Capellas: Net telephony is the future

LAS VEGAS--Michael Capellas, CEO and president of the newly reorganized MCI, is banking on Internet telephony and other new digital technologies as the carrier rebuilds itself after coming out of bankruptcy protection.

On Tuesday, three weeks after MCI emerged from the biggest corporate bankruptcy reorganizations in U.S. history, Capellas addressed a packed auditorium of engineers and vendors at the NetWorld+Interop trade show here. In his first public speech since the bankruptcy reorganization, Capellas focused on MCI's future and made no mention of its financial losses. (On Monday, the long-distance telephone company formerly known as WorldCom reported that it had lost $388 million in its first quarter and would cut 7,500 jobs.)

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Capellas' message to the masses was that Internet Protocol convergence is coming and that MCI, with its $38 billion data-oriented network, is well-positioned to catch this next wave of innovation, in which voice traffic will ride the same network as data. Capellas said that phone calls and video no longer needed separate networks, since they have merely become applications on the IP network.

"The rules are changing," he said. "Voice, data, music--they have all been digitized, and people want to access this content. But it's really just packets on a network. And on an IP network, packets all look the same."

MCI emerges from bankruptcy with renewed customer focus Michael Capellas, CEO, MCI

Driving the move to IP is the desire of people to access communications in many different forms, Capellas said. Mobility is becoming pervasive, but this is not just about wireless technology, he said. Rather, people want the ability to access content and applications on a variety of different devices.

As part of MCI's strategy, the company is expanding its network, which is already on six continents in 140 countries. On Monday, the company announced it was expanding its multiservice label switching (MPLS) network in China and India.

It also is focusing more on new partnerships. On Tuesday, before the keynote address, MCI announced a deal with Microsoft to develop and integrate voice over IP (VoIP) technologies with collaboration tools.

"We know that just about everyone is already running Windows," Capellas said during his speech. "We wanted to provide people with simple-to-use collaboration tools, so the partnership with Microsoft made sense."

Capellas reiterated that MCI will carry all of its traffic--including its traditional voice traffic--over a single, converged IP network by the end of next year. When asked if the company's plans to offer VoIP might take business away from MCI's current telephone service, Capellas said: "Yes, it does. But I've learned over the years that in a technology transition, if you don't cannibalize your own business, someone else will."