Internet design should save network from problems even if WorldCom goes under, analysts say

Wednesday, July 3rd 2002, 12:00 am
By: News On 6

WASHINGTON (AP) _ Rest assured, Web surfers. The Internet will keep running even if WorldCom Inc., the company that handles half of its U.S. traffic, goes under, technology analysts say.

Many analysts predict that the huge telecommunications company will file for bankruptcy, although WorldCom chief executive John Sidgmore said Tuesday that he hopes the company will not have to do so. The possibility is bound to worry WorldCom's Internet customers, but analysts said the Internet as a whole should be fine.

``The Internet itself is fairly resilient,'' said Joel Yaffe, an analyst with Giga Information Group.

A key Democrat in Congress raised the possibility of government intervention should WorldCom go under.

WorldCom disclosed last month it had improperly accounted for nearly $4 billion in expenses, inflating its earnings. The disclosure sent the company's stock plummeting, prompted the Securities and Exchange Commission to file fraud charges and triggered an avalanche of denunciations from politicians and investors.

UUNet, a WorldCom subsidiary, is one of the Internet's backbone providers. It controls the wires that Internet service providers use as superhighways to carry Internet traffic between cities and across continents.

Sidgmore said UUNet handles more than 50 percent of U.S. Internet traffic, including about 70 percent of all e-mails sent within the United States and half of e-mails sent in the world. With KPNQwest in Europe, it handles over half of European traffic as well.

Thousands of companies in over 100 countries rely on WorldCom for Internet access, including the Defense Department and the State Department.

Sidgmore said the Homeland Security office has inquired about WorldCom's situation to make sure that ``we were going to stay in service, and in other words there wouldn't be a blip.''

Massachusetts Rep. Edward Markey, the ranking Democrat on the Internet subcommittee of the House Energy and Commerce Committee, asked Federal Communications Commission Chairman Michael Powell on Tuesday to take steps to make sure WorldCom customers won't be cut off and to develop contingency plans.

Sidgmore assured them his audience Tuesday that UUNet, based in Virginia, will keep going no matter what happens to WorldCom.

``I don't really see any significant chance of the UUNet network going dark under any circumstance,'' Sidgmore said.

Some analysts agreed.

``UUNet is WorldCom's crown jewel,'' Giga analyst Lisa Pierce said. ``It's hard to imagine a scenario in which he would willingly close it down or cut off its legs.''

Several experts predicted that governments and companies wouldn't let UUNet die.

``There's just a recognition that you can't let that go down given how much traffic rolls over it,'' Yankee Group analyst Courtney Quinn said.

The analysts did worry that worldwide layoffs at WorldCom could lead to problems as fewer engineers are available to maintain the network.

Europe is in more serious straits. European Internet backbone provider KPNQwest is in deep financial trouble itself, so WorldCom problems would be a double blow.

``Other (companies) will need to scramble to pick up the WorldCom business, but serious hiccups may occur in service continuity during this process,'' wrote Eileen Eastman, another Yankee Group analyst, in a recent report.

Sidgmore said his company has tried to assure customers that the company and its services will continue. Those steps are critical, analysts said, to stave off the same mass exodus of customers that hurt accounting firm Arthur Andersen.

``WorldCom must come completely clean about its financial situation, quickly determine its course of action, and begin effectively executing the plan to re-establish its credibility with this constituency,'' Eastman wrote.