Payment Woes: WorldCom Partners Worry

"There is definitely uncertainty," said Quy "Q" Nguyen, CEO of Allyance Communications, a master agent in Newport Beach, Calif. WorldCom channel executives have been unable to respond to payment questions, he said.

Solution providers, who asked to remain anonymous, said that in some cases WorldCom owes several months' worth of back commission payments.

"[Solution providers get screwed, that's the technical term for what can happen," said one network services executive familiar with the WorldCom situation.

WorldCom filed Chapter 11 bankruptcy July 21 to protect it from accelerating creditor claims while company executives attempt to restructure and renegotiate outstanding debt, said John Sidgmore, WorldCom president and CEO, during a press conference last week.

WorldCom can now renegotiate existing channel contracts, which is causing a good deal of anxiety among WorldCom partners, said another network services executive. "WorldCom can say, 'Based on the current business climate, we can't pay you your commissions. Sorry,' " he said.

Although this executive and others pointed out that WorldCom could choose to pay its partners money owed, the general feeling is one of caution.

Artie Bellini, president of Connectwise, a Tampa, Fla., solution provider, is recommending carriers with a more stable track record. "We're looking at AT&T and Verizon, people like that," he said.

Still, Allyance's Nguyen, whose company also has stopped recommending WorldCom, pointed out that many companies are still confident in the carrier. For example, Allyance is completing a voice contract that was implemented prior to the Chapter 11 filing for a "large hardware manufacturer," he said.

In addition, solution providers believe that WorldCom's Uunet backbone,the largest in the country,will stay operational, regardless of the carrier's ultimate fate. "I don't think the government will let [the Uunet backbone go away, but whether it stays with WorldCom is another question," said Phil Lagestee, general manager at Gemini Associates, Irvine, Calif. "WorldCom services the military and several federal agencies. Too many pieces of the government are relying on that [connectivity."

In addition to calling partners to reassure them that WorldCom's network will be operational, WorldCom channel executives are also fielding inquiries regarding the departure of Paul Fiore, director of WorldCom's reseller channel. Fiore left to take a position at Radware, Mahwah, N.J. Brad Wise, vice president of channel development and sales, is assuming his duties, said a WorldCom source.