The backhaul business
Ron Mudry has seen many changes to the US telecoms market during his years in business in the southeastern US. He talks to Tim Phillips about telecoms then and now.
Ron Mudry was one of the faces of the late 1990s telecoms gold rush. Ten years ago, as the CEO of the regional wholesale carrier Progress Telecom (a 1998 start-up subsidiary of utility Florida Progress Corp), he went from running a business with one employee to 100 in just over a year. “It seemed an unbelievable opportunity to start something where the chances for success were high,” he told Florida Trend in March 2000.
Mudry was recruited as the first (and only) employee of Progress after 15 years at GTE. He joined a group of other small backhaul businesses in the US which grew rapidly on the demand for broadband. It helped that Florida was the landing point for several cables, and that the boundless optimism of the time encouraged small companies to grow large quickly. By mid 2000, Progress Telecom had 106,000 miles of fibre and 80 PoPs in the southeastern US.
Today, Mudry is still in the backhaul business, but this time it’s wireless: as chairman, CEO and president of Tower Cloud, he sees a similar opportunity in solving the bottlenecks that will inevitably arise from the deployment of 4G. That much has remained the same.
He’s also still based in the southeast states: Tower Cloud has networks in Miami, Orlando and Atlanta. It also has the investment – $20 million of private equity funding – but compared to working in the gold rush that was just coming to an end 10 years ago, Mudry would much prefer to be a CEO now.
The most obvious reason is how investment is acquired and used: today, he says, it’s not for growth at almost any cost. “The industry in those days was all about expansion. Smaller companies with a good business model could take market share,” he says. But taking market share quickly made some start-ups look more attractive as long-term investments than they were. Mudry criticises the lack of careful planning. “One good change is that the industry overall has a lot more financial discipline these days,” he says. “You can see changes in the way it structures transactions, how it is more disciplined about where it invests and how you need the anchor customers already lined up. Ten years ago, people were willing to take a bet on the future a lot more.”
Looking back a decade, much of the buzz around Progress Telecom in the press was less to do with its longterm chances of survival – Progress Telecom was still under Mudry’s control when it was acquired by Level 3 in 2006 – and more to do with the opportunities for an early initial public offering (IPO) and a killing for investors. Florida Trend carried excited industry speculation that Progress could match the share performance of Northeast Optic Network, later Neon Communications, whose stock had jumped from $1.61 to $75: but Neon Communications would file for Chapter 11 in 2002.
It’s not just the money that has changed, Mudry says, but the people who are using it. Unlike the dotcom boom, when too much experience was almost a disadvantage, Tower Cloud boasts that its six most senior managers have 125 years of telecoms experience between them – careers which now take in two booms and two busts for the market. Mudry’s other observation is that now it’s possible to hang on to staff at every level of the business. Without the spectacular (on paper, at least) stock option offers of 1998 and 1999, there are fewer speculative job offers, and more of an opportunity to build a team for the long (back)haul.
That said, managers have to work harder too. “Employees have changed. You see it in the flexibility, the way that the same employees can wear different hats. They take more responsibility, more ownership for building the business. Think about 10 years ago: the number of employees in our industry was expanding quickly, but they were constantly moving from company to company. They were not loyal. Now I find that employees realise their role is critical, and the way they work is more flexible and mobile than it was,” he says.
Mudry piloted Progress through the telecoms boom and out the other side of the bust, unlike most of the other start-ups of the era. This time with Tower Cloud, he says, the relative stability of finance and people in his company bring their own benefits: “I’m more optimistic than I was last time round. The economy has been down, but we’re still moving forward. It’s easy to make money when the market is going up, but we have always had a pretty high degree of financial discipline here.”
Ron Mudry is chairman, CEO and president of Tower Cloud.