VERIZON AND THE ENTERPRISE PUT PRESSURE ON WORLDCOM

While WorldCom worked to repair its image, Verizon Communications was doing its best to hasten the company's demise, and many of WorldCom's enterprise customers started making contingency plans.

Last week, Verizon filed a petition with the FCC to force WorldCom to prepay for services it receives from other carriers. Specifically, Verizon wants to modify tariffs to require security deposits or advance payments from companies that demonstrate a financial concern.

“The FCC has concerns about continuity of service,” said Ed Shakin, Verizon vice president and associate general counsel. “We're asking them to give the same consideration to making sure we get paid.” WorldCom's large enterprise customers also are mulling their relationships with the carrier.

For the moment, however, most are stuck, said Courtney Quinn, telecom analyst with The Yankee Group. “Out clauses are generally tied to [service level agreements], not bankruptcy filings,” Quinn said.

That doesn't mean they're not thinking of making a move.

The Nasdaq stock exchange, one of WorldCom's marquee customers, is publicly standing by its carrier but has made contingency plans, according to a spokesman.

AskJeeves, a WorldCom co-location customer, also is looking, said Dayne Sampson, vice president of information technology. However, the company is not expected to flee to another carrier, in part because of the uncertain carrier landscape.

“In this case, the devil you know might be better than the one you don't,” Sampson said.

Pascal Aguirre, senior vice president of Adventis, believes many customers will stay, partly because the circumstances of the bankruptcy filing. “WorldCom is falling victim to a financial scandal. This is not an operating bankruptcy.”

However, the stigma of Chapter 11 will do irreparable harm to the brand, said Drake Johnstone, analyst with Davenport & Co.

“I really question how WorldCom can make positive inroads in the business market considering this behavior,” he said.

The process of changing carriers, though, will work to WorldCom's advantage, said Aguirre.

“You have to reconfigure physical circuits and change a lot of IP addresses and phone numbers,” he said. “Multiply that over a number of locations and employees, and you have a geometrically growing headache.”

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With additional reporting by Tim McElligott and Toby Weber in Chicago.