McGowan, William George

(b. 10 December 1927 in Ashley, Pennsylvania; d. 8 June 1992 in Washington, D.C), business entrepreneur and chairman and chief executive officer of MCI Communications Corporation.

A native of a small coal mining and railroad town southwest of Wilkes-Barre, Pennsylvania, McGowan grew up in an Irish Catholic family with three brothers and a sister.

His father, Andrew J. McGowan, Sr., a railroad engineer, and his mother, Katherine Evans, a schoolteacher, both placed a strong emphasis on education. McGowan graduated from Hanover Township High School in 1945, attended the University of Scranton for one year, and then joined the army in 1946. After a three-year stint as a medic in Germany, he was honorably discharged as a sergeant and entered Kings College in Wilkes-Barre on the GI Bill, graduating with a B.S. degree in chemistry in 1952. After college McGowan entered the Harvard School of Business Administration, graduating as a Baker Scholar with an M.B.A. in 1954. For the next thirteen years he worked primarily as a management consultant and venture capitalist, specializing in saving companies in distress and financing emerging technology companies. In 1967 McGowan traveled around the world on a mission for the United Nations Educational, Scientific, and Cultural Organization (UNESCO) to see how venture capital might spur the growth of small businesses in developing nations. When he returned in 1968 he discovered a developing business in need of financial expertise.

With venture capital, a business plan, and strong financial contacts, McGowan rescued an Illinois company, Microwave Communications, Inc. (MCI), which sought a license to build a private line microwave telephone system between Chicago and St. Louis. McGowan realized that to compete successfully, a telephone system would have to be nationwide. He headquartered the company in New York City to be close to the sources of investment capital, then he established seventeen locally financed, affiliated, regional companies, each covering the area between major cities in its part of the country. When all the affiliates were put together, they created a national network of independently franchised companies. At the center of the MCI affiliates was McGowan’s new company, Microwave Communications of America, established in August 1968.

More critical to the company’s success than McGowan’s cash or business acumen was the decision of the Federal Communications Commission to grant MCI the license to build the microwave system. On 14 August 1969 the Commission, in a 4–3 vote, approved MCI’s application. It was the first time that the federal government had licensed a long-distance competitor to the American Telephone and Telegraph Company (AT&T), a change that AT&T’s attorneys immediately challenged in court. For the next sixteen years, until AT&T divested its local operating companies from its long-distance business in 1984, MCI and AT&T were locked in a series of fierce regulatory and legal battles over the issue of competitive telecommunications.

McGowan’s personality perfectly matched the qualities needed for such a war. McGowan radiated his Irish background, Harvard training, and unbridled optimism. Like the leprechaun of Irish folklore, he spoke with twinkling eyes, lively gestures, and a bit of blarney. He exuded a confidence born of his extraordinary ability to process mounds of new information, to synthesize data, and to present the material with clarity, precision, and accuracy. He inspired others to join him in the crusade against monopoly and for equal access to long-distance calling. McGowan also looked the part. His wrinkled, bulldog-like jowls and quick, combative tongue left no doubt that the fight was worth every minute and every dollar invested. McGowan’s natural brashness, impish grin, dogged determination, intense desire to win against overwhelming obstacles, aggressive sense of humor, and relish for verbal combat, all at the expense of the archenemy AT&T, came to personify MCI: smart, pugnacious, feisty, and competitive.

After raising more than $30 million in an initial stock offering in 1972, McGowan moved MCI’s headquarters from New York and its financial connections to Washington, D.C., to be closer to the federal regulators that could make or break the fortunes of the company. The move proved to be prescient. From 1973 until 1980 McGowan defined competition in telecommunications and led the move to break up the Bell Telephone System. So much of MCI’s resources were tied to litigation that wags called the company a law firm with an antenna on the roof. Mc-Gowan won the first legal case in December 1973 when a federal judge ordered AT&T to provide MCI with interconnections to the Bell network. AT&T bitterly fought MCI’s right to market long-distance service, legally in a series of cases at the Federal Communications Commission between 1975 and 1978 and unilaterally by refusing to provide MCI with interconnections to the Bell System.

AT&T’s actions served to bolster McGowan’s mantra that the telephone giant was a harmful monopoly impeding advances in telephony. In March 1974, at McGowan’s urging, MCI filed a civil antitrust suit against AT&T. The following November, using much of the material MCI had assembled, the Department of Justice filed a similar antitrust suit. On Friday, 13 June 1980 the jury of the MCI v. AT&T trial found that the defendant had violated the Sherman Antitrust Act and awarded MCI damages of $600 million. Trebled to $1.8 billion, the monetary award was the largest in the history of American law. Some eighteen months later, AT&T and the Department of Justice reached a settlement in the government’s antitrust case. AT&T would divest itself of the Bell operating companies, separating the long-distance business from the local access networks.

McGowan embodied MCI. His vision and determination drove the MCI cause. His biting wit proved effective in the press and in the courtroom. His optimism rallied MCI’s troops when all seemed lost. He was also a shrewd businessman. Under his leadership MCI grew to become an $8 billion company. It was the first telephone company to market its services, the first to aggressively advertise, and the first to widely integrate new technologies—such as digital switching, microwave transmission, fiber optic cable, electronic mail, and computer software—to create intelligent networks that enabled the advent of the Information Age. Aside from creating fresh opportunities for communications lawyers, he created new industries. McGowan opposed MCI’s entering the equipment manufacturing business as AT&T had done. He asked vendors to build to his advanced specifications. This policy helped establish a second telephone equipment industry to compete with AT&T. With MCI struggling to attract customers in the early 1980s, McGowan engineered an alliance with IBM, giving his company instant credibility in the business community. When interest rates rose above 18 percent, McGowan successfully turned to a new kind of financing, junk bonds, which enabled MCI to continue its growth to become the second largest long-distance carrier in the country. Although McGowan liked to portray himself and MCI as a David against the AT&T Goliath, he and MCI were more like Joshua before Jericho. They sounded their horns so persistently that the walls of AT&T’s monopoly finally came tumbling down. These same tactics later eroded the defenses of the international telephone monopolies.

McGowan married Sue Ling Gin on 3 July 1984. They had no children. McGowan was a workaholic. MCI was his business, his passion. Years of fifteen-hour days, living on cigarettes and coffee and forsaking exercise, finally took their toll. Just days after his fifty-ninth birthday in 1986, he suffered a heart attack. In April 1987 McGowan received a heart transplant at the Presbyterian University Hospital in Pittsburgh. By June he had returned to his office and was back on a regular basis by Labor Day. McGowan’s humor remained, but those who knew him best recognized that he lacked the energy of the old McGowan. Four years later, while waiting to begin one of his regular early morning exercise sessions at the Georgetown University Hospital, he collapsed and died of another heart attack at the age of sixty-four. He is buried in St. Mary’s Cemetery in Hanover Township, Pennsylvania.

McGowan and the company he built, MCI Communications Corporation, reshaped the telecommunications industry in the United States and fundamentally changed the way Americans phoned long distance. Because of McGowan, telephone service shifted from a comfortable monopoly to a highly competitive industry in the last quarter of the twentieth century. Because of the changes brought to telecommunications by McGowan and MCI, longdistance calling had gone from the uncommon to the commonplace.

There is no biography of McGowan. For someone with a high public profile, McGowan was a very private man and released little about his private life. He wrote almost nothing for publication. The MCI archives are at the Hagley Museum and Library in Delaware and include a transcript of an extensive McGowan oral history completed in 1988. Books about MCI and its fight for competitive telecommunications and equal access include works by two journalists: Steve Coll, The Deal of the Century: The Breakup of AT&T (1986), and Larry Kahaner, On the Line: How MCI Took on AT&T—And Won! (1986). An excellent economic history that includes the impact of MCI on AT&T’s divestiture is Peter Temin with Louis Galombos, The Fall of the Bell System: A Study in Prices and Politics (1987). The definitive work on MCI and McGowan is Philip L. Cantelon, The History of MCI, 1968–1988: The Early Years (1993). An obituary is in the Washington Post (9 June 1992).

Philip L. Cantelon