Goodbye to all that

“I’ve always been very interested in building something from the ground up—not worrying about changing and downsizing but building something fresh, the way I think it should be done.”—Alex Mandl, newly appointed chairman and CEO of Associated Communications, which later became Teligent (Telephony, Aug. 26, 1996)

Alex Mandl became an icon of the new competitive era in the summer of 1996 when he left the second-in-command post at AT&T to head up a then-unknown start-up company planning to attack the coveted last mile using a largely unproven wireless technology. His departure from that company last week is evidence of how even the people and companies with the most promise can fall victim to circumstance. But it shouldn’t mark the end of innovation.

Mandl’s 1996 move had all the trappings of a classic David and Goliath story, at a time when that theme was still unique and exciting: Top brass at Big Telco takes talent to energetic new company that seeks to dismantle stale incumbents. Along with that came unconfirmed rumblings about strife in AT&T’s executive suite and about Associated Communications—shortly thereafter renamed Teligent—wooing Mandl away with a substantial salary and a $20 million signing bonus. Recall that this was the twilight of the Robert Allen era, when being among AT&T’s top executives meant lobbying for the CEO seat and becoming disgruntled when you found out you weren’t a contender.

The David part of the story got even better: Mandl went on to assemble a veritable dream team at Teligent, pulling together seasoned talent from established carriers, executives who had founded and run some of the earliest competitive carrier organizations, regulatory gurus and people with experience planning and operating wireless networks. Vendors of fixed broadband wireless equipment coveted the big Teligent contract, and its network launch was one of the most anticipated events of the time. Teligent was considered one of a small group of emerging carriers that defined what telecom competition was all about.

As with everything, though, there were snags—in Teligent’s case, enough to prevent even the best ideas and the brightest people from sustaining a lucrative business. Fixed broadband wireless technology in its earliest incarnations didn’t work as well as everyone expected it to—or at least as well as its proponents claimed it would. Teligent ultimately became burdened with technology choices and spending decisions it had made too early. The industry-wide economic downturn hit Teligent’s stock hard, and the company’s debt problems weighed heavily on its financial health. That culminated last week in Mandl’s resignation and IDT’s takeover of the 33.7% interest that AT&T’s Liberty Media unit previously held. 

All of this flies in the face of the company-building vision Alex Mandl described when he took the Teligent job in 1996 and the competitive insurgency that so many start-up entities aspired to attain—and it is a scenario that is being repeated throughout the industry with disturbing frequency.

It’s easy to be melodramatic about the David vs. Goliath theme—to lament the demise of the underdogs and condemn the behemoth incumbents, even when much of the blame for the failure of start-ups lies in poor execution, financial mismanagement and technology choices. The more pragmatic approach is to interpret Teligent’s problems in ways that would help companies avoid similar fates. It would be tragic if the negative experiences of people like Mandl served to dissuade him and others from devoting their experience, leadership and vision to trying to make competitive entities thrive, despite the obvious struggle involved in that attempt.