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How Will WorldCom/UUNet Impact The Internet?
somewinner writes "CNN.com has an article discussing WordCom's impending failure and its possible impact on the internet. Given that WorldCom (via UUNet) handles 50% of US internet traffic, and a large percentage of traffic worldwide, some concern is certainly justifiable. However, the author of the article seems to think that nothing serious is going to happen."
When a company goes bankrupt for whatever reason, its assets do not vanish. They are property of the banks, and since banks are not in the business of running the Internet, they would sell the assets to the highest bidder[s]. This is true of an Internet company as it would be if a oil tanker company went bankrupt and the banks sold their ships to another company.
UUNet (Worldcom) has God knows how many routers, lines, Satellite equipment, and other things not in my vocabulary. Not only will they not "vanish," they will never be clicked off even temporarily as a result of this legal situation.
So relax.
Just because there are tons of creditors for the equipment that WorldCom runs doesn't mean that the service will be interrupted. The massive amount of debt is essentially represented by the assets themselves. The ongoing costs are relatively miniscule, incremental, and covered by the incremental usage. The rest is allocated over an amortization schedule. In short, it does not serve creditor interests to simply shut the switches off. They have to recover part of their costs somehow, and that way is to keep the machine humming. My bet is that they will be sold at firesale prices to other major carriers (e.g. Sprint, UUNet, etc.) and the investors and banks will just simply eat the rest.
Don't blame Clinton for deregulation of communications. That was the trickle-down economics of the countryclublican House and Senate. The deregulation disasters began under Ronald Ray-gun. The airlines, Savings and Loans, other lenders, energy, communications, and radio all went to shit as a result of deregulation. When they said "we need to get goverment off of business's back," far too may of us fell for it, and all the wachdogs got their teeth pulled out. They need their teethe back, and we need even more watchdogs. Greed is still evil, even in business.
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1. Worldcom's telecom business has been losing money for a long time now. It's almost a lock that it will be sold off.
2. Ditto for a bunch of their other units - i.e. Skytel paging, etc.
3. The current CEO basically founded UUNet - it's his baby - it's not going away. The networks are owned by UUNet Worldcom - they're not going away either.
4. WCom's web hosting and data centers have been profitable for the past 8 quarters - plus, they are among the most well run DC's in the world. They're not going anywhere either.
Long story short - they're not going to get rid of anything making money - which is data and hosting. The worst that's going to happen is that you send your long distance checks to a different carrier. No worries, people.
There was a big internet outage where I work today,(Pomeroy) and our T1 lines are from Worldcom. Our MIS guys said it went beyond our company, and a lot of Worldcom's portion of the backbone was down. If our MIS wasn't just shifting the blame elsewhere, it was probably because a lot of the technicians who maintain the backbone have been laid off, just as the CNN article predicted. I suspect it is because Pomeroy has the best MIS department minimum wage will buy, but what if the whole backbone did go down?
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Who's to say that WorldCom might not aggressively sell "pink contracts" to raise cash flow? I doubt that UUNet will be sold, simply because the most likely buyers already have Internet backbone, and given the FCC's history with backbone mergers, (WorldCom-Sprint merger failed because the DOJ would block any merging of backbone ownership. MCI's backbone was sold prior to merging with WorldCom to satisy FCC and DOJ concerns.), such a deal would not go through. If WorldCom/UUNet can't raise peering charges, then look for them to sell bandwidth any way they can, because it's their greatest asset right now. Sale of MCI and UUNet will be last-resort efforts to save the corporation, because those are their best revenue sources.
DMCA - Chilling free speech since 1998.
much greater problem is losing their peering
entry points into other networks. If from Lubbock, instead of connecting to an Austin, TX site through Dallas, you had to connect on a
pipe through LA, do you think that might be
noticeable? I think it could...
Losing a big chunk of the network is a big deal -
just ask KPN/QWEST in Europe. I came into work
this morning to find the peering points into
AT in New York slammed as the transatlantic routes converged.
Actually, Sidgemore did not found UUnet -- Rick Adams did. Adams brought Sidgemore on board UUNet because Adams realized that he needed someone with Sidgemore's track record in running telephonic and networking businesses. I think that Adams became CTO of UUnet when he made Sidgemore the CEO.
A lawyer & digital forensics examiner. Also an expert on open source software (OSS).
And at 1700BST yesterday the EBone shut down as a result of KPNQWest's collapse. Nobody was found to buy their bunch of "God knows how many routers, lines, Satellite equipment, and other things". It is indeed possible for key companies to collapse and for infrastrauctures to not keep running, especially at this point in the economic cycle, when there aren't a lot of other companies around with the resources to buy Worldcom.
Consider also - it might be better value for the receivers to sell off Worldcom's assets at auction than find a buyer for the networks as is.
ben_ the technologist and platform agnostic