"A couple of years ago, Washington D.C. was the major location nationwide, and just about every one of the competitive players were here," said Tom Koutsky, a Washington-based lawyer who has worked in the industry since 1994.
In the spring of 2000, the stock market collapsed under the weight of massive overbuilding and overspending. When the market reversed course, Washington's telecom sector fared badly. One by one, familiar local names like Net2000 , Teligent Inc., PSINet Inc. and Winstar LLC, and smaller companies such as CityNet Telecommunications Inc. and Velocita Corp. shut down.
William G. McGowan, shown here in 1979, moved MCI to 17th Street NW to better lobby the government to open long-distance calling to competition.
(Douglas Chevalier -- The Washington Post)
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An Entire Industry Downsized Employment and venture capital funding is down sharply from the Washington area telecom industry's peak.
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_____Venture Capital News_____
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InPhonic Shares Debut, Gain (The Washington Post, Nov 17, 2004)
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Contracting Pioneer at Ease (The Washington Post, Nov 1, 2004)
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Venture Capital Picks Up From 7-Year Low (The Washington Post, Nov 1, 2004)
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Ruckus Seeks to Raise a Digital Community (The Washington Post, Nov 1, 2004)
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The Buyout Business Has Changed, and So Has Frederic Malek (The Washington Post, Oct 25, 2004)
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Venture Capital Section
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The losers even included such former stalwarts as MCI and XO Communications Inc. Both weathered a trip through bankruptcy court to emerge diminished.
The bankruptcies, sales and restructurings have left Washington's telecommunications industry much smaller. And if the Federal Communications Commission maintains its more hands-off approach to oversight and regulation, it may reduce the incentive of telecom companies to be based in the Washington area, said Jeff Kagan, an independent industry analyst based in Atlanta.
The local telecom companies that survived and those that have recently rebounded are focused -- like companies nationwide -- on the areas expected to be big sectors of growth in the coming years, including wireless technologies and phone service over the Internet.
The Washington region boasts few industry-leading players in these fields but rather has numerous smaller companies trying to develop business in niches that big companies have ignored.
In the wireless field, Nextel is the biggest local player, with more than 15 million customers. It is the smallest of the five national wireless carriers, but it is popular because of its "push-to-talk" walkie-talkie service. The company, with a network that was cobbled together from walkie-talkie licenses bought from taxi-cab dispatch operators, continues to develop new technologies and grow.
In addition, Nextel and other telecommunications companies, like MCI, have become a breeding ground for a new generation of local entrepreneurs.
"I think you've got multiple telecommunications companies in addition to Nextel, all of whom have spun off or graduated people who are able to address the shortcomings that big companies aren't nimble enough to address," said Michael Riemer, a former Nextel executive who left two years ago to work at Trust Digital in Tysons Corner.
Trust Digital, which recently received $3.1 million in funding from Core Capital Partners LP, a Washington investment company, makes software to protect wireless phones from hackers and viruses. Bluefire Security is developing similar technology in Baltimore. It recently received an undisclosed amount of funding from Motorola Inc., Nextel's biggest supplier of phones.
