BUSINESSWEEK ONLINE : NOVEMBER 20, 2000 ISSUE
BUSINESS WEEK E.BIZ -- COVER STORY

Better Late Than Never


For years, WorldCom ( WCOM) CEO Bernard J. Ebbers didn't worry too much about how consumers were going to get on the Internet. As AT&T Corp. ( T) and other rivals bet billions on high-speed Internet access for individuals, WorldCom kept focusing on its bread-and-butter corporate customers.

Not anymore. Telecom's cowboy is now preparing to mosey into the consumer Internet market. The idea is to boost the profitability of the consumer business by selling customers speedy Net access and other extras along with their long-distance service. WorldCom has been laying the groundwork for the initiative by providing services to nonpaying customers over the past year in six test markets. For example, it provides high-speed Net access over radio waves to homes in Dallas and digital television over souped-up copper phone wires in Atlanta. Now, WorldCom is planning to go commercial with consumer services in a few markets by yearend.

But Ebbers isn't going to follow AT&T's lead in trying to use the cable television networks to hook people up to the Net. His first effort will be to roll out zippy Internet access over copper phone wires, a technology called digital subscriber lines ( DSLs). That will begin next month. Next year, WorldCom will start commercial sales of ''fixed wireless,'' a service that beams digital bits over radio waves between rooftop antennas. And in 2002, WorldCom will provide a mobile high-speed Internet-access service for laptop computers. The company's Chief Technology Officer Fred M. Briggs, who is overseeing the consumer Net initiative, says WorldCom will spend a total of $10 billion on the effort. ''We'll bundle video on demand, television, and high-speed Internet access into one package,'' says Briggs. ''We'll eventually eclipse the cable [providers].''

Brave words for a company getting started. Excite@Home ( ATHM) says it should have 3 million customers buying its Net access over cable lines by the end of the year, and SBC Communications Inc. ( SBC) expects to have 1 million DSL customers then. But Briggs insists WorldCom can catch up. The company will offer connections as fast as 7 megabits a second, while rivals rarely offer service faster than 3 megabits. These superspeedy DSL lines will allow WorldCom to offer digital TV as well as Net access so fast that people can watch video clips off of Web sites.

Still, the track record of companies trying to provide television over phone lines is spotty. Verizon Communications ( VZ) and others toyed with the idea in the mid-1990s, but abandoned it because of high costs. The only substantial deployment is from Qwest Communications International ( Q), which is providing TV service to about 50,000 homes in Phoenix.

Clearly, Ebbers and WorldCom have miles of ground to make up in the consumer Internet business. Most analysts think the odds are against the company becoming one of the sector's top players. Still, Ebbers has poked his nose up from under his cowboy hat. And he looks ready for a shootout.

By Charles Haddad in Atlanta

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EBIZ Contents for issue dated Nov. 20, 2000


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