Analysts advise MCI users to stay put - but monitor bills Analysts: MCI won't pull plug

Posted: July 23, 2002

In the wake of WorldCom Inc.'s staggering but expected bankruptcy filing, consumer advocates and industry analysts were confident yesterday that the company's MCI phone network would continue to operate. But they suggested that customers monitor their bills and customer service closely.

MCI is the nation's second-largest long-distance phone company. It has 20 million residential and small-business customers across the country, including in Pennsylvania and New Jersey. The parent WorldCom provides local, long-distance and Internet services to large corporate customers.

"If the consumer chose MCI for a good reason - price, a package that fit [telephone] usage patterns - nothing has changed," said Mark Cooper, director of research at the Consumer Federation of America. "Only when you see something change should you revisit that decision."

Those changes likely would be price increases or eroding customer service, Cooper said. "Over time, if the plan you chose gets more expensive or customer service deteriorates, then you want to switch" to another phone company, he said.

If MCI were to discontinue service, Federal Communications Commission regulations would require the company to notify customers at least 30 days in advance.

WorldCom, which is based in Clinton, Miss., said its bankruptcy would not interrupt service or lower service quality. But the company announced last month that it was slashing 17,000 jobs.

Cooper said the cuts likely would worsen customer service. "If you have half as many operators, it will take twice as long to get your call answered," he said.

Ken McGee, an analyst at Gartner Inc., a Stamford, Conn., technology research company, said WorldCom's quality of service was already fairly poor. He said none of the three biggest long-distance companies - which include No. 1 AT&T Corp. and No. 3 Sprint Corp. - gets high customer-service marks, but Gartner's clients complain most about WorldCom.

McGee said fewer workers also mean that phone outages that occur on WorldCom's network could last longer. "Because of layoffs, there will be a longer duration for outages, because you need humans to attend to them," he said.

MCI customers who wish to switch to another phone company can do so immediately. Usually, the switch can be made the same day with a phone call to the new company. The change is done electronically.

It's a seemingly simple process, but some customers have experienced changeover delays and double billing.

"The handoff is not smooth," Cooper said. "The notion of cooperating to give up a customer is alien to these guys."

Competitors say they have been receiving calls from WorldCom customers for several weeks. The inquiries began last month when WorldCom disclosed that it hid more than $3.8 billion in expenses.

"We certainly are getting more calls from customers, and we're opportunistic in contacting customers," AT&T spokeswoman Eileen Connolly said. She said it was too soon to know how much new business AT&T had received due to WorldCom's troubles.

Fiberlink Communications Corp., a small Blue Bell company that competes with WorldCom in offering certain Internet services, is trying to take advantage of WorldCom's predicament with new print ads it began last week.

"We're seeing a number of inquiries coming in from [existing] customers and prospective customers," said Skip Taylor, vice president of product marketing.

MCI would not say how many customers have left because of the troubles, but it is giving incentives to large-business customers. For instance, new customers and those who renew their multi-year contracts this month are being offered a customer-satisfaction guarantee. After six months, if customers are not satisfied with their service, they can cancel without penalties.

MCI is waiving the first month's bill for some new residential customers who sign up for the Neighborhood-calling plan, which bundles local, toll and long-distance calls for a monthly flat rate. That rate varies by state, ranging from $49.99 to $59.99.

Analysts said federal regulators likely would keep WorldCom operating because so much of the nation's business and 20 different federal agencies rely on the company's telephone and Internet networks. More Internet traffic flows over WorldCom's network than any other.

"There's a huge vested interest by the government to keep WorldCom a viable entity," McGee of Gartner Inc. said. "Otherwise, disruption to business would be catastrophic."

Contact Wendy Tanaka at 215-854-2752 or wtanaka@phillynews.com.

If you are considering changing local and long-distance telephone service, these Web sites offer price comparisons:

www.lowermybills.com

www.

comparelongdistancerates.com

http://abtolls.com

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