Just in! 3:00 p.m. (PST) update
The Wall Street Journal reports Qwest's former chief executive Joseph P. Nacchio could face civil charges for the accounting scandal at the telco. Good. J.R. Snyder Jr. (internal link) says it's really difficult to appreciate from a distance how much resentment customers now have against the Qwest, the renamed, former regional Bell System telephone company. What went on?
Corporate raiding came to telecom, tearing down what had been carefully built up over decades. It's what happened when the Roman Empire finally fell. People in formerly conquered territories did nothing to surpass Roman building, they did the opposite, pulling carefully laid stones out of well made Roman roads to use for their own houses and walls. Public infrastructure fell apart and would not be improved on until the 18th century.
Two years ago U.S. Representative Diana DeGette laid out the Qwest story before a House subcommittee:
"As most of my colleagues know, US West, the predecessor to Qwest, was created with the break-up of Ma Bell, as one of the Baby Bells serving the Rocky Mountain region. US West was a solid, profitable, and traditional company with strong ties to the community. The stock certainly wasn't the riskiest, but the company was a valuable part of the community and a good corporate citizen. Exactly what you'd want your grandmother to invest in."
"In June 2000, in the waning days of the go-go Internet boom, a group of cowboys by the name of Qwest rode into town and acquired US West. These cowboys promised big changes. Higher profits. New innovation. Instead of a traditional telephone company they would turn the new Qwest into a model of the so-called new economy. This led to a corporate transition bumpier than most. The top management changed almost completely. Service problems abounded. There were painful layoffs and an almost complete halt of corporate charitable giving. This led to a dramatic change in corporate culture that had a serious affect on morale."
"In the years since Qwest's new management took over, their bad business decisions have had a significant impact on our local economy, the local workforce and the community as a whole. And now it appears that the problems might be much worse than simply poor business decisions. That is why we are here today. Not to belittle anyone or condemn without proof of wrongdoing, but rather to determine whether we are dealing with another instance of corporate malfeasance."
An anonymous source tells me:
"An AP report says the story was broken by a Qwest union (Communications Workers of America) official. As you can see there is no mention of that in the WSJ article.:
"Officially Qwest is not acknowledging any of the Wells notices to former executives because they are no longer a part of the company. I'm sure there's legal reasons also. Additionally, and this is alluded to in the WSJ story ("Qwest continues to face shareholder lawsuits and an investigation by the Justice Department. Qwest recently set aside $300 million in addition to an existing $200 million reserve for litigation."), Qwest faces some of it's own legal problems which I'm now hearing from inside that are even deeper than I thought."
"I am relieved, of only slightly to read: "To live up to high expectations, Qwest senior executives and staff participated in a culture in which fraud and hype were pervasive, according to people with knowledge of the SEC's final draft complaint against the company. The report also says Qwest hyped communications about its performance with investors." I was corporate staff and I was becoming so stressed out from the conflicts with my values that it was making me ill. I didn't participate in supporting any of those things, to the detriment of my employment, which I'm way beyond dwelling over."
"In any case, the CWA Union VP, John Thompson, who made the announcement in a formal press conference, naturally infuriated current Qwest execs. CWA is laying the groundwork, in their own inimitable way, for labor negotiations, a la the major airline carriers, because Qwest is about to start asking for concessions from the union."