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**Rebuilding the Brand**

**Strategy & Implementation Plan**

By

Team 3

Mike Lindamood

Jennifer Yontz-Orlando

John Pallotta

Jeff Plitt

November 12, 2023

**EXECUTIVE SUMMARY**

**Introduction**

Rebuilding the MCI brand will take intense focus on current industry
trends and emerging technologies. Understanding the impact of those
trends and technologies will allow MCI management to follow a corporate
strategy based on their core competence. The implementation of this
strategy will position MCI at the forefront of the telecommunications
industry for decades to come.

**Industry Trends:**

**Bundling, Wireless & International Growth**

Telecom industry trends include bundling of consumer services such as
local and long distance service, Caller ID, and Call Waiting. With
bundling, more services can be sold to the consumer and customer
churning is reduced. Competitors are betting heavily on wireless, DSL,
and Wi-Fi Networks that will allow both consumers and businesses to be
connected via mobile phones and laptops. Services include sending
photos, playing games, accessing the Internet, and high speed data
transmission. Growth overseas and in developing markets is a bright spot
within the telecom industry.

**Emerging Technologies:**

**VoIP & Data Services**

Industry participants are anxious to provide services which allow for
calls over the Internet. This technology, known as Voice over Internet
Protocol (VoIP), provides significant savings to consumers and
businesses for long distance calls. Global annual spending on VoIP is
expected to exceed \$20 billion within the next few years. Data services
to the business segment has the potential for substantial growth. The
barriers between telecom and IT are blurring and those companies that
can effectively integrate the two will reap the benefits.

**MCI Internal Analysis**

**Strengths**

The company has \$5B in cash reserves to invest in its future. The
company's customer base has largely continued with MCI in spite of
recent challenges. MCI has expanded its agreements with the Federal
Government through contract extensions and a winning bid for a wireless
network in Iraq. The UUNET, continues to be the largest portal for
companies requiring internet access and data services. The company holds
over 50% of U.S. online traffic. This Internet pipeline positions the
company strategically for further international growth.

**Risks to MCI**

-   Continued decrease of local and long distance rates and income

-   Small local companies entering the market and diluting the customer
    base

-   Government regulation of Internet calling processes

-   MCI's Limited Wireless presence

-   Cable companies are offering VoIP via their broadband fiber optic
    cable networks

-   Federal courts have decided that companies owning major data
    networks must share those networks

-   Competitive Rivalry between Existing Players: Legal action by AT&T
    and Verizon

**Stakeholder Analysis**

Prominent stakeholders must believe they are associated with not only a
winner, but an honest winner. The message from MCI to all stakeholders
needs to present MCI as the best managed and most ethical company in the
US. When addressing the past, MCI will show stakeholders it takes full
responsibility for wrongs, makes corrections to ensure those mistakes
are not made again, and is focused on moving forward in the service of
clients, investors, and the public at large. Major stakeholders include:
New investors, Wall Street and media, Customers (consumers, business,
and government), Employees, and Lenders.

**Recommended Business Strategy**

MCI will focus on its core competency. The UUNet entity provides an
extensive global fiber optic network for MCI to base all future
services. MCI will continue to reduce costs and generate income from
Local and Long Distance Markets. Retained cash will be used to develop
data and voice internet services locally, internationally, and into
emerging markets. The MCI brand will be promoted throughout all target
markets. Expanding aggressive corporate marketing plans for data,
conferencing, and voice communications (Convergence Technologies) are
keys to future growth. Continued emphasis on Government based business
activity is desirable.

**Implementation Plan**

The implementation of MCI's strategy will include focus in the following
areas:

-   Management

-   Corporate Landscape/ Environment

-   Strategic Flexibility

-   Organizational Structure

-   Knowledge Management

-   Organizational Learning

-   Ethical and Governance Related Issues

Management needs to provide a continuous and focused mission statement
of the company and the values they will operate within. This needs to be
voiced by the CEO directly with regular scheduled organizational
meetings and internal focus groups. Management must create an
environment where governance, cost improvement, and the corporate
mission statement is understood and known by all employees.

Strategic flexibility will be essential in order to focus on business
opportunities of emerging technologies. The organization must support a
strict open door policy and flatten the communication links within the
company. Proactive flexibility will drive new markets and satisfy
existing clients.

The company must establish world-class standards for product
development, innovation, and quality. The employees must be encouraged
to participate in corporate decision making for processes and products.
A holistic alignment of values, attitudes, and direction is critical for
success.

##### Industry Trends, Technology, Competition

**Trends**

*Internet Calling (VOIP & Telephony)*

Large and small industry players are working on ways to send calls over
the Internet VoIP (voice over Internet protocol) or another data
network, with potentially big savings for consumers and companies
(Grant, 2003). Internet phone service is unregulated, and the
improvements in technology make even the smallest start-ups a credible
threat (Grant, 2003).

Currently, VoIP accounts for less than 3% of global voice phone calls,
according to an AT&T estimate. A number of trends are working in the
technology's favor: the boom in demand, the evolution of the technology,
which permits companies to offer services beyond the reach of
conventional phones; and the spread of broadband connections, which make
VoIP much easier to use (Grant, 2003).

World-wide spending on Internet telephone systems by businesses is
expected to exceed \$20 billion this year, nearly 20% of world-wide
business spending on phone systems (Grant, 2003).

Fixed-line voice-based networks are being eclipsed by a multitude of
packet-based data networks on which voice is just another kind of data.
Eventually, all of those packets of data will be carried using internet
protocol (IP). "IP will eat everything in the next decade," says AT&T\'s
Mr. Eslambolchi (Standage, Untangling, 2003).

SBC Communications, the nation's #2 local service phone company, will
offer Internet-based phone service to businesses nationwide in an effort
to shore up slipping sales of traditional phone service. SBC has
provided VoIP for several years, but it required expensive phone systems
and a hefty investment from businesses (Cox, 2003).

The new service offers customers voicemail and e-mail that is stored in
a single box, forwards calls to mobile phones, and use of regular office
phone numbers when on the road. These services operate via SBC networks
and don't require major system upgrades (Cox, 2003).

Even though SBC has been testing VoIP for residences, there are no
immediate plans to roll out a consumer offering. "A lot of the growth
the Bells are going to see over the next 24 months is going to come from
the business markets," says John Hodulik, a UBS Securities telecom
analyst. "It's a \$35 billion opportunity and SBC expects to get 10
percent of that over the next three years" (Cox, 2003).

VoIP is a fast emerging technology which will be the future of the
telecommunications industry. The marriage of IT and IP protocols will be
essential for any of the industry companies' future existence in this
marketplace. MCI, with its global internet data network is better
positioned than their major competitors for this emerging technology.
Global spending on VoIP will exceed \$20 billion or approximately 20% of
business spending on phone systems (Grant, 2003). MCI must make VoIP a
part of its focus with corporate clientele.

## *Broadband (Fiber Optic Cable) Technology*

Internet-based telephony is one of many problems facing incumbent
telecom operators around the world. Incumbents are losing subscribers to
competing fixed-line operators. Incumbent operators are now
repositioning themselves as broadband operators. By installing special
equipment at telephone exchanges, operators can supercharge
old-fashioned telephone wires and turn them into fast broadband pipes,
using digital subscriber line (DSL) technology. Around the world, DSL is
flourishing and has become the dominant means of providing broadband
access to homes and small businesses.

To get growth from DSL, incumbents will have to become more data-savvy,
form partnerships with content providers, and market themselves in a
different way. Mobile operators have been doing this for a while, and
have made good progress in transforming themselves from dull utilities
to vibrant consumer brands. Broadband is a key to their future growth,
but the transition will be hard to manage.

Bundling of services has been key for growth in this market.
"Variations" of a combination of services including local, long
distance, DSL and wireless on a single bill have been profitable for
Bells including SBC and BellSouth (Howe, 2003). Both wireless and
broadband are intensely competitive markets that usually produce lower
profits, but are elements of a total telecom package. SBC has attracted
60 percent of its customer base to broadband and BellSouth has gained an
even more impressive 70 percent of possible customers (Howe, 2003).

MCI should make bundling part of its strategy for all sectors of
clientele. Value added service will be the differentiating factor among
seemingly commodity oriented companies within the telecom industry.

## *Wireless Technology*

The rise of mobile phones is eating away at the core business of
fixed-line voice telephony. Such "fixed-to-mobile substitution" means
people are making fewer calls on their land lines, and are doing away
with second lines. European incumbents\' fixed-line voice revenues are
expected to decline by 2.5% this year. In some countries the drop may be
as much as 12%. American incumbents (the former Baby Bells) are watching
fixed-line voice revenues decline by 7% a year. This trend is likely to
worsen with wireless number portability, which lets American subscribers
transfer their fixed-line numbers to mobile phones (Standage, Between a
rock).

Last spring, AT&T Wireless launched a high-speed digital service in the
Memphis area providing services such as sending photos, playing games,
and accessing the Internet wirelessly. AT&T Wireless is different from
other wireless providers in that it provides more content to consumers.
AT&T uses the GSM standard which stands for Global Standard for Mobile
communications. It is most widely used outside of the United States
(Watson, 2003).

The industry considers the most promising source of growth will be
delivering data to handsets alongside voice. In the most developed
mobile markets, the introduction of such data services is well under
way. One such service, text-messaging, has been a spectacular success,
showing that consumers are prepared to use their phones for more than
just voice calls. More than one billion text messages are now sent every
day around the world, at an average cost of around 10 cents. The average
mobile-phone subscriber sends 30 messages a month.

Other companies, such as Nextel, use a different standard known as iDEN.
iDEN stands for "Integrated Dispatch Enhanced Network". This technology
allows Nextel to provide consumers with Doppler weather radar of their
areas (Watson).

The telecoms will need to continue to defend their home turf of wireless
and land line services while keeping their eyes on future technology
which can help them offer more services to select groups of demographic
users to improve or sustain revenues.

Although wireless service is a strong trend within the telecom industry,
MCI (SkyTel) does not play a prominent traditional role. MCI could spend
large sums of available cash to rival current industry players such as
AT&T, Sprint and Verizon. Even with large capital expenditures MCI will
still run a distant third or fourth in the wireless commodity market.
MCI should focus on unique solutions and not commodity services.

**Competition within the Telecom Services Industry**

*General*

The overall telecommunications industry consists of voice and data
communications services. Voice communications consist of local, long
distance, conferencing, wholesaling and mobile/wireless services. Data
communications consist of computer networking, web-hosting, Internet
(Dialup, Broadband, WiFi), and VoIP/telephony services.

Domestic Telecom Service Strengths by Company:

  ------------- ------- --------- --------- ----------- ------- ------------
                MCI     AT&T      Sprint    Verizon     SBC     BellSouth

  VOIP          X       X         X         X           X       X

  Broadband             X                   X           X       X

  Wireless              X         X         X           X       X

  Long Distance X       X         X         X           X       X

  R&D                   X         X                             

  Market Share          X                                       

  Network       X                                               

  Global        X       X                                       
  Presence                                                      

  Cash          X                                       X       
  ------------- ------- --------- --------- ----------- ------- ------------

*[Top Ten Telecom Service Providers (Ranked By Sales)]{.underline}*

1\. Nippon Telegraph and Telephone Corporation (NTT)

2\. Verizon Communications Inc. (VZ)

3\. Deutsche Telekom AG (DT)

4\. France Telecom SA (FTE)

5\. SBC Communications Inc. (SBC)

6\. AT&T Corp. (T)

7\. MCI Corp.

8\. Telecom Italia S.p.A. (TI)

9\. Telefónica, S.A. (TEF)

10\. BT Group plc (BTY)

## 

## ***Wholesale Local and Long Distance Service*** 

Voice data communications through traditional delivery is a service that
is beginning to change. Both local and long distance calling services
are beginning to be delivered via IP (internet protocol) networks as
VoIP technologies continue to improve. This has led cable companies such
as Time Warner to enter the market by delivering flat rate voice
communication services through already existing cable connections that
run over fiber optic cable networks. Traditional voice service companies
are beginning to bundle voice (local & long distance) and high speed
data communication services (DSL) together to at least keep current
customers from switching to cable.

*[Long Distance Service (Ranked By Sales)]{.underline}*

1\. AT&T

**2. MCI**

3\. Verizon

4\. Sprint FON Group

5\. Quest Communications

*[Local Telephone Service (Ranked By Sales)]{.underline}*

1\. Verizon

2\. SBC

3\. AT&T

Verizon -- In addition to its strong presence in the mobile/wireless
market, Verizon is also a large provider of local telephone services.
Formerly a baby bell, it has continued to grow from a regional telephone
service provider into a global telecom giant located in 32 countries.
The success of providing traditional voice communication, while
continuing to add new data and mobile services has turned Verizon into a
major force within the industry.

Another converted baby bell, SBC, has an initiative to bundle all of its
communication services together to win back local telephone customers
who have switched to wholesalers such as AT&T and MCI, as well as other
mobile/wireless services. In addition to decreasing SBC's product reach,
each departing land line customer helps to trim SBC\'s profit margins.
Bundling DSL with long-distance and local phone service has helped
temper customer desertion by 73% in 2003. To attract customers to
packages, telecom companies must charge less for each service, and that
cuts into earnings.

## 

*Mobile Services -- Wireless & Text Messaging*

NTT DoCoMo, Inc. is the mobile services subsidiary of the Japanese
company Nippon Telegraph and Telephone Corporation (NTT) listed above.
Located throughout the world, NTT's DoCoMo division continues to provide
mobile, satellite, wireless, and high speed data transmission services
in addition to the equipment it runs on. \$38 billion in sales was
posted in 2002 (Reuters Investor).

Vodafone Group recently created a joint venture with Verizon Wireless,
making it the #1 wireless provider in the U.S. The Vodafone Group PLC
provides a variety of mobile telecommunications services, including
voice and data communications (Yahoo Finance). Vodafone is located in
Europe, the UK, the U.S., and the Far East. It operates in 28 countries
worldwide through various undertakings and investments.

Cellco Partnership, which does business as Verizon Wireless, is the #1
US mobile phone operator serving 32.5 million customers nationwide.
Verizon Wireless began operations in 2000 when Bell Atlantic and
Vodafone combined their US wireless assets, including their PrimeCo
partnership. Verizon Wireless gained GTE\'s US wireless operations when
Bell Atlantic bought GTE to form Verizon Communications, which owns 55%
of the company; Vodafone owns 45%. Plans for an IPO, postponed in 2001,
were revived but finally withdrawn in 2003 citing lack of funding needs.

*[Top Global Wireless Service Companies (Ranked By Sales)]{.underline}*

1\. NTT DoCoMo, Inc. (DCM)

2\. Vodafone Group PLC (VOD) - Verizon

3\. Cellco Partnership - Verizon

4\. Cingular Wireless LLC

5\. Orange SA

6\. AT&T Wireless Services, Inc. (AWE)

7\. T-Mobile International AG

8\. China Mobile (Hong Kong) Limited (CHL)

9\. Telecom Italia Mobile SpA

10\. Telefónica Móviles, S.A. (TEM)

Note that SkyTel Communications, owned by MCI, was not listed on the top
10 in wireless sales.

### Risks for MCI

1.  Continued decrease of local and long distance rates and income

2.  Small local companies entering the market and diluting the customer
    base

3.  Government regulation of Internet calling processes

4.  MCI's Limited Wireless presence

6\. Threat of New Entrants

> Cable companies are beginning to implement VoIP via their broadband
> fiber optic cable networks. As the telecom and IT industries converge,
> other products will surely be invented as a result. These new
> technologies will re-invent the telecom industry as we know it today
> (Stern, MCI Ready, 2003).

7\. Threat of Substitutes

> Federal courts have decided that companies owning major data networks
> (both telecom & cable) must share those networks, so substitutes will
> enter the market and gain some market share (Grant, 2003). For
> example, ISP's already can rent either MCI network lines (to sell
> high-speed DSL broadband Internet services) or Time Warner's
> Roadrunner broadband cable network. Consumer based VoIP services are
> already being tested by Time Warner in Maine over its cable network.

8\. Competitive Rivalry between Existing Players

> AT&T and Verizon filed legal action to contest MCI emerging from
> bankruptcy. Also, AT&T has supported legal action for the potential
> misrepresentation of long distance being routed through Canadian
> transmission lines and claiming them as local calls (Weinberg, 2003).

## Internal Analysis

## MCI Core Competency 

## Providing comprehensive single source service to customers for phone (VoIP), internet, and data transfer.

## *Backbone Network*

The UUNet provides an extensive global fiber optic network for MCI to
base all future services. The company needs to focus its Digex, VoIP,
and Convergence Networking capabilities to capitalize on the growing
special features segment of the telecom industry.

AT&T, Verizon, SBC, and Bell South offer VoIP services. With the MCI
network positioned number one globally, this provides a strategic
advantage over the competition in providing comprehensive single source
service to customers for phone (VoIP), internet, and data transfer.

This service in the near term will provide an ability to maintain higher
levels of pricing compared to traditional land line service. With the
ability to provide a single source service package, MCI can protect
itself from the typical churn which prevails in the wire and wireless
sectors.

*UUNET*

UUNET is the leading Internet pipeline globally (Kallens 2003). It
provides corporations with Internet access and data services. MCI
handles over 50% of U.S. online traffic (Haddad, 2003). This is MCI's
backbone network. With the scope of UUNet, which provides an extensive
global fiber optic network, the company needs to focus its Digex, VoIP,
and Convergence Networking capabilities to capitalize on the growing
special features segment of the industry.

AT&T, Verizon, SBC, and Bell South offer VoIP services, but with the MCI
network positioned number one globally, this provides a strategic
advantage over the competition in providing comprehensive single source
service to customers for phone (VoIP), internet, and data transfer.

The ability to grow and provide data services globally is enhanced by a
telecommunications infrastructure throughout Europe, the Middle East,
Africa, Asia Pacific and North America. With their international
network, MCI has the ability to design and deliver product sets and
features globally so that multinational enterprises enjoy a consistency
in service performance regardless of geography. MCI's global network
provides a platform for supporting a broad range of related services
that enhance customer convenience, add value and provide additional
revenue sources.

*[MCI "UUNet" Global Network Diagram]{.underline}*

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# Positioning MCI in This Turbulent Environment

MCI can expect increased competition from providers determined to
exploit technologies to reduce costs in providing services. MCI should
be working to develop services and expect to be at the forefront of
technological developments. MCI must use these developments to leverage
their strengths to protect their client base, grow market share, and
increase revenues and profitability. MCI faces intense competition in
offering wholesale services, small business services, dial-up Internet,
and paging and prepaid calling card services (Thomas Register, 2003).

MCI must regain focus on its core competencies, synergize its existing
networks and continue to focus on becoming a competitive force within
the emerging technology markets (Stern, MCI Ready, 2003). The following
industry segments represent the bulk of MCI's core competency. Within
each segment, MCI must concentrate on the expansion of new products and
technology required by each type of client served: Consumers, Wholesale
segment of local and long distance service, and Corporate and Government
service.

[]{.mark}

###### *Consumer*

Strong financial pressures and federal deregulation has moved telecom
providers into the "all-distance" model of providing services. The trend
for the consumer market is a bundling of services (including local and
long distance calling, and features such as Caller ID and Call Waiting)
for one flat monthly fee. AT&T, BellSouth, Qwest, SBC, and Verizon were
quick to copy MCI's launch of "The Neighborhood" bundling service
(Palmeri, 2003). This is an attempt to sell more services to each
customer, make more efficient use of networks, and preserve an
increasingly fickle customer base. In an effort to maintain their
customer base, some regional telephone providers argue that pricing
pressures are creating an atmosphere where companies are working below
cost (Black, 2003). Eventually, it is possible that these pricing
pressures and the blurring of local and long distance carriers will
create a need for the consolidation or integration of companies that can
best support these services with the highest level of quality at the
lowest possible price.

The next all-distance model being adopted by the competition includes
wireless and DSL. This model integrates Net services such as e-mail from
a wireless device that can be accessed from any location. "We want to
integrate Wi-Fi so that customers on the road get Internet service no
matter where they are. There's a sizeable segment of the high end market
that values integration. That's where the battle is," says Forrest
Miller, an SBC group president.

The consumer market needs to be maintained and leveraged as long as
support costs can be continually reduced and contained without a loss of
service. Cross functional teams need to investigate and study ways to
improve service. Continual visibility and review of ROI should be
maintained for this market in a spiraling down price war.

The consumer market needs to be evaluated for potential income from DSL
based fiber optic activity and determine if this potential is a viable
market for MCI. To the consumer, it is difficult to differentiate
between cable DSL and fiber optic DSL service. This market offers
potential gains in bundling of local, long distance, and DSL services to
existing and potentially new markets and consumers. Once again, strict
adherence to corporate ROI must be maintained and evaluated regularly to
insure the maximum use of capital.

*Wholesale Segment Local & Long Distance*

The wholesale market received a boost in the late 1990s when MCI made
available DSL line services to a myriad of wholesale customers. This
allowed customers to purchase lines at a discount, create a network
instantly, and focus on the services to be provided (Lindstrom, 2003).

As mentioned previously in the consumer market, MCI needs to maximize
the strength of the network and to offer services to smaller local
companies. It makes sense to reduce the risks of increased capital
expenditures and to directly avoid the consumer price wars by selling
wholesale local and long distance service to smaller companies.

######### *Corporate / Government* 

The business segment is one of the most exciting prospects for MCI. Data
services range from securing a company's regional office network to the
running of entire networks, data centers, or call centers. The future is
not just in holding internet or service capacity, but actually providing
and supporting those services at the corporate level.

As the telecom industry matures, the lines between telecom and IT blur.
The future of telecom integration and computing are converging in
complex network-based technologies such as web services and (stitching
together programs running on different computers across the internet)
and utility computing (providing computing power on demand, like
electricity or gas), (Economist, 2003).

Another important market for MCI is the U.S. government. Government
contracts account for \$1B of MCI's business per year and is growing.
The amount of business dealt to MCI by the Defense Information Systems
Agency, the Department of Justice, and the Social Security
Administration may have saved MCI from a less favorable restructuring
arrangement during bankruptcy proceedings. Even though the U.S. General
Services Administration suspended MCI from securing new contracts in
July, extensions in contracts and additions have accounted for an
additional \$117.9 million in MCI revenues (Hamblen, 2003). In addition,
in May, the Pentagon awarded MCI a contract of about \$45 million to
build a wireless network in Iraq (Shorrock, 2003).

Cross functional teams need to evaluate and develop new corporate
programs to capitalize on the growing trends of corporate data and voice
transfer, teleconferencing, and secure data transmission. The extensive
company network is a strength that can be utilized to solidify a one
company, one network global strategy.

**Strategy & Implementation**

**Stakeholder Management**

Opportunities abound with the new MCI. Prominent stakeholders must
believe they are associated with not only a winner, but a nice winner.
The reemergence of MCI will in itself create industry buzz, and that is
free advertising. The message from MCI to all stakeholders needs to
present MCI as the best managed and most ethical company in the US.
Capitalizing on the poster child persona of corporate governance will be
a positive strategy for the next several years. When addressing the
past, MCI will show stakeholders it takes full responsibility for
wrongs, makes corrections to ensure those mistakes are not made again,
and is focused on moving forward in the service of clients, investors,
and the public at large.

*New Investors*

New investors will be needed to generate revenue for future growth. The
floating of new stock will generate that needed cash base. Substantial
industry "buzz" will ensue as the result of issuing new stock. The vast
percentage of Wall Street was not vested in WorldCom, did not suffer
financial loss during the bankruptcy, and will view the new issuance of
stock as financial opportunity. MCI will be a rare example of a new
issue being backed by years of solid performance.

Price the stock slightly below the expected market value. This will
leave money to be made by investors. Giving new investors an opportunity
to see immediate return will create a strong perception of MCI's new
found strength. Potential gains by investors will make MCI stock a
strong buy. Positive news will spread to other areas of MCI's
reputation.

Prior to floating the new issue, MCI's policy towards shareholders needs
to be well known. Key tenants of this new policy should include:

-   Quarterly reports and meetings with selected shareholders to discuss
    internal educational and training results of ethics programs

-   At-large shareholder representative on the Board of Directors

-   Strict Governance rules that require stakeholder approvals for major
    financial matters and executive compensation (Breeden Report)

# *Wall Street - Media*

Wall Street pundits need to see strong signs that MCI is solid, not for
sale, and above all stable in their reemergence into the market.
Positioning of a sale of MCI, if played correctly, could create
substantial interest in the new MCI. Industry attention of the new MCI
will likely capture headlines on Wall Street for some time.

Analysts must see MCI is the poster child for good corporate governance.
Governance is the politically correct business focus for the decade.
Compliance with the Breeden report, internal ethics training,
implementation of an independent auditing and internal oversight
committee will go a long way in providing the openness needed to
accommodate the concern of corporate governance.

## *Customers*

Consumer

Business

Government

For all classifications of the client base the following guidelines
should be applied:

-   Heavily promote the MCI Brand.

-   Recreate the company as the best run, most ethical communications
    company.

-   Be "forward thinking" in all aspects of communication with clients.

-   Offer services that customers are interested in. Don't rely on
    technology to drive sales, rely on meeting customer needs today and
    tomorrow.

*Employees*

Continue development of employee governance and ethical training
programs. Implement internal communications system to provide continuous
information of the company's strategy and progress post bankruptcy.
Develop employee feedback and incentive programs to build upon a
philosophy of their importance to the success of the corporation. The
incentive programs will also provide a stimulus for innovative process
and product developments.

*Lenders*

Future lenders will be pleased at the cash rich position MCI is in. MCI
will be a good risk coming out of bankruptcy. MCI is likely to be the
most scrutinized public company in America for the next several years.
This scrutiny will lead to openness from MCI that will validate the new
thought that MCI is 100% "above board" in its operations and direction.

##### Recommended Business Strategy

1.  Continued development and expansion of the UUNET/Backbone.

2.  Continue cost reduction activity for Local and Long Distance
    services. Future considerations may be given to sell or lease
    services to smaller local companies and de-emphasize all-distance
    service as a primary business strategy if profitability or ROI goals
    cannot be met.

3.  Utilize cash reserves to continue development of data and voice
    internet services locally, internationally, and into emerging
    markets. Promote the MCI brand throughout all target markets.

4.  Expand and develop aggressive corporate marketing plan for data,
    conferencing, and voice communications (Convergence Technologies).

5.  Continued emphasis of Government based business activity.

##### Implementation Plan

1.  Management

> Management needs to provide a continuous and focused mission statement
> of the company and the values they will operate within. The vision and
> corporate mission needs to be voiced by senior management directly on
> a continual basis with regular scheduled meetings with employees and
> internal focus groups. This message needs to be directed externally
> through various mediums on a repetitive basis to ensure maximum
> visibility and continuity.
>
> Communications through the company need to be flattened in order to
> ensure that mission statements, corporate financial goals, and
> governance activities remain visible and focused.

2.  Corporate Landscape/ Environment

> Management must continue to develop trust of the employees through
> ethical actions and practices that are supported through internal
> communication and oversight groups.
>
> Management must create an environment where governance, cost
> improvement, and the corporate mission statement is understood and
> known by all employees and stakeholders. Through monthly
> communication, the employees and stakeholders need to be updated on
> all financial, market, and governance issues. The corporation must
> solicit feedback to evaluate affectivity of the message.

3.  Strategic Flexibility

> Strategic proactive flexibility will be essential in order to focus on
> business opportunities of emerging technologies. The company can
> maximize flexibility through selection of high quality management
> personnel, development of employee training programs, customer driven
> innovative technology, and continual monitoring and dissemination of
> corporate goals and contingency plans for future market conditions.
> Innovative technology development will be supported through employee
> training programs and the formation of cross-functional teams that
> will be provided incentives for successful ideas and problem solving
> solutions. Further, the organization must support a strict open door
> policy and flatten the communication links within the company.

4.  Organizational Structure

The structure of the corporation needs to be proactive to customer
needs. MCI will be a client driven organization providing services
within the scope of our ability. Sales and marketing will drive the
company to meet the diverse needs of our various client segments. The
work environment must be developed to ensure an atmosphere where
employees can be productive and meet the needs of both internal and
external clientele.

Optimal organizational structure will be both centralized and
decentralized. Product development, infrastructure, and stakeholder
relations will be a tightly monitored and highly centralized.
Innovation, marketing, and meeting the needs of our clientele will be
decentralized. Decentralization of areas that touch the end user will
allow for proactive problem solving and meeting needs in the most
expeditious manner.

![](media/image3.wmf){width="5.993055555555555in" height="4.1375in"}

MCI's stakeholders have the expectation that we will operate at the
highest ethical standard in all aspects of our business and within MCI's
code of ethics and operational principles. This expectation will be met
and carried out to the fullest extent globally. The potential of loss or
gain of business will not alter the ethical governance of MCI.

Management must develop continuous measurement and incentive based
programs to facilitate productivity and innovative thought. Management
needs to provide a continuous message of corporate direction and help
employees understand the strategic importance of taking that direction.
Employees must be engaged with a sense of corporate "belonging" which
instills enthusiasm and nurtures commitment to the organization.

> Management will need to lead by example in order to build trust and
> credibility where an open door policy prevails. Credibility will
> support the compliance required to fulfill the governance, ethical,
> and social standards that have been set forth. Management will need to
> create a culture where doing the "right thing" is supported and
> expected of every employee (Day, 2003).

5.  Knowledge Management

> Develop an informative database system where all employees and
> operating divisions have the ability to share internal knowledge.
> Additionally, knowledge management and innovation creation will be
> enhanced through the formation of cross-functional employee teams at
> all levels within the company. The company must establish and
> implement world-class standards for product development, innovation,
> and quality. Employees will participate in corporate decision making
> for processes and products.
>
> The company will establish incentive programs for employees that
> contribute knowledge through not only personal but internal and
> external sources. The ability to create knowledge within the company
> will be further developed by management's support of idea contests and
> creativity as an example even if it proves to be unsuccessful
> (Hauschild, 2001).

6.  Organizational Learning

> Organizational learning is a continuous process of growth and
> improvement that uses information or feedback about processes and
> outcomes to make changes. MCI must integrate organizational learning
> into work activities and the organizations infrastructure (e.g., its
> culture, systems and structure, leadership and communication
> mechanisms) to invoke an alignment of values, attitudes, and
> perceptions among the organization members.
>
> MCI can accomplish this by establishing processes where employees
> learn incrementally over time and are provided dialog among program
> staff and organizational leaders (Torres, 2000). These processes can
> be reinforced based upon repetition, routine, and under conditions the
> organization can control (Lawson, 1992). "Higher" organizational
> learning will need to be done in order to overcome previous rules and
> organizational behavior attitudes. The organization's behavior will be
> changed through the setting and continual message of corporate goals,
> performance measures, incentives, and feedback mechanisms (Lawson
> 1992).

7.  Ethical and Governance Related Issue

> Continue compliance and implementation of the recommendations set
> forth in the Breeden report. Areas of focus will be: internal ethics
> training and a focused message to all employees regarding their
> compliance and zero tolerance of non-compliance of the policies.
> Implemented external marketing program are needed to disseminate the
> message of the corporations' guiding principals, ethics goals, code of
> ethics, business principals, and the guidelines set forth in dealing
> with government and international business and contracts. MCI will
> continue to use of the "Sharing the Commitment to Integrity" slogan in
> all corporate internal and external communications.

Conclusion:

The implementation of this strategy will position MCI at the forefront
of the telecommunications industry for decades to come. The barriers
between telecom and IT are blurring and those companies that can
effectively integrate the two will reap the benefits. The UUNET entity
continues to be the largest portal for companies requiring internet
access and data services. This Internet pipeline positions the company
strategically for further global growth.

Prominent stakeholders must believe they are associated with not only a
winner, but an honest winner. The message from MCI to all stakeholders
needs to present MCI as the best managed and most ethical company in the
US. Major stakeholders include: New investors, Wall Street and media,
Customers (consumers, business, and government), Employees, and Lenders.

MCI will focus on its core competency. The UUNet entity provides an
extensive global fiber optic network for MCI to base all future
services. Retained cash will be used to develop data and voice internet
services locally, internationally, and into emerging markets. The MCI
brand will be promoted throughout all target markets. Expanding
aggressive corporate marketing plans for data, conferencing, and voice
communications (Convergence Technologies) are keys to future growth.
Continued emphasis on Government based business activity is desirable.

The implementation of MCI's strategy will include focus in the following
areas:

-   Management

-   Corporate Landscape/ Environment

-   Strategic Flexibility

-   Organizational Structure

-   Knowledge Management

-   Organizational Learning

-   Ethical and Governance Related Issues

Proactive flexibility will drive new markets and satisfy existing
clients. The company must establish world-class standards for product
development, innovation, and quality. The employees must be encouraged
to participate in corporate decision making for processes and products.
A holistic alignment of values, attitudes, and direction is critical for
success.

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