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The View From the Bottom

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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.

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.

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.
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Mark Donald
Contact: Mark Donald

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