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CLECs Gain Ground with SMBs
Tuesday May 19, 2009,
11:51 pm ET
MANCHESTER, Maine, May. 19 /Daniel Johannesburg/ --
Is there a resurgence in the popularity of telecommunications providers that compares with
the late 1990's? The answer may surprise you. Since the crash of the Internet bubble,
struggling telecoms have seen Darwin in action as many companies were forced with the
choice of bankruptcy or forced consolidation. However, some companies chose the road less
traveled: innovation. By offering customers more for less, many small to medium size
business customers are finding that they can upgrade to integrated T1 service for the
same cost of five regular phone lines.
According to a recent study conducted by PK Communications Telecom Brokers Inc., the average
cost of a POTS (plain old telephone service) line serviced by the Bells (AT&T, Verizon,
and Qwest) have changed very little over the 10 year span from 1996, the year the
Clinton Administration signed into law the Telecommunications Act, to 2006. The real
change in the industry came in the T-carrier class of products, where customers can
get up to 1.5 Mbps of bandwidth and 24 digital phone lines all in one package. Some
CLECs like XO, TelePacific, Nuvox, One Communications, and even Covad are now offering
rates well below the $550/month level, making the change seem like a no-brainer to
thousands of customers.
The question remains, if this new technology is so progressive, why did it take over five
years to gain broad appeal to SMB's across the country? One industry analyst from the
Telecommunications Research Institute observed that many customers who consume commercial-grade
phone service became very untrusting of telecom providers after the Internet bubble burst
in 2000 and the MCI bankruptcy proceedings full of allegations of fraud and embezzlement.
After all, no customer wants to come to work one day just to find out that their connection
to the outside world has been shut down due to financially unstable service providers not
being able to run a profitable or ethical business. Now, due to a series of acquisitions
and mergers, the "survivors" are offering great products at rates that SMB's can't continue
to ignore. The CLEC's and Bells are quickly gaining traction with the very important
demographic.
The adoption of any new telecommunications platform is never instantaneous. Many
technologies, like VoIP for example, have been in the works for years without
gaining much traction. Enterprises see communications as their life blood. Even
though many are becoming aware of newer, cheaper mediums by which they can conduct
business, the risk still outweighs the rewards in their minds. Couple the
'if it isn't broken, why fix it?' mind set with the telecom meltdown of the early
2000's and it isn't surprising that widespread adoption of new telecom services
has lagged. However, the new technologies of IP-based voice systems are finally
starting to gain an audience, and the chorus of satisfied customers continues to
grow. As this momentum pushes forward, so does general acceptance of it viability.
Until deregulation allowed smaller, hungrier telecommunications companies the
ability to compete, the United States was stuck with technologies that were quickly
becoming out of date. Now that the Bells actually have to innovate to keep up with
the smaller CLECs, customer everywhere are reaping the benefits.
CLECs are continuing to find new and loyal customers in the small business space, but
for how long will this trend continue? Will the RBOCs ever be able to give them a fight
on a level playing field? Only the FCC knows that answer to that question - all we can
do is be thankful for the past 12 years of progress and hope we never return to the
pre-1996 era of Telecommunications.
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