Luring commercial customers from WorldCom, which had US$20 billion in revenue from business clients last year, is an attractive option for AT&T, but many WorldCom customers are locked into contracts that they cannot easily escape.
Some fear a nightmarish possibility: that WorldCom and the rest of what Johnstone calls telecom's "living dead" -- companies reorganizing under Chapter 11 -- emerge from bankruptcy, relieved of their crushing debts and hungry enough for customers to cut prices sharply.
With the Baby Bells gearing up to offer service to business customers, AT&T must capitalize on problems of its rivals. That is particularly true with WorldCom, many of whose customers are a good fit for AT&T's voice and data service services. Business customers are less profitable for telecommunications companies than are residential ones because of the higher capital investment needed to give businesses what they need. But after deducting the depreciation and amortization costs associated with buying equipment, businesses offer slightly wider profit margins. Most important, business services offer some prospect of renewed growth.
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