You Want the Truth?
October 22, 2008
This post is part II in a series on telecommunications forbearance and getting on the bandwagon.
If you want the truth, here it is: Most asset-light competitive CLECs started out all having the same business plan — targeting a 12% market share in each market by colocating, renting, #5ESS switching, UNE-P, UNE-L, etc. If you have 30 competitors in the same market, all with the same business model, the odds of capturing a 360% market share is illogical. In addition, few will admit it, but back in the 1990s, the CLEC fantasy was to build out with a #5ESS and rent — look like an ILEC and be acquired by a long distance carrier for doing so. Well, who would have predicted the collapse of all the major long haul carriers that were consolidated by the ILECs and blessed by the United States government? Perhaps, just perhaps, if a few Wall Street experts thought a little longer term, that maybe recommending company stocks that actually owned local fiber optic infrastructure, that built it out slowly and selectively, were a better bet than 30 look-alikes vying for 12% market share. I must be nuts; Wall Street can’t get past a 90-day horizon, so my conjecture is a pure indication I am off my meds today. In assuming any type of long term fiduciary duty on the part of Wall Street — is insane.
What some more truth? Investor experts of the 1990s flocked to celebrity-like CEOs and CFOs that showed up with a CLEC plan. The majority of these CEOs and CFOs came from the long haul or old CAP business with great claims to fame. The truth is, running a local metropolitan network, in any form, is 10 times more costly and complex than any form of long haul or CAP networks. Many of these CEOs and CFOs gorged themselves on investors’ cash while they were in reality getting on the job training at shareowners expense. Pick any CEO that went bankrupt… you will see what I mean. Check out any of their current resumes – they won’t say they went bankrupt, they will use the word “acquired.” Though having your assets or business “acquired” in bankruptcy is a small detail they leave out. Yet, the insanity continues. Why the hell would anyone hire a CEO or CFO that destroyed a company and lost everything while doing the lemming waltz with Wall Street? Strangely enough, it happens. I guess if you didn’t destroy shareholder value, you are not “experienced” enough for Wall Street.
Still more to come on this topic. I’m pacing myself…
Is Dave right on or do you think he’s missed the mark? Tell him so. Shoot him an email or give him a piece of your mind below in the comments section.
Written by Dave Rusin - Telecom Executive
Posted by admin | Filed Under American telecom, Fiber bandwidth, Forbearance, Telecom broadband, Telecom bubble, Telecom news, Telecommunications companies, Telecommunications industry, Trends + telecommunications, Trends in telecommunications
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