MCI faces customer wrath after failures

Many customers say that MCI WorldCom has not handled the crisis well--to the point where some are considering quitting existing contracts or installing their own back-up systems to guard against future failures. This sentiment bodes ill for MCI WorldCom, which has focused its business plan on serving corporate needs.

"This has been enough to sour the relationship to the point where I would not want to go back to a carrier in the course of an entire career," said Glenn Seidman, director of technical services for Complus Data Innovations, a New York-based network company that serves police departments and municipal governments. "We have plans to bid out our service."

MCI WorldCom's response to the situation stands in stark relief to AT&T's quick reaction to a similar outage last year. In that case, CEO C. Michael Armstrong held a conference call with customers, taking full responsibility and personally assuring customers of a quick fix.

By contrast, senior MCI WorldCom executives have made no public statement on the outage, which shut down automatic teller machines, slowed or stopped traffic on many business networks, and even closed some operations at the Chicago Board of Trade.

An MCI WorldCom spokeswoman did say that senior management had been involved in "one-on-one" discussions with customers, and a Board of Trade spokeswoman confirmed that MCI WorldCom had been in contact with Board executives.

Nevertheless, it appears that the messages relayed in these discussions weren't consistent, and in some cases, were simply inadequate. Customers complain that the company gave inconsistent messages about the scale of the problem, and--as it has progressed--have been vague about solutions.

"Everyone I've talked to has a different story on this," said Rich Malone, an analyst with Vertical Systems Group, a research firm with a substantial client base using MCI WorldCom's frame-relay technology. "No senior executives were available, in some cases they haven't even provided details on the extent of the problem...These are items that need to be explained to the public."

The Board of Trade was one of the first and most prominent companies to go public with its concerns. In a letter to its customers released on its Web site yesterday, the company said it already was concerned about its data service, and had even been assured by the company that performance would improve--just days before the outage.

"This prevented thousands of customers and traders from accessing the market for five days," said Katherine Spring, a Board of Trade spokeswoman. "We anticipate a certain level of technical glitches. But this was unacceptable."

The Board of Trade isn't the only MCI WorldCom customer that has had trouble in recent months.

"This is not MCI WorldCom's first frame-relay network problem. It has been getting progressively worse for the last several months," said Sean Donelan, a senior network architect with Data Resarch Associates, a St. Louis-based company that provides networking support for libraries. "I think these events have strengthened our decision to select a different frame-relay supplier."

Who's down, how long
The system outages, which began last Thursday and continue today, are centered in MCI WorldCom's frame-relay data network, which has been one of its fastest-growing data businesses.

Frame-relay technology is similar, but not identical, to technology that transmits information over the public Internet. Data is broken up into individual "packets," which are then sent along a network and reassembled once they reach their destination.

The technology is widely used by businesses that need fast, efficient data connections. About 30,000 businesses in the United States use the systems, creating a $5 billion annual market, according to the Vertical Systems Group.

A MCI WorldCom spokeswoman said the outages affected 15 percent of the company's network, but close to 30 percent of the company's frame-relay customers.

"We're bringing people back up one by one," said spokeswoman Linda Laughlin. "We're trying to reestablish connectivity as fast as we can."

The companies have traced the problems to a scheduled upgrade for Lucent Technologies' software and hardware, which directs and transports data traffic inside a network.

"We're definitely looking at glitches in our software," confirmed John Callahan, a Lucent spokesman. The company has a team of engineers working with MCI WorldCom to try to determine why the software upgrade caused the problems, he added.

As of midday today, the companies had not determined why the software upgrade caused the system failure. The software at fault is used by other Lucent customers and has to date worked without problem, Callahan said.

At the end of 1998, Lucent held about 37 percent of the frame-relay market, Malone said. Their market share has climbed since then, but new estimates will not be available for several more weeks, Malone added.

For its part, MCI WorldCom controls about 20 percent of the frame relay market. Whether it is able to build on that share depends greatly on how it handles this week's crisis. AT&T's quick management of its problems last year cost it less than 2 percent of its customers, Malone said.

Customers are already beginning to seek compensation for downtime, and some are reporting that MCI WorldCom sales account representatives are not being helpful.

The company said earlier in the week that any compensation would be determined by the terms of individual contracts, but has since retreated from that statement.

"Those issues haven't been discussed yet," Laughlin said today. "We're still trying to get connectivity back up." The company does not have an estimated time when service will be back to normal for all customers, she said.