While Qwest Communications International Inc.’s Joseph Nacchio, WorldCom Inc.’s Bernie Ebbers and AT&T Corp.’s C. Michael Armstrong have rode into the sunset, there is one cowboy left, and he might have an interesting trick up his sleeve.
But before we get to that, let’s take a step back and look at what has upset the telecom cart.
Theories abound, but a simple and direct one is put forth by Scott Cleland, CEO of Precursor Group, a research firm for institutional investors: “Many telecom companies were built with heavy debt assuming high growth; now that growth has slowed and projected demand has disappointed – the math doesn’t work.”
The heart of Cleland’s argument is that the anticipated uptick in service demand that would have helped these companies pay down the debt never materialized. “The conventional wisdom, repeated by almost everyone in the industry from 1997 to 2001, was that data traffic growth was doubling every three to four months – an extraordinary 800 per cent to 1600 per cent annual growth rate from 1996 through 2001. Unfortunately, it simply was not true. The actual growth rate had been closer to a 100 per cent to 200 per cent annual rate since 1997.”
Now back to the last cowboy: Philip Anschutz, founder of the fibre company that became Qwest and the majority shareholder with 18 per cent. Anschutz is a billionaire with investments in everything from sports to railroads, oil refineries and pipelines. Oh, and the most important collection of Western art in the country.
And now, according to Boxoffice magazine, Anschutz has quietly put together a movie theatre empire. Boxoffice estimates that various deals during the last few years have left Anschutz with 20 per cent of the theatres in the country, twice as many as the largest competitor.
Why? Digital distribution of movies, Boxoffice theorizes. With technology advances, Anschutz could become a “category-killing, virtual Wal-Mart of exhibition.”
That’s one way to deal with the problem from overestimating demand: finding new ways to generate traffic.
Anschutz is dreaming big.
Dix is editor in chief of Network World (U.S.). He can be reached at [email protected]