Verizon Unthered is a book by McMurray about the time Ivan Seidenberg was at Verizon.
First it must be noted that this is a book about Ivan
Seidenberg and not by Ivan Seidenberg. If the notices are correct the primary
author is McMurray with inserts by Charan. The book is a hagiography of the
subject and via that a presentation of the evolution of Verizon from the time
of the ATT breakup in the early 80s to about 2019. Unlike the book by Coll, TheDeal of the Century, which is a brilliant exposé of the actual ATT breakup,
this work is a view of the evolution of one of the Baby Bells from then to
almost now. Likewise unlike the classic book by Alfred Sloan, My Years with
General Motors, the book does not purport to be a personal reflective.
Prior Nexus
It is worth reflecting that I worked for Seidenberg in the
early 90s. Two issues are quite insightful. First, both he and I agreed that I
needed no title, no rank, and all that was known was I reported to him. My job
was to clean up messes that had resulted from poor choices from acquisitions.
The closest I got was an introduction to the Board as “Doctor Death”. My second
observation was at a meeting with Seidenberg about planning, the VP of HR told
a tale about the types of people in the various former ATT elements. He noted
that; “the A students went to Bell Labs or ATT, the B students to Western
Electric or Long Lines, and the C students to the operating companies”. I
tried to deconstruct that remark, initially as humor. But there I was an MIT
PhD, having worked at Bell Labs, with all those C students. It was no longer humorous;
it was a fundamental definition of “culture”. Culture is a theme that pervades
this book, especially in the dicta by Charan.
Death of Wireline
The wireline business is the old copper line telephony. I
recall that in 2002 I wrote a paper for OSTP, the White House Science Advisor’s
Office on the Imminent Collapse of Telecommunications Industry. The point was
twofold. First wireline was being disintermediated by wireless and second IP,
Internet Protocol, was displacing classic telephone networking. Clearly
Seidenberg saw that and his actions to bolster wireless by scale, thus the Bell
Atlantic deal and then to sell off many rural properties to companies like
Frontier et al was prescient. However the recognition of IP came a bit too
late.
Evolution of Wireless
Wireless was a displacement technology. It required less
capital per subscriber than copper and had shorter evolutionary lifetimes.
Namely we see it go from 1G to 5G in relatively short periods as compared to
the time between crossbar mechanical switches and electronic switching. Scale
is critical because it can drive down the costs. But it is just infrastructure,
and the value added is de minimis. Moreover wireless was unlike the old
telephone world, there was competition. Dealing with competition was something
the old Bell companies had no experience in. One of my early experiences was
explaining that in the real world that profit was revenue less expenses whereas
in the regulate world profited was a return on assets, no matter how
inefficient you may have been. Thus the Seidenberg approach is laid out his typical
manner of bringing competing elements together and letting the best one win.
The result was a Bell Atlantic victory and a dismemberment of the old NYNEX
mobile, a brilliant move.
FIOS
Fiber to the home sounds like a great idea. I actually tried
it out in the US in the early 2000s after doing some in Europe. However it is
very costly. It is tens of thousands per mile just to run the fiber, then costs
to acquire and equip customers, and then to have the culture to provide content
and maintain customers. The most significant barrier to entry is the CATV
incumbents. They are brutal, they hold the high ground, many own the very
content you want to provide.
How Verizon ever managed to present a viable business case
is beyond reason. But they did. Here I think Seidenberg may have allowed the
folks to go well beyond their capabilities. The Telco people are street
fighters where as the Cable folks are strategic warriors. The true barrier to
entry is the incumbent, and the Verizon management did not seem to truly grasp
that issue. Thus lots of unused fiber. It does not age as well a good wines.
FLAG
FLAG was a global fiber network. It was a great idea , a
first, and it demanded great skills to implement. The problem there was again culture.
As staff requirement were needed they drew from the operating company base.
Unfortunately, few if any even had a passport, no less international business
skills. The book I believe fails to see the less in this failure.
MCI Acquisition
MCI was left hanging after WorldCom collapse. It had a sales
culture and its acquisition by Verizon was spot on. It added an element that
was missing, the ability to deal with large business customers and provide them
with excellent fiber backbone networks. The discussion in the book about this
are well worth the read.
The World of Content
Probably the biggest business mistake made by the company
was the acquisition of AOL and Yahoo. AOL was done in 2015 and Yahoo 2017. I
recall that in 1996 I was teaching at Columbia Business School and one case I
did was on AOL. I noted that AOL’s business model was defunct and that in many
ways it was then just a Potemkin village. Yet 20 years latter after multiple
signs of failure Verizon buys it. Then Yahoo. The they all get dumped at great
loss to the shareholders. The book lacks any self-reflective understanding of
the reasons why this happened.
Deals, Deals, Deals
In many ways this is a book about deals. Some were great,
MCI for instance, some were disasters, AOL. Seidenberg shows brilliance in executing
deals that lie in his plane of competence.
Missed Opportunities
The Internet space seems like a major set of missed
opportunities. But it has always been a blind spot for Telcos. That is strange
since in the late 80s my colleague at NYNEX was building and supporting NYSERNET,
the IP based network for NY schools. It later became PSI, one of the first
Internet carriers. I recall I asked Bob Kahn, a father of the Internet to give
a talk to senior NYNEX management about the Internet in 1987. After the talk
the head of MIS came to me and berated me for having such a fool speak. This
would never happen, no Internet! This was the cultural base of the missed
opportunity.
However Seidenberg saw some of this with GTE and BBN but the
slowness to respond may have been driven by regulatory issues. There also was
Genuity, an international carrier populated by NYNEX folks that had a great
opportunity but alas went bankrupt. That too was in my view a cultural failure.
Overall
The major deficit of this book is the lack of any self-reflection
and moreover any assessment of the weaknesses of any of the principals
involved. It reads that every step and decision was at times stressful but had
flawless results. My assessment is based upon being an inside observer but not
an insider. I had come from the competitive world of cable and start ups before
rejoining NYNEX/Verizon, and thus I had poor political skills, if any, but
strong entrepreneurial capabilities and experience. Thus my assessment is filtered
by that predisposition. In my experience, Seidenberg was a brilliant organizational
politician and utilized people to their best. He kept the company well situated
through a complex period and managed to see it grow exceptionally well. His
successors, not so well.
Finally the style of the book in my opinion is chaotic. It
is a staccato of vignettes about one deal after another interspaced with charts
of aphorisms by Charan, that real like power points from a Harvard Business
School lecture. There is some chronological flow but little exogeneous
environment inclusions showing what may have drivers to decisions.
However, Verizon has lost 50% of its market value in the
last year (2022). It had dumped AOL and the other “ego” driven buys and
attempts to use 5G as a springboard. However, the management never really comes
to ask the key question: “What business are we in”. I would say
perhaps the need a Lou Gerstner who resurrected IBM after the collapse of large
main frames.
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