For a captain of industry, Crowe displays a disarming modesty when he talks about his college experience. In the late 1960s, Crowe entered Rensselaer with the intention of becoming a physicist, but says he realized early I wasnt smart enough to do that.
Crowes discovery that his abilities and interests lay outside of pure science was, he says, a central part of what he considers an enriching college experience I wouldnt trade it for anything and led him to major in mechanical engineering.
After graduating from Rensselaer, Crowe took a job at construction powerhouse Morrison-Knudsen, and embarked upon a career path about which he is similarly self-effacing. I would assume like most graduates of RPI, I took a job as an engineer, and did OK, then had a handful of engineers working for me, and did OK. By the mid-80s, Crowe had become a vice president at Morrison-Knudsen, having also taken time out to earn his MBA from Pepperdine University.
In 1986, Crowe joined the Omaha-based construction firm Peter Kiewit Sons Inc., with whom his career has been intertwined ever since. At Kiewit, he ran a telecom subsidiary, MFS Communications, which he took public in 1993. In 1996, Crowe sold MFS to WorldCom for $14 billion, and Crowe even spent six months as WorldComs chairman of the board in 1997. In little more than a decade, he had become a major player in the telecom world.
Crowe left WorldCom because Kiewit had decided to start a new telecommunications firm to address the burgeoning Internet business. Crowe was handed control of a Kiewit subsidiary, the Kiewit Diversified Group Inc., and given license to build a broadband network based on Internet protocol instead of older circuit-based switching, which he set about doing in short order. In 1998, the group was renamed Level 3, a term that comes from a standard engineering model, which holds that there are seven levels to a network, from the physical connections in the ground at the base to the uses of the network in this case, the Internet and data transmission at the top. Crowes firm was designed from the start to specialize in the foundational levels.
Boom, Bust, and Recovery
During its first few years of existence, Level 3 concentrated on those physical layers, building out its Internet backbone network, which connects dozens of cities in North America and Europe, and runs under the Atlantic Ocean. Planning decades into the future, Level 3 installed 12 conduits far more than any of its competitors built so it would have room to upgrade its fiber-optic cables as technology progressed. Featuring leading-edge OC-192 transmission technology, which can carry 10 gigabits of data per second, Level 3 offers network space wholesale to major Internet service providers (ISPs), such as AOL and EarthLink, and directly to companies needing to send data around the globe.
The basic Level 3 network was completed in 2000, at about the same time the companys stock peaked at more than $130 a share. Later that year the dramatic crisis in the telecom world began what more than one observer has called the industrys nuclear winter. So many companies had laid down so much cable that the sector had an enormous oversupply of lines and a paucity of customers. According to one recent estimate, the amount of broadband cable available multiplied fivefold from 1998 to 2002, while technological advancements allowed 100 times as much data to be sent over those lines. But while capacity thus grew 500 percent, demand in 2002 was only four times as great as it had been in 1998.
As a result, many companies that had collectively spent billions of dollars constructing networks, including Global Crossing, Williams Communications, and 360networks, have declared bankruptcy. Telecom stocks have tumbled, and even Level 3s share price briefly plunged under $2, although it has since rebounded and has been holding steady around $6.
Crowe is frank about the change in fortunes Level 3 experienced as the telecom boom turned sour. Its been an incredibly difficult time, he says. The bubble was built on sensible enthusiasm for the future of broadband. But like so much in technology, the hype exceeded the reality in the short term. It has been very painful.
To survive, Level 3 sold some regional network lines, cut operating costs, and reduced staff by about 3,000 an inevitable reaction to the industry slump, but a move Crowe says he thinks about every day. The consequence wasnt simply an antiseptic need to do something to a balance sheet, says Crowe. It inevitably boils down to good people who lost their jobs.
Having cut costs, Level 3 has gone about refocusing its business on large-scale corporate clients, rather than the multitude of dot-coms that wanted broadband access in the late 1990s. Level 3 provides dial-up Internet access for the six largest Internet service providers in the United States. In addition, the worlds 10 largest telecoms now use network services offered by Level 3.
Those services helped Level 3 turn a profit in the first quarter of 2003. And while the companys performance was aided by some one-time-only transactions that raised revenues, any telecom firm making money in these economic conditions moves to the front of the pack. As a result, Crowe has won plaudits from the business press for his performance during the telecom slump.
Crowe has managed it well, said Business Week this September. And Level 3 looks better positioned than its immediate peers.
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