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AGIS sues WorldCom over Net service

In another volley at WorldCom, AGIS files an antitrust suit charging the telecom firm with providing shoddy service to eliminate competition.

In another volley aimed at WorldCom, Internet backbone provider AGIS has filed an antitrust suit charging the telecommunications firm with providing shoddy service to eliminate competition.

The suit, filed in U.S. District Court in southern Michigan, seeks a preliminary injunction requiring WorldCom to honor a contract it signed with AGIS, which is the fourth largest carrier of Internet traffic. It comes amid a series of other challenges to WorldCom, including a suit GTE filed last week attempting to block WorldCom's proposed $38 billion merger with MCI Communications.

"WorldCom has intentionally canceled, delayed, and otherwise interfered with the [services it promised AGIS], specifically with the contract between AGIS and AGIS's customers," the court filing alleges. Damages "have cost and will continue to cost AGIS loss of revenue, pecuniary losses, compensatory losses, loss of goodwill, and further damages in excess of $50 million." Although AGIS in January invested $260 million in infrastructure from Qwest Communications, it still relies on WorldCom to provide services to some of its customers.

WorldCom also has come under fire from the Justice Department, the European Commission, and consumer advocate Ralph Nader's Consumer Project on Technology. They allege that if Jackson, Mississippi-based WorldCom, which is the No. 1 carrier of Internet traffic, is allowed to merge with MCI, the No. 3 Internet carrier, the merged company will move some 70 percent of all Net traffic.

"We think there's very serious concern about potential dominance of the Internet backbone market," Sprint vice president of law David Eisenberg said in March about the proposed merger.

Representatives from WorldCom were not immediately available for comment.

Jason Delker, a spokesman for AGIS, said the suit did not directly take aim at the merger but that as WorldCom's competition has shrunk, it has deliberately provided less reliable service to AGIS. "WorldCom is trying to prevent us from being a competitor by offering poor performance," he added.