The View From the Bottom

What's it like surviving the telecom bust? Numbers alone don't tell the story.

Telecom companies just got ahead of the rest of us and thought that everyone would continue to upgrade infrastructure and buy the next killer application--the next big thing that would cause the industry paradigm to shift and make them the most efficient, the most technologically advanced, the coolest. It didn't help that telecom vendors saw business orders skyrocket because of Y2K angst, charting their business futures based on this once-in-a-millennium anomaly. It didn't help that the phenomenal 30 percent annual growth in the wireless phone industry began to level off. Or that the next killer app didn't happen. Or that September 11 did.

Until the first round of layoffs at Nortel, "everyone was in denial," Jenkins says. "The downturn was so huge and so sweeping and so fast, no one wanted to believe it." They chose to think it was a mild adjustment. Department after department, however, was getting downsized, right sized, optimized--first the deadwood, then the inexperienced, then the nonessential. A paralysis seized employees who were at once terrified of being laid off yet fearful of being the last one out the door. "There are a dwindling number of jobs out there, and those who got laid off first were at least better positioned to compete for them," Jenkins says.

Most of the CLECs he worked with were filing for Chapter 11 bankruptcy protection. "It didn't take a rocket scientist to figure out they couldn't afford to pay me to sit around and do nothing." He didn't want to leave Nortel, but he figured he had little choice.

After three successive layoffs, telecom engineer Ted Woods hit bottom, moving into The Samaritan Inn, the only homeless shelter in Collin County.
Mark Graham
After three successive layoffs, telecom engineer Ted Woods hit bottom, moving into The Samaritan Inn, the only homeless shelter in Collin County.
A "for lease" sign outside telecommunications giant Nortel Networks serves as a nagging reminder of hard times in Richardson's Telecom Corridor.
Mark Graham
A "for lease" sign outside telecommunications giant Nortel Networks serves as a nagging reminder of hard times in Richardson's Telecom Corridor.

In mid-July 2001, he secured a job in the Dallas office of a Denver telecom consulting firm listed in the Denver Business Journal as fastest-growing private company in Colorado. Six weeks later, his entire group at Nortel was "optimized."

He considered himself one of the lucky ones--at least, he did then.

It was February 4, 2000--his 10-year wedding anniversary--and John Bennett just couldn't do it anymore. He couldn't keep all the pieces of his life in place: his full-time job at Alcatel as an international marketing manager, his part-time Web-hosting business, his rigorous MBA class schedule at Southern Methodist University, his family. His wife, Laura, agreed to support his decision to get another master's degree on two conditions: that they would not go into debt and they would stay married. But he was seldom home. Even when he was home, he was never there--not the way he needed to be for his family.

It wasn't enough that he held undergraduate degrees in electrical engineering, music and German, or that he had received a master's of telecommunications from Michigan State University in 1996. To get to the top of the telecom food chain, he figured he needed an MBA. Times were good when Plano-based DSC Communications, a telecom equipment provider, offered him financial assistance to attend grad school, a perk and one of the reasons he decided to work for the company in the first place.

The job market was hot; he had his choice of offers, but DSC was competing fiercely for European carriers, and Bennett's fluency in German and desire to travel clinched his decision. He became a project manager, eventually pushing DSC's wireless infrastructure in both Germany and France. "I was in my element," he says. "The telecom industry was exploding and DSC was hiring 80 to 100 new employees a week."

To become a dominant player in their market, telecom companies set upon a feeding frenzy of mergers and acquisitions. Aggressive WorldCom gobbled up 50 or so smaller long-distance companies and merged with MCI, acting on the questionable assumption that two companies together could operate more efficiently than they could separately. "Everyone was buying up everyone, paying way too much and taking on far too much debt," Kroder explains. "We were blinded by our 'irrational exuberance.' Many of the executives running these companies had never even seen a downturn." Wall Street rewarded these mergers by inflating stock prices, but these valuations didn't reflect how hard it was to merge two corporate cultures with differing styles and infrastructures.

In 1998, Paris-based Alcatel, enhancing its presence in the Telecom Corridor as well as eliminating a tough competitor, bought out DSC Communications. Alcatel soon began consolidating operations, combining departments and ridding itself of product lines, all of which heightened a sense of insecurity among its employees and made John Bennett's decision that much easier. He quit his job, devoting his energies to getting his MBA. He did it to save his marriage, his family and himself.

SMU would be expensive, but he and his wife were never big spenders, and in the end he would be more marketable to the telecom sector with master's degrees in both telecommunications and business. Because his Plano home had a manageable mortgage and he had no outstanding debt, he didn't panic. He still had two small revenue streams: his side Internet business and the occasional church performance where he would sing and sell his Christian contemporary CDs.

A deeply religious man, he was convinced God would provide. So would the career placement center at SMU, he hoped.

Five years at Fujitsu, a company Woods loved, and comes the beginning of the telecom implosion, and he is out of a job. Maybe he should have dealt with it better, not pushed his feelings down so deeply, but he was too preoccupied with finding another job, particularly with the added responsibility of being a new father. Being in the first round of cutbacks in 2000 turned out to be a good thing; within days, he was employed at MCI-WorldCom as a "long-distance engineer," but he says he could tell from the start that the second-largest phone carrier in the nation was being dangerously mismanaged.
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