October 10, 2002, 9:07 AM — WorldCom Inc.'s bankruptcy presents new problems but also new opportunities for its corporate clients, a panel of Gartner Inc. analysts said during a presentation Wednesday.
What the WorldCom debacle does not necessarily call for is for corporate clients to panic and flee their contracts, the analysts said. This is especially true if by doing so clients will get hit with early-termination penalties and find themselves agreeing to unfavorable terms in a hurry with another provider. For example, competitors, including AT&T Corp. and Sprint Corp., are taking advantage of panicked WorldCom clients by raising their rates and adopting inflexible stances when negotiating new contracts, the Gartner analysts said.
Instead, WorldCom's bankruptcy has opened up opportunities for its clients to renegotiate their contracts and revise anything, including prices, terms, service levels and guarantees, the analysts said. This window will probably be open for 12 more months. Gartner analysts expect WorldCom to survive its current problems, but to emerge from them as a smaller second-tier provider next year.
Entitled "WorldCom - Its future and how that affects the enterprise," the panel consisted of Gartner analysts Dean Eyers, Bob Hafner, Dave Neil, Eric Paulak and Jay Pultz.
In addition to renegotiating their contracts, clients should also watch their backs and add redundancy to their services, by securing back-up from other providers in parts of their network that are too dependent on WorldCom, the analysts said. So far, WorldCom's service quality hasn't deteriorated significantly, but problems have begun to appear, something that was expected given the carrier's massive layoffs.
Still, having redundancy is a good policy in all cases, whether WorldCom is the client's primary provider or not, because just as no one saw the WorldCom collapse coming, it could happen again with another major carrier, considering the enormous levels of debt most of them carry, the Gartner analysts said. Along those lines, WorldCom clients shouldn't feel at a disadvantage when negotiating with a competitor, and instead should be free to point out to all of them that none of them are safe, because of their precarious financial situations. And corporate clients shouldn't feel that they are limited to carriers when seeking network services. IT service providers, such as IBM Corp.'s Global Services unit and Computer Sciences Corp., are also an option, the Gartner analysts said.