc. last summer.
The 20 new markets will increase the availability of MCI service to nearly 45 percent of the nation.
The company says it acquired a half million paging customers since last May through contracts with Paging Network Inc. and SkyTel Corp.
PageNet doesn’t consider its deal with MCI a resale venture because MCI doesn’t just buy bulk airtime. It purchases a complete program.
For instance, MCI offers its 20 million long-distance customers local numeric paging for $12.95 a month. MCI leases the pager from PageNet. Pagers are shipped to the customer, ready to go. The monthly cost is rolled into the long-distance bill. PageNet provides customer service, airtime and pagers. MCI does the billing.
But MCI only leases pagers. It doesn’t activate service for pagers already owned; MCI doesn’t provide service only, Mannella said.
Those are just the wireless arrangements. MCI is most proud of its new customer marketing deals, such as:
When an MCI customer spends a total of $100 on their home long-distance, they earn $10 in airtime credit on their cellular bill.
MCI residential cellular customers can earn flight credits with several U.S. airlines when they pay for monthly cellular service.
All MCI Cellular customers receive free domestic long-distance service.
MCI has a plan to knock down landline charges as well. Its Metro division has built fiber optic local networks in the cities of Baltimore, Md., Chicago, Philadelphia, Detroit, Pittsburgh, New York, Milwaukee, Hartford, Conn., Boston and Seattle.
Wireless was more profitable to buy than to build, Mannella said. Not so with local phone service, hence, the company intends to construct local systems in cities that will be rewarding, he said.
Mannella said no one can match MCI’s marketing and merchandising ability. Telecom analysts say they expect all the hoopla over telecom competition to boil down to about five super telecom networks in the future. MCI admits it is positioning itself to be one of them.