Vandals are gathering at the doors of the established local telephone companies.
In 1998, competitive local exchange carriers (CLEC), the upstarts that hatched out of the Telecommunications Act of 1996, will start their assault.
These rascals are ready to pillage the regional Bell operating companies' most prized customers: big business data and remote access accounts. And they hope to do so before the RBOCs can rouse themselves from their government-protected complacency and fight back.
While slow, the RBOCs aren't rolling over. They own the local phone lines and are buying time by making it painful for challengers to get access to the local loop.
After CLECs make their inevitable inroads, corporate customers will end up with more choices. They can try out new CLEC services on a small scale to check their reliability and weigh whether the newcomers should win more of the corporate account.
Unencumbered by installed networks, the challengers can focus on innovative network designs and introduce new technologies such as broadband digital subscriber line (DSL) access. Without trying to compete against all RBOC business, they can chip away at select areas.
"They will try to create and address niche markets," says Sanjay Mewada, an RBOC analyst with The Yankee Group, in Boston. "While they won't come in and suddenly take away all the RBOC business, they may siphon off high-end customers."
For example, a host of CLECs - including Vitts, Inc., of New Hampshire, Dakota Services, Ltd., in Milwaukee and Covad Communications Co., in Santa Clara, Calif. - already are specializing in DSL broadband access over regular phone lines.
They can roll out their DSL networks offering dedicated Internet access and corporate remote access at T-1 speeds and higher for less than the RBOCs charge for conventional T-1. And they have been rolling out servicesfaster than incumbent local exchange carriers (ILEC). CLECs will take their tol l on the ILECs based on their sheer number.
"In aggregate and over time, they do pose a threat. Certain high-end customers will be able to get a better package from a CLEC than from an LEC," Mewada says.
RBOCs not helpless
The federal telecom law forces the monopoly LECs to interconnect with certified CLECs. But they have been slow to do so.That slowness is the biggest hurdle CLECs face, according to Royce Holland, president of Houston-based CLEC Allegiance Telecom, Inc.
"The biggest problem is getting circuits provisioned and installed and moved from one carrier to another. We're trying to get it as smooth for local customers as it is for long-distance customers," Holland says.
ILECs may be delaying on purpose. "I think RBOCs are fighting a rear guard action to protect their markets," Holland says. Mewada agrees: "It is masterly inactivity. You appear to be busy, but you are not."
For their part, the RBOCs may be slow to react, but once they get going, they will be formidable. They want permission to sell long-distance services in their own coverage areas, where potential revenues are counted in billions.
But to get into long-distance, RBOCs must first prove that competition is healthy in their local markets. They can't keep the CLECs out forever.
