FAITH NO MORE

Trust is a funny thing. If you are trusted, you can do just about anything, assuming you have the time and abilities required by the task. But if you are viewed as untrustworthy, no one will give you a chance to do anything. Making matters worse is that regaining lost trust is extremely difficult or even impossible to accomplish.

The telecom industry right now is considered untrustworthy. Lousy business plans, bankruptcies, disastrous earnings reports and accounting misdeeds have combined to destroy whatever trust investors once had in the sector.

Because the sector provides vital services and employs millions of Americans, Congress and the FCC are racking their brains trying to figure out how to restore confidence. And while their emphasis on eliminating — or at least significantly reducing — regulatory uncertainty is a good goal, it won't be enough in some cases.

One such case is WorldCom. No investor with any brains at all will ever trust the bankrupt carrier again until all vestiges of the accounting scandal are removed. Malfeasance is like cancer — you have to carve out every cell, lest it return. That's why John Sidgmore made the right call when he decided to step down as WorldCom's president and CEO. Whether he was pushed or made the call on his own, it had to be a painful decision because it will have a profound effect on Sidgmore's career and personal fortune. But he had little choice.

While Sidgmore has maintained from the beginning that he had nothing to do with the scandal, asserting that he had no involvement in the daily operations of the company during the time the cheating allegedly occurred, Sidgmore was a member of WorldCom's board of directors. And for most people, that will make him guilty by association.

Sure, he could wait things out in the belief that the courts will exonerate him from any wrongdoing. But even if that were to occur, there would always be doubt in the back of most people's minds that he had to have some idea about what was transpiring. Investors are like moths — there are plenty of them, but once burned, they never return to the flame. Which is why his career at WorldCom — like that of Bernie Ebbers before him — needed to be snuffed out.

Now that it has been done, WorldCom can get on with the task of recovering from its wounds. It can be done, as Yipes, 360 Networks and Teligent have proved. And investors will come back if they believe in a company's products, business strategy and, most importantly, its leadership. Warren Buffet's recent $500 million investment in Level 3 is proof positive of that.

Telecom is not the first major U.S. industry to take a giant hit. It wasn't that long ago that the doomsayers foretold of the extinction of the automobile industry. It came back. Telecom will too.