(FORTUNE Magazine) – ON A SINGLE DAY IN MARCH, A JURY found WorldCom founder Bernie Ebbers guilty of fraud, and the SEC filed charges against Qwest's ex-CEO Joe Nacchio. It may be a coincidence that these fallen executives got hit with bad news at the same time. But it isn't exactly happenstance these two swashbucklers failed in the same industry.

Yes, Ebbers cheated and Nacchio allegedly engaged in fraud too. (He denies wrongdoing.) Even if they hadn't, though, they were doomed: They had the wrong pedigrees and the wrong business models to triumph in the U.S. telecom industry. Ebbers, who did stints as a basketball coach and motel owner before stumbling into the phone industry, never fully appreciated the way regulation shapes fortunes in the telecom business. When Scott Cleland, an analyst with Precursor Group, warned investors that the Justice Department might block WorldCom's proposed acquisition of Sprint back in 2000, Ebbers called him an "idiot." Cleland, of course, was proved right.

Nacchio, meanwhile, grew up at AT&T. There he positioned himself as the bold, aggressive guy who was too entrepreneurial for Ma Bell. But he made his name in the long-distance business--not the dull Bell System that was home to AT&T's local phone lines. When long-distance upstart Qwest eventually acquired Baby Bell US West--using its bubble-inflated stock as currency--Nacchio showed little enthusiasm for the local business, treating it instead as a cash cow to fund expansion of Qwest's Internet-oriented strategy.

In so doing he made a critical strategic mistake--one that Ebbers also made. As it turned out, the Baby Bells are the survivors of the phone business, not the long-distance companies. The Bells possess a rare asset--direct connections to consumers' homes--while Qwest and WorldCom were just two of many operators of long-distance networks. In the end, says telecom consultant Rich Nespola, the phone business is a slow-growth, regulated industry with little room for flashy dudes. "It just doesn't allow for total gunslingers," he says.

And so now, as Ebbers seeks to appeal his guilty verdict, his former company--renamed MCI--is trying to save itself by hooking up with Verizon, the biggest Baby Bell in the country. Those plans, however, may be scuttled by a competing offer from another telco trying to save itself. The bidder? None other than Nacchio's former employer, Qwest. -- Stephanie N. Mehta