You are the weakest link

Pick a telecom sector, and chances are several of its contestants already have been brusquely dismissed. The only thing missing is a mean Englishwoman to berate them on the way out.

Advanced Radio Telecom intends to reorganize its operations and seek the protection of the United States Bankruptcy Court by filing a Chapter 11 petition. Market conditions have created a difficult business climate for many companies, including ours.
ART Web site, March 30, 2001

Reality TV is starting to look more and more like reality every day. Being marooned on a desert island or marrying a millionaire never seemed all that realistic because those things only happen to fictional characters like Tom Hanks and Mrs. Howell. And most people can count on one hand the number of times they've lived in a tropical paradise surrounded by people specifically assigned to seduce them.

But now the real reality is setting in on TV, anyway. NBC has imported the BBC program The Weakest Link, a hybrid quiz show/humiliation platform in which contestants who answer questions wrong are exposed as the idiots they truly are and eventually get voted off the sound stage by their peers. NBC also imported the fierce host of the show's BBC version, Anne Robinson, who is an expert at making people feel small. Robinson, who was voted by British viewers as the rudest woman in television, dismisses the show's many losers with a curt: You are the weakest link. Goodbye!

That's reality, especially in the communications industry. Pick a telecom sector, and chances are several of its contestants already have been brusquely dismissed. The only thing missing is a mean Englishwoman to berate them on the way out.

The stars of last week's episode of The Weakest Telecom Link were the competitive service providers that chose to use fixed wireless technologies as one of their last-mile alternatives. While the writing's been on the wall for some time, the abruptness with which some of them have hit the skids is almost shocking. The excerpt cited above is part of a short announcement that takes the place of Advanced Radio Telecom's home page on the Internet. It isn't an announcement posted on the site, it is the site.

This is the same company whose CEO, Wharton Zie Rivers, gave a keynote speech at the Broadband Wireless World forum last month promising that his company would start keeping its promises. Needless to say, he didn't promise bankruptcy or a layoff of 90% of ART's employees. At the time, he announced a deal with Cable & Wireless worth $11 million, all of which was to be collected this year. Apparently the deal fell through: ART's Web statement says the company has been unable to complete any of the financing alternatives it had been pursuing.

ART is not the only service provider contributing to the obliteration of the fixed wireless chain. Teligent's Ernst & Young auditors issued a report last week stating that the company may not be able to continue operating. Winstar Communications had its debt ratings cut to junk status, and at mid-week, its stock was trading at less than half a dollar. Winstar also halted network expansion and cut 2000 jobs, saying it is engaged in discussions concerning certain material transactions which have not been completed. Even XO Communications, which has tried to separate itself from the fixed wireless pack but remains the largest holder of LMDS spectrum in the U.S., was downgraded by analysts on concerns about the company's debt load.

Fixed wireless proponents maintain that this disturbing trend is not related to the technology, but rather to broader economic factors. Many of the DSL-centric data CLECs that are no longer in business clung to similar arguments. Regardless of the cause, the fact is that these companies have become weak links.

I hate to be an Anne Robinson, but Goodbye!

Contact Jason Meyers at jmeyers@intertec.com