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WorldCom Scandal To Boost Telecom Prices


Prices are likely to rise by as much as 15% as telcos try to improve their bottom lines, according to one analyst.

By John Rendleman
InformationWeek
July 15, 2002 12:00 AM

The first aftershocks of the WorldCom scandal are reverberating through the telecom industry. Prices are likely to rise by as much as 15% as telcos try to improve their bottom lines--"a pretty good thing for the industry," Gartner analyst David Neil says. Low rates have driven vendors' margins so low that they fueled the industry's instability and contributed to WorldCom's problems.

"The old maxim applies, that you get what you pay for," he says. Because there will be fewer vendors, "telecom prices aren't going to continue to drop," says Ken Harvey, CIO at Household International Inc., a consumer credit company in Prospect Heights, Ill. Household just installed voice-over-IP phone systems at all 1,500 U.S. locations, which consolidates its traffic and saves about $3,000 a month at each location.


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