August 17, 1999
MCI Points Finger at Lucent for Recent Network Woes
Free Service Is Offered to Make Amends
By SETH SCHIESEL
fter one of the AT&T Corporation's big data networks, based on
equipment from Cisco Systems Inc.,
failed last year, AT&T fully restored
the system in about 24 hours.
After a similar network run by
MCI Worldcom Inc., based on equipment from Lucent Technologies Inc.,
began having problems on Aug. 5, the
system was not fully restored until
Sunday, 10 days later.
In his first public comments on the
breakdown, in a conference call Monday, Bernard J. Ebbers, MCI
Worldcom's chief executive, said
that MCI Worldcom planned to offer
each of the as many as 3,000 customers who were affected by the problems up to 20 days of free service.
He
said it would cost his company only a
"very, very slight downtick" in revenue.
But the fallout for MCI Worldcom,
the nation's No. 2 long-distance communications carrier, may extend far
beyond the next quarterly financial
report.
Ebbers tried to shift ultimate
responsibility for the problem to Lucent, and Lucent -- which sells MCI
Worldcom hundreds of millions of
dollars worth of products every year
-- accepted it. Some of MCI Worldcom's own customers, however, have
been scathing in their attacks on the
company. And some analysts pointed
out that the network debacle raised
unflattering questions about MCI
Worldcom's policies for handling
such situations, especially in light of
AT&T's speed in dealing with a similar problem last year.
Calling the problems "unacceptable" and describing as "hollow"
MCI Worldcom's assurances last
week that the problem was under
control, Thomas R. Donovan, president of the Chicago Board of Trade, a
big MCI Worldcom customer, wrote
in a letter to Ebbers on Friday:
"As a result of MCI Worldcom's failure to deliver on their promises to
me early last week, the C.B.O.T. is
pursuing all available remedies. We
have lost all confidence in MCI
Worldcom's ability to provide reliable service."
In yesterday's conference call,
Ebbers apologized to his customers
and said any additional compensation beyond the 20 days of free service would be negotiated privately
with individual customers.
But he
essentially disavowed responsibility,
saying the problem was related to an
upgrade of Lucent's software.
"We do not have a definitive cause
of the problem," he said. "That is
something that Lucent continues to
work on. Lucent has acknowledged
full responsibility." He added: "Because we do not as a company -- and
no one else in the industry does either -- write software for this type of
switch and network, that it is not
something within our power, to determine the exact cause of the problem."
Ebbers thanked the network
experts from Lucent and its Bell
Laboratories unit who worked on the
problem, but later in the call he took
a serious swipe at Lucent, wondering
aloud whether the company even employed the right people.
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An unusual airing of
the long-distance
industry's dirty
laundry.
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"Part of the reason that there is
some concern here is that there has
been a lot of consolidation in our
industry and this software was originally developed by Cascade Communications, who was then acquired by
Ascend Communications, who has
since been acquired by Lucent," he
said. "And so one of the concerns
obviously in this cycle of events is
what happened to the people and the
process that did the development
and wrote the software. And was the
capability to maintain this software
retained through these transactions?"
That might sound somewhat obtuse, but for the telecommunications
industry those are very harsh words.
Communications carriers generally
refuse to discuss their vendors at all,
yet Ebbers publicly questioned
whether Lucent, which spent $20 billion of its stockholders' money to
acquire Ascend earlier this year, has
been managing that deal correctly.
Lucent took the high road, accepting responsibility, as indeed it should
if its software was at fault.
Still, some analysts said that in the
end, MCI Worldcom had to bear responsibility for allowing the problem
to continue for as long as it did. After
trying for more than a week to fix the
problem (or to have Lucent fix it)
while the network remained online,
MCI Worldcom threw in the towel
this past weekend by shutting down
the whole system and reloading an
older but more stable software version.
But that raises the hard question
of why MCI Worldcom waited almost
a week and a half to make that
decision. In one way, the choice was
easier for AT&T because it had an
almost complete failure; that allowed AT&T to limit the length of the
crisis by reloading the proper software. MCI Worldcom spent all of last
week betting that it could fix the
problem without shutting down, and
it lost that bet.
"When you delay something this
long, this is not a vendor problem,"
said Frank Dzubeck, the president of
Communications Network Architects, a networking analysis and consulting firm in Washington. "Somebody in the organization made the
decision to let this situation linger.
What does the song say? Sometimes
you've got to hold 'em, sometimes
you've got to fold 'em. This was a
great time to fold 'em, cut your
losses and move on."
