Ted Pierson Sees the Present as the Past

Posted: 11/2000

Ted Pierson Sees the
Present as the Past
By Bruce Christian

When
he quit practicing law in the 1980s, W. Theodore "Ted" Pierson Jr.
could have second-guessed himself. He went from earning a quarter of a million
dollars as a telecommunications attorney one year, to being $35,000 in debt as
an entrepreneur the next. "Could have" are the operative words,
because Pierson did not look back.

"Law was good training ground," says Pierson, who currently is the
founder and CEO of LighTrade (www.lightrade.com)
a pooling point developer. "Law can be satisfying. It requires you to be
precise and punishes you for lazy thinking."

Pierson’s thinking is far from lazy. Since leaving law more than a decade
ago, his focus constantly is on what could be. He sees the present as the past.

Pierson became involved in telecommunications law back in the 1960s, when he
joined the firm where his father worked. "Actually, I was born into
it," Pierson recalls. "My father was a broadcast lawyer. When I joined
the law firm, people were trying to figure out something new called cable
television, and being the new kid in the firm, it fell on me."

In that role, he became an outside counsel to the Sterling Network, which
evolved into Home Box Office (HBO, www.hbo.com).

As a telecommunications attorney, Pierson also found himself involved with
the early domestic satellite business during the 1970s, and in the emerging
cellular telephone market during the 1980s.

"Early on, I realized there are two businesses that will always be
around," Pierson says. "Unfortunately, health care is one, and
fortunately information transfer is the other one. It was obvious to me 40 years
ago that the information transfer business would grow exponentially."

Pierson also says that telecommunications interested him more than
broadcasting did, because telecom requires two-way interaction. "During
most the 1980s, I spent my time trying to find a way out of telecommunications
law to become an entrepreneur," he says.

His experiences representing aspects of the cellular market convinced Pierson
that wireless made a lot of sense to him.

"Assuming that health concerns and environmental concerns are not
significant, wireless is the way to go, especially for emerging companies,"
Pierson says.

He and Vern Fotheringham founded Advanced Radio Telecom Corp. (www.art-net.net)
a broadband local wireless loop company in 1992. As the company struggled for
the first couple of years, he found himself borrowing $10,000 in March 1994,
only to see it become a huge financial success when it went public in 1996.

With investments by Qwest Communications International Inc. (www.qwest.com)and
an Oak-leaf venture capital group, the company’s market cap has hit $800
million.

With Advanced Radio Telecom, Pierson was executive vice president. He knew he
needed actual operational experience if he was to become the successful
entrepreneur he wanted to be.

So he began searching the globe for an opportunity and found that Poland had
all the conditions he needed to transplant the Advanced Radio Telecom model. In
the Eastern European country, Pierson founded CEL Polska (www.cel.com.pl)
which achieved positive cash flow in only 13 months. It has become the largest
provider of broadband wireless infrastructure in Poland.

While Pierson was pushing his own startups, he also was assisting others as
the director of ComSpace Development LLC (www.comspacedev.com).
Last year, Pierson was ready to make the kind of jump into a business that could
allow the industry to leap into uncharted territory.

"I recognize the two most difficult problems in the industry are
last-mile and provisioning," Pierson says. He chose to tackle provisioning
with LighTrade.

"We recognize there are large quantities of bandwidth, but if you want
to buy or sell that capacity, you are often talking several months. With
bandwidth becoming a commodity, the telecommunications industry cannot wait
several months, because you are losing an asset every day you wait.

"We are provisioning in minutes rather than months," Pierson says.

LighTrade’s mission from the start was developed through the recognition that
the economics in bandwidth and the Internet demanded a shift in the way
bandwidth is procured and provisioned. Pierson says that by placing pooling
points in major markets–and moving into smaller tier and the international
markets–LighTrade eventually will be able to provide bandwidth on demand.

"Some carriers are nervous about that, because they say it will
accelerate the commodization of the market and reduce prices," Pierson
says. "But if you can capture the demand quickly, as prices go down, you
can make up for that in volume."

According to Pierson, for every $1 lost in the price reduction commodization
may cause, $1.50 to $3 can be made up with increased volume.

"If that is so, then carriers should embrace this, because they have
more customers and the bigger networks," Pierson says. "Even if you
set that aside, we don’t really need to talk to the large carriers, because they
really need instant provisioning. We provide instant provisioning and we monitor
quality of services."

While Pierson has changed career paths, his law background still comes to the
foreground.

During his career, he served as outside counsel for the Competitive Telecommu-
nications Association (CompTel, www.comptel.org)
during the mid-1980s, when the Bell System divestiture was occurring. He also
served as general counsel and a member of the board of directors of ALTS (www.alts.org)
More recently, he has been a catalyst in CompTel’s decision to spearhead the
development of creating a standard contract for bandwidth trading, and for
creating the Bandwidth Trading Organization (BTO).

LighTrade’s senior vice president of engineering Steve Parrish serves on the
BTO committee. Pierson says the time is ripe for such an effort, because he
expects the bandwidth transaction market will explode next year–largely because
of the instant provisioning his company can provide. Looking even more into the
future than a single year, Pierson sees a larger kind of convergence than the
data-voice coming together that seems to have had everyone’s attention since the
passage of the Telecommunications Act of 1996.

The convergence that will again reshape the industry will be that of
telecommunication and electrical power, Pierson says.

"Telecommunications companies are increasingly a user of electrical
power. Where that takes us, I don’t know."

What he does see occurring is the development of more niches within the
industry, as third-party companies develop to fill in potential gaps between
buyers and sellers.

He also says he sees the potential of selling capacity and minutes on a
dedicated and as a pre-emptive service, just as the satellite television
industry did in its early years.

Finally, Pierson says that while many believe content will drive the future
of broadband, he believes content selection is more important. "Our biggest
problem as human beings is information selection," he explains. "I
want to develop LighTrade as an engine to a third party to help the content
selection and capture content during down times."

Bruce Christian is editor of PHONE+ Magazine.