Another "negative" story -- this time from ZiffNet (dated May 7th -- reprinted for fair use and education purposes only). I assume this will just add to the pressure WCOM's stock has been under. Perhaps this will light a bit of a fire under Bernie and the boys who have all of a sudden been left looking like a follower as AT&T has garnered the headlines and positive stock momentum. I still believe WCOM is a great and core long term hold...
"MCI WorldCom sites feel post-merger blues"
By John Rendleman
05/07/99 07:55:00 PM
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As MCI WorldCom Inc. tries to deliver on its strategy of seamless global data services, some large customers are plagued by problems resulting from last year's merger of MCI Communications Corp. and WorldCom Inc.
Some MCI WorldCom customers are facing lengthy delays when upgrading ATM (asynchronous transfer mode) data circuits; others are suffering outages using the company's frame relay services. Other complaints arise from customers paying thousands of dollars in additional monthly costs to connect to still-separate MCI and WorldCom networks.
The problems of MCI WorldCom are likely to give pause to customers concerned about the spate of telecommunications megamergers. While newly merged entities pledge a future of seamless data, voice and video networks, getting the infrastructure in place is fraught with peril.
"It's buyer beware out there if you're buying service after a merger, because there is no clear escalation path in place to resolve problems," said Daniel Gasparro, chief technologist at Booz, Allen & Hamilton Inc., in McLean, Va. "Customers that wander into a contract after a merger are often the victims of ill-considered merger execution plans."
Messy situation
The lack of integration between MCI and WorldCom's international networks "is kind of a mess," said one customer who operates a data network in Europe and the United States.
"We can buy ATM service from MCI, or we can buy it from WorldCom, but we can't buy it from both because the MCI and WorldCom networks are definitely not interconnected in Europe," said the customer, who requested anonymity.
The customer requires two 34M-bps E-3 access circuits in Munich, Germany, to reach both the MCI and WorldCom networks -- at an extra per-circuit cost of $3,000 to $10,000 a month.
Post-merger, MCI WorldCom has about 20 Newbridge Networks Inc. 36150 switches in MCI's legacy ATM network in the United States and 60 to 100 Cisco Systems Inc. BPX switches in WorldCom's international ATM network. But the Jackson, Miss., company does not intend to link the separate WorldCom and MCI ATM networks, said John Scarborough, director of virtual data services product marketing.
"Ultimately, we decided that because of the extensive global reach of the Cisco BPX platform, we would continue investing in that platform globally," Scarborough said. The company plans to migrate customers on the Newbridge platform to the BPX network "when the time is right," probably by late next year, he added.
MCI WorldCom's U.S. ATM service will get a boost next week when the company launches local ATM services in 350 U.S. cities.
The new local ATM connections, along with international ATM services available in 10 countries "and the largest facilities-based global ATM network, [are] a great demonstration of our commitment to the local-to-global On-Net strategy," Scarborough said.
Problems with Concert
An ongoing problem in Europe, however, stems from MCI's previous partnership with British Telecom plc., called Concert.
MCI's partnership with BT, formed in the mid-1990s, was to have culminated in a merger between the two. The deal unraveled when WorldCom came in with a higher bid. But MCI WorldCom is still bound by a distribution deal for Concert services, an entanglement that's causing lingering problems for MCI customers.
The MCI-BT breakup "has been a messy divorce, and it looks like I'm the ugly child," said Christopher Luise, vice president and chief technology officer at Skandia Assurance and Financial Services, in Shelton, Conn., and a PC Week Corporate Partner. Skandia Assurance operates a global frame relay network with 25 nodes and service speeds ranging from 16K bps to 2M bps.
"We've had quite a few outages caused by MCI and Concert," Luise said. "We don't know where MCI ends and Concert begins. I'm clearly getting one set of answers from MCI and another set of answers from Concert, as well as a lot of finger pointing."
To address the problem, MCI WorldCom has put interfaces in place between the legacy MCI and WorldCom frame relay networks, and "we're very careful about the integration and the migration we go through so that the end result is something better," Scarborough said.
"We're busy at work completing the integration of the two [frame relay] networks, which will be completed by the end of the year," he said.
The challenge of operating two networks and migrating to a single platform "is very complex, and I don't want to characterize these as trivial issues," Scarborough added.
Customers such as Gasparro of Booz, Allen & Hamilton, while not experiencing technical problems, nevertheless remain wary.
"We're still a Concert customer, but we're going from month to month right now because of all the merger activities around these companies," Gasparro said. "We're still getting the service levels that we had before, but it's been really difficult in terms of having a customer-to-vendor relationship. We've been kind of dragged around a bit because of it."
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