Et tu, WorldCom?
News that the telecommunications giant filed phony earnings for the last five quarters to the tune of US$3.8 billion late Wednesday did not trigger the usual industry reactions. None of the experts quoted in media reports seemed to be enjoying the triumphant sense
of “”Gotcha!”” that comes from such a scandal. There may have been a race to see who would be the first to call it telecom’s Enron, but even these kinds of quips are laced with bitterness.
It is hard to convey the expressions on people’s faces as I shared the news with them this morning. The closest word that comes to mind is flabbergasted, but also mixed with hurt. People who never invested in WorldCom seem betrayed, hurt. We thought this sector had hit rock bottom. Only members of the Catholic Church have faced such a massive test of faith over a relatively short period of time. It’s like the legal rule of double jeopardy, which does not allow an individual to be tried twice for the same crime; we don’t want to pass judgement over ongoing scandals, either. The first time the crime happens, we can achieve a certain catharsis in our outrage. A second time — or a third — the outrage becomes exhausting. We just want it to stop.
Good luck trying to bolster optimism in the telecommunications sector now. There may be reasons to expect a long-term recovery, but they will have to get past the guarded skepticism of customers turned gun-shy in WorldCom’s wake. If the company declares bankruptcy as some insiders suspect, there may be an opportunity for whoever buys the assets to become a sort of folk hero to the millions who depend on its IP network, but it’s hard to imagine who would be prepared to step up to the plate.
The whole mess casts such a dark shadow on an already struggling industry that it is important to remember what good there was about the WorldCom organization. In particular we should keep in mind UUnet Canada, which WorldCom purchased in 1999. As Canada’s first Internet Service Provider (it launched in 1991), UUnet continued to work hard following its integration into WorldCom by providing value to the local market. It doubled its points of presence in Canadian cities shortly after the integration, for example, rather than spinning individual cables between offices and cities where costs can rise based on long distance charges. It focused on the business market, developing a solid reputation that was validated by a benchmark test of Canadian ISPs released last year.
Having been rebranded WorldCom Canada by this point, the company received six “”A”” or “”A+”” grades out of nine categories in a report based on tests conducted in January. WorldCom Canada experienced the least amount of call failures among all providers during the 24-hour test period, for example, as well as the fewest number of call failures during business hours. This was a period in which it moved its data centre to a new location after exceeding its previous site’s capacity. It was moving in all the right directions — Web hosting, virtual private networks and media streaming.
It would be a shame to see the former Uunet Canada tainted by the alleged lack of integrity among some of its parent company’s senior management. Give up on our trust in the accounting practices, but don’t give up on the people who made the company the market force it is.
