International powerhouse – interview with MCI Communications Corp.’s chief engineering officer Fred Briggs – Interview
MCI’s Fred Briggs talks about taking responsibility of Concert’s network and about the future of the BT/MCI megamerger
When BT and MCI announced that they were merging last November, many industry watchers gave the union a thumps up. BT was already part owner of MCI, and the two companies had worked together for years through their worldwide network joint venture, Concert. Concert and its partners will be one of the largest telecom concerns in the world with networks literally stretching from pole to pole.
Fred Briggs is currently the chief engineering officer for MCI, but he will take over as chief technology officer of Concert once the merger is complete. An ex-Navy submarine engineering officer, Briggs is friendly but to the point. When he extolls Concert’s potential, the cadence of is speech picks up in time with his gesturing, hinting at is enthusiasm not only for technology, but also for the global network he will soon head.
Telephony’s Switching & Transmission Editor Beth Snyder spent some time with Briggs over the past few months and posed some questions about MCI, his new job, Concert and the future of telecommunications networks. An edited transcript of his answers follows.
Telephony: BT and MCI have been working together for several years. What are the reasons for a merger now, and what kind of results do you expect?
Briggs: They say timing is everything, and in our industry the timing really couldn’t be better for a merger like this. The competitive landscape is changing almost daily as we see competition take hold in telecommunications markets around the world. The U.K. is a good example. Not all that long ago, BT was the monopoly phone company in the U.K. Now, the U.K. is arguably the most competitive market in the world. By 2000, deregulation will open 90% of the world telecom market.
At the same time, the number of telephone customers worldwide will increase by more than 50%, from 800 million to 1.2 billion, including 300 million mobile users. There has never been a better time than now to be in the global telecommunications business, and this merger gives us the tools to be a successful player – globally and locally within the U.S.
BT and MCI certainly aren’t strangers; we’ve been working with them for nearly a decade, and we’ve been very successful with our joint venture, the original Concert. The merger will give us the capability to work together even more closely, leveraging our resources, maximizing our purchasing power and decreasing our time to market with new products. It also will give us the ability to consolidate networks to provide better and more cost-effective service worldwide.
There’s no downside to this merger.
What will be some of the most immediate and noticeable changes when the merger is complete?
Obviously, there will be changes within the organization itself, but I don’t think customers will notice anything terribly dramatic right away. Concert will become more aggressive in the European markets as well as in the U.S., accelerating the rollout of products, tying some networks together and consolidating others.
Our large, multinational customers will probably feel the impact first as they begin to enjoy the benefits of a seamless global network. Over time, many of the products and services offered by MCI and BT will become seamless at the consumer level, so no matter what country you’re calling from, no matter how many time zones your company operates in, you’ll be able to use Concert products that are very familiar. And together, MCI and BT will bring consumers an unmatched portfolio of products and services.
What do you see as your biggest challenge as chief technology officer of Concert? What are some other challenges you anticipate?
It’s important to remember that half the world has never made a telephone call, and for them, simple dial tone is an enhanced service.
One of my biggest challenges is to understand what some areas of the world really need in terms of telecom services and then deliver that. Does it make sense to market paging or Internet in countries that barely offer basic phone services? Maybe. Many developing areas will need simple solutions now that will allow for future growth into the more sophisticated products and services.
The other challenge is to scale the solutions and still make them seamless. MC! and BT will be looking to offer solutions that will serve millions of customers. That’s not easy when you’re talking about hundreds of different markets, all with specific cultural issues and infrastructure needs. Every market is very different, and we don’t want to make the mistake of locking into a solution that might, for example, make perfect sense in Europe but isn’t the right thing to do in Asia.
We need to have a large range of options that will ensure we can address not only the technology issues of each market, but also the regulatory, legal and competitive landscape.
BT and MCI recently cut a deal with Spain’s Telefonica to join Concert as a partner. What does that mean strategically for Concert? What about the Far East? There are no major signed partners as of yet, but do you anticipate one and when?
Telefonica is a great strategic fit with Concert and shows how compelling our offering is in terms of global reach, products and services. Not only do Spain and Portugal provide the critical elements that will help us build a Pan-European network, but with Telefonica’s holdings in South America, we also have the basic pieces to be the first to build a network in South America that can be tied in with Avantel, our Mexican venture.
With Telefonica, no other telecom company will be as well-poised as Concert to serve the $35 billion South American market.
The Far East will he a different story. While there are large players, there is not a single company that can deliver as extensive a network as Telefonica gave us in South America. This region will be put together with a number of partners and will probably grow somewhat more slowly than other regions of the world.
Can you compare what Concert and deals with companies such as Telefonica do for MCI’s standing worldwide in the competition with the two other major U.S. interexchange carriers, AT&T and Sprint?
MCI is currently the second-largest long-distance carrier in the United States, with annual revenues of more than $18 billion. Concert will be sixth in the world in profits, 15th in terms of market value and 23rd in annual revenue. I don’t think there’s any doubt that our merger with BT will make us a much more significant global player.
But there’s plenty of room for growth. Concert will begin life with a mere 6% of the world’s $670 billion telecom market – a market that will grow to $i trillion by 2000. Through our original Concert joint venture with BT, we have 3000 customers, $1.5 billion in revenue and, most important, an 18-month lead on the competition.
Deals like Telefonica only accelerate that lead and will help make the new Concert more competitive in the global arena. Concert has now set the pace in global telecommunications. Everyone else is playing catch-up.
How does data fit into the future of BT/MCI and Concert? Will either company make changes or modifications to its datacom plans?
Data, including frame relay, asynchronous transfer mode and the Internet, are among the company’s fastest-growing products. Our Internet backbone is enjoying a 200% annual growth rate. In 1996, we carried a whopping 3400 terabytes across our network. We’re predicting that the Internet will match the size of the switched network in terms of bandwidth by 2001.
But even with the explosive growth in data, we are still seeing double-digit growth in many of our less glamorous products: private lines and X.25.
Our data strategy in the coming years is going to be based largely on our Vault architecture. From our perspective, the line between voice and data is getting increasingly blurry. In the near future, look for products that really mix and match the best qualities of the voice and data networks to provide whole new categories of products and services.
What high-speed local access/local loop technologies is BT/MCI using or testing now? Which do you think will be the strongest for BT/MCI and why?
We don’t think a single technology will necessarily provide the best solution for everyone. Cable modems may be the answer in some markets, while digital subscriber line will work in others. Cable data modems offer excellent connectivity but require a large investment – an estimated $30 billion industrywide.
Look for wireless offerings at ISDN speeds. And DSL will be important, which is why we’re doing the DSL trials in Northwest Iowa. As all this bandwidth becomes readily available to ordinary consumers, watch out: Applications for business and consumer will explode, and the size, quality and reliability of the network that carries these services will become more important than ever as consumers integrate these applications into their daily lives.
How soon do you think MCI will have widespread access to the local loop in the U.S.? Is the situation different in the U.K.? What effect does lost time to market have on eventual performance and market share?
It’s difficult to offer an exact time table, but we are already conducting various technology trials in Iowa, New York and Connecticut so that we’ll be ready when that day comes. MCI has demonstrated throughout its history that it can win whenever given a chance to compete fairly, and as markets open around the country, we expect to be a competitive player. The real losers today are the consumers. As long as the LECs continue to throw up roadblocks to local competition, many consumers are stuck in a technological time warp, where the fastest speed available is via the 28.8 modem.
In the U.K., BT is a local service provider as well as a long-distance company. As demand grows for faster connectivity, BT is rolling out more advanced products to its customers.
You have talked in the past about all-optical networks. In what kind of time frame are you hoping to complete that either in the states or the U.K.? How important is all-optical to the strategy of BT/MCI and Concert?
The move to an all-optical network is in full swing at MCI. We’ve already begun to implement innovations such as optical amplifiers. The next big steps will be in areas such as optical cross-connects and switching, where we expect to see a large number of new optical products by 1999. The increased reliability and cost savings that the all-optical network will bring makes it a key consideration as we move toward the merging of BT and MCI and begin planning for the future.
Take a look into your crystal ball and give us an idea of what the network infrastructure of the future will be.
As fast as technology is moving today, making predictions probably isn’t too smart. I think it was back in 1945 that the chairman of IBM forecasted the need for only five computers in the world.
Without revealing too much about what our networking gurus are dreaming up – both in our research facilities here in the U.S. and at BT’s labs in Martlesham, U.K. – it’s fair to say the network of tomorrow will be the very first designed specifically for the needs of the customer.
As we consider our various options, whether it be optical backbone equipment or a Vault architecture that merges the Internet protocol and voice networks, the best way to look at the network of the future is not to think about how it works but what it offers customers.
Let’s face it: The customer couldn’t care less whether we use digital or optical cross-connects, or which vendor provides our routers and switches. To users, the key will be whether or not the network delivers the necessary bandwidth to provide the information and applications they’ll demand.
The company that offers the products and services that meet those demands will win their business. And as you might expect, our plan at Concert is to win lots of business, all over the world.
THE BT/MCI MEMBER
* 43 million customers worldwide
* Combined assets of $53 million
* Operations in more than 70 countries
* Investment in telephone companies in several countries, including Mexico, New Zealand, Germany, Spain, Italy and France
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