I am in a unique position to tell the Bandwidth story, having been perched inside the tent from its exciting beginning to its glorious end.
I was part of all four of the major surviving players—AT&T, Verizon, Lumen, and Zayo. AT&T’s buyer acquired my first employer, Ameritech Corporation. My second and third employers—MFS and WorldCom—are now part of Verizon. I was a co-founder of Level 3, Lumen’s largest acquisition. Before the acquisition, Level 3 had acquired my fourth company, ICG Communications. My fifth and final employer was Zayo, which I founded in 2007 and sold in 2020 for $14.3 billion.
I am the Forrest Gump of fiber—an unwitting average guy who survived and then thrived on the multidecade Bandwidth roller-coaster ride. I excelled, failed, learned, and emerged as the industry’s most successful value creator.In the ICG subsection of Chapter IV, I will provide the financial metrics that substantiate this claim.
My uneventful childhood was spent in a blue-turning-white-collar suburb south of Chicago, in a family with a strong Italian heritage. One of my great-uncles was Guido Marconi, a bread maker, and another was Nicky Ripani, a butcher. My godfather, Jimmy Zeranti, was a barber. My grandparents on my dad’s side owned Dog n Suds, a fast-food burger joint that was eventually wiped out by McDonald’s. Marino Lale, my maternal grandfather, was a factory worker whose friend and neighbor was Mike Costabile, the enforcer for the Chicago Heights Italian mob.
Costabile pulled a shotgun on me when I was ten years old. I was playing alone in my grandfather’s backyard when I heard, “Hey, kid,” from the yard that abutted my grandfather’s. I looked up to see Costabile with the shotgun pointed from his hip. He looked like a body double of the short and round Peter Clemenza, the fictional caporegime, or captain, in The Godfather. As if mimicking Clemenza, Costabile laughed loudly as he stared me down. I beelined, tears flowing, into my grandfather’s house. Five minutes later my grandpa sat me down on his outdoor bench, fetched Costabile, sat him next to me, and ordered him to apologize. “Kid, I was just trying to toughen you up” was the best he could do.
My dad was the first in his family to get a college degree. He spent his entire career as an engineer at AT&T.
Brookwood was my junior high, located seven miles south of Chicago and four miles from the Indiana border in my hometown of Glenwood.
When I entered sixth grade, Brookwood adopted a new method for assigning students to a classroom. Students took a test. Depending on how well you did, you’d get assigned to one of six cohorts. For sixth-graders, the smart kids were in cohorts 6:0 and 6:1. The average kids were in 6:2 and 6:3. The not-so-smart kids were in 6:4 and 6:5.
My brother, who was eleven months older and in the seventh grade, made it to 7:1. He was a smart kid.
I didn’t do as well. I was assigned to 6:2. I was average, according to Brookwood Junior High.
I must have shown childish disappointment to my friends, as they started calling me “Av,” short for “average.” This infuriated me. My friend Jeff Frigo poked at me the most, and finally, I had enough. In the classroom, after lunch and just before class started, I charged at him. We exchanged punches, though neither of us was a fighter. We were sent to the principal’s office, and each of us had a choice: the wooden paddle or detention for a week.
Frigo chose the paddle. I chose detention.
I always regretted this moment. The fight wasn’t a regret—after all, Frigo was my friend, and we barely touched each other. My regret was choosing detention instead of the paddle. I was embarrassed that my friends knew I feared a smack on my ass.
Reflecting, I also dreaded a life of being average. I wanted to be somebody.
In my family it was a given that we’d go to college. Only later in life did I realize this didn’t have to be the case. Without this implied expectation, I might not have gone to college.
My brother went to the University of Illinois in Champaign-Urbana to be an accountant. The conventional wisdom of the time was that being an accountant was the path to a good life: a country club membership, a three-car garage in the suburb of Naperville, and an annual vacation to Florida.
With my brother picking the best major at the best public university in Illinois, how would I one-up him?
I learned that engineers made starting salaries of around $28,000, while accountants lagged at $22,000. So, I decided to apply to the University of Illinois School of Engineering. I made this decision without really understanding what engineers, including my father, did. Yet I was so convinced this was the right decision that I didn’t apply anywhere else.
The University of Illinois’ engineering school was among the top rated in the nation. They rejected my application because accepting applicants whose junior high nickname was “Average” was not in their bag of groceries.
This was a wake-up call for me and a foreshadowing of my life to come. I could have let it go, and if I had, I wouldn’t be writing this book. Instead, I applied to the University of Illinois’ liberal arts school, with the intent of backdooring into engineering via a transfer.
My counselor warned me against this: “To transfer, you will need a 3.6 out of 4.0 grade point average for two years while taking predominantly math and science courses.The University of Illinois was on a five-point scale instead of the more standard four-point scale. My GPA was 4.6 out of 5.0. Highly unlikely, don’t you agree?” I ignored him and his know-it-all smile. Stubbornness is another one of my admirable traits.
Two years later, despite a C in Spanish that pushed my GPA just below 3.6, I transferred into mechanical engineering. For the first time, I felt that maybe I was better than average. Maybe I would be somebody.
Fortunately for me—this kid who yearned to be more than average—the Bandwidth Revolution was on the cusp of being ignited.
I was in the middle of college in 1983, the year of both AT&T’s breakup and the Internet’s birth. Judge Harold H. Green, a United States district judge for the District of Columbia, was assigned to a 1974 antitrust lawsuit filed by the US Department of Justice to blow apart AT&T’s regulated monopoly. On August 5, 1983, Green approved the consent decree, thereby breaking up the largest corporation in the world.
The judge’s move required the divestiture of AT&T’s local telephone operations, resulting in the creation of seven Regional Bell Operating Companies—Ameritech, Bell Atlantic, BellSouth, NYNEX, Pacific Telesis (PacTel), Southwestern Bell (SBC), and U S West—known as the “Baby Bells.” These new companies were required to provide equal access to their networks, enabling competition in local telephone services, but the Baby Bells were prohibited from providing long-distance services and information services.
During this time AT&T was fighting off a pesky new competitor named Microwave Communications, Inc. (MCI), which offered an alternative for long-distance phone calls. A few years later, Sprint joined in on the fun. The local phone business, however, did not yet face competition.
In the early 1980s, phones hung on walls or sat on tables. If you wanted to use one, you had to walk up to it, pick up the handle, and press it to your ear and mouth. You couldn’t roam around too far while talking because the cord tethered you to the phone outlet on the wall.
Life was simple in that way.
The idea of a portable communication device wasn’t new. Walkietalkies had been around since World War II. Yet the vision of mobile phones for everyday calls began its path to fruition in the early 1980s. To enable wireless phones, the Federal Communications Commission (FCC) awarded spectrum licenses—initially through hearings and lotteries and, beginning in 1994, through auctions—with the hopes of sparking a new era of mobile communications.
Motorola’s 1985 brick phone marked the beginning of the wireless phone era. We stretched our imaginations to envision a world where most everyone would carry a phone in their pockets and a wearable à la Dick Tracy on their wrists.
Clearly, the underlying infrastructure that transmitted phone calls was on the verge of a disruptive transformation of massive proportions. Copper was used by Alexander Graham Bell when he invented the phone call in 1876. Two thin copper wires, twisted together and called a “copper pair,” carried a single phone call. The signals were analog, meaning information was converted into electromagnetic waves that were transmitted through the copper pair, with variations of the waves’ amplitude, frequency, and phase being used to code and decode voice conversations. Like music records played on a turntable, static was an annoying part of most phone conversations.
In the 1960s AT&T standardized on the Digital Service 1 (DS1). This breakthrough allowed a single copper pair to carry 24 voice calls at a time. Digital technology—the sequencing of 1s and 0s to encode information—replaced analog as the communication modality. It improved the clarity of communications, and gone was the static.
In the 1970s AT&T advanced to the Digital Service 3 (DS3) standard, which multiplexed 28 DS1s—meaning 672 phone calls—over a single copper line. The DS3 was state of the art when I was in high school.
The capacity of a DS3, though revolutionary at the time, is extraordinarily tiny by today’s standards. Most individual homes surpass a DS3 worth of capacity, and larger businesses use the equivalent of dozens of DS3s. Data centers and cloud facilities each use more than ten thousand times the capacity of a DS3. If we still relied on copper, nothing we experience today would be possible.
In 1977 AT&T deployed the first experimental fiber-optic telecommunications system, connecting a Bell Laboratories facility to a nearby office building. Fiber-optic systems use strands of glass that are as thin as hair to transmit light waves. The digital 1s and 0s are represented as pulses of “light on” and “light off.” Relative to sound transmitted through copper, the light, fired by lasers and carried by the fiber, enabled gigantic increases in the amount of information—or bandwidth—that could be transmitted over a single signal.
Quality was also better on fiber than copper. Sprint highlighted the quality advantages through its pin drop advertising campaign. Sprint proclaimed its newly activated fiber network provided better user experience over AT&T and MCI, both of which relied heavily on microwave. “You can hear a pin drop” was Sprint’s memorable tagline.
Fiber was destined to replace copper as the medium for communications, gradually gaining momentum throughout the 1980s. As this became clear in the 1990s, entrepreneurs envisioned an infrastructure buildout opportunity on the scale of the early 1900s’ Golden Age of Railroads and the oil pipelines in the mid-twentieth century. The first movers of fiber deployment would own and control the most important infrastructure of the twenty-first century. Thus fiber deployment accelerated, and, it appeared, the Fiber Barons of the twenty-first century were being anointed.
The answer to the question, “What would data be used for?” was hiding in plain sight. The technological breakthroughs that became the Internet began in 1957, as the United States became locked in the Cold War with the Soviet Union. Russia had launched the first-ever satellite, called Sputnik, into orbit, further presaging an intense geopolitical era between the United States and USSR. America was determined to stay ahead of its principal rival. The Department of Defense sought a communications network that would function in the aftermath of a nuclear war. This led to the formation of ARPANET in the 1960s and 1970s, a closed network for researchers closely connected to Department of Defense projects and associated work.
January 1, 1983, is considered the birthday of the Internet, marking the date when ARPANET adopted the Transmission Control Protocol/Internet Protocol (TCP/IP), a programmed set of rules for transferring data and by which computers could communicate on a network. The inventors of TCP/IP—Dr. Bob Kahn and Dr. Vint Cert—are honored as the fathers of the Internet. Taking things to a higher level of specific data communications in 1989, Sir Tim Berners-Lee introduced the World Wide Web, the Hypertext Markup Language, the URL system, and the hypertext transfer protocol (HTTP). Marc Andreessen released the Mosaic web browser while he was a student at the University of Illinois, my alma mater, and followed up with Netscape web browser in 1994. These advancements aided the transmission power, usability, commercialization, and rapid growth of the Internet.
So there you have it. Break up the AT&T monopoly. Give birth to the Baby Bells and open the local telecom markets to competition. Untether telephones and fit them in pockets. Use fiber optics to juice up capacity. Commercialize the Internet.
Mix all this together in a firepit, light a match, and pour a giant pile of money on it to stoke the flames. In less than ten years, the world had become overwhelmed by competition. The Bandwidth bonfire was erupting, all serendipitously timed to coincide with the launch of my career.
My first job out of college was with the Bell System—in my case, Illinois Bell, which was a division of Baby Bell Ameritech. I accepted without hesitation when offered a position in the management development program for engineers. I was intrigued by the AT&T breakup and the impending competition. I was aware of, though didn’t fully understand, the looming revolution of mobile, data, and fiber. I also craved the management development program as a way of supercharging my career.
I would be remiss if I didn’t mention the other reason for joining Illinois Bell: it was the only employment offer I received. The job market, which was weak during my graduation year, was unenthusiastic about engineers who backdoored into the program and took five years to get a four-year degree.
My rotational program began with a field supervisory position at an Illinois Bell garage in Chicago’s fast-growing, upscale suburb of Naperville. It ended with a position in Corporate Development at Ameritech’s headquarters in the heart of downtown Chicago.
One of my assignments was network planning, where I was tasked with evaluating fiber to the home. I worked on variations of this for over a year and found my passion. How much would it cost to replace all the copper with fiber? How would we architect the network, and what technology would we deploy? What services would be enabled, and how much new revenue would be generated? Where should we start? At what pace should we invest? Would it be a good investment?
This was fun. I built Lotus 1-2-3 spreadsheets, plotted colorful pictures using Harvard Graphics presentation software, and shared my insights in a storytelling fashion. The thirty-year veterans I worked for—most of whom were comfortable only with their Texas Instruments TI-81 calculators—didn’t know what to make of me.
In the Bell hierarchy, the Seventh Level was the big boss; he ran Ameritech. The Sixth Level ran Illinois Bell, and the Fifth Level managed large departments such as network, sales and marketing, finance, and corporate strategy. The Fourth Level was a division head—a big deal.
Rarely was a First Level, which I was, allowed to speak to a Fourth Level and almost never to be in the presence of a Fifth Level. That’s just the way the bureaucracy worked.
My boss gave me the assignment of creating a long-range plan to replace all the copper serving homes with fiber. I did my analysis and put together a slick presentation. However, no one followed up with me, so I didn’t know what to do with it.
Months later, the Fourth Level sent down the word. His boss, the Fifth Level, needed the work immediately because he was presenting to the board the following week. “Is it done?” my boss asked. I showed it to him. He shrugged and, with no time to change anything, told me to drop it off at the Fourth Level’s office.
The Fourth Level reviewed it, and he, too, was perplexed. He told me to go to the Fifth Level’s office first thing the next morning. Strangely, neither my boss nor the Fourth Level joined me. I went to the hallowed floor of the executives, checked in with the secretary, and waited outside.
After a long wait, the door opened, and he invited me in. I presented my study, which I knew was good work. He asked many questions, and frankly, I could tell he was absorbing a lot.
He then saw the results of the spreadsheet, which showed an investment of $6 billion over a ten-year period to wire most homes with fiber. He was astonished and said he could not present it to the board. He would lose all credibility. There is no way the regulators would let Illinois Bell spend that amount of ratepayers’ money. “Are you sure it is right?” he asked me.
It was. The Fifth Level escorted me from his office. I never heard what happened next.
I went on to my final rotational assignment as an analyst in Ameritech’s Corporate Development group. This opened up a whole new world to me. My colleagues all had MBAs from top universities, including Harvard, Yale, and Northwestern. Nearly the entire team was hired from outside the Bell system. All my colleagues grew up in upscale suburbs, or so it seemed. I was blue collar to them.
We met with investment bankers and management consultants. We supported Mergers and Acquisitions (M&A). We studied new lines of business, including Cable TV.
John Malone of Tele-Communications Inc. (TCI) was leading the charge in rewiring America for Cable TV service. It was an unregulated monopoly that had the glam of content and the promise of getting rich. Should Ameritech overbuild its networks to offer a competitive service? If so, should it deploy the architecture of the Cable TV industry, which was the heavily touted hybrid fiber/coax?Coax, short for coaxial cable, is a type of transmission line used to carry high-frequency electrical signals with low losses. Among the use cases was the Cable TV industry because it had advantages over the twisted pair copper cables used by telephone companies for transmitting television signals.
Fiber/coax architecture referred to the combination of fiber-optic cables being used in the central portions of the network, where traffic was consolidated, and coax being used to feed a relevant portion of the traffic to customers in a neighborhood cluster. Or should Ameritech leapfrog the cable industry with fiber to the home? Alternatively, Ameritech could just buy Cable TV companies.
Those were big questions. I created numerous Lotus 1-2-3 spreadsheets and Harvard Graphics presentations. I learned about various architectures and technologies. More fun for me. No clear answers were self-evident. With seven Baby Bells all sorting through their Cable TV strategies separately, variations of each possibility were pursued.
In all cases the Cable TV industry got the better of the Baby Bells. The Cable Cowboys, as the Cable TV pioneers were branded with Malone the lead cowboy, were simply better entrepreneurs. The Baby Bells were forced to retreat from each expensive mistake, while the Cowboys got rich.
My tour through Ameritech unveiled my purpose in life. Though I chose engineering for the wrong reason, I discovered my passion was assessing the financial outcomes associated with new technology. Business, not engineering, was my true love. I loved using spreadsheets to gain insights into how to leverage disruptive changes to create wealth.
While at Ameritech, I applied to Northwestern and University of Chicago’s MBA programs. I chose Booth, Chicago’s MBA program, for two reasons. First, I was analytical, which made Booth and me well suited for each other. Second, Northwestern rejected me. Are you detecting a pattern?
The MBA experience is when I realized I was more than just average.
I purchased a book on the Graduate Management Admission Test (GMAT) preparation and spent a weekend or two breezing through it. I enjoyed problem-solving. When I took the GMAT, I was surprised by how easy it was and thought I got every answer correct. I scored in the top 2 percent, so I clearly got a few wrong.
I unlocked quantitative skills, financial discipline, and business acumen, all hallmarks of a University of Chicago MBA, that provided me with the capabilities that catapulted my career journey.My most impactful professor was Steven N. “Steve” Kaplan. His use of case studies, which were rare at Chicago in the early 1990s, shaped my career. Kaplan prompted his students to share their thoughts on the business decisions in play while requiring that rigorous financial analysis be used to analyze the cases and defend conclusions.
Kaplan emerged as one of the most important professors at Chicago and made a global name for himself for his contributions in both finance and entrepreneurship. I invited Kaplan to join my Zayo board, where he helped us navigate the 2020 exit.
In the mid-2010s, Kaplan wrote a case study on Zayo’s IPO and featured it in his course curriculum for many years thereafter. Each year I am a guest to provide firsthand color to the dynamics that led to the Zayo IPO. I also gained confidence that I could hold my own with the smart kids.
As I navigated my MBA, I knew I belonged on the other side, the one attacking, not defending the Bell System monopoly. Soon after I completed my MBA, I left Ameritech to join founder Jim Crowe’s MFS Communications, which was rapidly emerging as the biggest rival to the Baby Bells.