Opinion: Will Capellas resurrect telecom?

The recent appointment of Hewlett-Packard's ex-No. 2 exec, Michael Capellas, to run WorldCom Inc. may breathe life into the rather exhausted notion of computing and communications convergence. It also points the way to a possible resurrection of the telecom industry through the ministrations of a seasoned IT executive.

For years, voice over IP and easy-to-configure, high-security VPNs have been touted as the next wave of innovation, along with exotic enterprise services such as video-on-demand from the likes of WorldCom. Instead, it delivered innovative accounting, with US$9 billion in fraudulent bookkeeping and $40 billion of debt.

To be successful, Capellas will have to split himself in two, donning his green accounting eyeshade to reassure investors, bondholders and creditors that all's well on the finance side while also wearing a clean-room smock to assure customers he can deliver the technology they want.

That won't be easy. Telecom is mired in a deep depression, and customers remain gun-shy of new, potentially expensive technology.

Capellas has signaled that one of his first tasks will be to set up an advisory board of 10 to 12 of WorldCom's largest customers. The test will be whether he uses it to really grapple with customer issues and drive changes that move WorldCom's focus from voice to data services.

The goal should be to find the right mix of services to make the IT network more than a hodgepodge of overlapping dependencies. The new CEO needs to deliver a reliable, high-speed network backbone married to IT necessities at prices that make sense in today's economy -- for customers as well as for WorldCom.

These efforts will be for naught if the advisory board is merely window dressing for customer grievances.

Capellas has also vowed to reorganize WorldCom's sales teams, taking a direct interest in their accounts and procedures. This should also boost morale and perhaps spruce up telecom's image as a sector that delivers technology services to enhance vital business functions rather than a marketing machine that knows only how to slash prices and undercut competitors. WorldCom has got to start showcasing world-class technology, not quick PR fixes.

In the coming months, Capellas will come under scrutiny because the biggest question remains: Has he been installed at WorldCom merely to prepare the company for sale, much as he handed Compaq over to HP?

He has said he doesn't want the company shopped piecemeal, but he didn't rule out a complete sale. Let's hope convergence gets another chance at life.

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