XO expands offerings in wake of UNE-P rulings

XO Communications likes to position itself as the nation’s largest facilities-based provider of telecom services “focused exclusively on businesses.”

But that’s not to say it’s limited to enterprise businesses. Following recent court decisions that essentially do away with key carrier network access wholesaling regulations, XO is stepping into the breach by launching a wholesale local voice service for competitive local exchange carriers (CLEC).

The XO Wholesale Local Voice Services let service providers offer local voice and integrated services to businesses in 36 U.S. markets. The offering was made possible through XO’s recent acquisition of bankrupt carrier Allegiance Telecom. The buyout expanded XO’s network presence in local U.S. markets and lets the carrier now offer additional facilities-based services to other carriers looking to provide voice and integrated services locally. XO, which emerged from bankruptcy 18 months ago, closed the Allegiance deal June 21.

Interest in the new XO offering has been high in light of a Washington, D.C., appeals court’s decision in March to order an end to portions of the FCC’s unbundled network elements platform (UNE-P) policy, says XO CEO Carl Grivner. UNE-P is a regulation in the Telecommunications Act of 1996 designed to give competitors access to the local-access network, which the RBOCs dominate.

Under UNE-P, RBOCs were to sell access to their local facilities to CLECs at government-determined rates in exchange for entry into the long-distance business. Now that UNE-P has been all but dissolved, RBOCs are expected to raise wholesale local facility leasing rates to CLECs, which would raise retail fees.

“It’s favoritism towards the monopoly-embedded base,” Grivner says. “It’s not right in terms of facilities-based competition.”

CLEC efforts to overturn the ruling have been blocked – the most recent case being a month ago when Supreme Court Chief Justice William Rehnquist refused a petition for a stay of the court’s decision.

Grivner says a lot of UNE-P carriers now are working with XO. The carrier is set to announce one major carrier deal, and expects more big names to sign up for the XO wholesale offering.

“There are more opportunities ahead of us,” Grivner says.

Industry experts agree. U.S. wholesale wireline revenue will top $47.9 billion in 2004, according to The Yankee Group. Wholesale services now account for nearly 25% of total U.S. wireline telecom market, the firm says.

At first blush, it would seem that XO is offering competitors access to the very enterprise customers it courts. But such is not necessarily the case.

In some instances, XO’s wholesale carriers need to find an alternate wholesale provider to grant access to the customers they already own. Second, there are plenty of small and midsize businesses to go around.

Third, even if a wholesale carrier wins a new customer that XO could have served, XO still gets a share of the revenue from that customer.

XO’s wholesale services consist of:

• Wholesale Integrated Access, which provides voice and data over one T-1 to carriers’ end users who needs at least six analog or digital voice lines and 512K bit/sec of data speed.

• Wholesale primary-rate interface, which provides PRI configurations to carriers’ end users.

• Wholesale Digital PBX, which provides T-1 digital trunks to carriers’ end users.

XO Wholesale Local Voice Services are available in 36 markets across the U.S. Each integrated Internet and voice service package is also available with a variety of features, including call forwarding, three-way calling, caller ID, directory assistance and enhanced mailbox options.