Staff writer

Although the exploding cyberspace phenomena has reams of information crisscrossing national borders in mere seconds, William Sheils, president of WorldCom Japan Ltd., simply describes his job as digging ditches in Tokyo.

The Japanese subsidiary of America’s second-largest telecommunications carrier, MCI WorldCom, started international corporate and individual telephone services under the the 0071 number last month.

As these services begin, however, his firm is still digging up roads and laying optical fibers to expand its local network, Sheils said. “It’s a part of our global strategy. Our policy is very clear. It is to own a network and provide end-to-end services. It’s to provide what we call local-to-global-to-local services,” Sheils said.

WorldCom Japan is the first foreign firm to obtain a Type 1 carrier license, which the government grants to carriers who offer telecommunications services based on their own networks and facilities.

To attract multinational clients, WorldCom Japan plans to build optical-fiber networks linking about 1,000 buildings situated in business districts in such big cities as Tokyo and Osaka.

In the Tokyo area, the company plans to build its network in the five wards of Chiyoda, Chuo, Minato, Shinjuku and Shinagawa, with about 60 km to 80 km of cable.

That network will be connected to the global network of the MCI WorldCom group, providing a direct link to about 38,000 buildings in the U.S. and Europe which are already on the network.

“My task here is also to connect key strategic buildings where we already have customers in other parts of the world to our network. Starting at the end of this year, we will be connecting the buildings (here) to the global network (of WorldCom Inc.),” Sheils said.

Sheils said WorldCom’s strategy of offering services based on its own global network contrasts heavily with conventional carriers who try to cover the globe by forming alliances and connecting the networks together.

By owning a global network that reaches end-users, the company can control its cost base, instead of going through negotiations over charges and other various conditions with alliance partners, Sheils said.

Japan’s international carriers are suffering severely from the ongoing decline in telephone rates under the government’s deregulation initiatives, and Sheils predicted that rates will drop further due to new players in the market. “There will be a lot more companies coming into the market anyway. Some people just try to win business on prices. And the technology will bring down costs and prices. The price is artificially high anyway,” Sheils said.

Starting Dec. 1, the firm will adopt a new rate of 50 yen per minute for telephone calls to the U.S., which is less than one fourth the weekday daytime rate offered by KDD. But WorldCom Japan charges a minimum monthly fee of 5,000 yen.

Sheils said his firm will be able to lower its current rates in 2000, when the U.S.-Japan Cable project, which will link the two countries through a 21,000-km optical fiber network placed on the ocean floor, is completed.

Meanwhile, Sheils denied characterizations that new companies like MCI WorldCom are “cream skimmers” because they take away only the most profitable part of the telecommunications business — corporate users.

“Obviously, you go for high-volume business to build your business. The corporate market is the lowest margin business in telecom (business) because companies enjoy discounts due to their volume. And it’s not cream skimming. It costs us a fortune to lay fibers in Tokyo,” Sheils said.

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