Broadbandits: Inside the $750 Billion Telecomm Heist / Edition 1

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Overview

Broadband (noun):–High-speed network access.

Broadbandit (noun):–One who padded his coffers by $50million or more riding the bandwidth bubble.

Before the ink was even dry on the Telecommunications Act of1996, a telecom bubble larger than that of its dot-com sister wasquickly beginning to form. With the deregulation of the telecomindustry finally complete, the race was on; and what ensued wasnothing less than a financial hit and run, which left thetelecommunications industry in shambles and investorsbroke–but made the broadbandits who led this charge richbeyond their wildest dreams.

Broadbandits: Inside the $750 Billion Telecom Heist goes behindthe scenes to uncover the actions and motivations of a handful ofmen and a few dozen companies who worshipped at the altar ofcorporate greed–and for the most part got away with it!Through interviews with numerous industry insiders and real-worldstories, investigative reporter Om Malik follows the money trail toreveal the events that all but destroyed an industry and decimatedthousands of portfolios in the process.

Broadbandits offers a candid look at how fiber barons such asBernie Ebbers of WorldCom, Gary Winnick of Global Crossing, and JoeNacchio of Qwest turned simple light and glass fibers into veins ofgold that allowed them to build enormous personal fortunes, even astheir companies were going down in flames. You’ll be there towatch as eager venture capitalists and unknowing investors try tobuy their piece of the American Dream–only to get burned byonce high-flying companies such as Excite@Home, Winstar, McLeodUSA,Nortel, and Sycamore.

Broadbandits puts you face-to-face with the shamelessindividuals who used the hype and hysteria of the telecomrevolution to pump up telecom stocks and line their ownpockets–even when there was little evidence to substantiatetheir claims. You’ll learn how the former pied piper of thetelecom industry, analyst Jack Grubman, played both sides of thefence to make millions, while pundit George Gilder’spie-in-the-sky predictions transformed him into a cult hero, untileverything came crashing down on him.

The broadband bubble was the result of over-blown expectationsand irrational exuberance. Broadbandits provides an inside look atthe financial schemes and misguided power plays that made victimsout of everyone and brought an industry to its knees.

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Editorial Reviews

From the Publisher
The latest in an increasingly popular string of works analyzinganother burst bubble, this book takes on the demise of the telecombroadband industry. The author, formerly a writer at Red Herringand now an editor at Forbes, focuses on the individuals andcorporations involved in some of the most egregious hypes andheists of the telecom industry. The individuals profiled includeBernie Ebbers (WorldCom), Phil Anschutz (Qwest), Gary Winnick(Global Crossing), Jim Crowe (Level 3 Communications), Ken Rice(Enron), Alex Mandl (Teligent), John Doerr (Excite@Home). TeddyForstmann (Forstmann, Little & Co.), Jack Grubman (SalomonSmith Barney), John Roth (Nortel), Gururaj Deshpande and DanielSmith (Sycamore Networks), and Vinod Khosla (Cisco). This is alively work, though edging toward overblown, which delights indishing the dirt on some once high and mighty industry giants. Byproviding background and details, however, it helps the readerconnect individuals with corporations and gives insight into thetangled web that has now almost completely unraveled. Purchasewhere there is interest. Susan Hurst, Miami Univ. Libs., Oxford,OH (Library Journal, June 15, 2003)

"...This book offers a scathing analysis and a riveting readíavery readable book...it's a must read" (The Inquirer, 19June 2003)

Lenette Crumpler, a former employee of Frontier Communications,lost $86,000 of her 401(k) money. Paula Smith worked most of herlife at US West and then lost her life's savings of $400,000 afterQwest took over US West.
How and why did these employees find themselves in such anoutrageous situation? To find the answer, Om Malik burrowed deepinside the so-called broadband bubble — the colossal build-out ofcommunications networks that accompanied the technology andinvestment boom of the late 1990s.
He unearthed copious evidence of what he dubs, "broadband bandits"— businessmen who took full advantage of the telecom bubbleto line their own pockets even as their companies collapsed.
The result was "Broadbandits," a book that tells the whole sordidstory of the dishonest men who profited from the broadband boom.The author, a senior writer at Business 2.0 magazine, provides aclear, sober account of what he calls' 'the robber barons of theinformation age" —and how they pulled off one of the biggestheists of all time.
Some $750 billion vanished when the telecom bubble burst, Malikwrites. More than 100 companies went bankrupt and an equal numbershut down, leaving up to 600,000 telecom industry workers withoutpaychecks.
"The biggest bubble in the history of the modern world was not thedot-com bubble but the telecom bubble," the author writes.
Some of the industry insiders Malik cites as culprits are GlobalCrossing's Gary Winnick, WorldCom's Bernie Ebbers, QwestCommunications' Joe Nacchio, Salomon Smith Barney telecom analystJack Grubman, Enron Broadband Services' Ken Rice, and Lucent'sRichard McGinn.
To understand the unscrupulous insiders who got rich on an industrybuilt on light and fiber, one must first understand the broadbandbubble. Malik writes that about 80.2 million miles of optical fiberwas installed in the United States from 1996 through 2001. Thatmeans about three-fourths of the installed base of 105 millionmiles was put in place in just six years.
What's even more stunning is that the vast majority of this cableis not even used today amid the colossal fiber glut that hasemerged from years of overbuilding. As Malik points out, "the worldis crisscrossed with fiber that is unlikely to be used fordecades."
The whole complicated situation began with the TelecommunicationsAct of 1996. The act was meant to increase competition in the onceclosed-off telephone industry and to help create new companies. Thecapital markets caught wind of this new technology revolution andbasically threw money at anything or anyone connected with this newopen telecom market. Along with deregulation of the telecom market,demand for bandwidth skyrocketed.
These conditions set the stage for the broadband bubble. Malikwrites that' 'the broadband bubble and the dot-com bubble resultedfrom overblown expectations and irrational exuberance."
This book is the story of the unsavory businessmen who benefited ascompanies collapsed and rank-and-file employees saw their lifesavings and retirement funds dissipate.
The saddest part of the whole story is that these men basically gotaway with their greedy corporate maneuverings while many of theirloyal employees had their lives turned upside down by the downfallof the companies they worked for.
The financial shenanigans of the telecom executives and insidershave become the stuff of legends.
For instance, Gary Winnick of Global Crossing took in $735 millionwhile the company was blowing through $15 billion in investormoney, eventually ending up as the fourth-largest bankruptcy casein U.S. history.
Then there's stock analyst Jack Grubman, who had buyrecommendations on 20 telecommunications companies. Twelve are nowbankrupt and the others are on the brink. Grubman himself pocketed$100 million and has been barred from the securitiesindustry.
The exploits of the companies are no less staggering. Sometimes itseemed as if common sense had completely blown out the window. Forexample, Lucent acquired 21 companies between September 1997 andJuly 2000, spending a staggering $43 billion. CEO McGinn was firedin October 2001. His severance package was $12.5 million and histotal take' 'for reducing Lucent to shambles" was about $38million, Malik writes.
The author clearly exposes the mismanagement and wrongdoings ofthese individuals and companies. He relentlessly pursued them inhis research and interviews, peeling back the layers of misconductto reveal the shocking greed and dishonesty so prevalent as thebroadband bubble grew bigger and bigger.
The bubble finally burst, creating a huge mess for all but theexecutives who took care of themselves.
The book is fascinating and well-written. Lay people willappreciate the way Malik cogently analyzes the tumult intelecom.
This book enables even those who have never read a stock marketreport in their life to understand exactly what happened and whythe broadband bubble—and its demise—were so stupendous.(San Jose Mercury News, July 20, 2003)

"...a compelling account of the downfall of the telecomgiants..." (Dunstable Gazette, 6 August 2003)

Library Journal
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 Copyright 2003 Reed Business Information.
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Product Details

  • ISBN-13: 9780471434054
  • Publisher: Wiley
  • Publication date: 5/23/2003
  • Edition description: First Edition
  • Edition number: 1
  • Pages: 352
  • Sales rank: 1,403,641
  • Product dimensions: 6.18 (w) x 9.18 (h) x 1.14 (d)

Meet the Author

OM MALIK is a Senior Writer for Business 2.0 in San Francisco.Prior to joining Business 2.0, he worked for Red Herring and ForbesOnline, where he was a senior editor. An award-winning journalist,his work has also been published in newspapers and magazines suchas The Wall Street Journal, Forbes, Brandweek, and CrainÕs NewYork Business. For a very brief while, he was a venture capitalist.

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Table of Contents

Broadbandits: The Most Wanted List.

Prologue.

PART I: THE FIBER BARONS.

1. Bernie’s Bad Idea.

2. Rocky Mountain High.

3. Once a Junkie, Always a Junkie.

4. Billionaire versus Billionaire.

5. The Attack of the Clones.

PART II: THE MILE NIGH CLUB.

6. Fresh Prince of Hot Air.

7. Nobody@HOME.

8. Teddy Gets Taken to the Cleaners.

9. The House (of Cards) that Jack Built.

PART III: THE LIGHT KNIGHTS.

10. Canadian Rhapsody.

11. The Dan and Desh Show.

12. Just an Illusion.

13. The Swami of the Broadband Boom.

Epilogue: The End Game.

Acknowledgments.

Appendix A: Cash & Carry.

Appendix B: Bank Balance Buildout.

Notes.

Index.

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Customer Reviews

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Sort by: Showing all of 2 Customer Reviews
  • Anonymous

    Posted May 5, 2004

    Highly Recommended!

    If you¿ve even glanced at your retirement account balance or brokerage statement in the past few years, you no doubt have felt the effects of the broadband bubble. Less publicized than the tech wreck of 2000, the broadband meltdown was every bit as costly. Journalist Om Malik gathers the varied tales of telecom shenanigans anddf then adds up the stock sales so you can see just how much the broadbandits took. Malik¿s engaging and vitriolic writing style is fun to read, and he makes the intriguing assertion that the telecoms outdid the dot-coms in terms of sheer greed and gall. We suggest this book to any investor who hopes not to get burned, and to any executive responsible for safeguarding shareholder value.

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  • Anonymous

    Posted October 18, 2003

    What, if any, role did the author play in the banditry?

    An obvious question. Forbes ran a lot of stories about Gilder, and the Herring had details and color, but not much negative.

    Was this review helpful? Yes  No   Report this review
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