ICEBERG COMETH

“You can't turn the Titanic on a dime.” An analyst said that to me recently, referring to a wireless firm that was still eating costs it had incurred back in the bubble days. Maybe he meant to say the Queen Mary (the token analogy for unwieldy companies) and slipped, or maybe he saw the Titanic as a more apt metaphor in an age when excess and blind ambition caved in on themselves.

As Enron continues its slow descent into darkness, those of us in the telecom industry might have given the company a silent new slogan: “There but for the grace of God go I.” And we might wipe our collective brow over the fact that the prevailing icon of this era's corporate failures is an energy company and not, say, a global submarine network provider. The telecom industry doesn't have enough space left on its forehead for another black eye.

Given Enron's penchant for smoke screens and slight-of-hand, it's not surprising it saw a home for itself in telecom. Enron's threat to create a bandwidth-trading sector generated more conversation than commerce. Its vow to partner with Blockbuster to distribute movies to the home became premature when the only movies Enron could secure the rights to starred Clint Eastwood and an orangutan.

But these were standard business practices in telecom at the time: Make exciting promises, point to the far end of the hockey stick chart and collect funding. Rinse and repeat.

History may remember dotcommers as the personification of the foolishly wasteful late '90s, but telecom companies collectively incinerated far more cash than the dotcoms ever did. The self-deluded among us point their fingers at a single group as the cause of this mess: The Bell companies did it. The VCs did it. Some chalk it up as an act of God (as if the collapse of the capital markets was a function of plate tectonics), and some see it as a victimless crime (risk, after all, is part of investing and entrepreneurship). It's more comforting to blame the iceberg but more truthful to say this disaster was man-made.

And there were indeed victims.

Nearly 318,000 telecom industry members lost their jobs in 2001. For perspective, imagine the entire city of Miami out of work. Worldwide, telecom layoffs were closer to 450,000. But in bar-charting the numbers, we obscure the greater truth: Nearly half a million people lost their jobs in telecom last year.

As more telecom firms earn the scrutiny of the SEC, we must ask ourselves how many “crooked Es” there are in telecom. And as we press our noses further into the ice, we must not forget the people on the lower decks for whom there are no lifeboats.