The View From the Bottom

Ted Woods became an installer at Fujitsu, tearing out antiquated copper lines and replacing them with fiber-optic cable. Much of what he learned, he learned on the job, which was fine with Woods, who considers himself a hands-on guy who drove himself harder than any boss might have demanded. "Because I didn't have a college degree, I had a lot to prove," he says. "I would work 15-hour days. Since the military, I've never needed much sleep." Driven by changing technologies and the thrill of competing within a Japanese corporate culture that honored structure as much as he did, he worked his way from installer to technician to engineer, from $8 an hour to $15 an hour to $80,000 a year. On the job by 5:30 a.m., he ate three meals a day at his desk, mostly fast food from the nearest Sonic. He gained nearly 100 pounds as his weight ballooned to 270.

The life had its perks, most of which came in the form of toys. Not ready to buy a house, he says, he spent his money on a new Lexus for his wife, a new Ford pickup for himself. Then there was the bass boat and the flat-bottomed boat and the Jet Ski and the motorcycle and the dirt bike. And the sophisticated home office that kept him wired to work. He stored his whole business life on his laptop, every e-mail and voice mail, every work order and memo. "I guess you could say I am obsessive about detail," he says.

Headhunters would call him almost daily, searching for engineers to fill the burgeoning demands of the boom. They tried to lure him with the promise of stock options and salary hikes at companies such as Enron and Qwest and WorldCom. But for him, it was always about the work. "I was the happiest I have ever been at Fujitsu," he recalls. "I wanted to stay there the rest of my life."

Fujitsu would have other plans.

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No matter that Fed chairman Alan Greenspan had warned as early as 1996 that an "irrational exuberance" had seized U.S. markets and inflated stock prices. No matter that the Internet's rate of growth peaked in 1999, never realizing its predicted exponential expansion. No matter that the Dot-com bubble burst in March 2000 after Wall Street realized that e-commerce was not immune to the laws of profit and loss. A month later, Walter Jenkins would sign on with Nortel Networks, despite its ambitious commitment to the Internet. "There were still a lot of dot-com millionaires out there," he says. "Nortel [like so many] was betting the farm that the Internet would be the way to do business in the future." With service providers borrowing heavily to build out networks, Nortel stood ready to provide them with all the bandwidth they needed.

Jenkins had been working as the chief operating officer for a small telecom-consulting firm, but took a pay cut to join Nortel. "I figured I would be exchanging dollars for job security in a large company." He came heavily credentialed and thick with experience, working in the Dallas IT industry since his first job at Texas Instruments in 1980. "I moved here for a girl [whom he would marry and divorce], and computer programming was the only job I could find where I could make a decent wage," he says. Jenkins was making far more than that--$145,000 a year--at the consulting firm, building a comfortable life for himself, his second wife and children ("Three of mine, two of hers, one of ours," he says). His four-bedroom home and three cars were modest by Plano standards, but they created enough debt for him to jump at Nortel's offer after the consulting firm closed its doors because of irreconcilable differences between its partners.

At Nortel, he worked with a new breed of telecom service providers called CLECs (competitive local exchange carriers) that were created by the Telecommunications Act of 1996 to compete with the ILECs (incumbent local exchange carriers, mostly the old Baby Bells). Congress figured competition had worked so well for long-distance carriers, sparking innovation and lowering rates, that it could do the same for local phone service. Hundreds of carriers seized on this opportunity, which granted them the rights to use the incumbents' phone lines to compete for new customers. The business possibilities seemed limitless.

"Nortel was positioning themselves to be the dominant supplier to the CLEC industry," Jenkins says. "New carriers needed the kind of equipment that Nortel manufactured to build out their networks." Not only did investment capital pour into CLECs, Nortel and others would underwrite generous loans to them, selling them millions of dollars in fiber and switches on credit. "It just crossed the line of common sense," Jenkins says.

Problem was, the demand for CLECs' services never materialized. "What had worked for long distance didn't work for local service," Kroder says. "Incumbents like Southwestern Bell had lots of satisfied customers, and the CLECs, unlike long-distance start-ups, couldn't offer a cheaper product. The economies of scale just weren't there." The result was massive business failures, bankruptcy and a glut of repossessed and unused telecom equipment back on the market at bargain prices. Telecom equipment manufacturers were stuck with bad debts, stagnant inventories and big losses.