So what does this Worldcom thing mean? Many people saw it coming. I've been hearing about this possibility for a long time.

Many people are aruging that this is the beginning of the end for telecom because Moore's law applies to telecom and although bandwidth gets cheaper and cheaper, demand has slowed down.

There is an interesting comment from Professor Gerald Faulhaber on David Farber's list. His point is that we should be apalled by the Enron/Andersen of it all and that isn't directly related to the problem with the business model.

Having been through the bankruptcy of PSINet as a former CEO of the PSINet Japan, I have my own theories. I think part of it was the telephone companies trying to gobble up the ISP's that are a threat to their voice business and choking on their acquisitions while at the same time trying to use regulators to make it difficult for ISP's to compete directly with phone companies. The cool thing is that regulators in Japan haven't figured it out or NTT isn't good at lobbying them and Yahoo is providing voice over IP broadband and really starting to be a pain in the neck for NTT.

I heard a rumor that China bought out all of the backbone carriers and is running it as a state operation. Even if this isn't true, this makes sense.

Anyway, I think that trying to continue to charge for voice doesn't make sense and I think it is the freebie giveaway like email to get people to really go for broadband.

Here are some good articles about Worldcom etc.

This Week's Clue: The Telecom Crash of 2002
Gordon Cook on how regulators are trying to bail out legacy telcos at the expense of ISP's
Worldcom Reveals Accounting Scandal - Reuters
AS THE WORLDCOM TURNS: A blog about WorldCom

1 Comment

As an alumnus of the early UUNET, I have had the good fortune to work closely with the new CEO, John Sidgmore.

If anyone can pull this company out of the trouble, it's John. The real question is whether any human can.

John is a good guy, and one of the more ethical senior executives I've known. He was brought up at GE, during the reign of Jack Welch, if I'm not mistaken, which is a good place to learn.

I am inclined to agree with some of Ito-san's analysis. I believe that that telephone companies didn't get the ISP business for a long time. I firmly believe that UUNET would be profitable again were it to be extricated from the clutches of the phone people.

My best wishes for a safe and happy Independence Day for the US folks out there.

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