MCI Worldcom, the telecommunications giant, has been tracking Telecom Eireann closely. Mr John Sidgmore, vice-chairman of MCI Worldcom, said he was even talking to the Taoiseach, Mr Ahern, in the run-up to the Telecom flotation.
When asked whether MCI Worldcom might consider buying Telecom, he said "the valuation as a result of the Initial Public Offering makes it a high acquisition target". However, he believes privatising the previously State-owned company "is great for the country of Ireland".
The challenges now facing Telecom, he advised, are to stimulate demand for Internet and data traffic because "the economy in Ireland can support higher spending levels" and to become more aggressive in its pricing. "If it's smart that's what it will do," he said.
Last week, at a press briefing in Manhattan, Mr Sidgmore outlined MCI's ambitious plans for reshaping the global communications landscape. Last year, MCI Worldcom, with operations in 65 countries and 88,000 employees, had revenues of $30 billion (€29.3 billion). It is the fastest growing telecommunications company in the world, expanding at a rate of 17 per cent to 20 per cent a year.
For the past 100 years, telecommunications has been a "very boring industry, that was monopoly controlled and slow to change", Mr Sidgmore said. However, in the last five years, it has suddenly exploded with the adoption of the Internet. "For the first time in history we have the potential to reach everyone with the same public network at a reasonable cost," he said.
Dataquest, a research firm in California, has estimated the telecommunications industry has the potential to grow from $800 billion this year to $1.1 trillion by 2002.
Mr Sidgmore said MCI's international market is growing faster than its domestic operations in the United States. It receives $4 billion of its revenues from overseas of which $1 billion comes from Europe. He expects revenues coming from the Internet, data and international operations will rise to 70 per cent within a few years, up from 36 per cent currently.
One reason for this growth is that technology costs are being driven down. Ten years ago, MCI spent 65 per cent of its capital expenditures on the switching and transport pieces of its network. Five years from now, they will represent 10 per cent of capital."
Overall, MCI spends 6 per cent of its total costs on switching and transport and the rest is dominated by access fees (34 per cent), selling and administrative costs (49 per cent) and billing systems (11 per cent). In fact, he said, "it costs us twice as much to bill you for the service than it does to offer it to you".
He believes broadband networks, which offer high quality and high speed, will take the Internet to the next level. New applications are driving the demand for larger bandwidth, which doubles every 3.5 months. "Bill Gates [of Microsoft] believes bandwidth should be free," he said. "We think software should be free!"
MCI Worldcom's Internet network this year is 10 times the size of what it was last year and by next year it will be 10 times this size again. He expects 99 per cent of its bandwidth will be the Internet by 2004. "Voice will be a niche market," he said.
The biggest drivers of change, though, are what he termed the Silicon Cockroaches. These are computer to computer communications that are live, active, breed quickly and require more bandwidth. They can send huge amounts of traffic in short bursts.
One observer has envisaged that by next year each person will have five Internet-access devices on their person at any one time. These could include pagers, PalmPilots, Web phones, digital day-timers and Internet watches.
International Data Corp (IDC) projects, for example, that 12.2 million non-PC, Internetaccess devices will be sold next year - nearly matching the sale of personal computers. By 2002, the number of low-end, Internet-connected devices is expected to reach 55.7 million, according to IDC.
Jupiter Communications, meanwhile, projects that more than 10 million mobile phones will be capable of accessing Internet data by 2002.
What the Internet basically has done, said Mr Sidgmore, is change the playing field and allow new companies break onto the scene. Previously unknown companies, like Amazon, eBay and E*Trade, can compete with large companies and therefore make the world more competitive. The winners, he believes, will be those that have the best marketing ideas, the best service, the most knowledge of their customers, and the best use of the Internet.
MCI Worldcom itself has not been standing still. It has been deploying its technology as quickly as possible through 70 acquisitions in the last four years and by investing in infrastructure. To strengthen what it calls its OnNet strategy, it has built two trans-Atlantic cable systems and another two under the sea to Asia-Pacific.
Two years ago, it became the first company to build an inter-city, inter-country network that covers all the major financial centres in Europe. "We are deploying these capabilities this rapidly because we see unprecedented growth driven by the Internet," Mr Sidgmore said.
He was adamant that MCI Worldcom wants to deliver bundled, integrated services on its own network, rather than outsource it to a consortium. This way it can control its own costs, products and pace.
Now, in what Mr Sidgmore called the "Golden Age of Communications", MCI is looking to see how it can enter the wireless world. Traditionally, wireless devices have not been as important a part of business in the United States as they have been in Europe. One reason is that telephone carriers rarely sell them bundled together with their Internet, local and long distance offerings. But in the next three years they probably will.
Mr Sidgmore sees three options facing MCI Worldcom: to acquire a wireless company; to wait a few years until a phone company goes out of business; or to build its own wireless network. "I would be surprised if we don't have a presence in wireless communications in Europe in three years time," he said.
