Yesterday, WorldCom filed for bankruptcy – the biggest corporate insolvency in US history.
The firm, which has 85,000 employees and operates in 65 countries, applied to the courts for Chapter 11 bankruptcy protection, preventing creditors from seizing the company’s remaining assets while it works on a restructuring programme.
WorldCom’s bankruptcy is twice the size of Enron’s, which filed for bankruptcy, amid an accounting storm, in December last year.
At the same time, its collapse is not likely to affect US internet networks.Worldcom owns almost 30% of the biggest net cables in the US but the company expects to keep these wires operating while it refinances its business.
In June 2000, WorldCom’s network suffered an outage that meant delays for traffic right across the US portion of the internet, sparking fears that if the company did shut down then the internet would slow dramatically.
But according to Peter Williams of Silicon Valley-based analyst DataWatch, even if finance for the company failed there is now more than enough spare capacity to soak up the data needs.
‘There is a huge glut in bandwidth capacity in the world and even if Worldcom were out of the picture completely it would not be enough to dent that over supply,’ Williams said.
He also said it was unlikely that Worldcom’s receivers would shut down any of the network as it was the company’s biggest asset.
‘I know we saw that happen with the recent closure of KPNQuest, but it is unlikely to happen in this case where the company is likely to get bankruptcy protection and carry on trading,’ Williams said.
Even in the case of KPNQuest, customers were given a month to switch providers so it had the minimum amount of impact, he added.
‘You do not tend to see black holes opening up,’ said a spokeswoman for the London Internet Exchange (Linx) – where the UK’s net service providers swap traffic.
‘Networks do not just disappear,’ she said. ‘They tend to run until someone takes over that particular network.’
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