If you think Wall Street's voice-over-Internet fever is just a passing fancy, think again.

That's what

MCI

(MCIAV)

chief Michael Capellas told analysts and investors at the Precursor Group's Workshop for Technology and Communications Investors. Tuesday morning's session, held in Washington, D.C., focused on the threat that so-called voice-over-Internet protocol, or VoIP, technology poses for conventional telephone companies.

VoIP, Capellas said, isn't the only industry-sweeping change going on right now. "It's communications over the Net, and it's already here," the executive said.

Some observers suspect VoIP may not be the boon it has been advertised as for networking gearmakers like

Cisco

(CSCO) - Get Report

,

Lucent

(LU)

and

Nortel

(NT)

. But at Tuesday's conference, Capellas and others suggested that the ongoing shift stands to change an even bigger market, the service provider arena -- by, in this example, recasting MCI's UUNet, a leading provider of Internet backbone, as a wholesaler.

Capellas, of course, is a longtime technology executive who took the reins at MCI soon after its predecessor company, the far-flung telco called WorldCom, filed the nation's largest-ever Chapter 11 case. As such he carries a certain amount of authority at events like this. And on Tuesday, he wasn't mincing words.

For example, Capellas underlined the spread of VoIP by pointing to

a deal MCI struck earlier this year with

Time Warner

(TWX)

. That deal uses MCI's global voice and data network to sell phone service to Time Warner Cable customers.

Capellas, who was head of PC maker Compaq before it merged with

Hewlett-Packard

(HPQ) - Get Report

, also rejected the notion that the big phone companies are participating in their own undoing by embracing the new Internet standards.

"I've learned something from Michael Dell," he said, referring to the

Dell

(DELL) - Get Report

chief who essentially drove Compaq into H-P's arms by undercutting everyone in the industry on price. "You better cannibalize your business before someone else does."

Scott Cleland of Precursor Group saw evidence of VoIP's transformative nature in Capellas' comments.

"Capellas isn't going to make a big deal" of the MCI-Time Warner deal, partly because it undermines MCI's core business, Cleland said. But he said another reason is that VoIP helps MCI compete as a wholesaler of Internet capacity with network operator

Level 3

(LVLT)

.