It looks like the giants want to go in as fast as possible. Once it gets too crowded in the local market, they will look outside for more profits. It won't be long before DGIV and its competitors get their suitors. Possible suitors, imho, are companies of these savvy deal makers: Malone, Murdoch, Turner, Ellison, Gates, Armstrong, Ebbers, or Sony's Idei. Take a pick.
Competitive Local Exchange Carriers
Reign As Telecom Charmers
(04/09/98; 4:08 p.m. EST)
By Margie Semilof, Computer Reseller News
AT&T will own one when it seals the deal with Teleport
Communications Group. WorldCom bought one when it
acquired MFS Communications. And this week, white-hot
Level 3 Communications, which is building its own
nationwide fiber network on which to run IP traffic,
bought one when it snapped up equally hot XCOM
Technologies.
They are competitive local exchange carriers, called
CLECs (pronounced cee-lecks), and they are the darlings
of Wall Street. Their names are chatted up as potential
partners to every major long distance carrier out shopping
for a presence in the highly populated and lucrative local
markets.
CLECs are hot because they own their own local facilities
for voice, data, and Internet access. Their services are
important to value-added resellers (VARs) because they are
often less expensive than those of the local telephone
company, and they are not regulated, so they can sell a
wider variety of services. In addition, since the companies
are smaller, they say their customer service can be more
responsive.
For large carriers, buying a CLEC is the easiest way to
enter a local market. It's too expensive to build another
network, and, in some cases, cities will no longer let
carriers dig up the streets, said Rob Rich, a
telecommunications analyst at the The Yankee Group, a
Boston-based consultancy.
CLECs differ from other local exchange carriers because
they can price more freely than a regulated monopoly, and
they can bundle local and long distance services well ahead
of the incumbent carriers, except perhaps GTE, Rich said.
But they can be more nimble than a GTE because they are
small: The typical CLEC is valued at around $100 million to
$300 million in revenue.
Because CLECs are younger outfits than regional Bell
operating companies, they generally have more modern
networks. Many built small fiber optic rings to serve
populous areas. By staying small, they focus on offering
better service and being responsive, Rich said. "RBOCs, on
the other hand, serve all customers," he said. "The RBOC
model is cost-plus. They figure out their costs and go to
the Public Utility Commission and say, 'Here's what we
need to charge to make a profit.' "
Here's a random selection of some top CLECs:
Perhaps the largest CLEC, Teleport Communications
Group, was taken out of circulation earlier this year when
it announced a deal to be acquired by AT&T [T]. The deal
is still pending, waiting for regulatory and Federal
Communications Commission approval.
Teleport sells voice, data, and video services over its fiber
optic networks. Teleport also sells local phone service in
about 65 markets, including a few large cities. Through
TCG SurfNet, its ISP division, Teleport offers a VAR
program to complement its line of data and Web hosting
services, said Dev Ittycheria, director of marketing at TCG
Surfnet.
Teleport is also partly owned by several cable operators,
including TCI, Cox Communications, Comcast, and
MediaOne.
When Alex Mandl, AT&T's former president, cut himself
loose from the mother ship, he landed at Teligent. This
Vienna, Va.-based CLEC is building a 34-state microwave
network for transmitting voice, data, and video.
It is also adding local and long distance services and
Internet access. Teligent cut a deal this week with
Concentric Network [CNCX] for Concentric to provide
Teligent with nationwide backbone data network services.
When complete, Teligent's wireless networks will connect
to Concentric's ATM backbone to provide speedy
Internet-based services.
Teligent [TGNT] said it plans to serve 10 markets by the
end of 1998. NTT, the Japanese carrier, has invested $100
million in this CLEC.
Another carrier building a national wireless network for
local, long distance, and Internet service is WinStar
Communications [WCII], in New York. WinStar said last
week that line orders increased to 55,000, a jump of 35
percent over orders for the fourth quarter of 1997. In
December, the carrier purchased GoodNet, a Phoenix ISP.
Intermedia Communications [ICGX] is perhaps the largest
independent CLEC, and its name is often linked with other
carriers as a potential partner. The Tampa, Fla.-based
carrier announced this week that it has purchased from
Williams Communications Group, in Tulsa, Okla., the
rights to use Williams optical fiber network for Intermedia
voice and data services.
Intermedia has sold frame-relay-based Internet-access
services since 1992. In March, Intermedia announced a
relationship with Tech Data where Tech Data will offer
Intermedia's data-networking services to its customers.
XCOM Technologies, the data-communications carrier
purchased by Level 3 Communications [LVLT] this week,
is a new breed of CLEC. Its network is loaded with Gigabit
Ethernet and custom switching gear, which it said will
mean cheaper services compared with what can be had
with traditional phone equipment.
Some other CLECs to watch are ICG Communications
[ICGX], in Englewood, Colo., and GST
Telecommunications [GST], in Vancouver, Wash.
ICG Communications announced in late March Internet
access for business customers in additon to those at home.
ICG also said it would deploy digital subscriber line
technology throughout its regions, which include Colorado,
California, and the Southeastern United States.
GST Telecommunications sells network services in 15
cities throughout the Western United States. |
