Inside WorldCom's Billing BlundersBy Baselinemag | Posted 2002-03-14 Print
Online update: Can the telecom giant unsnarl its byzantine billing system to soothe customers and the SEC?
Four years after telecommunications giant WorldCom acquired long-distance sibling MCI for $34.7 billion, the company continues to face significant hurdles in providing large customers with a single, accurate bill for its services.
While billing is a challenge for all top-tier telecommunications companiesa situation aggravated by mass mergers and the growing number of Internet, paging, computer and voice services a company can now offersome analysts and business customers say WorldCom, which must bill for $35 billion in annual revenue, gets the dubious honor as possibly the worst offender.
"It's a nightmare," laments a WorldCom sales representative who asked not to be identified. Typically, the representative estimates, clients who spend at least $25,000 a month are overbilled an estimated 75% of the time.
The sales rep says their commissions are also hard to compute and often backlogged because billing is so hard to track. That's why he and some of his colleagues shrugged their shoulders when the company launched an investigation in three of the company's branch offices in February after an order-booking scandal broke in Arlington, Va.
In this case, employees were accused of making more than $4 million by billing for sales already posted by other divisions. The company's counsel told the Wall Street Journal the problem was limited to "a few bad apples," who apparently took advantage of the accounting system.
On March 11, a little more than a month after the commission scandal broke, the Securities and Exchange Commission asked WorldCom for information on its 2000 accounting procedures and loans to officers. The investigation includes examining information relating to sales commissions and disputed customer bills.
For at least one chemical company's technology director, who oversees $4 million in spending annually on voice and data services, WorldCom isn't doing enough. The company gets 200 bills a month written in 30 different formats, and more often than not, they include erroneous charges.
"It's horrible," says the director, who requested anonymity. "I need an army of accountants to go through the bills," that include charges for services from UUNet and CompuServe, both bought by WorldCom.
Casey Letizia, communications manager for a national credit organization, canceled his contract with WorldCom last March and moved to Sprint. "We were billed wrongly," says Letizia, whose company spends $15,000 to $20,000 a month on long distance. "Of course, that's standard."
Robert E. Morrison, president of the Morrison Group, a consulting firm that specializes in helping companies manage telecommunications contracts and does some management work for WorldCom customers, just laughs when he describes the bills he sees going to corporate customers. "The average bill that's five inches thick takes us two hours to understand. WorldCom takes me double or triple that. It's a lot."
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