The great MCI debate

Kevin Werbach, linked to my previous article on MCI and the death of telecom as we know it, and has posted very interesting commentary. In his opinion, there are two holistic points of view on the whole MCI debate.

This is what Kevin has to say.

bq. There are really only two intellectually honest viewpoints about the future of the telecom industry.  Om’s perspective is on one side, where the most thoughtful advocate is Eli Noam of Columbia University.  The argument is that telecom is locked in a deflationary death spiral, which only the stabilizing influence of regulators and oligopolies can avert.

From the way I read my previous post on the MCI debate, it makes a whole different point and discusses the moral issue. I am not discussing the deflationary death spiral and the need for Bells. In fact, I could care less about the Bells.

The point I was trying to make is that MCI nee WorldCom committed a massive fraud, (however simple as some commentators have said, but still a fraud,) and has gotten away scot free for its bad behavior. $750 million in fines is not enough because nearly $50 billion in shareholder equity has been wiped out.

The little guys who entrusted their money to the equally corrupt mutual fund industry are the ones holding the bag. The creditors, large banks and vulture funds have managed to push through this bankruptcy and will be able to recoup their funds quickly enough. The little guy gets screwed one more time.

Nevertheless, trying not to get away from the issue, I like to point out that since AT&T, Sprint, and the Bells did not commit fraud and are paying off their debt as any almost reasonable business entity, why should they suffer from the largesse of justice system. The long term impact of course would be financial upheaval at these companies and can the telecom industry afford that? Your guess is as good as mine. If they slowly die the natural death, so be it. But why accelerate the death spiral by supporting a criminal and fraudulent enterprise.

That was the point I was trying to make.


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