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WorldCom Lashes Back

Senior executives at bankrupt carrier giant WorldCom Inc., a.k.a. MCI (Nasdaq: MCIT), might be looking forward to a relatively stress-free work week, compared with the almost daily barrage of negative news they dealt with in the previous fortnight (see The Week at WorldCom: Chapter II and The Week at WorldCom).

Following a number of allegations concerning the improper routing of traffic so as to avoid regular interconnection charges (see last week's roundup, Chapter II), the carrier's creditors, desperate to keep the operator as stable as possible and maximize their chances of some financial returns, have struck out at WorldCom's rivals. The official committee of unsecured creditors has challenged the likes of AT&T Corp. (NYSE: T), SBC Communications Inc. (NYSE: SBC), and Verizon Communications Inc. (NYSE: VZ) to produce evidence of WorldCom's wrongdoings or keep quiet. They believe the other operators are deliberately trying to further discredit and destabilize WorldCom in the weeks preceding the planned review of its financial reorganization by the bankruptcy court (due September 8).

In a bankruptcy court filing, these creditors claim that the accusations leveled at WorldCom are a "smear campaign" that has "led to widespread adverse press coverage about the company quite clearly aimed at imperiling these cases and frightening the company's customers into the arms of its accusers." As a result, the creditors want to subpoena documents and examine witnesses concerning the allegations. In addition, they want access to any communications between AT&T, SBC, and Verizon that might reveal any cooperative efforts to smear WorldCom.

Not only that, but they want these documents by September 4, in an effort to prevent the repetition of the claims in question. The creditors also say they may use any evidence they find as the basis for future legal proceedings against AT&T, SBC, and Verizon. The trio of rivals are playing it cool: AT&T and SBC say they have already provided documented evidence of WorldCom's rerouting practices to the bankruptcy court and the U.S. Department of Justice, respectively. Verizon is keeping mum.

To read the full story, on our sister site Boardwatch, simply click here. — Ray Le Maistre, International Editor, Boardwatch

straightup 12/4/2012 | 11:31:21 PM
re: WorldCom Lashes Back If this is a smear campaign, it is unfortunate. But I really have a hard time feeling sorry for Worldcom. I mean really, "the other guys aren't playing fair" is a tough pill to swallow.
skeptic 12/4/2012 | 11:31:18 PM
re: WorldCom Lashes Back
Its just "concedental" that the government
(the GSA) going after BOTH MCI AND SPRINT
to bar them both from federal contracts.
(of course to be fair, sprint's situation is
so uninteresting that light reading has not
even managed to write an article on it).

And its just "concendence" that so many carriers
have been motivated to audit MCI's traffic and
complain about call routing issues all at the
same time and "concendentally" all the information
came out in the run-up to MCI coming out of
bankrupcy.

The simple truth is that if the RBOCs are
successful in destroying their competition
in the form of MCI and Sprint.....there will
be nothing to stop them restoring their old
system of being a monopoly protected by law
and the FCC from any competition.

They are already preparing for it. As soon
as their competition is destroyed, they will
unveil a "broadband crisis". Every magazine
and newspaper will be full of articles about
the "crisis" and the crisis will not be "fixed"
until the republicans in congress & the FCC
give them everything (and I do mean everything)
they want.

Whatever the faults of MCI, getting rid of MCI
is only going to make things worse.

verstand 12/4/2012 | 11:30:57 PM
re: WorldCom Lashes Back skeptic,

I am with you on this one.
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