News

Can WorldCom debacle cripple the 'Net?

• By John K. Waters
• July 9, 2002

Fears that WorldCom's meltdown might cripple the Internet--even shut it down completely--were spreading like an Arizona forest fire last week. The reason: among the company’s assets is UUNet, which carries a huge share of the world’s Internet traffic, including about 70 percent of all e-mail messages sent within the U.S. and approximately half of all e-mails worldwide. The company also owns MCI, the second-largest long-distance provider in the U.S. But even if WorldCom declares bankruptcy, the company’s chief says that no one will be throwing the ''off'' switch on the 'Net.

New WorldCom CEO, John Sidgmore, promoted to the post just before the company revealed two months ago that earnings were improperly inflated by close to $4 billion, insisted at a recent press conference that UUNet will continue operating regardless of the fate of its parent company. Speaking to reporters at the National Press Club in Washington, D.C. last week, Sidgmore said that he saw no significant chance of the UUNet network going dark under any circumstance. ''I am as confident as I can be that customers are not going to wake up and not have service,'' he said. ''I really just don’t believe that’s possible.''

Menlo Park, CA-based bankruptcy attorney T. Michael Turner predicts that WorldCom's troubles won't have much effect on the Internet. ''[WorldCom] has a lot of valuable assets,'' Turner told e-ADT, and normally, creditors are not going to trash something if they can get more money by keeping the asset intact and valuable. In other words, everyone would seem to have a common interest in keeping the thing alive as an ongoing concern, so as to maximize their own economic interest. And this is likely to be the case in or out of bankruptcy. Turner expects that either WorldCom will come up with a plan that will permit the company to continue to operate its systems, or the company's assets will be sold intact to someone who will keep the systems up and running.

Virginia-based UUNet (UNIX to UNIX Network) Technologies, founded in 1987, is said to be the first commercial Internet service provider, first offering e-mail and news services. It quickly grew into a full-fledged service organization, with dial-up services, leased-line accounts and archive space for files and Web pages. In 1996, UUNET was acquired by MFS Communications, which was acquired later that year by WorldCom. At UUNet prior to the acquisition, Sidgmore is credited with building the firm into a major Internet access player and for its sale to WorldCom for $14 billion.

Along with his reassurances about UUNet, Sidgmore maintained that the survival of WorldCom is a matter of national security, because of a customer base that includes key federal government agencies: the defense department, the state department and the General Services Administration.

Meanwhile, WorldCom recently handed out approximately 17,000 pink slips, and some analysts worry that layoffs could lead to service problems resulting from a dearth of network maintenance engineers. ''Other [companies] will need to scramble to pick up the WorldCom business,'' wrote Yankee Group analyst Eileen Eastman in a recent report, ''but serious hiccups may occur in service continuity during this process.''