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Fiber-optic firm sues WorldCom

Williams Communications sues WorldCom for allegedly failing to honor a promise that guaranteed it capacity on WorldCom's network.

Fiber-optic network provider Williams Communications said today that it has sued WorldCom (WCOM) for allegedly failing to honor a promise that guaranteed Williams capacity on WorldCom's network.

Williams said it signed a contract three years ago when it sold its WilTel network to WorldCom. As part of the deal, Williams retained rights to use a portion of the 11,000-mile network to transport multimedia and Internet traffic, the company said, noting that WorldCom stopped honoring that provision in January after Williams announced it was building its own fiber-optic network.

"While our strategy is clearly supported by building our own state-of-the-art network, the agreement we negotiated more than three years ago just as clearly gives Williams the option of obtaining additional capacity at economical rates anywhere WorldCom has fiber," Howard Janzen, Williams president and chief executive, said in a statement.

The suit, filed in state court in Tulsa, Oklahoma, asks that WorldCom be compelled to honor its agreement. It also asks WorldCom to pay unspecified compensatory damages.

A spokeswoman for WorldCom declined to comment.

WorldCom has come under the scrutiny of a number of regulatory agencies for its proposed merger with MCI Communications (MCIC). In addition to concerns about competition in the long distance market, antitrust investigators are looking into complaints that the $37 billion merger would create a monopoly in the industry that runs the high-capacity network known as the Internet backbone.

Currently, each provider controls only a small portion of the overall network, which carries high volumes of Internet traffic at high speeds. In order to guarantee that traffic moves seamlessly, providers are forced to exchange messages with competitors. Critics of the proposed WorldCom-MCI merger, which is being investigated by the Justice Department, the Federal Communications Commission, and the European Commission, say the delicate balance that current exists will be broken if the merger is allowed to go forward.

Williams said it agreed not to compete with WorldCom in the telecommunications market for three years. The non-compete provision, part of the terms of Williams's sale of its WilTel network to WorldCom, expired in January.