Without going into gory detail, let’s just say the past five years have not been kind to the competitive telecom industry. And the worst might be yet to come.
The recently announced AT&T/SBC and MCI/Verizon megamergers could hurt competitive local exchange carriers (CLEC) in a few ways: First, it’s never a good thing when you’re the little guy and the big guys you’re competing against get even bigger and stronger.
Second, AT&T and MCI fought the good fight in front of the FCC on behalf of the non-RBOCs. Now the CLECs will have to take on those regulatory battles alone. And based on recent FCC rulings, that’s probably not a good thing.
The FCC dealt a stinging blow to the beleaguered CLECs by voting in December to phase out the rule that gave the CLECs discounted access to the RBOCs’ local loops for competitive voice services. This means the CLECs need to either build out their own networks or find a last-mile alternative to RBOC copper.
Which brings us to problem No. 3 – the capital markets got burned once financing giant fiber network build-outs, and they aren’t about to go down that road again.
All in all, it looks pretty grim for the competitive telcos. But you wouldn’t know it from the CompTel/ASCENT show in New Orleans earlier this month. Three thousand people turned out, the show floor was full, vendors were introducing new services for enterprise customers, and there was a definite buzz in the air. So what gives?
Well, it takes a pretty determined entrepreneur to take on companies such as Verizon and SBC in the first place. And that fighting spirit was evident throughout the show.
Mark Richards, president of Vox Communications , urged his colleagues to transition to VoIP immediately. “CLECs are not going to die,” he said defiantly. “The vast majority of what you do, [billing, customer care, etc.] carries over to the VoIP world. Get into it now.”
VoIP was certainly the hot topic among the CLECs, but not the only one. WiMAX , satellite and broadband over power line were also mentioned as alternatives to copper.
On a more strategic level, there was widespread agreement that opportunities still exist for smaller, more focused, nimbler players to thrive in a world dominated by the telecom giants.
“This transition period will be painful,” said CompTel/ASCENT CEO H. Russell Frisby. “The landscape will look quite different.”
But will the competitive telecom industry survive? “Absolutely,” he said.”We bottomed out and we’re on our way back.”
