GOOD WITH THE BAD

WorldCom's breathtaking bankruptcy no doubt has caused much hurt. However, it is not Pollyanna-ish to see some good in the outcome — specifically, the affirmation that our nation now has such a vibrant, competitive and sustainable telecommunications network, and that even the largest bankruptcy in history will not threaten anyone's access to local or long-distance service or the Internet.

The WorldCom bankruptcy presents less turmoil than one might expect, primarily because several policy and market initiatives have worked in the 18 years since the divestiture of AT&T. No one can credibly say that we lack a robustly competitive long-distance industry — competition has thrived because the carriers providing the local portion of the call have delivered on their obligation to make their networks easily and fairly accessible.

Indeed, the lack of operational problems in the long-distance and Internet markets occurring as a result of the WorldCom bankruptcy shows the benefit in requiring full and fair access to local telecom networks. Yet at the onset of the WorldCom mess, FCC Chairman Michael Powell signaled a willingness to help avoid financial meltdown by implying a tolerance for a merger of a Bell company with all or part of WorldCom — an odd initiative coming from a federal official typically adverse to government intervention or marketplace meddling.

Current economic turmoil instead attests to the messiness in capitalism and in markets. One cannot expect a rising tide to raise all ships, yet most of us bought the notion that the Internet would trigger unquenchable demand for the pipes used to provide the bandwidth for high-speed data applications. But we have seen that absent a commensurate increase in demand for capacity-guzzling applications like full-motion video, a glut of unused capacity will flood the marketplace.

Clearly, a run-up in demand must match supply — a balance that will occur only when consumers have access to compelling content and to the local and long-haul networks needed to link consumer and supplier. In the future, with the push of “must-see TV” and other broadband data services, we will need even more capacity robustness and carrier variety.

Ironically, the WorldCom bankruptcy confirms robustness in the technology side of the equation. Powell should accept the bankruptcy, reorganization, disaggregation or liquidation of WorldCom as a normal — if perhaps unfortunate — marketplace occurrence. The fallout from irrational exuberance all but necessitates destruction, regrouping and reform.

DOSSIER ROB FRIEDEN

Occupation: Professor of Telecommunications, Penn State University

Location: University Park, Pa.

Hobbies: basketball, antique telephones and radios

Current reading: “The Internet's Coming of Age,” edited by the National Research Culture

Favorite Web site: my.yahoo.com

Next project: Tracking the European Union's new technology-neutral approach to telecom regulation

InFocus, online Wed., Aug. 21 Tunable lasers: The key ingredient for flexible, high-capacity and economical metro networks
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