The Great Telecoms Swindle: How the Collapse of WorldCom Finally Exposed the Technology Myth

Citation

Curwen, P. (2003), "The Great Telecoms Swindle: How the Collapse of WorldCom Finally Exposed the Technology Myth", info, Vol. 5 No. 2, pp. 52-52. https://doi.org/10.1108/14636690310480216

It is not unknown for those who operate on the more theoretical heights of the academic community to dismiss anything that attempts to explain what goes on in the real world as “journalism”. However, the precise whereabouts of the dividing line between “academic” and “journalistic” need not trouble us here; the authors are happy to state that they are writing for the “general reader” with little prior knowledge and that they intend to offer their personal opinions and reflections and, in some cases, simplifications. So, no tables, figures, footnotes, references or glossary, and a perfunctory index which, for example, lists the word “market” as appearing on nearly every page with no sub‐categories.

At first sight this appears to be no more than a modest book, yet on opening it one is immediately struck by the acres of white space. A rough count indicates no more than 40,000 words, which hardly merits the term “book” at all in this reviewer’s opinion, and explains the need for the padding‐out to justify the price. The second point to note is that the authors have carefully chosen the pejorative term “swindle” to grab the reader’s attention, yet they are forced to introduce qualifications, admitting on p.171 that the word “swindle is somewhat incorrectly taken to mean criminal intent”, since it can mean no more than “a fundamental lack of honesty”. So, basically, this is a breathlessly‐told story of managerial dishonesty and incompetence? Well, sort of, provided you are willing to be fobbed off with being told that these things exist[ed] but only very sketchily the reasons why. There are five individual case studies covering NTL, Lucent Technologies, WorldCom, Marconi and Global Crossing. The choice is fair enough, but each is only 1,200‐1,500 words long and barely skims the surface. Slightly oddly – despite the book’s subtitle – the WorldCom story also fills the whole of chapter 1 and provides the postscript, so it gets much more coverage, overall, than the other companies. However, what you get is not an in‐depth study but in good part a load of press cuttings strung together – you would be better off reading the Financial Times’ two‐page spread on pp. 23‐24 of 28 June 2002, for the bulk of the story. Indeed, you would be better off reading the Financial Times’ assessment of the telecoms crash published on 5‐7 September 2001, than what is said about it in this “book”.

The book appears to have been produced in a hurry. The proof reading is rather poor, with, for example, “lead” for “led” throughout, “wrecklesly” (p. 73), “Deutsche Telekon” (p. 169) and “Vodaphone” (p. 113), and there is a strange tendency to insert “sic” all over the book for reasons that wholly escaped this reviewer. However, even with the general reader in mind, getting the facts right is the most important thing. Perhaps the claim (p. 57) that the auction of 3G licences in the UK was “rape and pillage” by the Treasury, which caused widespread economic damage, even if hospitals and schools were built with the fees, is a debatable assertion best left for the likes of Paul Klemperer to mull over. But readers may feel, for example, that the claim (p. 89) that most telecoms executives were half‐baked to believe in the late 1990s that they could all be winners, merits just a touch more analysis about the nature of capitalism and creative destruction (not to mention the railways). They may also desire a touch more support for the assertion that 3G is “revolution not evolution” (p. 106) – where does cdma2000 1xRTT/1x EV‐DO fit in, for example? – and that there is a “clear relationship between the size of 3G fees … and the scale of the telecoms bloodbath” in many markets (p. 112). As for the recycled claim (same page) that half of the 3G licences awarded globally may never be used, the fact that this will totally waste $50 million (sic) and, yet, oddly, Sonera paid $109 billion (sic) for its 3G licences (p. 149), not to mention the assertion that the “12 most expensive licenses awarded were all in either the UK or Germany”, even though only 11 were awarded there, and “the next five most expensive all in Italy”, even though the original two in France were sold for nearly twice as much, the less said the better. And why, of all possible markets to choose as an example of excessive competition (p. 132), do the authors prefer the mobile market in Britain, which is the only one in Europe with four operators each with well over ten million subscribers?

Given the book’s subject matter, and the constant generalised harping on about the importance of liberalisation as a causal factor underpinning the “swindle”, the fact that there is no specific reference to the 1996 Telecommunications Act in the USA, nor to any of the European legislation is also somewhat worrying if the reader actually wants to understand, as against simply to be told in outline, the story of the telecoms sector’s recent roller‐coaster ride. In fact, the general reader, let alone those of this journal, would be seriously short‐changed in every sense if they bought this book. It is truly the most superficial “book” on the telecoms sector this reviewer has ever read. Avoid.