WILLIAMS' DAY IN COURT CONTINUES

Williams Communications'' attempts to prevent SBC from terminating its partnership with the carrier will have to wait at least another few days after a bankruptcy court judge decided to continue the case until this week.

Williams earlier this month filed and received a temporary injunction preventing SBC from “exercising its rights” to terminate its partnership with Williams (Telephony, Sept. 2, page 6). Late last week, the two companies appeared before Judge Burton Lifland in the U.S. Bankruptcy Court in New York, with Williams asking the judge to continue the injunction until its bankruptcy hearing on Sept. 25. “They are still negotiating through the weekend,” said a Williams spokeswoman.

For Williams and President/CEO Howard Janzen, who negotiated a $150 million investment from Leucadia National in July, the continuation leaves its future hanging in the balance. SBC, which accounts for around 40% of Williams'' revenue, is threatening to revoke its agreement on the basis that Williams changed ownership when it spun off from The Williams Companies in April 2001. Additionally, the carrier''s Leucadia investment hinges upon the continued health of the SBC relationship.

“Providers that tie themselves too closely to just one customer are really putting themselves at risk,” said David Gross, senior analyst at CIR.

In some cases, though, such as the relationship between OnFiber Communications and Qwest Communications, the smaller company has dealt with the situation well, Gross said.

However, few bankrupt carriers actually make it out of bankruptcy, according to Gross.

And while Williams grapples with contract issues, some former stakeholders may be angry about the percentage that existing investors will get in the newly formed company.

“A lot of people are questioning whether or not preferential payments were made to [The Williams Companies],” said Dave Schaeffer, CEO of Cogent Communications.