WorldCom: The end of a seamless dream?
Remember the days when WorldCom Inc. boasted its global seamless services? It's not that long ago.
In July 2000 the Clinton, Mississippi, carrier announced a US$7 billion plan to expand its fiber-optic network to more than 44 countries.
The vision was enticing: Corporate customers in, say, New York could connect to a nearby metropolitan ring and route their traffic across the Atlantic and Pacific to major cities in Europe and Asia -- without having to leave the WorldCom high-speed fiber network.
Sounds great, doesn't it? The problem is, WorldCom nearly broke its neck trying to build that network.
The company is currently saddled with a debt of nearly $30 billion. A good chunk of that debt can be directly attributed to the company's decision to acquire over 96,000 kilometers of cable, some of which it dug in the ground itself, some it leased through long-term IRU (indefeasible rights of use) contracts.
WorldCom's obsession with owning as much of the network as possible drew plenty of attention from corporate users. After all, here was a company promising seamless local-global-local connectivity across an all-fiber network. It was telling users it had better control over quality of service and prices because it owned the network and didn't have to deal with other suppliers in the chain.
Those are sales points that are irresistible to corporate users, especially multinational corporations seeking high-speed, reliable and less-costly links to their offices, plants and partners around the globe.
Despite its huge network expansion, WorldCom has failed to deliver seamless fiber connectivity to the many different places required by its corporate customers. It was, experts agree, an unachievable undertaking.
"End-to-end network ownership is a complete misnomer," said Stephen Young, an analyst with Ovum Ltd. in London. "Such ownership simply doesn't stack up; it's not economic reality."
The big issue is not whether the operator owns the entire network, but whether it can "cut deals with the right suppliers to ensure quality service at good prices," said Camille Mendler, an analyst at the London office of the Yankee Group Inc.
Rival operators also had their doubts.
"All along, I felt that owning seamless infrastructure wasn't economically sustainable," said Allen Timpany, chief executive of Vanco PLC of London, a virtual network operator that uses the infrastructure of other providers. "But it was a pretty lonely view to have back then," when industry and financial analysts were urging operators to invest in their own infrastructure and avoid dependence on other carriers, he said.
Because Vanco's corporate customers have high disaster-recovery requirements, Timpany said those requirements "by definition" force his company to use multiple carriers.
If owning seamless infrastructure is a strategy for the history books, offering seamless service remains a top priority of the large international providers, such as AT&T Corp., Equant NV, Infonet Services Corp. and BT Ignite, the data communications unit of British Telecommunications PLC.
BT Ignite, which owns 16,000 kilometers of cable, makes no secret of its reliance on other service providers, especially to provide local links. "We offer end-to-end customer service, as opposed to end-to-end seamless network ownership," said Steve Andrews, president of carrier services at BT Ignite.
But then, who knows what BT would be saying today if the company had beaten former WorldCom Chief Executive Officer Bernard Ebbers to the punch in 1997 and acquired MCI Communications Corp., or if it had succeeded with its Concert global network venture in partnership with AT&T.