Newspaper article THE JOURNAL RECORD

Williams Communications: From Brainstorming Sessions to Chapter 11

Newspaper article THE JOURNAL RECORD

Williams Communications: From Brainstorming Sessions to Chapter 11

Article excerpt

TULSA -- A pioneering idea at the start of the technology boom spawned now bankrupt Williams Communications Group and made its former parent company a fortune.

But neither innovation nor its bigger brother could save Williams from the whipsaw of mounting debt and the telecommunications meltdown. The Tulsa-based broadband wholesaler filed for bankruptcy Monday.

Williams began in a 1985 brainstorming sessions where executives of a Williams Cos. subsidiary were wrestling with miles of idle natural gas pipelines.

At the same time, long-distance phone service companies, who were thriving a year after the Bell System breakup, needed fiber-optic lines to carry messages.

For Williams Cos., a Tulsa-based energy firm, the opportunity to diversify into telecommunications was too good to pass up. It became the first company to lay high-capacity fiber-optic cables in its decommissioned pipelines.

Soon, Williams Communications, then known as Williams Telecommunications, built a nationwide network and found its niche as a long-distance wholesaler, selling use of its fiber-optic lines to companies like Sprint.

Rapid growth attracted a suitor in 1995. LDDS Communications, which later became Worldcom, bought all but one fiber of Williams Telecommunications' 15,000-mile network for $2.5 billion.

Williams Cos. used profits from the sale to acquire Transco Energy, a large Houston-based pipeline company, and fellow Tulsa energy company Mapco. It nearly tripled in size.

In January 1998, after the expiration of a noncompete clause with Worldcom, Williams Cos. announced a $1 billion effort to re-enter the wholesale broadband market, using its one remaining strand as a starting point.

Williams Cos., whose assets had grown to more than $14 billion, now had the balance sheet to back construction of a second, larger network for subsidiary Williams Communications.

The company borrowed heavily to build more fiber-optic cables, hair-sized glass lines capable of transmitting thousands of signals at once. The network grew to 33,000 miles connecting 125 cities on five continents.

Stock value soared, peaking at more than $40 per share in summer 2000, as the company attracted blue-chip customers and rode the telecom wave. Revenue was growing about 10 percent per year, stoking confidence among executives, analysts and investors that the young high-tech firm would soon become profitable.

The subsidiary outgrew its space in Williams Cos. headquarters, so a 15-story technology center was built next door. Fully wired for video and data transmission, the all-glass building opened in July and soon became known as "the dirty ice cube" for its off-white nighttime translucency.

"This is about who our customers are -- the biggest players in the telecom business -- and showing them a state-of-the-art facility, a leading-edge company that's going places," Williams Communications chief executive officer Howard Janzen said then. …

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