MCI/MICROSOFT JOINT ANNOUNCEMENT

BERT ROBERTS, CHAIRMAN AND CEO, MCI & BILL GATES, CHAIRMAN AND CEO,
MICROSOFT

12:15 P.M. ET/9:15 A.M. PT: MONDAY, JANUARY 29, 1996
---------------------------------------------------------------------
MODERATOR: Thank you very much. And thanks to all of you for joining us.
I'm here in Redmond, Washington, today with Bert Roberts, chairman and CEO
of MCI, and Bill Gates, chairman and CEO of Microsoft. Each chairman will
make a few brief remarks and then they will take a number of questions.

Now here's MCI's chairman and chief executive officer, Bert Roberts.

MR. ROBERTS: Thank you. I'm very pleased to be here today with Bill to
announce a broad strategic alliance between MCI and Microsoft. I'm not
using the word "new" to describe our relationship, because MCI and
Microsoft have been working together for some time. For example, MCI
provides the customer service for all Microsoft/MSN customers in the
United States, and the companies have been doing joint marketing on a
variety of services.

This alliance with Microsoft fits perfectly into MCI's strategy to partner
with companies that complement our own strengths, to provide customers
with the unmatched communications and computer solutions. In the last five
years, MCI has grown from an $8.5 billion company to more than $15 billion
in revenue. We have achieved this growth by leveraging our core strengths
with those of our alliance partners worldwide. Nearly three years ago, we
formed a partnership with British Telcom to provide global communication
services to our customers. Eight months ago, we formed an alliance with
News Corporation to bring rich and meaningful content to our customers,
including the digital satellite services that we announced last week.

Today's announced alliance with Microsoft will offer our customers a broad
range of on-line, Internet and networking solutions. Communications and
computing are the power tools of today's information age. There are now
more than 10 million people in the United States using the Internet, this
number increasing daily as more and more people come on-line. That's why a
number of the early initiatives in this alliance focus on the
opportunities in the Internet market. Let me highlight some of these.

For consumers, MCI will offer its own customized version of Microsoft's
on-line Internet service, MSN. We will call it MSN From MCI. This new
offering will include affordable and high-quality access to the Internet
through MCI's Internet network, the largest and the fastest in the world,
full and easy access to MSN content and all of the information on the
Worldwide Web, and MCI's customized content and services as well.

MCI will tailor this offering to the individual needs and interests of our
more than 20 million customers. Next, MCI will have the opportunity to
market our full range of communication services to the millions of
Microsoft users and package Microsoft software and applications with MCI
services. That means you'll be able to order MCI services from ISDN to
conferencing to Friends & Family directly through Microsoft software. As
part of this alliance, MCI has selected Microsoft's Internet Explorer as
our preferred browser software, and we will offer it as part of our
Internet MCI service.

Today MCI is also announcing a new Internet Web site hosting service which
will help businesses connect to the Internet, create content and manage
their Web sites. We'll use Microsoft's Internet information servers to
support this offering.

In addition to the Internet area, MCI and Microsoft's alliance will also
target the networking market. MCI will work with Microsoft to offer
businesses turnkey solutions for distribution applications. Last fall, MCI
acquired SHL System House, one of the world's largest systems integration
companies and a leader in client-server consulting and training. The
combination of MCI's network services, Microsoft applications and
software, and SHL's consulting and support expertise, is unmatched in the
industry.

It's hard to imagine two companies more known for innovation than Microsoft
and MCI. Through this alliance, we look forward to many positive results
for our customers, for our employees and for our shareholders.

Bill?

MR. GATES: Well, good morning. It's a real pleasure to be here with MCI
announcing a number of new initiatives. MCI and Microsoft have a lot in
common. We're both very entrepreneurial and see some great opportunities
ahead related to the Internet. MCI's been developing their Internet
offerings, as has Microsoft. And today that's really the theme of many of
the things we're announcing.

The joint work covers both the consumer side and the business side. On the
consumer side, it's very exciting to have MCI helping us to market MSN
through their direct channel to their over 20 million customers. The
business side is also very interesting, because we believe the Internet
will be used for lots of conferencing, sharing voice and data at the same
time. And we're working together to actually build into Windows easy
access to those capabilities.

We're very pleased to strengthen our relationship with Systems House, which
is part of MCI. They have been putting a lot of their energy into Windows
NT in the client-server world. And the client-server world has greatly
expanded as both applications are running across the Internet.

In terms of the Internet browser, it's also a big step for us to have MCI
involved with that, because we think it's very important to get the share
of our browser up over the next several years so our browser will be one
of the browsers that authors test to and are willing to use some of the
exciting extensions that we're making. And so we've been working with MCI
on where they'd like to see the browser go, and they'll certainly be a big
help in getting that out there into very widespread use.

It's an exciting set of announcements and a greatly strengthened
partnership.

MODERATOR: Thank you. Now Mr. Roberts and Mr. Gates will be happy to take
your questions. We'll take as many as we can, although we understand
hundreds of listeners are on the call today. For those of you who may have
joined us late, if you would like to ask a question, please depress the
pound key, followed by the 1 key on your touchtone telephone. We ask that
you begin your question with your name and your affiliation.

This is Katharine Barrett of Cable News Network. You may ask your
question.

MR. ROBERTS: Yes, go ahead.

Q How does MCI's partnering with Microsoft or expanded partnering with
Microsoft impact at all MCI's existing partnership with News Corp in light
of Microsoft's partnership with NBC?

MR. ROBERTS: Well, first of all, MCI's existing partnership with News Corp
stays intact. It's being expanded. The announcements last week of going
into the high-powered satellite business, I think, are indicative of this
and a tremendous step for us going forward. I would expect there would be
some overlaps between the partnership with News and Microsoft as we
develop new things going forward. So I don't see a problem there. I see an
opportunity.

If you're referring to the on-line venture that MCI had put in place with
News Corporation, both MCI and News will be putting the assets and our
ownership of that venture into another venture which will be announced in
the short-term future. We will both remain partners in that, with MCI
having a minority, non-controlling stake.

MODERATOR: Mr. Tim Klass, with Associated Press, you may ask your
question.

Q Yes, Mr. Gates. Is this going to be the first of a series of alliances in
which companies will essentially gain advertising in a sense on Windows?
This will be the first, I believe, experience in which Windows users will
have another corporate logo appearing much in an Internet fashion and a
Wide World Web fashion. Is this something that you expect to see
continuing with other companies?

MR. GATES: On the world of the Internet, you're certainly going to see a
lot of partnerships taking place, and many of those will relate to cross
promotion, where you're taking one person's home page and linking it to
another person's home page, and vice versa. MCI has got a pretty good
presence out on the Web today, and of course Microsoft corporately, and
through MSN does. And part of this is the easy access that you have going
back and forth between those.

Because things are very dynamic, most of the links you'll see will come
through the Internet itself, rather than through packaged products. But we
do have in this field some code that we're putting that relates to
business conferencing that will easily tie into MCI services.

MODERATOR: Ms. Emily Green of Forrester Research, you may ask your
question.

Q Good morning. I guess I have two related questions. One is I would like
to understand where exactly money is changing hands in this relationship.
And, secondly, specifically about the News Corp. on- line venture -- does
this relegate that to one of series of options that MCI will have to drive
consumers on-line through Internet MCI? Or will the option to use for
instance the Internet Explorer browser to be pulled into the on-line JV?

MR. ROBERTS: Let me answer that question in terms of the News Corp. on-line
MCI venture. Again, that is being put into another venture -- the
announcements of that will come at some time. That venture will have
control of its own products and services. We will be continuing to have
the responsibility for the services that we have offered to our customers
in the network MCI business part of things, and the selection of the
Microsoft Explorer, Internet Explorer, for us in our products, in itself
does not extend to the other venture that I had talked about. MCI has cast
the die. We are going to use the Internet Explorer -- the Microsoft
Internet Explorer on a preferred basis. We will integrate that into our
software. Our Web pages and what we are offering to our customers will be
based on that software. The on-line venture will move in its own direction
under a new management format, under which MCI again will have minority
interest and non- controlling interest.

MR. GATES: In terms of money, to the degree that MSN from MCI attracts lots
and lots of customers, we will be sharing the revenue that comes out of
that. Some of the Internet service software that MCI will be using here
will generate revenue for us. The browser is an exception to that, because
browsers are free. But all the money exchanged here is based on the
success of the offering that we are putting together.

Q There's no up front money?

MR. GATES: Nothing material in that area.

Q Okay, thank you.

MODERATOR: Mr. David Lynch of USA Today, you may ask your question.

Q Yeah, I don't want to belabor the MCI News Corp. on-line situation, but I
am still a little unclear here: Won't that on-line venture, even though
MCI will have -- Mr. Roberts, as you say, a minority non-controlling stake
-- won't that Internet-based on-line service compete with Microsoft
Network? And if so, why be involved in it at all?

MR. ROBERTS: Well, the presumption -- you're making a presumption that the
charter of that venture and where they will be going will be duplicative
services, and I really don't want to comment on that any more until they
are able to make the announcement themselves.

But, again, I would say insofar as it might compete, we will have a
minority interest, non-controlling interest, and we are pushing our boat,
if you will, into the waters of going with the Microsoft various products
as we move forward in our Internet ventures -- as we go forward.

MODERATOR: Mr. Howard Bryant of San Jose Mercury News, you may ask a
question.

Q Yes, I was -- my question is being able to order MCI products - - is that
only going to be through Microsoft Network? Is that going to be through
Windows or across the broad range of all Microsoft products? And how will
that take place? Will there be some kind of information screen when you're
registering products? How is that transaction going to take place?

MR. GATES: Well, the picture you should have in your head is that MCI has a
strong relationship with their customers. And one of the things they will
offer those customers is MSN, and then of course people will get a disk
and be able to dial in.

On the business conferencing side, we will have software inside Windows,
that if you want to set up a business conference, it's able to go out to
the Web, get the latest phone numbers that we've set up that include the
conferencing services that MCI offers, and be able to connect up those
very easily. That mostly comes up when you want more than two people to be
able to do conferencing, that you want a service capability to be able to
make that all work. And so that's what you'll get access to through
Windows itself.

Q Okay. And also, what -- is this in conflict with current software that
MCI Internet users can use? Or do all MCI Internet users, are they going
to be using the Explorer browser now?

MR. ROBERTS: Well, there obviously will have to be a transition or a
conversion plan to get from here to there. Today MCI has basically its own
face to the customer, or particularly on the business side called Network
MCI Business. Underlying that you have a number of capabilities in terms
of what customers can do, one of which is being able to surf the Internet.
And we will be pushing, if you will, the Microsoft Internet Explorer. We
are working through the migration paths to be able to get our customers on
that. There will be new product content coming out in the not too distant
future, and we will migrate customers to the Microsoft software.

Q But will the consumer have a choice of which browser they can use, or is
it eventually moving toward an Explorer-exclusive service?

MR. ROBERTS: No, there will be a choice, from MCI's point of view, in the
sense that if a customer wants to use other browsers, obviously they will
be able to access our services and so on. But the integration of the
browser into the MCI software will focus on the Microsoft Internet
Explorer.

MR. GATES: Yeah, what MCI will do is the same as what Microsoft will do.
That is, the content we publish will work with all browsers. The browser
we'll distribute and promote in the Microsoft browser. And as our browser
is coming up with unique extensions, the content we publish will do a good
job of taking advantage of those. But you'll always be able to get access
with the other browsers. And we expect over time all the browsers will be
adopting pretty much the same extensions. That is, if they do good things,
we'll make sure we have those; if we do good things, there's nothing that
stops them from picking up those extensions. So there is some marketing
advantage out of this, and there is some lead-time advantage out of this,
but the world is still going to be a heterogeneous world.

Q Good. Thank you very much.

MODERATOR: Mr. Richard Tadescu of Broadcasting Cable magazine, you may ask
your question.

Q Just how soon will this all be consummated between the two companies? How
soon will the transition take place?

MR. ROBERTS: Well, obviously the business arrangements and what we're
announcing today is consummated. We are now putting teams together and are
groomed to go full bore ahead to begin to deliver what we have announced.
Obviously product by product, it will vary. As we said earlier, in the
case of SHL Systemhouse, there is active participation with Microsoft with
respect to NT and the businesses.

I think the other important thing is these discussions go back some time
and we have been working together already. If I had to put a time frame on
it, you're talking about within a couple of months you will start to see
things flow in terms of the new integration into the MCI software and
other things we've talked about.

Q Okay, thanks.

MODERATOR: Mr. Ellis Booker of Web Week. You may ask your question.

Q Hi. This question is for Mr. Gates. What does this relationship with MCI
mean for your pre-existing access relationship with UUNET?

MR. GATES: We're very pleased with our relationship with UUNET and we will
continue to drive traffic to UUNET for people who sign up directly with
us. The main thing we have working with UUNET is helping them to expand as
rapidly as possible, both in terms of their presence here in the United
States and their presence outside the United States. They are -- there's a
lot of market demand for Internet coming with MSN and so that partnership
continues intact for the direct customers.

Q And one quick question for Mr. Roberts. You've mentioned the extensions
in the Explorer that will make it the preferred browser, although I'm
still not clear what exactly those capabilities are going to be that made
it preferential.

MR. ROBERTS: Well, I'm not sure what you mean by the word "preferential." I
mean, today MCI is offering a series of software which is pointed to other
browsers, but what we will be doing is integrating into the software we
offer, in terms of access to the Internet, the Microsoft Explorer. We will
have our own links and extensions to proprietary content and software that
we do. We will be pushing this as a browser of choice in what we do
through our own marketing channels, and as I said, we will be offering MSN
for Microsoft as part of our offering, particularly to the consumer, but
also to the business base as well.

MODERATOR: We have time for one more question.

Mr. Alexander Davis, United Press International, you may ask your
question.

Q Yeah. I'd like to know if Mr. Gates could comment on the possibility that
-- or reports that news -- excuse me -- that MCI was asked to scale back
its stake in the venture with News corporation.

MR. GATES: Sure, I'll comment on that. We did not have any direct
conversations with MCI or News about Delphi. We simply talked about the
things that we could do together and none of this arrangement excludes
them continuing to do things with whatever interests they retain in that
area.

The excitement we have about this is based on the things we're going to do
together, and, in fact, most of what we're doing here is not exclusive,
but we expect with the energy we're putting into this that this will be a
real focal point.

MR. ROBERTS: Yeah. I would even add to this -- this is Bert Roberts -- is
endorsing exactly what Bill said, and as a matter of fact, it was after we
had put these arrangements together that I actually picked up the phone
and informed Bill that we would be taking a divergent course with putting
our investment along with News into another venture. So it not only was
not the way you characterized it; it was exactly the opposite. This
venture and what we're doing with Microsoft will succeed because of the
two companies working together and making it happen and using our
strengths and driving the products and services into the marketplace, not
because of any exclusivity.

Q Thank you.

MODERATOR: Thank you all very much for joining us today. Please check your
media advisory for details of a 24-hour audio replay of this call as well
as the time and coordinates for today's two satellite feeds. Again, thank
you very much.

END
 
 =========================================================
 From the 'New Product News' Electronic News Service on...
 AOL (Keyword = New Products) and Delphi (GO COMP PROD)
 =========================================================
 This information was processed from data provided by the
 company/author mentioned. For additional details, please
 contact them directly at the address/phone# indicated.
 Trademarks are the property of their respective owners!
 =========================================================
 All submissions for this service should be addressed to:
 BAKER ENTERPRISES,  20 Ferro Dr,  Sewell, NJ  08080  USA
 Email:   rbakerpc@aol.com   --or--   rbakerpc@delphi.com
 =========================================================
