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In 2005, Chattanooga knew Henry Luken as the guy with the biggest boat in the water. For months, locals gawked at his $26 million, 157-foot yacht, Liquidity, moored in Chickamauga Lake. In 2006, Chattanooga knew Luken as the guy who bought most of the vast commercial real estate holdings of then-U.S. Senate candidate Bob Corker, in one of the biggest such transactions in city history.

Henry Luken thinks big, and he was thinking big in 2001 when he bought controlling interest in a 250-employee New Jersey long distance and Internet provider, Covista Communications (formerly TotalTel), and moved it to Chattanooga. Although the company was losing money—like most telecoms at the time—Luken announced a goal of tripling its annual sales to $500 million and, in a taped message to the Chamber of Commerce, said he expected Covista's local workforce to reach 1,500 by late 2003. He purchased a downtown landmark for headquarters, built state-of-the-art switching and call centers, and bought instant-flagship status by joining corporate stalwarts like Unum and Coca-Cola as a stage sponsor at the city's popular Riverbend Festival, from which he launched KISS, a national, residential telecom service intended to steer Covista into profitability. Kevin Alward, former TotalTel CEO and Covista's COO from 2001-04, blames "execution" problems for the six unprofitable years that followed. And the fact that Covista launched in turbulent waters probably didn't help much, either. Industry consultant Clif Holliday of Information Gatekeepers suggests that the traditional competitive local exchange carrier, no match for incumbent carriers, is "dying;" Covista likely steered wrong by abandoning its small-business focus to chase less-lucrative residential customers, who now are leaving landlines altogether. Whatever the reason, by 2005, despite cash infusions by Luken and board member Thorpe McKenzie, the company's stock had plummeted, and Covista de-listed itself from NASDAQ.

But seeds planted in dark times may be taking root. In January, Luken brought Alward back as CEO, acquiring two Voice-Over-Internet-Protocol companies Alward headed after leaving Covista. Now, nationally marketed VOIP is Covista's fastest-growing segment. The company's brightest hope, however, lies closer to home. Luken's downtown properties anchor Covista's newly lit fiber-optic ring around Chattanooga's business district. At press time, the company had, in weeks, signed 50 small businesses to what Alward calls fast, economical service that he hopes to roll out elsewhere in Tennessee.

Alward's resolve to reach near-term profitability has forced tough choices at Covista, which recently pared its already-reduced headcount. And the company's new, stripped-down mindset means there will be no "Covista Stage" at next month's Riverbend. When the bottom line's at stake, Alward says, substance trumps splash.

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