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Net needs fatter pipes - WorldCom

WorldCom Inc. Chief Operating Officer John Sidgmore sounded the alarm about crowded Web pipelines, warning the technology needed to solve the problem doesn't yet exist.
Written by Lisa M. Bowman, Contributor

Sidgmore told analysts at a NationsBanc Montgomery Securities Conference Wednesday that demand for Internet bandwidth increased by 1,000 percent in the last year, compared with voice bandwidth, which grew by only 8 percent.

"There has never been an industry that I know of that's seen the kind of growth rate you're seeing here," said Sidgmore, whose company has become one of the major players in the telecom industry. "This is a frightening level of growth."

And WorldCom (WCOM) knows all about growth-it's now the fourth-largest long-distance carrier in the U.S., and is about to leapfrog two places by acquiring No.2 MCI. On March 11, shareholders from both companies are going to vote on the planned merger of the two companies, which will mark the largest marriage in corporate history. Each MCI share will be exchanged for $51 in WorldCom stock.

As far as bandwidth goes, Sidgmore said the increased demand so far has only been due to new Internet subscribers. "We haven't seen any impact from audio or video," he said.

Eventually, Sidgmore predicted, technologies such as complex corporate applications, interactive voice, and multicasting will drive bandwidth demand through the roof.

To solve this problem, the industry needs to create faster, more cost-effective routers, switches, and fibers, he said.

He also predicted a new Internet pricing structure that's similar to traditional phone service, including charging higher prices to connect longer-distance locations.

Sidgmore said telecommunications companies that link with Internet firms-as WorldCom has done several times in the past year; for example, with its purchase of UUNet-will land on top.

"The winners 10 years from now will be different than the winners you see today," he said.

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