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MCI, Nortel attempt to allay users' doubts about stability

N+I attendees worry about ethics, support

May 17, 2004 12:00 PM ET

Computerworld - LAS VEGAS -- At NetWorld+Interop last week, MCI Inc. and Nortel Networks Ltd. both tried to put their financial problems behind them and get on with business as usual. But they continued to be dogged by concerns among users about their business practices and their ability to provide reliable customer service.
The concerns were voiced after MCI CEO Michael Capellas and Malcolm Collins, president of enterprise networks at Nortel, delivered separate keynote addresses at N+I. Each company also used the conference to detail plans for IP-based conferencing products, with MCI announcing a technology partnership with Microsoft Corp. and Nortel disclosing a similar deal with Polycom Inc.
But MCI, which emerged from bankruptcy protection in April, also said last week that it plans to lay off 7,500 workers after losing $388 million in the first quarter.
Meanwhile, Nortel is being investigated by securities regulators in both the U.S. and Canada for possible accounting improprieties, and three weeks ago the company fired its CEO and two top finance executives (see story). On Friday, Nortel disclosed that a federal grand jury in Texas has issued a subpoena seeking accounting records and other documents as part of a criminal investigation by the U.S. attorney's office in Dallas (see story).
Some users at N+I said they are still behind MCI's network services and Nortel's networking equipment, despite the revelations. But several others weren't so sanguine.
For example, Fred Gratke, assistant vice president of telecommunications at The Burlington Northern and Santa Fe Railway Co. in Fort Worth, Texas, said MCI's accounting problems and latest layoffs have made him nervous about the vendor's customer service capabilities.
"Mr. Capellas should pay attention to reliability and should not ignore existing customers as MCI finds new business," Gratke said. He added that despite MCI's emergence from bankruptcy, he is "still not very confident" about the company and has no plans to expand the level of voice and data services that the railroad gets from MCI.

Fred Gratke of Burlington Northern and Santa Fe Railway
Fred Gratke of Burlington Northern and Santa Fe Railway

Gratke said BNSF uses several other telecommunications carriers for most of its voice and data traffic, but it has an agreement to give MCI rights of way for burying optical cable along railroad lines in return for network bandwidth.
Ethics Concerns
Carl Schneider, systems manager at Gray & Co. in New Orleans, said he's gathering information from Nortel and other vendors on setting up a voice-over-IP (VoIP) system for the insurer's 14 branch offices.
But Schneider said he's worried about business ethics at Nortel in light of the executive firings and the ongoing government investigations. "It troubles

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