Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.bonus From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: bonus Tue, Jun 9 1992 Date: Tue, 9 Jun 92 05:19:54 EDT Message-ID: 06-09 0000 BONUS: MCI chairman dies USA TODAY Update June 9, 1992 Source: USA TODAY:Gannett National Information Network The raised eyebrow, the twinkle in the eye, the look of incurable mischief - Bill McGowan's face told you all you ever needed to know about the man who helped make a one-minute long-distance telephone call almost as cheap as sending a letter. The 64-year-old McGowan, chairman of MCI, the nation's second-largest long-distance company, died of a heart attack about 8 a.m. Monday at Georgetown University Hospital. WAS MCGOWAN IN POOR HEALTH? He went there regularly for exercise to strengthen his transplanted heart. McGowan, a chain smoker who kept a brutal work schedule, had a heart-transplant operation in 1987. After the operation, he quit smoking and started exercising. McGowan may have ruined his health to get MCI where it is today, but the company is in strong shape. It had $9.5 billion in revenue last year and claims 16% of the $55 billion spent annually on long-distance calls. MCI stock climbed 5:8 Monday to $32 7:8. WILL MCI'S MISSION CHANGE? MCI remains tightly focused on its primary mission: Battling AT&T for market share. And industry analysts say McGowan's hand-picked successor, Bert Roberts Jr., knows how to run the company. Still, losing a legend like McGowan is tough to take. McGowan almost singlehandedly brought about the end of the Bell System monopoly on telephone products and services in the USA. HOW DID MCI BEGIN? Founded in 1963 by Jack Goeken as Microwave Communications, MCI gave trucking companies a way to communicate with their drivers by microwave link between St. Louis and Chicago. AT&T and Western Union battled MCI every step of the way. In 1968, McGowan, a Harvard Business School graduate who already had founded an electronics company, bought half of MCI for $50,000. DID THINGS GO SMOOTHLY? After dozens of ugly court fights with AT&T, McGowan in the mid-'70s won tiny MCI the right to connect to the Bell companies' local telephone lines. Once connected, MCI's small, low-cost network of microwave dishes gave telephone customers a choice, offering long-distance rates 40% cheaper than AT&T's. McGowan's court fights in part prodded the federal government to sue AT&T on antitrust grounds. The result was the historic 1984 breakup of AT&T and full-fledged competition for long-distance phone calls. DID THE INDUSTRY EXPECT COMPETITION TO WORK? "The one thing that was clear was that (McGowan) was certainly upsetting the order of things," says William Weiss, a former Bell System executive who is now chairman of Ameritech, the Midwest regional Bell company. "There wasn't a great deal of confidence within the industry that competition would help things." That assessment turned out to be wrong, at least as far as long-distance rates are concerned. Today, about 200 companies handle long-distance calls. And they charge roughly 40% less than AT&T did in 1984. WHERE DID MCI GET ITS MONEY? Much of McGowan's success came from hammering the Federal Communications Commission and the Department of Justice to allow him to compete with AT&T. And by suing AT&T for alleged antitrust violations, he won millions in damages to help finance his company. He also successfully used high-risk, high-yielding junk bonds to expand MCI in the 1980s. HOW DID MCI KNOW WHAT AT&T WOULD DO? For years, he kept MCI corporate headquarters in an ordinary-looking office building in downtown Washington just to stay within walking distance of the FCC. MCI attorneys could stroll down the block and pore over AT&T's voluminous long-distance rate filings, which revealed its pricing strategy and let MCI anticipate its every move. HOW DID MCGOWAN REACT TO THE BELL SPLIT? In 1984, after AT&T was forced to spin off its local operating companies into seven regional companies, McGowan boldly sued the new companies, making the same antitrust accusations he had hurled at the old AT&T. At one point, McGowan predicted that the millions MCI would win in jury trials would underwrite MCI's construction budget for several years. McGowan lost those battles with the regional Bells, but he never lost the urge to look for an edge - in any competitive endeavor. DID MCGOWAN HAVE OTHER INTERESTS? His only great passion outside of MCI was golf. As he told USA TODAY in 1986, "If somebody hits a ball farther than me, I pay him a compliment. I put my ball next to his and play it from there." At MCI, McGowan's preoccupation with competition helped foster one of the USA's most competitive corporate cultures. DID MCGOWAN BELIEVE IN COOPERATION? "His style was completely different from my style for dealing with people," says Goeken, the founder of MCI who left the company in 1974 after a disagreement with McGowan. "He would get people working against each other ... one guy working against the other guy in a similar job. "My idea would be to say, `Hey, we're fighting against AT&T. Let's not fight against ourselves, ' " Goeken says. DID GOEKIN THINK MCI HAD A CHANCE? Goeken, who today heads In-Flight Phone, a company that provides phone service for airline passengers, never thought MCI could make it against AT&T. "Bill wanted to become a discount telephone company. I wanted to come in with new types of services." McGowan has imbued the entire company with his aggressive style. In the cutthroat long-distance market, MCI never hesitates to lay off people for poor performance or to satisfy investors. It demands total devotion and a single-minded focus on the goal of increasing market share. IS MCI CHANGING ITS PHILOSPHY? In the McGowan tradition, MCI remains as focused as ever. While AT&T has made recent strides against it, MCI is still more innovative in how it attracts new customers. Its Friends and Family program, which gives people a 20% discount if they persuade family and friends to switch to MCI, has been wildly successful and has spawned similar programs at both AT&T and Sprint, the USA's third-largest long-distance company. DID MCGOWAN HAVE ANY CHILDREN? McGowan, who is survived by his wife, Sue Ling Gin, and his brother, Joseph, had no children. But Sandi Goeken-Martis, daughter of MCI founder Jack Goeken and president of In-Flight Phone, says McGowan always related well to young people. Goeken recalls visiting McGowan's bedside in 1987 after his heart transplant. It was the last time she saw him. "He said, `See you around, kid.' I always wondered if we'd bump into each other. Bill never had kids and was fascinated that I grew up in the industry." Says Goeken: "I'll always hear him saying that ... `See you around the industry, kid.' " Bonus Editor: Ed Kelleher. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM