Executives' fears have escalated since May, when the pace of disintegration in the telecommunications sector picked up -- particularly in Europe. Some experts say the continent's connectivity woes should serve as advanced warning for what could happen in the United States. The situation appears dire for KPNQwest, a joint venture between Dutch national carrier KPN and Denver-based Qwest. Bankruptcy court trustees have until the end of the day Friday to find a buyer for Europe's largest fibre-optic network, which carries one-quarter of the region's Internet protocol data, or the remaining pieces of the network may be shut down. KPNQwest declared bankruptcy in May, after its founders announced they would not invest more money into the joint venture. The network, which once spanned 18 countries from Finland to Portugal, has seen its market capitalisation sink from $42bn to about $4m. Court-appointed bankruptcy trustees want to sell the network in one chunk to maximise proceeds. But most potential bidders, including US telecom giant AT&T, have backed out. It's unclear what will happen to the assets -- or to Internet connectivity in Europe if the network is turned off. Mid-week, a bulletin appeared on the KPNQwest site saying, "During this week you can already expect outages to happen that we cannot solve any more. At the end of this week we expect that larger parts of the network will be down." Even though most have created elaborate backup plans in case of slowdowns or disruptions, European companies and divisions of foreign companies that rely on KPNQwest are approaching a state of panic, according to Vincent Rais, founder of European telecommunications consulting firm Rais Associates. According to documents filed with regulators and published on its Web site, KPNQwest international customers include Nokia, Dell, Cable & Wireless Service's Exodus, Terra Lycos and National Semiconductor. Executives in North America and Asia are also monitoring the situation for clues to what might happen in case of a similar outage of UUNet's Internet protocol services. Eric Paulak of Gartner Research said in a recent research note that WorldCom customers' fate is "not as dire -- yet" as the fate of KPNQwest customers, but WorldCom's plans to cut 17,000 workers will dent customer service and reliability of the network. Paulak issued bullet points for all WorldCom customers that don't already have extensive contingency plans: * Don't sign contracts for long-term WorldCom services until its financial situation is clearer. * Sign six-month extensions for expiring contracts. * Duplicate and investigate alternative hosts for Web sites hosted by WorldCom or Digex. * Evaluate how a second Internet service provider (ISP) might be used for Internet access and develop a virtual private network. * Where there is no alternative ISP, order back-up dial-up ISDN (integrated services digital network) services for key locations. Many companies have redundant systems or contracts with multiple providers -- despite the cost -- just to protect against this sort of problem. Internet service provider EarthLink, for example, buys network access from WorldCom, Sprint and Level 3 Communications. A spokesman for Hewlett-Packard said the computer giant wouldn't need to offer customers excuses -- even though WorldCom supplies some voice and data services. The company's recent merger with Compaq gave it two independent networks that offer some redundancy should one fail. It has also mapped out plans to redirect voice and data traffic to alternative service providers in case of a sudden WorldCom collapse. "Certainly we've been monitoring the WorldCom situation, as everyone would expect," spokesman Arch Currid said. "We are prepared in the event that WorldCom discontinues its services." Janis L. Gogan, assistant professor of computer information systems at Bentley College in Waltham, Massachusetts, said companies must extend existing contingency plans to incorporate potential telecommunications troubles. Gogan, who also teaches e-commerce strategy at Harvard University, said most Internet-dependent companies bolstered emergency planning to prepare for the Y2K bug and again after the 11 September terrorist attacks. She said it would be unrealistic for e-commerce companies -- particularly cash-strapped dot-coms -- to have 100 percent redundancy to avoid any loss of service in case of an outage. She recommended that companies assess how much money would be lost during an outage -- then determine how much they can afford to leave to chance. E-commerce companies, which perform transactions and customer service online, lose anywhere from $1m per hour to $1m per minute when the power goes off, according to analyst estimates. In one high-profile outage, Seattle-based retailer Amazon.com suffered a series of disruptions during the Thanksgiving weekend in 2000. Investment firm Thomas Weisel Partners estimated that the one 20-minute outage deleted 20,000 product orders and $500,000 in revenue. "Ask yourself, what are the consequences of being down for one hour, one day, one week?" Gogan said. "There really aren't many large companies in this country that would be OK if they were without Internet access for a week. But if you'd have a dramatic loss of revenue or productivity if access was down for one hour, you need a more elaborate plan." "Get creative" with contingencies
Gogan also recommended reviewing the disaster plans for companies or divisions based in India and adopting them for use in the United States and Europe. Offices in India have relatively comprehensive emergency planning, she said, in part because of the higher incidence of weather storms and the country's less reliable power grid. "If you don't already have a contingency plan, you should find one immediately," Gogan said. "It might help to get creative in where you look or how you pull it together." Brian Turley, president of business continuity consulting firm Strohl Systems, recommended companies tap at least two alternatives to any telecommunications vendor they have or are considering. "Establish relationships with those alternative companies and literally let them know that, if anything happens, you'll come calling," Turley said from his office in King of Prussia, Pa. "Clients' sole concern is that their vendor has promised them service and it's not provided anymore. They don't want to hear, 'Hey, it's not my fault.'" News.com's Troy Wolverton contributed to this report.
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