Sprint CEO Surveys Telecom Wreckage

Esrey's keynote speech at the Jacob Javitz Convention Center in New York began with an almost wistful look back at the Internet boom days of "ten pet portals, with no business plans." Infected with a "gullibility virus," carriers resorted to "irrational pricing" in an attempt to attract any and all customers, without any hope of being able to recover the fixed costs of building out their networks. As it turned out, though, "the new economy is more myth than reality," and Esrey cited a list from the boom times of 27 major telecom companies, only two of whom (AT&T and Sprint) were still operating outside of bankrupcy or junk-bond status.

But he saved most of his derision for Worldcom, the high-flying telecom company that has now acknowleged nearly $10 billion in accounding irregularities, and whose top executives now face federal prosecution. "A cloud of fraud and deception on a scale almost unimaginable," Esrey stated. "We kept asking ourselves what we were doing wrong," he explained, as Sprint executives failed to match the profit margins Worldcom was announcing, before realizing that Worldcom's margins "were a hoax."

"It's time to pick up the pieces," Esrey said. "Industry shakeouts are as good as they are inevitable." He cited statistics that the telecom industry would continue growing at a rate of 4% a year--larger than many other industries--and decried as "nonsense" the idea that telecom was dead.

Going forward, telecom customers will rely increasingly on providers that can supply "total access solutions," moving both voice and data seamlessly over wired and wireless networks. Not surprisingly, Esrey believes Sprint will hold a leading role among those carriers, with services such as PCS Vision, the "world's largest third-generation wireless network," which Esrey claimed now provides 50 to 75 kbps of data to unwired devices. "Faster than what most people have wired into their homes."