Investigating the financial fraud and misguided power plays that brought down the telecom industry
Once the foundation of the Dow and NASDAQ, the telecom industry has eaten up more capital than any other industry in recent history and has nothing to show for it. Today, it is by far the worst culprit in the spate of financial dirty dealings that have been splashed across the business pages, and yet the rewards reaped by top executives at many of these failed or failing companies have been inversely proportionate to their decline. Broadbandits takes readers behind the scenes to get the story they won't get in the media. Investigative reporter Om Malik follows the money trail and deciphers the actions and motivations of a generation of new economy "barbarians" that brought down this once lucrative industry. This intriguing book offers an inside look into the telecom bubble, with tales and anecdotes about mavericks who turned simple light and glass fibers into veins of gold, financiers who got greedy and fleeced unsuspecting millions, clueless venture capitalists who thought they'd tapped into the mother lode, hapless entrepreneurs who believed that they were changing the world, and self-proclaimed pundits who were cheering it all on from the sidelines. Broadbandits is a compelling account of the downfall of telecom giants such as WorldCom and Global Crossing, and will show readers how many telecom upstarts and veterans alike became victims of what one chief executive aptly described as "high-yield heroin."
Om Malik (New York, NY) is a Senior Writer for Red Herring who focuses on the telecommunications sector. Prior to joining Red Herring in July 2000, he was senior editor at Forbes.com. His work has also been published in newspapers and magazines such as The Wall Street Journal, Business 2.0, Brandweek, and Crain's New York Business. For a very brief while, he was a venture capitalist.
The latest in an increasingly popular string of works analyzing another burst bubble, this book takes on the demise of the telecom broadband industry. The author, formerly a writer at Red Herring and now an editor at Forbes, focuses on the individuals and corporations involved in some of the most egregious hypes and heists of the telecom industry. The individuals profiled include Bernie Ebbers (WorldCom), Phil Anschutz (Qwest), Gary Winnick (Global Crossing), Jim Crowe (Level 3 Communications), Ken Rice (Enron), Alex Mandl (Teligent), John Doerr (Excite@Home). Teddy Forstmann (Forstmann, Little & Co.), Jack Grubman (Salomon Smith Barney), John Roth (Nortel), Gururaj Deshpande and Daniel Smith (Sycamore Networks), and Vinod Khosla (Cisco). This is a lively work, though edging toward overblown, which delights in dishing the dirt on some once high and mighty industry giants. By providing background and details, however, it helps the reader connect individuals with corporations and gives insight into the tangled web that has now almost completely unraveled. Purchase where there is interest. ?Susan Hurst, Miami Univ. Libs., Oxford, OH
The Inquirer, 19 June 2003...
"...This book offers a scathing analysis and a riveting read?a very readable book...it?s a must read"
San Jose Mercury News, July 20, 2003...
Lenette Crumpler, a former employee of Frontier Communications, lost $86,000 of her 401(k) money. Paula Smith worked most of her life at US West and then lost her life's savings of $400,000 after Qwest took over US West.
How and why did these employees find themselves in such an outrageous situation? To find the answer, Om Malik burrowed deep inside the so-called broadband bubble -- the colossal build-out of communications networks that accompanied the technology and investment boom of the late 1990s.
He unearthed copious evidence of what he dubs, "broadband bandits" — businessmen who took full advantage of the telecom bubble to line their own pockets even as their companies collapsed.
The result was "Broadbandits," a book that tells the whole sordid story of the dishonest men who profited from the broadband boom. The author, a senior writer at Business 2.0 magazine, provides a clear, sober account of what he calls' 'the robber barons of the information age" —and how they pulled off one of the biggest heists of all time.
Some $750 billion vanished when the telecom bubble burst, Malik writes. More than 100 companies went bankrupt and an equal number shut down, leaving up to 600,000 telecom industry workers without paychecks.
"The biggest bubble in the history of the modern world was not the dot-com bubble but the telecom bubble," the author writes. Some of the industry insiders Malik cites as culprits are Global Crossing's Gary Winnick, WorldCom's Bernie Ebbers, Qwest Communications' Joe Nacchio, Salomon Smith Barney telecom analyst Jack Grubman, Enron Broadband Services' Ken Rice, and Lucent's Richard McGinn.
To understand the unscrupulous insiders who got rich on an industry built on light and fiber, one must first understand the broadband bubble. Malik writes that about 80.2 million miles of optical fiber was installed in the United States from 1996 through 2001. That means about three-fourths of the installed base of 105 million miles was put in place in just six years.
What's even more stunning is that the vast majority of this cable is not even used today amid the colossal fiber glut that has emerged from years of overbuilding. As Malik points out, "the world is crisscrossed with fiber that is unlikely to be used for decades."
The whole complicated situation began with the Telecommunications Act of 1996. The act was meant to increase competition...
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