Telecom industry could use a McNealy

By David Rohde
Network World, 10/18/99

The way the story goes, MCI WorldCom CEO Bernie Ebbers called Sprint CEO Bill Esrey on an Iridium phone while Esrey was out horseback riding on his ranch. Esrey got off his horse, plopped down under a tree, and the telecom executives had a pleasant talk.

They also met in a Kansas City airport hangar and at the Willard Hotel in Washington, often chatting about their respective ranch holdings. Eventually they developed code names for each other.

Now does anyone else besides me find this just a little offensive?

I thought these two guys were supposed to be cracking each other's skulls trying to win your business. Instead, here they are making nice-nice.

Can you imagine Scott McNealy cooing sweet nothings into Bill Gates' ear?

Say what you will about the Sun CEO, McNealy is not out there trying to appease his archrival. Sure, his attacks on Gates can be awfully ham-handed. I remember when McNealy appeared before the Senate Judiciary Committee and, mid-tirade, cracked one of his favorite jokes likening Microsoft's dominance of operating systems to a desire to control the English language, "especially the letters N and T." At that moment, I happened to be looking at Ted Kennedy, and the expression on his face was unforgettable ("What the @#!& is this guy talking about?").

What once seemed insufferable from McNealy now seems brave and forthright in the face of what Federal Communications Commission Chairman William Kennard calls a "surrender" by Sprint to MCI WorldCom. What's particularly galling is this: How many times have you heard Ebbers and Esrey lecture the rest of the telecom industry - especially those awful lowlifes, the regional Bell operating companies - about the glories of competition?

This is serious business that can't be glossed over with platitudes about consolidation and convergence. I can't think of another merger quite like this anywhere in networking. When SynOptics and Wellfleet merged to form Bay Networks, the deal basically combined a LAN company and a WAN company. When Bay, in turn, sold out to Nortel, it combined a data company with a voice company. When Cisco and Lucent made their dozens of acquisitions, they were filling in holes - much as Sprint could have solved its local-loop problems, and MCI WorldCom its wireless problems, that same way.

But MCI WorldCom and Sprint are like Coke and Pepsi. (Remember, AT&T's data market share, especially in the Internet, is less than its overall strength.) The closest thing to this merger is the one pending between Exxon and Mobil, and those are two among seven competitors, not two among three.

Much is said about Sun's (and others') manipulation of the government to try to stop Microsoft. But at least you can say McNealy is being consistent in arguing for a choice. By contrast, one gets the feeling that Ebbers and Esrey don't really believe Kennard's threats, given the FCC's caving on every other telecom merger. Have they no fear?