MCI's Call-Routing Policies Are Target of Federal Probe
All phone companies have looked at ways to reduce access fees to other phone operators' networks. The question is whether MCI's practices were within the limits of U.S. law. According to people familiar with the investigation, one person interviewed by prosecutors said that MCI initiated a systematic scheme to reroute calls to make long-distance calls appear as local calls and thus avoid paying access charges. That process was called "Project Invader" by MCI insiders and was known only to a handful of MCI officials, according to people familiar with the investigation.MCI's rivals said they were stunned by the scale of the alleged wrongdoing. "This is deceit has been going on for a decade and is going on today," said Bill Barr, a legal executive for Verizon. "We were stunned at its scale. Both the whistleblowers and the technical data show they are cheating on a huge portion of their costs, translating into hundreds of millions of dollars a year in the industry."
According to people familiar with the investigation, prosecutors are trying to establish whether MCI rerouted long-distance calls to make them appear like local calls to save an estimated $500 million in access fees per year industry-wide.
MCI 's Mr. Burns questioned the timing of the investigation. "For years we've had in place monthly access-charge resolution meetings with the local phone monopolies," he said. "Also, over the past two weeks we reached comprehensive legal settlements with Verizon and SBC on pre-petition bankruptcy claims related to access charges. You can't help but to question our competitors' motives."
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