But this latest quarter, Broadwing looked like any other service provider. It lost 15 cents a share on weak broadband revenues, causing its stock to drop nearly 25 percent in a day. Late last month, Broadwing began a reorganization, with President Rick Pontin leaving to "pursue other interests"; Kevin Mooney, executive vice president and CFO, assuming the new position of COO; 900 layoffs; and the closing of eight of its 11 Web hosting centers and six branch offices.
Broadwing came into being after local carrier Cincinnati Bell merged with long-haul player IXC in 1999. In one fell swoop, Broadwing inherited a profitable local business, including a dense metro space within which to roll out DSL, and gained the then-15,000-mile fiber network that IXC had so painstakingly been putting together.
Talk to Ellenberger, and it won't be long before he starts boasting about the services riding on top of the company's optical network. He claims to have been the first to deploy a large optically switched network, but he knows he won't be the last. "While many of the players that compete with us in the carrier space were trying to sell dark fiber, we were offering lightwave services through this optically switched network," he says. The trick is to stay ahead of the competition, and that means staying aggressive. One technique is to bundle services. "Customers like the way we bundle services," Ellenberger says.
Despite Ellenberger's love of bundled services, many customers prefer best of breed. In fact, earlier this year Sprint ditched ION, its ambitious attempt to sell integrated services.
Broadwing, through its Bell properties, is also ultra-aggressive about DSL. "Eighty-five percent of Cincinnati is available for ADSL, which is just a huge availability differentiator between us and the rest of the country," Ellenberger says. "We are trying to be a role model for the other RBOCs."
 Rick Ellenberger, CEO, Broadwing
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Broadwing has scaled back a few ambitions. "We abandoned the small-end business, closed a telemarketing center, and moved resources up to the national account and global level," Ellenberger says. In its sales to carriers, Broadwing has backed away from the ISP space and is focused on the top carriers, such as WorldCom and Sprint.
Broadwing may have a lead with its optically switched network, but others are on its tail. "Qwest has announced it is developing one behind us, and Williams is there as well, but we have about a year head start," Ellenberger says, adding that bigger guns may be on the move. "I think there's going to be some RBOC hooking up with long-distance providers," he says. But with his new network and the nimbleness of being smaller than the mega carriers and huge RBOCs, Ellenberger says he can keep his edge.
Sycamore Learns Patience
Two years ago Sycamore was the poster boy for new-economy success. Its co-founder and chairman, Gururaj "Desh" Deshpande, was quoted and photographed everywhere. But Deshpande's vision of a new optical-based worldwide network, with flexible and nearly unlimited bandwidth, has been tough to realize. The CLECs, a new breed of feisty data service provider, have pretty much collapsed, and the incumbents have put the brakes on their buildouts. As a result, Sycamore downsized this year and is now preparing to take the gloves off in 2002.
In April, the company laid off 140 employees, followed by 240 more in October. But Sycamore has been loath to touch its critical R&D personnel pool, which constitutes roughly half of the work force. With the backing of some 350 engineers, Deshpande plans to push his technical advantages.
 Gururaj Deshpande, Chairman, Sycamore
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"Sycamore's main competitive advantage is that our intelligent optical networking products are based on a software-centric architecture," Deshpande says. "This advantage comes into play against our two types of competitors: legacy equipment vendors that supply traditional SONET/SDH, ATM, DCS or TDM equipment, and other intelligent optical networking companies. With software as the intelligent foundation, we can rapidly integrate new hardware as innovation drives the cost down and the functionality up. This software intelligence also lets us develop technology that meets the capital and operational objectives of our customers but lets them support existing service more efficiently and tap into new sets of optical services made available by the promise of 'bandwidth on demand.' "
This concept now applies not only to core optical switches, but also to edge switches that Sycamore gained when it bought Sirocco. Soon after the purchase, Sycamore ported its routing and signaling software to run on the Sirocco boxes.
Faith in the concept -- and $1.2 billion in the bank -- gives Deshpande the patience to wait out a brutal market. "We need to make sure we don't blink on the new R&D initiatives and continue to invest in new architectures so when the market comes back up in 12, 18, 24, 36 months, we have the best technology," he says.
Knowing he is playing a waiting game, Deshpande is driving down costs to conserve capital, looking to burn some $15 million to $20 million a quarter. With more than a billion in cash, that's a lot of quarters to wait. "What we will do is just stay focused on developing the technology and really building the relationships with the Tier 1 customers, all the big guys, because they are the only ones that have the money to buy things," he says.
So how do you keep a company motivated in the face of layoffs and economic stagnation? "When the market is so static, we tend to pick more internal goals, things that need to get done in the next 24 or 36 hours. People feel good about those things," he says.
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