MCI Founder McGowan Is Dead at 64 : Telecommunications: The entrepreneur’s challenge to ATT forced its breakup.


William McGowan, the feisty founder of MCI Communications Corp. whose dogged challenge of AT&T; forced its historic breakup and sparked a revolution in the telecommunications industry, died Monday.

McGowan, who had a heart transplant in 1987, suffered a heart attack shortly after arriving at Georgetown Medical Center in Washington, where he was about to begin his regular cardiovascular exercise program. He was 64.

The MCI chairman’s illness had forced him last December to turn over daily operations to Bert C. Roberts Jr., 49, the company’s president and a close confidant of McGowan’s. MCI’s board is expected to elect Roberts as its chairman at a June 23 meeting.

Analysts said McGowan’s death is not likely to cause the nation’s No. 2 long-distance telephone company to suffer any loss of momentum or market share because the transition of power to Roberts is mostly completed. MCI stock closed Monday at $32.875, up 62.5 cents a share.


“We’re not likely to see a repeat of what happened five years ago when McGowan had his heart transplant and had to give up the company to his unprepared underlings,” said Ryan James, a research director at Link Resources, a New York market analysis firm. MCI lost money, its stock plummeted and its performance was erratic following McGowan’s hospitalization in 1987.

“Now the team is ready,” James added. “Roberts has had a chance to learn from his master teacher.”

In a press conference Monday afternoon, Roberts said his first priority will be to maintain the company’s fast-moving, freewheeling culture.

“We’re known for our tenacity, entrepreneurial spirit and can-do attitude,” the 20-year company veteran said. “I want to make sure that these will continue to be our trademarks.”


Roberts said MCI will continue its aggressive push to boost its share of the U.S. long-distance market and to expand abroad.

Analysts said that MCI’s position as the nation’s No. 2 long-distance provider is solid and that the company should be able to weather continuing fierce competition in the U.S. market, as well as the growing global battle to provide telecommunications services.

In his heyday, few businessmen were as formidable--and as irascible--as McGowan. The son of a Pennsylvania railroad worker, McGowan was known for his 15-hour work days, during which he would smoke up to three packs of Larks and drink two dozen cups of coffee. He often said his life’s mission was to break up the telephone monopoly held by Ma Bell.

At one point, McGowan even had the AT&T; logo carved into the cornerstone of his house--with a crack down the middle.


“McGowan almost single-handedly popped the telephone monopoly,” one analyst said. “He got past the regulators, the industry, the lobbyists and the courts.”

And McGowan’s chief rival, AT&T; Chairman Robert E. Allen, added: “Bill McGowan will go down in business history as one of America’s foremost entrepreneurs. He was at all times a tough and colorful competitor.”

McGowan joined Microwave Communications Inc. in 1968, investing $50,000 in the Joliet, Ill., company that was trying to challenge AT&T; for the long-distance business between Chicago and St. Louis.

Within months, McGowan took control of the company, imposed his more lofty goals and embarked on a course that was to revolutionize the nation’s telephone industry.


While he was building microwave radio towers in areas of the country where he could best compete with AT&T;, McGowan began hammering on the Federal Communications Commission and the Department of Justice, accusing AT&T; of abusing its monopoly power and stifling competition to the detriment of consumers.

Although the FCC gave MCI the right to compete with AT&T; for long-distance telephone services throughout the United States in 1971, AT&T; continued to resist the upstart company. Many of AT&T;'s 22 local telephone companies refused to provide the necessary connections for MCI’s local customers to access its facilities.

When McGowan couldn’t get what he wanted, he went to the courts--a pattern he was to repeat so often that the company earned a reputation for being “a law firm with an antenna on the roof.”

MCI sued AT&T; for alleged antitrust violations in 1974 and six years later won a landmark court victory. By then, the Justice Department had joined MCI’s cause and began a crusade that ultimately forced AT&T; to agree to spin off its seven regional Bell telephone companies.


MCI’s victory sparked the ongoing long-distance telephone wars. Although AT&T; still controls an estimated 63% of the long-distance market, MCI has captured an 18% share, according to the Yankee Group, a Boston telecommunications consulting company. Sprint’s share is estimated at 12%.

During McGowan’s tenure, MCI’s revenue grew from less than $100,000 in 1978 to $9.5 billion last year.

“The story of Bill McGowan is a tale inspiring faith in a very basic American belief: that an individual can set out to do whatever he puts his mind to, regardless of the odds,” Roberts said. “Perhaps more than any other single individual, he is responsible for the democratization of technology that has made it possible for all peoples to benefit.”

Although the MCI chairman presided over MCI’s annual meeting May 11, where he appeared to be in robust health, and showed up for work every day at the company’s Washington headquarters, he devoted most of his attention in his final months to his private charities.


He donated $1 million to establish the artificial heart research center at the University of Pittsburgh Medical Center, where his transplant operation was performed. In 1990, McGowan’s alma mater, Kings College, built a business school, naming it the McGowan School of Business.

McGowan is survived by his wife, the former Sue Ling Gin, three brothers and a sister.

Where MCI Stands MCI is the nation’s No. 2 long-distance telephone firm, based on minutes of telephone use in 1991. AT&T;: 63% MCI: 18% Sprint: 12% Others: 7% Some Key Dates 1968: William G. McGowan joins Microwave Communications Inc., the forerunner of MCI, with the hope of taking on American Telephone & Telegraph.

1969: The Federal Communications Commission grants McGowan’s company a license to operate long-distance service using microwave-radio transmission instead of underground cables.


1971: MCI becomes the first company authorized by the FCC to compete with AT&T; in the domestic long-distance market.

1974: Frustrated in its attempts to get adequate local connections, MCI sues AT&T;, accusing the phone giant of a wide range of antitrust law violations. The Department of Justice also sues AT&T.;

1980: MCI is victorious in its antitrust case and is awarded damages. AT&T; continues to challenge the U.S. suit but settles in 1982 by breaking up the Bell system into regional “Baby Bells.” Each long-distance carrier is also given equal access to customers.

1983: MCI becomes AT&T;'s first U.S. rival internationally.


1987: The company struggles after a series of FCC-mandated access charges crimp business prospects. McGowan undergoes a heart transplant, the first public inkling of his health condition. 1988-90: McGowan and a new management team expand a technological upgrade of its network, woo more business customers and introduce an array of new products for home and business use.

Source: Yankee Group