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Broadbandits: Inside the $750 Billion Telecom Heist
Investigating the financial fraud and misguided power plays that brought down the telecom industry Once the foundation of the Dow and NASDAQ, the telecom industry has eaten up more capital than any other industry in recent history and has nothing to show for it. Today, it is by far the worst culprit in the spate of financial dirty dealings that have been splashed across the business pages, and yet the rewards reaped by top executives at many of these failed or failing companies have been inversely proportionate to their decline. Broadbandits takes readers behind the scenes to get the story they won't get in the media. Investigative reporter Om Malik follows the money trail and deciphers the actions and motivations of a generation of new economy "barbarians" that brought down this once lucrative industry. This intriguing book offers an inside look into the telecom bubble, with tales and anecdotes about mavericks who turned simple light and glass fibers into veins of gold, financiers who got greedy and fleeced unsuspecting millions, clueless venture capitalists who thought they'd tapped into the mother lode, hapless entrepreneurs who believed that they were changing the world, and self-proclaimed pundits who were cheering it all on from the sidelines. Broadbandits is a compelling account of the downfall of telecom giants such as WorldCom and Global Crossing, and will show readers how many telecom upstarts and veterans alike became victims of what one chief executive aptly described as "high-yield heroin." Om Malik (New York, NY) is a Senior Writer for Red Herring who focuses on the telecommunications sector. Prior to joining Red Herring in July 2000, he was senior editor at Forbes.com. His work has also been published in newspapers and magazines such as The Wall Street Journal, Business 2.0, Brandweek, and Crain's New York Business. For a very brief while, he was a venture capitalist.
352 pages, Hardcover
First published May 15, 2003
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Displaying 1 - 8 of 8 reviews
August 3, 2024
A CRITICAL INDICTMENT OF WORLDCOM, GLOBAL CROSSING, QWEST, ETC.
Om Malik is a journalist and writer for Business 2.0. He wrote in the Prologue to this 2003 book, "The pages that follow tell the stories of a handful of men, a few dozen companies, and a culture that worshipped at the altar of greed... This is the story of insane optimism, astonishing selfishness, and a series of colossal failures to obey the tenets of Econonics 101." (Pg. xvi)
He observes, "Even as they were cashing out their own holdings, the executives at these broadband companies encouraged employees to put their 401(k) dollars into company stock. And since the employees had nary a clue about these shenanigans, they complied and are now ruined... while the robber barons of the information age sit in their Florida mansions, their Bel-Air palaces, and enjoy life on board their million-dollar yachts. The robber barons of a century ago at least created industries of lasting value. But the modern-day robber barons used bankruptcy protection laws, lined their pockets, and walked into the sunset..." (Pg. ix)
He notes that WorldCom "had been borrowing like there was no tomorrow and spending it like a drunken sailor." (Pg. 27) For Global Crossing, "The message coming out of the executive chambers was that anything goes and money is no object. People were spending money like drunken sailors, according to insiders... No one was shy about flaunting his personal wealth." (Pg. 75-76) But ultimately, WorldCom "had the dubious distinction of being the biggest bankruptcy in the history of America, even bigger then Enron. But more than that, the company would admit that it committed an accounting fraud, which at last count misstated revenues by about $9 billion." (Pg. 197)
Of Northern Telecom, he states, "Like rats deserting a sinking ship, Roth decided to retire in May 2001, and Clarence Chandran cited personal and health reasons for his own resignation. Today, Nortel is on life support, a pale imitation of its former self." (Pg. 233) But earlier, then and similar companies were "prompted [by] a culture of here-and-now investing, and no one considered even for a minute that the boom could ever come to an end." (Pg. 269)
He notes ironically, "For almost five years in the 1990s, when it came to broadband, George Gilder was god... Once a celebrated author who was worth $1,000 dollars a minute, he is now dismissed as a mere stock tout and a televangelist with a dead religion... He has lost his multimillion dollar empire and former adoring fans. Like the companies he once passionately championed, Gilder is now staring down the financial abyss." (Pg. 275-276)
He concludes, "Greedy chief executives undermined the American market free market system by stuffing their coffers; Wall Street encouraged the management of broadband companies to adopt short-term metrics; and investors simply played along. And the little guys just got slaughtered. The greedy chief executives who failed upwards should be penalized, and I would not shed a single tear if any one of them is sent to the big house. They deserve it." (Pg. 291)
This is a fascinating and critical summary of this often forgotten era of corporate crime.
Om Malik is a journalist and writer for Business 2.0. He wrote in the Prologue to this 2003 book, "The pages that follow tell the stories of a handful of men, a few dozen companies, and a culture that worshipped at the altar of greed... This is the story of insane optimism, astonishing selfishness, and a series of colossal failures to obey the tenets of Econonics 101." (Pg. xvi)
He observes, "Even as they were cashing out their own holdings, the executives at these broadband companies encouraged employees to put their 401(k) dollars into company stock. And since the employees had nary a clue about these shenanigans, they complied and are now ruined... while the robber barons of the information age sit in their Florida mansions, their Bel-Air palaces, and enjoy life on board their million-dollar yachts. The robber barons of a century ago at least created industries of lasting value. But the modern-day robber barons used bankruptcy protection laws, lined their pockets, and walked into the sunset..." (Pg. ix)
He notes that WorldCom "had been borrowing like there was no tomorrow and spending it like a drunken sailor." (Pg. 27) For Global Crossing, "The message coming out of the executive chambers was that anything goes and money is no object. People were spending money like drunken sailors, according to insiders... No one was shy about flaunting his personal wealth." (Pg. 75-76) But ultimately, WorldCom "had the dubious distinction of being the biggest bankruptcy in the history of America, even bigger then Enron. But more than that, the company would admit that it committed an accounting fraud, which at last count misstated revenues by about $9 billion." (Pg. 197)
Of Northern Telecom, he states, "Like rats deserting a sinking ship, Roth decided to retire in May 2001, and Clarence Chandran cited personal and health reasons for his own resignation. Today, Nortel is on life support, a pale imitation of its former self." (Pg. 233) But earlier, then and similar companies were "prompted [by] a culture of here-and-now investing, and no one considered even for a minute that the boom could ever come to an end." (Pg. 269)
He notes ironically, "For almost five years in the 1990s, when it came to broadband, George Gilder was god... Once a celebrated author who was worth $1,000 dollars a minute, he is now dismissed as a mere stock tout and a televangelist with a dead religion... He has lost his multimillion dollar empire and former adoring fans. Like the companies he once passionately championed, Gilder is now staring down the financial abyss." (Pg. 275-276)
He concludes, "Greedy chief executives undermined the American market free market system by stuffing their coffers; Wall Street encouraged the management of broadband companies to adopt short-term metrics; and investors simply played along. And the little guys just got slaughtered. The greedy chief executives who failed upwards should be penalized, and I would not shed a single tear if any one of them is sent to the big house. They deserve it." (Pg. 291)
This is a fascinating and critical summary of this often forgotten era of corporate crime.
August 17, 2024
A somewhat poorly written book that frequently slides in polemic. Nevertheless, this is still the only book I can find offering a comprehensive account of an extremely interesting and under-covered part of tech history, the late 90s telecom bubble
September 7, 2021
If you're interested in birth of new industries and massive financial fraud then you'll likely enjoy this book immensely. The author did an excellent job.
September 29, 2023
great company-specific case studies, but eh writing
September 30, 2015
I enjoyed the book by Om Malik, Broadbandits: Inside the $750 Billion Telecom Heist (2003), even though there were a number of factual errors within the text.
On Malik’s most wanted list, you had the bosses and underbosses, akin to the Mafia, the mafia of telecommunications during the early 2000s:
Bosses –
Gary Winnick, Global Crossing co-founder
Bernie Ebbers, Worldcom CEO
Jack Grubman, Salomon Smith Barney telecom analyst
Joe Nacchio, QWEST CEO
Ken Rice, Enron Broadband Services
Under bosses –
Scott Sullivan, WorldCom CFO
Matt Bross, Williams Communication Group, CTO
Richard McGinn, Lucent CEO
In 1996, the telecommunications sector was the new Wild West. The Telecommunications Act of 1996 had just been approved by President Bill Clinton, which led to an excess of bandwidth built upon an optical fiber high-speed that made Internet access the norm. The FCC wanted to break the chokehold of the Baby Bells in the local network, and the Telecom Act did just that. Deregulation provided new opportunities for entrepreneurs – and so did the rise of the Internet. AOL, for example, grew from 1.5 million subscribers in December 1994 to 7 million by December 1996 and to 15 million by December 1998. New service providers appeared to challenge the Baby Bells and new equipment manufacturers appeared to serve them. For those involved in telecom, it was a wild ride.
If you love reading about the history of the telecom and want to know more about the telecom bust of 2002, I recommend reading Malik’s book.
You can also check out my book, The Upstart Startup (2014) to read about some of those new equipment manufacturers, including Cerent, that challenged the status quo of optical transport equipment at the close of the millennium.
On Malik’s most wanted list, you had the bosses and underbosses, akin to the Mafia, the mafia of telecommunications during the early 2000s:
Bosses –
Gary Winnick, Global Crossing co-founder
Bernie Ebbers, Worldcom CEO
Jack Grubman, Salomon Smith Barney telecom analyst
Joe Nacchio, QWEST CEO
Ken Rice, Enron Broadband Services
Under bosses –
Scott Sullivan, WorldCom CFO
Matt Bross, Williams Communication Group, CTO
Richard McGinn, Lucent CEO
In 1996, the telecommunications sector was the new Wild West. The Telecommunications Act of 1996 had just been approved by President Bill Clinton, which led to an excess of bandwidth built upon an optical fiber high-speed that made Internet access the norm. The FCC wanted to break the chokehold of the Baby Bells in the local network, and the Telecom Act did just that. Deregulation provided new opportunities for entrepreneurs – and so did the rise of the Internet. AOL, for example, grew from 1.5 million subscribers in December 1994 to 7 million by December 1996 and to 15 million by December 1998. New service providers appeared to challenge the Baby Bells and new equipment manufacturers appeared to serve them. For those involved in telecom, it was a wild ride.
If you love reading about the history of the telecom and want to know more about the telecom bust of 2002, I recommend reading Malik’s book.
You can also check out my book, The Upstart Startup (2014) to read about some of those new equipment manufacturers, including Cerent, that challenged the status quo of optical transport equipment at the close of the millennium.
May 19, 2014
I first read this (and liked it a lot) when it came out years ago; thought it was time to revisit the issue. However, this time around I didn't find it that interesting... the stories are mostly quite shallow, with lots of important details missing and not a complete picture of each case Malik presents. A rather poor book, I find...
March 28, 2009
I enjoyed this book because I spent time in the telecom industry during the boom, so it brought a lot of memories back. However, it's not a particularly well organized or written book. Pick it up if you're very interested in the telecom business - otherwise, pass on it.
February 4, 2012
300 pages of random stock prices, valuations, millions and billions...
the same 20 names repeated over and over again, but not in a coherent manner.
painfully bad. just not for me.
the same 20 names repeated over and over again, but not in a coherent manner.
painfully bad. just not for me.
Displaying 1 - 8 of 8 reviews