CWD MCI Wades Into IP [ getting crowded djf]

[David Farber <farber () central cis upenn edu>]

CyberWire Dispatch // Copyright (c) 1994 //


Jacking in from the "Me Too" Port:


Washington, DC -- MCI will announce tomorrow (Monday) that it's becoming a
full-service Internet access provider.  Think of it as the proverbial
1200-pound guerilla jumping square into the middle of the Internet provider
biz.


That's right.  You can forget all this bullshit squabbling about the CIX
and the measly $7,500 in CIX membership fees and who the hell is or isn't
on the damn board of directors.  Forget all that. It means nothing: A big
dawg has just come to play in the boneyard and he likes to play rough.


According to sources familiar with the MCI announcement, the company plans
to announce it will provide full Internet access via its own network which
will be accessed by software developed and licensed from two major Internet
software providers under joint venture terms.  MCI sources declined to
reveal details of those terms.


MCI will provide Internet access through its own homegrown network.
Although details of MCI's Internet access network aren't yet known, it's
likely that MCI will piggy-back this commercial access on top of the high
speed computer network it built specifically to service the nation's
supercomputer centers. That high speed network, by the way, is something
you're paying for with tax dollars, all $50-plus million of them.


MCI prices will be highly competitive with current Internet service
providers, MCI sources said.  "When have you ever known MCI not to be
competitive?"  one source said.


MCI's entry into the commercial Internet access provider arena ups the
stakes for smaller providers, such as PSI, UUNet, Netcom and a host of
others. Until now, Internet service providers have been primarily the
domain of smaller, mostly privately held firms.  It is a market dominated
-- so far -- by PSI and UUnet with the market split among dozens of smaller
providers and Internet resellers.


But none of these Internet providers has a well-known brand name and
although PSI is said to hold more than 50% of all commercial Internet
business, even its name draws blank stares when mentioned to corporate
execs looking for a quick and easy on-ramp to the Net's tangled Web.


MCI could easily corner the Internet access market.  It has a recognizable
brand name.  It's marketing department is aggressive and willing to take
chances -- some of which are winners (1-800- COLLECT) and others total
losers (the MCI "brat" that touted futuristic services...)  Still, MCI
knows how to target a market. Over the past two years it has consistently
stolen market share from AT&T in several areas, despite being significantly
out spent by the telecom monolith.


In the Internet access provider market, they will tower over all current
providers.  That will be a heady draw for them in the early going as they
seek customers.  We could see a lot of corporate bloodletting real quick,
as smaller providers die off, leaving the market to look more like a
massacre than shake out.


And it the things could get much worse for smaller providers before it gets
better, if it ever does.


Before too many more months go by expect to see the same type of service
being announced by AT&T.  That company has all the pieces, they've just
been asleep at the switch, not recognizing the market's potential. They
will now...


Of course, AT&T could simply buy out PSI and have an "instant" Internet
access service.  But knowing something of the grit and determination that
underlies the PSI management team, I suspect AT&T would find those
negotiations arduous. And I'd love to be fly on the wall of talks between
those two companies.


In the meantime, it's all MCI.  But MCI can only pull this newest rabbit
out of its hat if there is, indeed a rabbit to pull.  And it seems there
will be that.  Why?  Because point man for the MCI project is "Mr.
Internet" himself, Vint Cerf. I doubt seriously if Cerf would sign on and
front a shoddy product.  He has too big a reputation at stake. If it is
broke, he'll fix it.


Another big selling point a la Cerf:  Security.


Cerf testified earlier this year before a Congressional subcommittee that
business "know they are taking a risk" by launching into the Internet
because of the Net's lax security. Businesses want to be assured their
systems and access will be secure, Cerf told the Congress.  Look for beefed
up security guarantees from the MCI effort if Cerf has anything to say
about. And if they pull this off (real or imagined) look for corporate
accounts to flock to MCI.


Meeks out...