Folks and Blokes

June 16, 1993

Here's further evidence that in the business world, borders are increasingly more porous than they are in the political sphere. A generation or so ago, telephone companies were jealously protected national monopolies. International telecommunications were negotiated among what amounted to sovereign entities. But that is now changing, as seen from the massive investment by British Telecommunications in MCI, this country's second largest interstate carrier.

This is all part of the increasingly internationalized global economy.

British Telecom, which less than a decade ago was a government-owned monopoly, is joining with MCI, the upstart challenger to AT&T's one-time dominance here, in a joint venture. The communications giants will jointly offer telecommunication services all over the world, notably to the increasingly large market of multi-national corporations that want a single telephone service. For its $4.3 billion investment in MCI, British Telecom will get a long-sought foothold in the U.S. market.

Viewed from this side of the Atlantic, the deal looks highly beneficial.

MCI is still a distant second to AT&T in long-distance service. The infusion of capital will enable it to become a much stronger competitor. To the extent that increased competition improves service to customers -- and it has not been an unmixed blessing since telephone deregulation -- that is all to the good. The deal may not look as advantageous from Britain, where British Telecom has continued under private management to behave a little like the arrogant monopoly of old.

One aspect of the new alignment remains unclear, and it will have a familiar ring to Marylanders. Britain is still a closed market in many respects to foreign telephone competitors like AT&T. As in the quasi-merger of USAir and British Airways, the question arises whether United States companies will get comparable access across the Atlantic. It is futile to try to halt the inexorable blending of international services, as some U.S. airlines attempted, but the process must work in both directions.

In British Telecom, MCI gets access to one of the most advanced communications research operations in the world. Stodgy British Telecom could pick up some marketing pointers from aggressive MCI, like its successful Friends and Family discount promotion. One wit has already suggested it could now be re-named Folks and Blokes.

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