It seemed like a great deal at the time.

Last year, start-up phone company E.spire Communications told Pete Fishman that his Atlanta accounting firm could save a lot of money on local, long-distance and Internet services. He switched to E.spire only to suffer through sudden price increases. Then the Herndon, Va., company filed for bankruptcy protection.

It was a pain for Fishman and his five employees. He figured he had learned a lesson. He chose his next phone company because it, too, offered him a better price than BellSouth. But this time, Fishman went with a name he'd known for years: WorldCom.

"It was a big company," Fishman said. "We thought our troubles were over."

Instead, Fishman and the heads of other small companies are thinking about an escape from WorldCom.

Last week, WorldCom announced it had disguised $3.8 billion in expenses. The No. 2 long-distance company is under investigation for fraud and seems a stone's throw from bankruptcy. On Wednesday, a federal judge appointed a former head of the Securities and Exchange Commission as a WorldCom monitor, telling him to "look into every nook and cranny" of the troubled company.

Fishman was already having problems with WorldCom before last week's bombshell announcement.

Billing problems started almost immediatelyafter he signed up. Fishman estimates he has been overbilled by $211 a month since January.

Things have only gotten worse since WorldCom announced its accounting error and began laying off thousands of workers -- including 450 in metro Atlanta.

Fishman can't get his WorldCom sales representative to return calls. He doesn't even know whether the guy still is employed.

While he's exploring all options, Fishman, for now, is staying put. "We're not really having problems with our connections at this point," he said.

"If we have a question about our bill, it may take it a year to get resolved, instead of a month," said the accountant. "But that's no different than dealing with the government."

Others aren't as patient.

The day after WorldCom unveiled its troubles, BellSouth signed up about 20 percent more small-business customers than usual for its long-distance service. The increased business has stayed steady for the Atlanta-based Baby Bell, which began offering long-distance service in Georgia and Louisiana in May.

Sprint Corp., the third-largest U.S. long-distance telephone company, says it has lured away one large business customer from WorldCom Inc. and is in talks with three others.

All four companies either used WorldCom or were about to sign agreements with WorldCom for the first time, said Sprint Vice President Mark Bowser. He declined to identify the customers, saying only that they ranked on Fortune magazine's list of the largest 250 companies.

Analysts have predicted that Sprint and AT&T Corp., the biggest U.S. long-distance company, will attract customers as WorldCom struggles.

WorldCom spokeswoman Julie Moore declined to comment on whether the company has lost clients to Sprint. Chief Executive John Sidgmore said Tuesday the No. 2 U.S. long-distance company hasn't had "significant" customer cancellation.

While WorldCom struggles to stay afloat, a former chairman of the SEC will be keeping a close eye on the company.

Richard Breeden, chairman of the SEC from 1989 to 1993, will be a watchdog for the court in the SEC's civil fraud lawsuit against the company. Breeden, who currently runs a company that tries to rescue failing firms, will be paid $800 an hour for the WorldCom work.

His chief duties: to prevent destruction of company documents and make sure employees -- especially top executives -- aren't given massive payouts.

"I'm not there to replace company management," Breeden said. "I'm there to be the eyes and ears of the court."

Before he can assume the job, Breeden must sell roughly 6,000 shares he owns in WorldCom, which closed Wednesday at 22 cents, up 12 cents. The stock once traded above $60.

Meanwhile, a would-be opportunist has begun to circle WorldCom, announcing an unsolicited $5 billion bid to buy the MCI long-distance business and major Internet assets from the company. Based on its current stock price, WorldCom is valued at about $652 million, according to Bloomberg News.

The bid came from IDT Corp., a feisty but much smaller provider of long-distance and other communications services and the parent company of Net2Phone, an Internet-based telephone service.

acj.com

-- Anonymous, July 06, 2002