Telecommunications giant WorldCom may be slouching toward bankruptcy, but Bay Area businesses and consumers probably don't need to worry about service interruptions, experts said Friday.
The company's customer-focused divisions, including long distance and business Internet service, would be attractive to creditors and potential buyers, they said, making it unlikely they would be shut down. Nevertheless, companies relying on WorldCom for absolutely essential Internet services would be wise to find a back-up provider, the sort of fallback they would want anyway.
WorldCom CEO John Sidgmore said Thursday that avoiding a bankruptcy filing "is looking much more difficult" for the company. WorldCom announced last month that it had improperly accounted for $3.8 billion in expenses, covering up a net loss for 2001 and the first quarter of 2002.
But John Navas, a Dublin-based communications consultant, said there is little reason to think a bankruptcy would shut down WorldCom's Web hosting, Internet access and commercial telecommunications services, or its consumer long distance operation. "The voice business is pretty heavily regulated, and there are lots of folks who would like to take over that service," he said. "I would not recommend someone dump WorldCom on the data side because the UUnet (Internet) part of WorldCom is a class act.
"I find it very hard to believe WorldCom creditors would have trouble with the continuation of parts of the operation like UUNet, because it generates positive cash, and creditors like positive cash."
Still, Navas said any business whose Internet connection is critical should have a backup provider at the ready, since Internet pipeline problems are still relatively common.
That's a lesson Emeryville-based Internet search company Ask Jeeves learned last fall, after a power crisis brought rolling blackouts to California and the stock market had begun to rock the telecommunications sector. One of the companies Ask Jeeves depended on to run its business, Exodus Communications, filed for Chapter 11 bankruptcy protection.
The bankruptcy did not interrupt Exodus' service to Ask Jeeves, and Exodus was eventually acquired by cash-rich Cable and Wireless, but Ask Jeeves decided that in the future it would contract with backup providers for critical operations like Web-site hosting. When it hired WorldCom to host its Web site, it also retained a backup, which it declines to name.
"We had to ensure the hard way that all our eggs were not in one basket," said Dayne Sampson, Ask Jeeves' vice president of information technology.
Still, Sampson said the possibility of a WorldCom bankruptcy "isn't terribly unsettling," since he does not think such a development would affect his company's operations. He said the company stays in close contact with its WorldCom sales reps and has reviewed its contract with the company with bankruptcy in mind. It is sufficiently confident in the company that it recently ordered additional services, Sampson said.
Consumers don't have too much to worry about either, said Lee Biddle, a telecommunications analyst with the Utility Consumer's Action Network, an advocacy group, since WorldCom and its creditors are likely eager to continue to tap the cash flow from long-distance customers. "If a customer has had WorldCom or MCI for long distance and has not had any problems, they probably should not anticipate any new problems," he said.
But WorldCom has been a "complaint leader" among long distance companies, Biddle said, and any customers with billing disputes or other issues should complain now, and in writing, to both WorldCom and the state Public Utilities Commission. After bankruptcy, he said, correcting errors "becomes much more of an unknown -- you just don't know if they are going to be there to answer the phone."
Reach Ryan Tate at rtate@cctimes.com.
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