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.