EXECUTIVE
FORUM Larry Schwartz Larry W. Schwartz is the CEO of and an investor in Bridgehouse Marine Limited, the company that acquired and restructured Global Marine Systems Limited. He is also Chairman of Global Marine Systems (Americas), Inc. Larry also serves as the CEO of The Wenham Group, LLC, a private equity investment advisory firm. He previously served as Chief Restructuring Officer & Senior Vice President of Genuity Inc., a company that had been a Fortune 1000, IP infrastructure business. While at Genuity, he led the first-ever consolidation of Tier 1 IP networks in the combination of Genuity with Level(3) Communications.
Are business conditions improving or getting worse, and are you optimistic or pessimistic about the future? With subsea capacity pricing having plummeted in the last few years and significant amounts of excess capacity still existing in many regions, we’re very realistic about the challenges our telecoms customers continue to face but we’re optimistic about our ability to succeed in this environment. Perhaps not surprisingly, as cable system operators’ margins have dropped, operators have focused on their primary O&M cost, that of marine maintenance, to reduce their operating costs. Global Marine has reacted favorably to customers’ demands for lower maintenance costs and Global Marine has itself also modified the way in which it operates to ensure that we can reduce costs and, at the same time, increase quality. In the last two years, Global Marine has invested more than 10,000 man-hours into research and development, primarily to find innovative ways to improve our overall costs, which translate into reduced maintenance costs for our customers. For example, we’ve found a way to grapnel more efficiently for a cable to be repaired. In addition, we've radically improved the processes involved in constructing a universal joint including the way in which our teams work, with the result that we’re
much quicker at constructing joints and we’re also having fewer failures. We have received very positive customer feedback for these improvements and consequently we now see Global Marine as industry leading in this area. These innovations have meant that overall time to repair a subsea fault has been reduced significantly, translating into lower costs for our customers. We've also been able to dramatically restructure our own costs over the past few years so we can deliver the same high quality service at improved price points. What do you see as the short-term and longterm health of the international telecoms industry? We c e r t a i n l y e x p e c t to see some additional consolidation in the international telecoms market, as evidenced by the recent announcements concerning AT&T and MCI, but we’re also mindful of the fact that consolidation of operators is easier said than done. It is always a challenge for an acquiring operator to find the cost synergies necessary to justify an acquisition since those synergies usually come primarily in the form of network consolidation, and network consolidation is typically an expensive proposition given the contractual commitments that relate to the network infrastructure itself. In the short-term most large operators will continue to seek to run their networks in the most 8