News Briefs: SBC, Williams Communications Wrangle Over Master Agreement

Posted: 10/2002

News Briefs
SBC, Williams Communications Wrangle Over Master Agreement

-- Josh Long

AS IT WAS ON PACE to emerge from bankruptcy, Williams Communications Inc. found its largest customer, SBC Communications Inc., was seeking the legal authority to terminate or alter a Master Alliance Agreement. The modification or dissolution of the agreement would give the No. 2 local phone company the right to haul its long-distance traffic over other networks -- jeopardizing the future of Williams Communications.

Williams Communications announced in late July, after reaching an agreement to secure a $150 million investment through New York-based diversified holding company, Leucadia National Corp., it was on target to emerge from bankruptcy by Oct. 15. However, the agreement with Leucadia could fall apart if the Master Alliance Agreement is broken.

SBC argues that when Williams Communications spun off from parent The Williams Companies in April 2001, the spin-off represented a change in control. Under the Master Alliance Agreement between SBC and Williams Communications, SBC may terminate or modify the 20-year agreement if a change in control takes effect.

Williams Communications denies the spin-off represented a change in control. "WCL (Williams Communications LLC, the operating company) is and was owned, in its entirety, by the debtor, WCG (Williams Communications Group, the company that filed for bankruptcy last April), the company said in a court filing. "Thus no direct ownership changed as a result of the spin-off."

Williams Communications also told the court an SBC representative sitting on the company's audit committee board approved the spin-off. Specifically, Ross Ireland, who was appointed by SBC, and two other audit committee members, voted March 26, 2001, in favor of the spin-off and recommended it to the Williams Communications board of directors. Moreover, SBC had 180 days under the MAA agreement to reserve its right to claim there was a change in control, but the company took no action, according to Williams Communications. SBC responds that neither Ireland nor anyone representing SBC agreed to the spin-off. "SBC did not grant consent to the spin-off at any point in time," according to a court filing.

A court hearing to consider whether the spin-off constituted a change of control was delayed. The matter could be taken up the date of confirmation of the reorganization plan scheduled for Sept. 25.

* Gordon Martin, executive vice president of global wholesale markets, Qwest Communications International Inc., has resigned after being with the embattled company less than a year.

Patricia A. Engels, a former senior manager at global information technology services giant EDS Corp., is assuming Martin's post.

While serving as EDS's president of business process management, Engels directed the day-to-day operations of a $3.2 billion unit that included more than 25,000 employees, Qwest said Friday. Prior to joining EDS -- a company that posted $21.5 billion in revenue last year -- Engels served as president and CEO of directory operations for SBC Communications Inc.

Engels is replacing a telecom veteran who had been on the job only nine months. Martin left AFN Communications Inc. as CEO to join Qwest.

Qwest said Martin "has decided to pursue other opportunities." The company declined further comment.

The Association of Communications Enterprises, a trade organization representing service providers and vendors, elected Martin as chairman in May. ASCENT representatives could not be reached for comment.

* Paul Aiello was named vice president of sales and marketing for Florida-based wholesaler Progress Telecom. Aiello spent eight years with Williams Communications, where he held various executive positions, including vice president and general manager; vice president, national accounts/outsourcing and vice president, strategic and government accounts. Most recently he was vice president of sales. He previously held management positions at Intecom Inc., RCA Telephone Systems, HCI Technologies, and NEC Telephones Inc.

* Verizon Communications Inc. is asking to get off the hook for $8 billion it may owe the federal government for spectrum licenses auctioned by the FCC. The licenses in question were seized by the FCC from carrier's carrier NextWave Telecom Inc. NextWave, which filed for Chapter 11 bankruptcy protection in August 2001, having not paid the FCC about $4 billion for the licenses. The FCC then seized the licenses and re-auctioned them. Thirteen carriers won the seized licenses in bids that totaled nearly $16 billion. A federal appeals court ruled the FCC did not have authority to seize the licenses. The U.S. Supreme Court is expected to hear oral arguments from NextWave this year and could issue a ruling by early next year on whether the carrier has the right to retain the licenses, an FCC spokeswoman said.

If the Supreme Court reverses the lower court's decision, the companies would be required to come up with billions of dollars within 10 days of the decision, said Verizon Wireless spokesman Jeffrey Nelson.

* Abiliti Solutions has completed a BillingCentral ASP implementation for Midwest wholesaler US Signal Co. Designed specifically for wholesale network service providers, BillingCentral incorporates Abiliti's business-rule based Rate IT for guiding, rating and complete event record management and its NetworkStrategies system for billing in an ASP delivery model.