By Khali Henderson

Posted: 05/2002

Ernie Kelly How He (and We) Got Here

By Khali Henderson

IT ISN’T UNCOMMON THESE DAYS to find someone “moving on” from his current career. Usually that’s a euphemism for “laid off,” but in the case of Ernest B. Kelly, who left the helm of the Association of Communication Enterprises (ASCENT) April 30, it is by choice. Yes, he is crazy, but not because of this decision. 

I have to admit that when I first met Ernie in November 1993, while I was working for ASCENT’s predecessor TRA (Telecommunication Resellers Association), I was a little unsure if he would fit in. We were a small group then, having started a year earlier with only 80 companies. He seemed a little “big business,” coming from COMSAT, and we were … well grass roots, small potatoes. His debut videotape — taken before he officially started and when he had no clue about resale — did little to assuage my concerns. To be fair, I was the entire PR department for this startup association, and I was hoping for someone who could sell it.

You could say he warmed up a lot during the next year or two, and he even showed some of his performing genes — he was once in a rock band — with some quite humorous monologues at the annual conventions and a passion for tennis. While I’m sure that did a lot to make him appear approachable to members, it was merely window-dressing for a leader who proved to be quite the salesman after all.

Kelly helped to orchestrate much of the lobbying effort undertaken by the group, and he took the show on the road visiting members and prospects every summer before a month-long vacation with his family in Michigan. Kelly always did business from his summer getaway, but the fact that he always made time for the family impressed me. I was fortunate to host his wife and children during the summer of 1996, here in Arizona. We had a great time at a local “wild west” hangout.

I know this doesn’t have much to do with his job performance, but it has a lot to do with what motivates him. I learned that he is a lot more small town (in the good way that he cares about people) than he at first seems to be, that he can be persuaded to part with money if it’s for a good cause (like my retainer), that he’s smart enough to know that he isn’t his job.

Anyway, I asked him a few questions about his experiences at ASCENT and, now that he’s not an industry spokesman, his views on the resale industry and the association’s future.

Q:
After eight years, what made you decide to leave ASCENT?

A:
It just seemed like the right time and the right thing to do. I had seriously contemplated it two years ago when my last contract expired, but the board asked me to stay on, particularly as we had just gone through the name change at that time and they felt that my continued presence was important. You know, I have a pattern in my life of sticking with things for a long time. That can have both positive and negative implications, I suppose, depending on perspectives. My wife commented upon this predilection recently with regard to some of my stock picks that I didn’t bail out of soon enough. “You stick with things too long” she scolded me. “Oh really,” I responded … .”

Anyway, at this point in my career I truly believe that I have accomplished what I was hired and rehired three times to do. Also, I think it is a good time for me to take the experience I have gained here and apply it towards other worthy endeavors. Now it may not be a great time for anyone in the telecom industry to move on, but for my personal journey it makes sense. Besides, and let’s be honest, people normally don’t last in these types of political jobs as long as I have. I’m on about my ninth life now … .

Q:
How has the telecom resale industry changed over that time?

A:
It’s come in and out of favor and, I think, may be coming back in vogue. At the time that I came on resale was really catching on in long distance. It has thrived in that market over the years even as margins have come down. Resale has not been as successful in wireless or local due in part to the fact that there are not enough competing wholesale carriers involved and the ever-present incumbent resistance.

When the 1996 [Telecommunications] Act was passed and for years after that, there was a bias against resale even though it was one of the three main projected modes of local service competition. Politicians and Wall Street financial experts, particularly, perpetuated this bias. There have also been a handful of facilities-based CLECs who, for their own purposes, played the “you gotta have pipe in the ground to be legit” card early and often.

We see now where that has gotten them — facilities rich, customer poor and, in many cases, out of business. It still makes sense to buy facilities as your customer base and business plan grow and dictate it. I see a return to resale right now; later many of the survivors can build back up.

Q:
You lead a group during times of tremendous growth and almost equivalent decline. How did that impact the role of the group and the politics with the group?

A:
I often used the “build it and they will come” concept when describing the first seven years at TRA. It was a magical and charmed time. When I opened up shop in 1993, it was like I turned on a neon light outside saying “open for business,” and before I knew it, there was a line forming. We rode the rocket of telecom competition and did some nice innovative things along the way to boost membership and participation.

On the other hand, the last two years have been very hard on the industry and hard on the association. You cannot have a collapsing industry and not have it affect the trade associations that serve it. I have seen many a good friend and member go down hard in the past two years, and each one took a piece of me with it. The industry downturn has clearly affected us internally. It has lead to a lot more stress within the membership, the board and the staff and, regrettably, a higher level of politicization within our leadership. Since May of last year, there have been dramatic, career-altering changes affecting over half of our board members. It has been harder to achieve consensus and comity. It is understandable, but sad nonetheless.

Q:
In your opinion, what were the three major achievements of your administration?

A:
First, I think we played a key role in legitimizing the role of resale as a viable mode of competition. We were not as welcome at CompTel (The Competitive Telecommunications Association) in the early years as we would be today, and we had to show the industry that we were a force to be reckoned with. When we passed the 800-plus-member level a couple years back, no one could deny the phenomena any longer.

Secondly, I do believe that we represented our members well in the various policy, legal and regulatory fights we engaged in on their behalf. The 1996 Act protected opportunities for our members and there have been a slew of court and regulatory victories since then to help solidify the progress we’ve made.

Lastly, I think we proved that you could create a trade association in the telecom industry that cuts across markets and unites competitors and entrepreneurs of different spots and stripes. Associations in this industry seem to be market specific and we broke that barrier down. The influence of the future will belong to the associations that can successfully do that.

Q:
Can you comment on the future of ASCENT and the rumors within the industry of a merger with
CompTel?

A:
We are certainly at a crossroads. The fundamental question that we have to ask ourselves is, given all the changes that have taken place in these various markets over the past two years, do we still believe that the competitive telecom industry can support three separate trade associations. I have reluctantly come to the conclusion that it cannot. Whether that means one survives and the others fail or that they come together in some fashion, I don’t know. Under these circumstances, not to aggressively consider a merger with CompTel would be doing the memberships of both organizations a disservice, in my opinion.

Q:
When you first came to TRA you were a beltway insider but not a telecom insider. What did you learn about this segment of the industry — the good the bad and the ugly?

A:
Well, let me wax nostalgic for a moment. I have often said that in the first few months on the job, I didn’t know a reseller from a hole in the ground. (Some people quickly pointed out that I actually had just defined a reseller… .) I will never forget my first meeting with the troops down at Amelia Island, Florida, in the fall of 1993 where I was introduced as the new head of TRA. One enterprising soul made himself known to me by sitting down across from me at breakfast, introducing himself as the biggest operator in the industry and then telling me that if I ever messed him up he would personally rearrange a very delicate portion of my anatomy. As I finished my bran muffin, I remember wondering if this had been a wise career move… .

Anyway, I learned the ropes quickly and became fascinated over time with the innovative and creative business plans and ideas that were coming out of this group of entrepreneurs. There has been a ton of talent rolling through the ranks over the years. More than anything else, this experience opened my eyes to the world of innovative, risk taking businessmen and women, which is a place I had not been to before. I just ate it up.

Q:
What are your plans going forward?

A:
I will probably be getting out an announcement of some type soon after I leave the association. I can’t say exactly what that will be right now, but I have a number of offers that I am sifting through and contemplating. They range widely in terms of commitment. I am going to make the decision on what to do next based on a number of criteria, not the least of which are the interests of my family and the lifestyle I would like to affect. I have put a lot of energy and effort into the last nine years. I want the next experience to be the capper on a fulfilling career. I am at the point now where the challenge and the excitement of an opportunity are the most important elements.