MCI, DOD explore security issues in upcoming BT buy

In anticipation of its announced purchase by British Telecommunications PLC MCI's Government Markets division has been working with the Defense Investigative Service to ensure that the company's guidelines for protecting federal classified communications meet the standards established by the Defense Department for foreign-owned firms.

Jerry Edgerton vice president of MCI Government Markets said the company has been working aggressively with DIS' National Industrial Security program "to make sure we put the things in place that are necessary to mitigate [security concerns] that arise" as a result of the pending BT purchase.

Edgerton said MCI has yet to determine what steps it will take to ensure compliance. He said one option would be to set up a corporate review board that would work with DIS to protect classified information on MCI's federal networks.

Communications analyst Frank Dzubeck president of Communications Network Architects Washington D.C. said the issue might raise problems for MCI especially because no wholly owned foreign company has ever won a U.S. federal telecom services contract. "There could be some sticky wickets that arise " he said.

"This issue has never been tested. It depends on what is in the fine print of these contracts."

MCI holds a key network management contract for the Defense Department the $400 million Defense Information Systems Network (DISN) Switched/Bandwidth Manager Services as well as the governmentwide International Switched Voice Service contract. It has also bid on the DISN Transmission Services contract and the International Direct Distance Dialing network. The company will probably also bid on the DISN video teleconferencing pact.

Warren Suss president of consulting firm Warren H. Suss Associates Jenkintown Pa. said he does not believe security questions will affect MCI's federal business once the BT acquisition goes through. He said there are already procedures in place to set up separate boards to oversee the classified business of foreign-owned companies.

Late last week a DOD spokeswoman said officials were still working on their response to the merger.

Benefits of MergerDespite the security questions Edgerton said the merger would give the company access to capital and technology it could use to offer a greater range of service to federal customers. For example he said British Telecom has invested in one of the most advanced programs for "one-number" technology. This service gives users a single phone number that will follow them throughout the day whether they are in the office traveling in a car or carrying a pager.

AT&T Government Markets declined to directly address the security questions of the BT acquisition of MCI. A statement by AT&T chairman Robert Allen said his company is "confident of our ability to provide the highest-quality global services to customers and we welcome real competition in that arena. At the same time we believe this proposed merger must get the scrutiny it deserves from the U.S. Department of Justice the Federal Communications Commission and the appropriate regulatory authorities in...Europe."

A spokesman for Sprint's federal operation said questions about security and the impact of the acquisition on the federal market can best be answered by pertinent regulatory bodies.

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