The Cable Guys: repairing lower Manhattan

By Stephen McKinley

When someone rushed into Kevin O’Kane’s office on Broadway near Whitehall Street and told him that a plane had crashed into the World Trade Center, he admits to having felt that it was “deja vu all over again.”

Eight years before, O’Kane’s company, Lexent (Nasdaq: LXNT), had helped repair the damage to the tower’s telecommunications network. O’Kane, Lexent’s chief executive officer, has vivid memories of the 1993 car bomb that shook the twin towers and killed six people, when it exploded in an underground garage.

Lexent designs, installs and maintains telecommunications networks, and had swung into action in 1993.

“It was,” O’Kane recalled, “the most massive damage I’d seen in my life. In essence what you had was a big hole inside the basement of the building. I believed that the attempts by the terrorists to blow up the building were futile and could never happen, as I think most people believed.”

As he headed out of his office on September 11th to attempt to assess the damage, the possibility of the towers collapsing never crossed his mind. Still thinking that the damage was on the scale of a Cessna light aircraft crashing into the tower, he ran into a colleague on the street, “one of the calmest people I’ve ever worked with.”

“He was visibly shaking, and he told me that he’d just seen another plane hit the towers. I still wasn’t processing what was happening, so I said, ‘you come with me,’ and we went around the corner to [another Lexent office,] 80 Broad Street.”

There, O’Kane and his team started to try and track down their employees and to make a plan as to how they might help with the situation. The company knew from the 1993 experience that it was important to get customers back on line with telephone and telecommunications access as fast as possible. But nothing could have prepared them for what happened next.

“There was a point at which we could look up Wall Street and see the Stock Exchange,” O’Kane said, ” and then there was this huge dark cloud came roaring down. Whereas before it had seemed like ash from a volcano falling down, it was now pitch black, a black cloud covering our windows.”

**The south tower had fallen, and the true horror of the attack and its impact began to be felt.

Horrified though he was, O’Kane and his team still managed to make their way to White Street, where they established a base in a garage facility that the company had recently vacated. They knew that assessing the damage this time around, would be on an unimaginable scale.

“The difference is, in ’93 you could see what needed to be repaired, and it was a more tangible target to fix,” said O’Kane. “You were going to restore service to parts of the building that were going to be reoccupied. This time round, everything at ground zero is destroyed. There’s nothing there to restore to.”

As a result, Lexent’s teams of workers have been mostly engaged in rerouting service through other parts of the city, away from ground zero. For the Internet to provide e-mail, web access, credit card transactions and much else besides, vast networks of cables, transformers, switches and hubs criss-cross the U.S., and probably nowhere in the world has such a concentration as does lower Manhattan.

After showing photographs that he took of the bomb damage from 1993, O’Kane pondered what the damage to telecommunications in the World Trade Center area might be like.

“There is a significant amount of underground infrastruture that has been destroyed. It predominently affects parts of the network that are copper-based, which are not so easily replaceable, and which really gets to why fiber [optic cable] is a better medium besides bandwidth.”

Installing fiber optic cable, and replacing copper cable with fiber optic, is the market in which Lexent has successfully positioned itself in recent years.

According to Erik Warren, an analyst at Kaufman Brothers, 80 percent of Lexent’s business is in the New York metropolitan area, and he expects the repair work at the World Trade Center to give Lexent something of a shot in the arm, given that the telecommunications market had been sluggish for a number of months.

“It was expanding pretty rapidly, but the bottom has dropped out of the telecommunications market [since March 2000],” Warren said. “But Lexent is holding on to its core customers.” Business is the business of lower Manhattan, even in the wake of the tragedy, and so after September 11th, “Lexent’s shares took a jump.”

However, as a full recession now appears inevitable in the U.S., Warren added, “there are a lot of variables and it’s hard to get a handle on it. But Lexent has no legacy assets and is purely focused on the next generation fiber optics.”

This is a market that can only grow in the future, because, as Kevin O’Kane noted, fiber optic cable is superior to copper in every way.

“If you have a copper cable in the ground that looks like this,” O’Kane said, and produced from his desk a piece of copper cable about six inches long and three inches across. It easily weighed about four pounds. “It gets severed or damaged – imagine pulling a thousand feet of that out of the ground. That’s a lot of work.”

By contrast, fiber optic cable, or ‘glass,’ as it’s called in the business is light and slender, simple to install and to repair. On Wall Street, two of Lexent’s workers were busy replacing a length of fiber optic in a manhole about a block south of the New York Stock Exchange. One of the workers held up a piece of fiber optic cable, slightly thicker than a human hair.

“This,” he said, ” will carry one hundred thousand telephone calls easily.”

With telecommunications deregulation in the late eighties and early nineties, Kevin O’Kane and his brother Hugh took their father’s company, originally a small electrical company called Hugh O’Kane Electrical, in the direction of fiber optic installation, providing services to companies such as AT&T, ConEdison and Time Warner, installing fiber optic cable in place of copper.

While the country is now wired with fiber optic, the problem that faces a company like Lexent is what is known as “the last one hundred yards” – the fact that most buildings over six or seven years old are still wired with copper.

“The cost of digging up those last one hundred yards is prohibitive,” said Warren. It is an ongoing challenge for companies like Lexent, but after the 1993 bombing and the disaster of September 11th, O’Kane’s company seems ready to rise to it.

“Within 24 hours of September 11th we were replacing cable in the street for customers,” O’Kane said.