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Cable exec takes know-how to telecom

Armed with decades of experience, telecommunications industry executive Leo Hindery is looking to rise to the challenge of Silicon Valley.

SUNNYVALE, Calif.--Armed with decades of experience, telecommunications industry executive Leo Hindery is looking to rise to the challenge of Silicon Valley.

A notorious hard worker and early riser, Hindery already had a lifetime of accomplishments in the communications industry under his belt when he recently took the helm as chief executive of Global Crossing, the three-year-old, Bermuda-based communications carrier that began as an international undersea network builder.

Hindery's no-nonsense ways worked well in the clubby cable industry, where he took credit for turning around the struggling Tele-Communications Inc. (TCI), spurring AT&T's interest in a takeover. Now he hopes to put his business acumen to work at one of the world's largest and most promising start-ups, a new-age communications firm with global Internet aspirations.

Hindery, 52, may be best known for helping cable industry mastermind John Malone right a struggling TCI. He also led Ma Bell's efforts to provide local phone service and high-speed Net access to millions of Americans.

But Hindery's career has not been without controversy. The executive clashed with Excite@Home chief executive Tom Jermoluk when the high-speed Net access arm of AT&T made a concerted effort to incorporate content into its strategy, rather than solely providing high-speed lines to consumers. Hindery also disagreed with AT&T chief C. Michael Armstrong, leading to his departure from the company last year.

Initially brought in to lead Global Crossing's Web hosting unit to an initial public stock offering, Hindery was soon tapped as CEO for the entire company. The start-up already has had its financial misfires and strategic blunders, and it's up against some of the world's largest and most powerful companies--outfits such as AT&T, MCI WorldCom, Deutsche Telekom and Vodafone AirTouch, among others.

His leadership approach may be just the cure for a company that has seen its losses more than triple--though some of that was related to acquisitions--amid a changing business plan. Analysts say Global Crossing, which used to simply supply undersea fiber-optic cable capacity on a wholesale basis to other carriers, has quickly ballooned into a much larger company that also offers retail consumer communications services and Internet hosting. It even made a bid to acquire local phone company US West last year, before rival Qwest Communications International swooped in at the eleventh hour.

Hindery on why he joined Global Crossing
To right the ship, Hindery has lured a cast of former cable industry colleagues to Global Crossing.

Hindery loyalists say he rolls up his sleeves, personally taking on many tasks others might delegate. "He networks 109 hours a day. He's his own president. He's his own CFO. He shoulders a lot of responsibility. He's a hardworking, direct guy," said Mark Coleman, executive vice president and general counsel at GlobalCenter.

Still, despite his stellar resume, Hindery has left choppy waters in his wake, including a stormy eight-month stint at AT&T and a handful of executive changes during his tenure at GlobalCenter.

Company insiders say Hindery didn't appear to connect with many Internet-minded GlobalCenter employees during his short stint there before his promotion to chief executive of Global Crossing.

"We have people with purple hair and earrings. He looks at them like they're from another planet," said one former company employee, who spoke under condition of anonymity. "But guess what? They look just like our dot-com customers."

But Hindery disputes the notion that he can't run a company in the Net era, noting that his performance boils down to running a solid business, no matter what that business may be. He sat down recently with CNET to discuss Global Crossing, his experiences in the communications industry, and his views on the disagreements he has had with fellow executives on strategy and policy matters, such as the "open access" battle waged in the cable and Net industries for much of last year.

CNET Global Crossing began with a very simple business model, and that was selling undersea fiber-optic cable to other communications carriers. That has since changed because of your acquisition strategy, including Frontier. What is Global Crossing now?
Hindery: The intent is to run it as three companies. This company is exactly three years old. For a handful of weeks, it believed that its destiny was simply to be an Atlantic carrier, and within months knew that its destiny was to be this global transport network company.

Frontier was a thoughtful way to add route miles in the United States, plus the (local phone company). Global Crossing's got about 101,000 route miles (of fiber-optic cables). Of those 101,000 route miles, about 75 percent are constructed and 25 percent are acquired. Frontier and a company in the United Kingdom called Racal were the acquisitions. One brought 20,000 miles and the other 5,000.

As fascinating and complex as sub-sea (network) construction is, it pales alongside terrestrial in a country as geographically immense as the United States. So 20,000 miles U.S. would have been a multiyear encounter. By buying Frontier you move that time frame way up. Going forward, the intent is to run the companies side by side by side. Global Crossing, Asia Global Crossing, which is nothing more than the Asia counterpart of the rest of Global Crossing, and then this company that we're sitting in today, GlobalCenter. I think running them that way is quite helpful. They have a lot in common, but they're quite different.

There are dozens of new networks being built. Is there an infinite demand for bandwidth?
It's really two questions. An aspirant (network builder) and an arrived company are not the same. You can't wish yourself into this space. So people who come and say they want to be in the space, contrasted with people who've actually gotten there, are not one and the same. Notwithstanding, every time I've tried to estimate on a personal level the demand for high-end telecom services I've missed it, by factors. Nothing in life lasts forever, but for now it seems to be almost insatiable. But then again, those who have announced their intentions, and those who would actually do it, may not be one and the same.

Global Crossing's stock has been in a slide since earlier this year, even before the recent marketwide sell-off. Why does Wall Street not value your company as highly as it did at one time?
Notwithstanding, I think it's fair to point out that in the past couple weeks, the stock, in what continues to be a very down-draft market, is actually quite flat.

I think we were less than crisp in talking with our shareholders. I think we confused some people with our actions last fall related to US West. There was some sense that we might be distracted by opportunities in advanced wireless and the stock lost some value...There were times right after the first of the year when I thought we were less than crisp. But the one thing I do think we know how to do is run the company well.

Was attempting to buy US West a bad move for Global Crossing?
In hindsight, we were not emotionally or managerially ready for an endeavor that ambitious. I've run those kinds of operations in my past; they're very hard to run. They take exceptional people, and you've got to be willing to devote a ton of energy to them. And I think we confused people by suggesting this largely high-end commercial company could, in its own mind, perhaps be just as capable managing a residential (local phone company). I kind of doubt it.

Do you think Qwest will have challenges with US West, especially based on some of the very public disagreements they've had?
I think those (disagreements) have perhaps made it more challenging...It's hard to go back to your wife when you've told her you don't like her. The more fundamental challenge is just running these companies. That's very hard to do. I admire Qwest for doing so. I think it's going to be a challenge.

Why did you and AT&T chief executive C. Michael Armstrong appear not to get along?
I was the seller, he was the buyer. It's very, very rare in corporate America for the seller to stay. I'd had a wonderful, wonderful time running TCI. I was arguably one of the leaders in the U.S. industry. It was a magical time in my career and my life, and I sold it. I loved every minute of it, and I loved those people like I loved no others in my life. We turned a company that was in the eyes of many quite broken, and we went up nine-and-a-quarter times in market valuation in 25 months. And it's just hard to be the seller. I wish Mike nothing but the best, and I hope he is imminently successful.

Why did you and Excite@Home chairman Tom Jermoluk clash?
I hoped it was never personal. I had a very, very strong opinion on the issue of open access. I had been in the cable industry for a long time, and I had an institutional legacy. I felt I had some insight into the issue of open access, that if it had been addressed thoughtfully and open-handedly in January of 1999, all of the deep-seated sentiments would not have been necessary.

Hindery on the globalization of communications
I thought that buying Excite flew in the face of a neutral approach to Internet access. I thought it was extremely hard to tell (Yahoo's) Jerry Yang and Tim Koogle and (Lycos CEO) Bob Davis and MSN and Snap and Go and XYZ and AOL and others that we were neutral when we were buying our own portal. I believed that then; I believe it today. I was very troubled with the mixing of the apples and the oranges. I felt that both Congress and the FCC would view self-serving behaviors in this space adversely and that we ran an enormous risk of being perceived as conducting ourselves in a self-serving fashion. So I didn't want us to buy Excite.

Having bought it, I was strongly of a position that we needed to own it in a way that was nondiscriminatory to other portals and aggregators. And therein laid the area of dispute between Tom and myself. He wanted Excite to be exalted. He wanted to advance his portal to the exclusion of other portals. I was around when this company started called @Home. When it became Excite@Home it was a different company. I had a multibillion-dollar business based upon what I thought would be perceived forever as balanced and fair open access.

This was never personal with me and Jermoluk. Tom wasn't around in '92 when the cable industry was pilloried for its discriminatory behavior relative to its owned content. The 1992 Cable Act was not about rates, it was about practices related to the industry's owned programming that was thought to be unfair to consumers. I was there. I knew that history. So now who was right?

So what do you think of open access today?
I think that open access is a sine qua non to responsible relationships with regulators as well as consumers. And any appearance or action that is contrary to that is grossly inappropriate. The Internet's strength is its openness, its nondiscriminatory nature. And no one should be precluded by gatekeepers from having their content readily available to all consumers. It's bad business. It's bad customer relations, and I think it may in fact be unethical. There would have been no Portland, no San Francisco, no Boston, no Miami in my opinion had there been a more advanced, and a more open, sense of this issue when it first reared its head.