WinStar CEO blames money markets

“Incredible schizophrenia” on the part of the money markets caused WinStar Communications’ fall from a high-flying, point-to-point, commercial broadband fixed-wireless provider to Chapter 11 bankruptcy, Chairman/CEO William Rouhana told attendees at the Wireless Communications Association (WCA) convention in Boston.

“For seven years, (WinStar’s business plan) was right on track,” Rouhana said. Then the financial markets shut off the funding that was making it happen, despite strong market demand.

Some correction was necessary for a money market that, “like most other manias, was overdone … there was not enough discretion in what was financed and what wasn’t,” Rouhana conceded, but what happened was too severe.

“The pendulum has swung way too far to the negative,” he noted. “That’s the challenge for an entire industry.”

The swing left WinStar grasping for ways to become solvent, a “process that is anti-gravity for us as a people, as a company,” he said. “Do we have enough critical mass to be able to do that quickly? I think we do, but it’s not an easy task.”

That’s especially true in the current economic conditions, he said. While some question whether the nation is in a recession, “in our industry, it’s more like a depression--definitely more like a depression in the telecom/Internet space,” Rouhana said.

A nationwide recession “would be good for the competitors,” because consumers would shop services more carefully to get better prices and features than incumbents offer, he said.

Better financial conditions will require “capital markets coming to grips with the fact that you cannot replace in a couple years what took 100 years to build,” Rouhana said. “I’m not an optimist.”