A US telecommunications company says it will seek letters of credit (L/Cs) or advance payments for providing connection services to troubled telephone companies. Verizon Communications is one of several local telecommunications providers owed tens of millions of US dollars by the failed WorldCom Inc.

Verizon, whose subsidiaries provide local telephone services in the region stretching from Maine to Virginia, is also asking US telecommunications industry regulators, the Federal Communications Commission (FCC), for more flexibility to deal with troubled telecommunications companies

Unpaid bills

Telecommunications providers, including Verizon, had been waiting for an FCC ruling over bills dating back to 1997 that were disputed and remained unpaid by WorldCom when it filed for bankruptcy this year.

Verizon wants the FCC to review the manner and speed with which it approves tariffs. In the meantime at least, Verizon will seek additional security deposits such as L/Cs or advance payments for providing services to companies in a sector in which there has been a widespread loss of confidence in companies' balance sheets.

DC-PRO has already reported that companies in the power sector that up until very recently routinely traded amongst themselves on open account have responded to the Enron bankruptcy by turning to L/Cs to manage trading risks.

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