The Bandwidth adventure was a wild, multidecade roller-coaster ride—an epic story involving start-ups and scale-ups that experienced grand successes and devastating failures. The unbridled ambition of newly minted billionaires and high-profile tycoons created extraordinary value soon followed by unprecedented value destruction. It was a time of insight, creativity, and courage accompanied by deception, fraud, and prison sentences. The pace of industry consolidation was fierce, often involving hostile multibillion-dollar acquisition battles. Growth was unprecedented, and opportunities seemed endless. Then the tech bubble burst, leaving the industry in shambles and many investors devastated. The stage was set for a glorious rebirth.
The tale begins in 1983 with two world-impacting events. One was the dismantling of the world’s biggest company, American Telephone and Telegraph Company (AT&T), an event that was noticed by all. The other was the birth of the Internet, which went entirely unnoticed. Further amping up these events were two technology breakthroughs: mobile communications and fiber-optic networks powered by lasers. The collision of these four forces ignited a revolution that would forever change how humankind worked, entertained and educated themselves, and how we communicated with one another.
The prehistory of the Internet began in 1957, when America’s Cold War rival, the Soviet Union, launched the first-ever satellite, called Sputnik, into orbit. The United States needed a communications network that would function in the aftermath of a nuclear war. This led the Department of Defense to develop the Advanced Research Projects Agency Network (ARPANET). For years ARPANET was used only by the government, research institutions, and universities. In the 1980s ARPANET gradually evolved into the Internet. Specifically, the combined efforts of three companies led to this commercialization of the Internet. BBN, UUNET, and PSINet were the Inventors of the Internet Backbones.The Internet Backbone is an expression that describes the physical links, electronic hardware, and operating software that serve as the on-ramps and pathways for the Internet traffic to flow between people and applications.
The AT&T breakup caught the attention of America’s wealthiest eccentric entrepreneurs, most notably John Kluge of Metromedia, Cable TV titan John Malone, industrialist Philip Anschutz, and the scrappy telecom veteran Craig McCaw. Many of the nation’s high-profile multigenerational family businesses—including the Kiewit construction behemoth of Omaha, oil giant Williams Companies of Tulsa, and the Roberts family of the Comcast media empire—also sniffed the aroma of opportunity. These tycoons partnered with ambitious entrepreneurs such as Robert Annunziata, who scaled Teleport; Jim Crowe, who founded MFS; Joe Nacchio, who became Qwest’s first CEO; Roy Wilkens, who formed WilTel; and Steve Garofalo, who launched National Fiber Networks, which later was renamed AboveNet.Another ambitious entrepreneur was Clark McLeod of Cedar Rapids, Iowa, who founded McLeodUSA. At the height of the Boom, McLeodUSA was worth $10 billion, making McLeod among the wealthiest people in Iowa. McLeodUSA went bankrupt in 2002 and again in 2005. See appendix 3, “More Bandwidth Stories,” to learn more about McLeodUSA. Together, they became the Renegades that built fiber networks to carry the traffic of the Internet.
While the AT&T monopoly was dying, the Internet was coming to life. The Internet Backbones merged into the spiderweb of fiber networks, resulting in overnight fortunes being created for both the Renegades and the Inventors of the Internet Backbones. Some turned their paper riches into cold, hard cash. Others decided to hold, believing their piles of cash would continue to multiply.
The riches being racked up by the Renegades didn’t go unnoticed. With wealth creation occurring at an unprecedented pace, a wave of business leaders, most notably Bernard J. “Bernie” Ebbers of WorldCom, did not want to miss the opportunity of their lifetimes. Frustrated executives from large companies—investor Gary Winnick launched Global Crossing, Greg Maffei left Microsoft to lead 360networks, and big company tech executive Michael Armstrong joined AT&T—made bold moves to get in on this action. Leaders of boring utilities—Cincinnati Bell, which became Broadwing; Montana Power, which transformed into Touch America; and GTE, which gave birth to Genuity—sought to transform their stagnant monopolies into new-age Internet giants.Enron and Dynegy also entered the Bandwidth industry, both ending up with disastrous outcomes. See appendix 3, “More Bandwidth Stories,” to learn about Enron Broadband Services and Dynegy Global Communications. Even those who sold out during the first wave, notably Crowe and Annunziata, fought their way back in.
The laser light shooting through the fiber networks was glimmering bright gold. All was playing out according to the Bandwidth players’ grand plans. Ever bigger fortunes were being created. But like all stampedes for gold, the window of opportunity would not stay open for long. The late 1990s Bandwidth Boom was followed by the early 2000s Bust, the biggest industry crash in history. Over a trillion dollars of value disappeared. Recently minted billionaires saw their paper fortunes flame out. Criminal and civil probes were initiated, leading to jail time and multimillion-dollar fines for some Bandwidth players.
The SEC investigated, leading to one of the most consequential securities reforms in history—the Sarbanes–Oxley (SOX) Act of 2002.
Like the phoenix from Greek mythology, the Bandwidth industry rose from the ashes to be stronger, smarter, and more powerful than before. A new breed of entrepreneurs scavenged the fiber mess and spearheaded the industry’s rebirth. A strange optronics inventor named Dr. David Huber brought Broadwing back from its deathbed. Operator Larissa Herda received an unwelcomed battlefield promotion to rescue tw telecom from a premature death. Famed financier Carl Icahn reached into his hostile takeover bag of tricks to wrest control of bankrupt XO. And I, the teller of this grand tale, began my ascent to be the face of the industry by snagging a dying Boom-era fiber provider named ICG Communications. We made fortunes buying assets even as fear gripped the industry.
The bigger the mess, the longer it takes to clean up. It took two decades for the Bandwidth Infrastructure industry to be reconsolidated into four robust national providers.
The first is AT&T, but not the old AT&T that was broken apart to jump-start the Bandwidth adventure. Seeking transformation, the original AT&T launched a bold multifaceted acquisition strategy, which included buying one of the pioneering fiber companies and bankrolling three fiber upstarts. The transformation failed, leaving AT&T no choice but to sell itself when the Bandwidth Bubble burst. The buyer adopted the still resilient, more formidable AT&T brand as its own.
The second is Verizon, but only after surviving two multibillion-dollar debacles during the meltdown. Verizon acquired post-bankrupt WorldCom, the biggest Bust of them all, melding the MCI and WorldCom network assets into a new Verizon Business. Years later, Verizon acquired XO Communications, which traced its origins to the early fiber build-out.
The third is Lumen Technologies, a brand introduced in 2020. Lumen is the consolidation of many of the most storied companies of the Bandwidth Boom and Bust, most notably Level 3, Qwest, and Global Crossing.
The fourth is Zayo Group, the company I founded in 2007. Under my leadership, Zayo acquired over forty fiber companies. Unlike AT&T, Verizon, and Lumen, Zayo is in the enviable position of being the only national pure-play Bandwidth Infrastructure provider.
Like electricity, Bandwidth enables every aspect of our lives: mobile communications, emailing, texting, social media, analytics, GPS security, podcasting, and telemedicine. Without the Bandwidth Revolution, we would still meet friends and soulmates at parties and in bars instead of today’s online social media and dating apps. We’d be watching linear TV, not streaming our content from Netflix, Google TV, and their dozens of rivals. Driverless vehicles would crash without the powerful Bandwidth. ChatGPT would not yet exist. Yet we take this networking resource for granted.
Bandwidth is the story of the characters who created this essential infrastructure of the Internet.
Bandwidth is my story.
Bandwidth is also your story because Boom and Bust cycles repeat themselves. In fact, the next one is already ignited, and it entwines the powerful forces of blockchain, generative AI, and quantum technology. Learnings from the Bandwidth Boom and Bust will prepare you well for navigating the new era.