The real con in WorldCon
WorldCom replaced engineering with financial engineering, and paid the price.
‘We are a digital communications company made up of thousands of people from all over the world. The kind of people who live for technology.’
That’s what the ‘About WorldCom’ section of the WorldCom website still says (1). WorldCom people live for IT, not for corrupt accounting practices.
The sad part about this is that it’s true, in a way. WorldCom people don’t quite live for IT; right now, they want new jobs. But at this very moment, thousands of WorldComers are wrestling with the company’s enormous global telecommunications network. They will be trying to maintain service for multinational corporations, as well as for the FBI and the US intelligence services – both big customers of WorldCom.
You can bet that keeping up operations is not the first thing on the mind of Bernie Ebbers, WorldCom’s disgraced ex-CEO. But if Ebbers, his greed and his yacht have so far dominated discussion on WorldCom, that doesn’t mean that they were the real problems with the company. An orgy of regulation in accounting matters is no guarantee against future WorldComs.
The real con that WorldCom reveals is that, far from living for technology, the corporate world now lives for finance. It now prefers innovation in financial engineering to innovation in old-fashioned engineering. The way in which WorldCom itself evolved shows this.
Like many IT firms, WorldCom began life in the 1960s with a heavy orientation to financial services. It pioneered the sending of communications in packets (the units in which data is transmitted on the internet), and so went on to help retailers conduct point-of-sale and credit-card transactions.
In those days, American IT firms had a real commitment to innovation. When MCI, which WorldCom took over in 1996, attacked ATT in 1969 by establishing a private telecommunications service between Chicago and St Louis, it did so with a whole new technology – microwave transmission. As late as 1983, MCI was launching America’s first nationwide email service, as well as building 150,000 miles of fibre optic cable.
But WorldCom forgot about such traditions. Transactions became a substitute for technological daring, as management dropped everything to gobble up more companies.
In the 1990s, WorldCom laid a lot of undersea cable to complete its global network. It made some fatter telecommunications pipes, which worked faster. By the time it bought MCI, its partner was into ‘Friends and Family’ marketing scams in residential services. The intrepid days of putting microwave transmitters on top of hills and mountains were long gone; no substantial breakthroughs were made.
Today, WorldCom says its priorities are in web hosting, virtual private networks and web-based call centres – not a very inspiring portfolio. Just as General Motors has come to be described as a pension fund with a car assembly arm on the side, WorldCom is a failed deal-making machine with a telecommunications network as a footnote.
WorldCom was creative with the accounts, but not so creative when it came to shuffling electrons. And with more regulation around the corner, other IT firms are now likely to focus on putting their books in order, rather than boldly going where no man has been before.
Footnotes and References
(1) See the About WorldCom section of the WorldCom website
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Robert Furchgott – discovered that nitric oxide transmits signals within the human body
Barry Marshall – showed that the bacterium Helicobacter pylori is the cause of most peptic ulcers, reversing decades of medical doctrine holding that ulcers were caused by stress, spicy foods, and too much acid
N Joseph Woodland – co-inventor of the barcode
Jocelyn Bell Burnell – she discovered the first radio pulsars
John Tyndall – the man who worked out why the sky was blue
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Rosalyn Sussman Yallow – development of radioimmunoassay (RIA), a method of quantifying minute amounts of biological substances in the body
Jonas Salk – discovery and development of the first successful polio vaccine
John Waterlow – discovered that lack of body potassium causes altitude sickness. First experiment: on himself
Werner Forssmann – the first man to insert a catheter into a human heart: his own
Bruce Bayer – scientist with Kodak whose invention of a colour filter array enabled digital imaging sensors to capture colour
Yuri Gagarin – first man in space. My piece of fandom: http://www.spiked-online.com/newsite/article/10421
Sir Godfrey Hounsfield – inventor, with Robert Ledley, of the CAT scanner
Martin Cooper – inventor of the mobile phone
George Devol – 'father of robotics’ who helped to revolutionise carmaking
Thomas Tuohy – Windscale manager who doused the flames of the 1957 fire
Eugene Polley – TV remote controls
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