MCI joins radio phone network

MCI COMMUNICATIONS, BT's transatlantic telecoms partner, plans to deliver an alternative telephone service to subscribers via wireless radio by taking a big stake in America's leading radio dispatch network.

MCI yesterday announced plans to invest dollars 1.3bn ( pounds 900m) in NexTel over the next three years, joining the cable TV operator Comcast in transforming the mobile radio network into a national wireless phone system. BT last week completed its purchase of 20 per cent of MCI for dollars 4.3bn.

MCI will initially pay dollars 800m for 22 million shares in NexTel, giving it a stake equal to the 17 per cent now held by Comcast. By 1997, MCI and Comcast will invest another dollars 500m apiece, giving them joint control of the network.

The NexTel link-up will allow MCI, a long-distance communications network with no direct access to local phone subscribers, to bypass local phone exchanges, which at present account for almost half its costs.

The wireless service, which will be operational in 10 cities by the end of the year, will also compete with cellular services.

MCI's decision to invest in wireless comes as a surprise. The company had been expected to opt for personal communications systems technology, which reaches homes via cable television wires, and had talks last year with a number of large cable groups.