f going under because SO many of its data customers had closed their doors. By mid-March, the Securities and Exchange Commission began an inquiry into MCI WorldCom's accounting practices. On April 30, Ebbers resigned as CEO. And on June 26, the com- pany announced that it would be reducing its reported 200I and 2002 year-to-date earnings before interest, taxes, depreciation, and amorti- zation by more than a third because of inappropriate capitalization of network operating expenses. The company also announced that its CFO had been fired and its controller had resigned. On July 21, 2002, MCI WorldCom, which had once had a market value of $180 billion, declared bankruptcy. MCI WorldCom's admission cast a pall of suspicion over the entire industry. Investors, tired of dealing with complexity, fled in the face of all the uncertainty. Our public stance was relatively muted as we took the high road, careful not to look as if we were exploiting another company's misfortune. And frankly, some of us worried that people who live in glass houses shouldn't throw rocks. Who knew what hon- est mistakes lurked in the thousands of financial records we had filed during our serial acquisitions, divestitures, and bond and share offer- ings?'s Fallout of Fraud As the full extent of MCI WorldCom's fraud was uncovered, we began to realize just how devastating it had been to Armstrong's strategy. Put Tough Calls simply, between 1999 and 2002, MCI WorldCom had cut its prices by about $10.6 billion to maintain the revenue growth rate on which its stock price depended, and it inflated its earnings by the same amount to maintain the illusion of dramatically greater efficiency than the in- dustry leader, AT&T. MCI WorldCom's competitors had no choice but to match the new prices it had introduced. Consumers can change long-distance carriers with one phone call, and about two million AT&T customers switched every month. On the business side, a small army of independent consultants pores over the contracts that AT&T must file with the FCC. Th