MCI says outage fixed

Ebbers apologizes for failures, promises client compensation

August 17, 1999|By Mark Ribbing | Mark Ribbing,SUN STAFF

In an effort to draw the curtain on an embarrassing and prolonged failure, MCI WorldCom Inc. said yesterday that its data-network problem has been solved and that customers harmed will be compensated.

In a conference call with reporters and analysts, MCI WorldCom President and Chief Executive Officer Bernard J. Ebbers apologized for the difficulties, which he said affected approximately 3,000 customers.

Calling the 10 days of outages and slowdowns "a very difficult time for the company and, more importantly, for some of our customers," Ebbers said the system was back in service after it was shut down and retooled over the weekend.

"By [Sunday] afternoon, we have stabilized the network and restored services to the customers that have been impacted," Ebbers said.

The Clinton, Miss.-based company said customers will get two days of free service for each day they were hit by the network problems, which have been traced to software provided by Lucent Technologies Inc.

Lucent did not participate in the conference call. William T. Price III, a spokesman for the Murray Hill, N.J., telecommunications-equipment company, read a carefully worded statement in which Lucent accepted responsibility for "the issues that occurred during the installation of our software on MCI's network."

Price said it was not yet clear if MCI WorldCom's problems were due to a glitch in the software itself, or to problems in its installation, which Price said was carried out jointly by MCI WorldCom and Lucent personnel.

"We haven't identified the exact root cause," the Lucent spokesman said.

Ebbers said MCI WorldCom was still investigating the performance of the software on the affected network.

Cataclysmic outages

"It's not within our power to determine the exact cause of this problem," Ebbers said. He declined to say if MCI WorldCom will sue Lucent.

Jennifer Pigg, an analyst with the Yankee Group in Boston, said MCI WorldCom's difficulties demonstrate that no matter how much attention communications companies pay to securing their wires and other physical infrastructure, they still have a huge vulnerability -- the software that runs the increasingly complex and busy networks.

"It's virtually impossible to test these software loads on a fully scaled network prior to rollout. You'll never catch all the glitches," Pigg said. "You have to expect software outages, and software outages can be cataclysmic."

Ebbers said that while MCI WorldCom will experience a "very, very slight downturn in revenue," he added that the company expects to meet the forecasts for its quarterly and yearly financial reports, and that no customers have abandoned the company over the recent error.

Chicago Board of Trade President and Chief Executive Officer Thomas R. Donovan, who has criticized MCI WorldCom for outages that affected the exchange, sent a letter to CBOT members yesterday in which he called the weekend shutdown "a drastic measure, highlighting the severity of MCI WorldCom's customer service plight."

Donovan added that MCI WorldCom "appear[s] to have taken an important step toward resolving their problem."

Provider to libraries

The CBOT's financial manager, Katherine Spring, said the exchange had no comment on MCI WorldCom's compensation plan. "We are still reviewing courses of legal action, as well as our relationship with MCI as a provider," Spring said.

Another business affected by the problem was St. Louis-based Data Research Associates Inc., which provides Internet access and other technological assistance to libraries. "It was very sporadic. Sites would go up, sites would go down. The network-engineering people were beside themselves," said DRA Vice President Joe Bonwich.

Bonwich said the company had yet to evaluate the compensation offer or decide on whether to take legal action. "We just don't have a clear-enough handle as to what the potential damage is," he said. "Nothing like this has ever happened before, an outage of this length. There's no precedent."

MCI WorldCom's head of network services, Ron Beaumont, said it was about 10 p.m. Eastern time Aug. 5 when the company discovered problems on one of its four main networks.

In order to boost the amount of traffic and services it could carry, MCI WorldCom had been working for nearly a month to install the new Lucent software on the network, which carries data traffic. The company's other three main networks use a different kind of software and were not affected.

Starting at noon Eastern time Saturday, MCI WorldCom shut down the faulty network for about 24 hours, reinstalling the old Lucent software. Ebbers said the company will use the old software "for the foreseeable future."

MCI WorldCom's stock slipped 25 cents yesterday to close at $78.4375.

Ebbers wondered aloud about whether the endless round of telecommunications industry takeovers and acquisitions might have somehow contributed to the error. He said the software used on the network had been developed by Cascade Communications Corp., which in 1997 was bought by Ascend Communications Inc., which was in turn taken over by Lucent this year. "Was the capability to maintain the software retained through these transactions?" Ebbers asked.

Some might see such musings as a little ironic, given that Ebbers built little WorldCom Inc. of Jackson, Miss., into a telecommunications powerhouse by buying one company after another, capping his campaign in 1997 with the announcement of the $37 billion purchase of the No. 2 long-distance company, MCI Communications Corp.

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