Still Standing

By Khali Henderson

J. SHERMAN HENDERSON III,

or Sherm, as he is known to most everyone in the telecom industry, is aptly described by those who know and work with him as persuasive, the consummate salesman, a cheerleader. He has used those attributes over the past 20-plus years to build two telecom companies and to lead the competitive telecom industrys associations through the best and worst of times.

Henderson is CEO of Lightyear Network Solutions LLC, a telecom reseller formed in 1993 as UniDial. His alter ego is the chairman of COMPTEL, the industrys remaining competitive association. COMPTEL over a span of six years acquired Americas Carriers Telecommunications Association, the Association of Communications Enterprises (ASCENT, formerly the Telecommunications Resellers Association [TRA]), and the Association for Local Telecommunications Services. Henderson joined the board of TRA in 1995, and served as its chairman for three years. In 2004, he was elected and served as chairman of the board of CompTel/ ASCENT in the first elections after the two were merged in fall 2003. He retained the post when COMPTEL and ALTS joined forces a year ago, and was reelected chairman last fall.

Sherm is a natural born marketer with boundless enthusiasm, says Ernie Kelly, an industry consultant who was president of TRA/ASCENT during Hendersons chairmanship. I used to refer to him as a cross between P.T. Barnum and the Energizer Bunny. When you combine those traits with a willingness to pitch in and do the heavy lifting to find compromises among potential competitors, you have a superb candidate for leadership in a trade association.

Earl Comstock, the current CEO of COMPTEL, says Henderson has played an integral part in ensuring that our member companies have a strong and effective voice within the communications industry.

Henderson told PHONE+ that as the spokesperson of the competitive industry, he is pleased with its progress. Did we as an association accomplish what we set out to do? Absolutely. All you have to do is look at pricing today. All you have to do is look at the bundling of products, he says. The innovation, the creativity and the competitiveness came out of the entrepreneurs of this country, came out of the very people that were allowed to get in and compete. If I had to say one word or two words: Mission Accomplished.

Though Henderson is upbeat about the gains competitors have made, he concedes disappointment with the litany of changes that were made to the Telecom Act of 1996. My regret is we didnt get to follow out and finish what the dereg act was that was bringing competitive pricing and innovation to the market, he says. Being a self-described optimist, he is buoyed by tenacity of the American entrepreneur. There is no way, no matter how many mergers happen, that the competitive juices of the entrepreneurship of America is not going to come out and figure out how to get niche markets, how to create better facilities, better switches, better pricing and better products.

Henderson has first-hand experience with building better mousetraps. The executive was first introduced to telecom when he was a restructuring consultant to several banks. The gig landed him at Charter Network, a company that resold banded WATS lines. If that doesnt date me, I dont know what does, he says. The company went on to install DSC switches and to create resale agreements for Centrex services and eventually sold to LiTel Communications, which became LCI International and was later sold to Qwest Communications International Inc. Henderson stepped back from the telecom industry for three years due to a noncompete following the sale. He was Competitions Champion Sherm Henderson on Fighting the Good Fight lured back by a proposal from Roy Wilkens, then CEO of the original WilTel Inc. The two along with a few individual investors formed UniDial in 1993 as a reseller for WilTel that used an indirect sales channel made up of agencies that bought distributorships at $25,000 a pop. Henderson says UniDial signed some 225 distributors and met a $500 million commitment to WilTel during a time when wholesale rates were plummeting from 8 cents to 4 cents. When WilTel sold to LDDS (later WorldCom) in 1995, its 12 percent stake went along. The new Williams Communications, then purchased a 16 percent stake for $27 million.

In May 1999, UniDial signed a $300 million UNE-P resale agreement with Bell Atlantic the largest for the ILEC at the time. Agreements with the other Bells followed. The company also moved into Internet and data services and renamed the company Lightyear to reflect the expanding product mix in 2000.

Like hundreds of other tech companies impacted by the Internet bust, Lightyears forward trajectory took a sharp downturn. In 2001, six creditors filed an involuntary Chapter 7 petition to claim more than $3.9 million from the company relating to notes due on a 1998 acquisition. In April 2002, the company filed voluntary Chapter 11 bankruptcy. The court allowed Henderson and other investors to buy the company back for $33.5 million in cash and assumed debt in November 2003. Those close to Henderson would recall these as dark days for the normally upbeat telecom executive.

No one has a perfect record, Henderson says. Winners always come up with solutions.

Going forward, Lightyear is planting itself firmly in the convergence space. It has installed softswitches from Sylantro Corp. in Cincinnati and Campbell, Calif., and provides residential VoIP services through its Lightyear Alliance division of independent sales reps. It also expects to roll out a commercial integrated dynamic T1 service to businesses this quarter.

Meanwhile, the company is not stepping back from local resale. To be in this business, you have to provide local service, he says. The company has signed commercial service agreements with each of the Bells following the courts order that resellers transition off the local resale platform by March 2006.

The companys nationwide product portfolio has its fans in some 100,000 customers. It was the primary deal closer for Meridian Healthcare Group Inc. in Tallahassee, Fla., which became a customer about eight years ago. President Tom Fucht says with operations in 35 states, the provider of pulmonary medicine needed a nationwide communications vendor. They are unique in their ability to provide services in small rural towns in Southern Georgia and in Manhattan, says Fucht. Lightyear provides all of Meridians long-distance services, local where possible and Blackberry services to the companys field force. The company has 700 sites its own offices and partner nursing homes and hospitals staffed with 450 employees. We could not do this without Lightyear, says Fucht, noting the company is now adding four-to-five clinical sites per day. It would be virtually impossible.

Meridian has had such a positive experience working with Lightyear that it has become an agent, selling telecom services to the medical community. The new division, Meridian-Lightyear, expects to roll out in second quarter. When asked if he ever thought hed be in the phone business, Fucht chuckles, and says: Lets just say Sherm Henderson is persuasive.

Up Close & Personal

CEO:

J. Sherman Henderson III

Company: Lightyear Network Solutions LLC

Web: www.lightyear.net

Headquarters: Louisville, KY

Revenue: $100 million+ annually

Customers: 100,000+

Underlying Suppliers: MCI, Level 3 Communications Inc., Sprint Nextel, Qwest Communications International Inc., BellSouth Corp., XO Communications Inc., Verizon Communications Inc., Broadwing Communications Inc., SBC Communications Inc.

Accolades:

Chairman of COMPTEL, former president of Florida State University Booster Club

Favorite Pastimes: Golf, Indy car racing and horse racing

Addiction: Normally, you can find me between 7 and 7:15 a.m. at one of five different Starbucks if I am in Louisville. I am a Starbucks addict.

Strength:

I really try to keep an edge away from the negative. … I am extremely aggressive and extremely positive about being aggressive.

Legacy:

Attended Florida State on a swimming scholarship; son Josh was an All American swimmer; and grandson Lee Duggins, a high school freshman, is now swimming against upperclassmen. Its in the genes.

First Job(s):

My first jobs were two. I cut grass and pulled weeds and I sold tickets to Churchill Downs one summer when I was 11 or 12.

First real Job:

My first job out of college was with P&G. I was on the development and sales team that rolled out Pampers disposable diapers.

Inspiration:

Wife Judy, son Josh and daughter Kelly as well as five (and counting) grandchildren.