New MCI plan is aimed at luring federal agencies

February 07, 1991|By Leslie Cauley

MCI Communications Corp. unveiled a new marketing program yesterday for federal agencies aimed at luring customers from the government's new FTS 2000 phone network -- and thus away from rivals American Telephone & Telegraph Co. and US Sprint.

MCI said its new Government Telecommunications Services program will sell voice and data services to federal customers at prices that are up to 40 percent below those offered through existing federal contracts, including FTS 2000. The FTS 2000 network is a program of AT&T and Sprint.

MCI's announcement comes two years after it lost out to AT&T and Sprint in a three-way bidding war for the FTS 2000 phone contract, a $25 billion project that is considered to be the crown jewel of the telecommunications industry.

According to MCI, the federal government could save about $100 million a year if all federal agencies signed up for GTS services tomorrow.

"We think FTS 2000 has failed to achieve the objectives it was designed to achieve," said Daniel F. Ackerson, MCI's executive vice president. "When General Motors and everybody else can buy telecommunications services cheaper than the federal government . . . something is wrong."

He said MCI's GTS prices, in some instances, are substantially below those offered to Sprint customers on the FTS 2000 network. Mr. Ackerson said MCI can offer similar savings to AT&T customers on the federal phone network.

Both AT&T and Sprint immediately questioned MCI's pricing claims, characterizing the GTS program as another attempt to ++ horn in on their federal business.

"If I was on the outside for 10 years, I guess I'd try every last straw to play in the game, too," said Gary Forsee, president of Sprint's business services group.

That view was shared by Dennis Roth of AT&T, who described MCI's new marketing initiative as "an attempt to undermine a legitimately awarded contract."

Mr. Roth also sharply questioned MCI's new pricing scheme, saying MCI's GTS prices, in some instances, exceed AT&T's by 20 percent or more.

The FTS 2000 contract in 1988 was split up 60 percent for AT&T and 40 percent for Sprint.

The contract, which calls for the vendors to overhaul the federal phone system, gives AT&T and Sprint a near-monopoly on federal phone services until 1998.

Along with that sizable chunk of business -- potentially worth $15 billion to AT&T and $10 billion to Sprint over the life of the contract -- the vendors must provide a plethora of services to maintain the network.

MCI has engaged in a number of attempts to overturn the contract since it was awarded.

Though its legal challenges have fallen flat, MCI has continued to look for ways around the FTS 2000 contract. MCI is trying to defeat a legislative measure that would require federal agencies to use FTS 2000 services.

Yesterday, Mr. Ackerson dismissed the notion that MCI is trying to circumvent FTS 2000, contending MCI is providing its competitors with a needed dose of "discipline about the virtues of overcharging the American taxpayer."

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