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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."
If Worldcom's failure were to bring a heightened sense of overall awareness about why you really DON'T want to put all your eggs in one basket, this may end up being a good thing.
If enough key (read: rich) players and businesses are seriously inconvenienced (read: lose a lot of revenue) because a key point of potential failure actually failed, then certain monopolies that have predatory practices might be trusted a lot less by default, with people seeking out alternatives "just in case".
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.
Looks like the forces of darkness decided that global thermonuclear warfare wasn't needed for knocking out the Internet: Why bother when rampant greed and corruption will do the job for you!
If UUNet goes away, then were will the spammers turn? Right now they have UUNet which says 'not our problem because the spammer is our customer's customer.' What happens if UUNet is taken over by a reputable ISP that shuts down spammers and those that harbor them?
It would be better to re-nationalize the internet backbone, then to bail out those bastards at Worldcom. It was government controlled when only the military and universities could use the internet. I hope Milnet, formerly Arpanet, the part of it that is still there to keep our defense network up and running in the case of an enemy attack, is not part of what Worldcom could pull the plug on.
The Uncoveror: It's the real news.
When they bill you, simply explain to them that although they originally invoiced you for $1300 what they actually meant to do was to give you a $2500 credit.
If they argue, just mumble something about irrational exuberance.
Invoicing, Time Tracking, Reporting
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.
The US Secretary of Defense (Rumsfeld) was asked about the impact of WorldCom's demise on communications its contracts with the military. His response was something like: "Where there is a viable need for a service, there will be a provider. Whether it's the corporate shell the the contract was given to or the corporate shell that bought the service from the original corporate shell, the service will continue." His use of the term corporate shell was quite interesting, making corporations seem to be fictional entities surrounding a service. Many times, viable profitable contracts are bought out between defense contractors and the same people who served them just get their paychecks from a different company (eg: Andersen accountants who get hired by the replacing auditors).
Through Global Crossing's bankruptcy, they've been able to keep service up and running for many of their customers. Now, it's not likely that they're getting new business, but the business that they have still manages to continue to run using a minimal staff. Even though MFN has gone bankrupt, you don't see the power going out at PAIX. Adelphia is defaulting on loans, but my cable modem with them still more or less works. The investors lose; the banks and lenders lose; non-core people get laid off; and eventually, a long time later, the customer loses if they obliviously stick around after the company can't sustain operations anymore.
Worldcom is not bankrupt yet. Many believe it's likely though. CNBC reports they have $2B in the bank (one analyst estimates $1.6B after accelerated repayments), $30B in loans, and $54B in sellable assets (worth $8B at $0.20 on the dollar during a fire sale). It's up to the banks as to whether to kill their goose now that it's not laying gold eggs. Even if WorldCom goes bankrupt, the service will continue for quite a while. Some might buy the assets for pennies on the dollar and operate the same business with a better chance at making a profit. All of the direct investors and the lenders and the investors of the lenders will be left holding the bag, but service will continue.
- ez
(proudly ex-uunet, pre-WorldDom)
this is a map of AS paths & peering relationships on the internet. take a close look at the center.
I despise all of this fearmongering over 'what would we do' if Microsoft, or Worldcom, or Enron, or AOL/TW were to fall. Even if it's justified, who's fault is that? Who let them get so big and unobstructed that they could hold an entire economy hostage? My opinion is that, in a free market system, "You need us," is not a viable solution to a failing business. Whether it's an airline or a telecom, let'em crumble. They all seem eager to be left alone, free to 'innovate' or 'compete' until innovation and competition reveals them to be a failure, and then they're newly born socialists begging for government cheese because they're existence is supposedly good for 'the people'.
Why does everyone assume that WCOME is now going to go bankrupt? The lied on their earnings, but that doesn't go in and take 3.2B from their bank accout. Also, unless it changed throughout the day the big story on cnbc this morning was that WCOME is saying they are NOT going bankrupt anytime soon. It caused their stock to triple throughout the day (from .07 - .22)
Will the UUNET network go dark? Not a chance. If/When WCOME does have to sell off its assets some other provider will be right there and will probably take the entire division-people and all. FUD does make good news though.
Incase it escaped anyone's radar Worldcom owns OzEmail, which according to an IT news website is ranked the No. 2 Australian ISP after Telstra. This most likely means that Worldcom will have to sell off OzEmail to recover some assets for it's creditors, but this is not all bad because it means it's original owners could buy it back for far cheaper than they sold it for. There is some more information at this link and this link.
aus.music.scrapbook
About forty years ago, it looked like Lockheed was going to go bankrupt. The stock fell from $60 to $3, which was below par (i.e. breaking up the company and selling off the assets would have recovered more money than the stock was selling for). The problem was that Lockheed wasn't just a defense contractor, it was the defense contractor, and during the height of the cold war, to boot. They couldn't be allowed to go bankrupt.
So the government bailed them out.
Then, some years later, there was a little problem at a generating plant owned by General Public Utilities (GPU). You might not have heard of GPU but you've heard of the plant: Three Mile Island. GPU stock took a hit, as you might imagine. In fact it looked like it might go broke. The problem was that it was a utility, which means it was a monopoly. If it went broke the lights went out over a fair stretch of countryside. That couldn't happen.
So the government bailed them out.
Now, my father saw both of those coming. He bought Lockheed stock at fire-sale prices because he knew that they couldn't be allowed to go broke. He cried because he couldn't afford more. He made out like a bandit.
When GPU started to go under, he bought all the GPU stock he could. And this time, he could afford more. He made out like a bandit. So well, in fact, that he assured himself a comfortable retirement. He's quite conservative, and told me ruefully, "I always preached the values of thrift and economy. Now I'm comfortable in my old age, but it isn't due to any of that. Hmph."
Then the Seattle public utility, through a boring series of blunders, started to go broke. They couldn't be allowed to go broke, for the same reasons that GPU couldn't and Lockheed couldn't.
So the government...said "Hey! Wait just a darn minute here!" And didn't bail them out.
And they went broke. And the lights stayed on.
Ditto when California started having rolling blackouts. Big raspberries from the Fed, because the Shrub knows California wouldn't vote for him if he was rolling out the red carpet in front of Jesus Christ for the Second Coming. Much stick-waving, stunningly bad contracting, and shouting, but the lights came back on and stayed that way.
The days of government bailouts are over.