FCC: WorldCom Services Wont Go Dark

Meanwhile, the FCC is probing for similar fraud at other carriers.

As increasingly bad news flows daily from the nations largest telecommunications carriers, top telecom cop Michael Powell asked Congress today for more authority to prevent telephone and Internet service interruptions. Powell also told lawmakers that the sector will not recover economically without a restructuring among service providers, but he refused to tip his hand on whether he would approve a merger between a distressed long distance carrier, such as WorldCom Inc., and a Regional Bell Operating Company.

Federal Communications Commission (FCC) Chairman Powell appeared before the committee of senators who oversee his agency this morning, where lawmakers sought assurances from him and from executives of WorldCom, Global Crossing Ltd. and Qwest Communications International that the countrys major networks wont go dark.

"I am confident that we are not facing a crisis in the provision of service stemming from this [WorldCom] bankruptcy," Powell told senators. The FCC chairman said that he had had discussions with WorldCom creditors, lenders and senior executives, as well as with government agencies, which are major WorldCom customers, and he believes that there is no imminent threat of service disruption.

However, Powell said that he does remain concerned about whether other carriers have committed the kinds of deception WorldCom is charged with. The FCC has opened an initiative to re-examine other carriers data and may require some to recertify their filings. Without naming names, Powell said that most of the telecom carriers under scrutiny today are the ones who were most aggressive in pursuing Internet-related business.

The Communications Act of 1934 authorizes the FCC to prevent common carriers, such as traditional local and long distance telephone companies, from discontinuing service before providing notice to customers and regulators, but Powell asked the Senate Commerce Committee today to extend his authority unequivocally to include less conventional telecommunications providers, such as Internet backbone providers and cable companies.

Because the FCC historically has had little occasion to promote its policies before bankruptcy judges (as telcos generally were regulated monopolies), questions remain with regard to the intersection of communications law and bankruptcy law. Although the commission has been fairly successful so far in preventing major service disruptions from bankrupt companies that fall outside the traditional common carrier designation, Powell said he was concerned that bankruptcy judges would not always understand the FCC position.

"One of real struggles we often have is were trying to get blood from a turnip," Powell said, adding that bankruptcy judges often first seek ways to stop companies from bleeding resources during the restructuring. "Fortunately to date we have usually been able to wrestle these situations to ground."