COMPTEL/ALTS HAS NEW LEADER, FACES SAME COMPETITIVE ISSUES

By all outward signs, the merger of lobbying groups representing competitive carriers into one organization — CompTel/ALTS — is complete and successful. While attendance figures for last week's CompTel/Ascent Fall Conference in Orlando weren't final, the show exceeded expectations of many attendees, including exhibitors.

“It's been an excellent show overall, with a lot of energy,” said Hank Carabelli, president and CEO of Pac-West Telecomm.

It was also clear, however, that many of the old competitive issues continue to challenge CLECs and that, despite the calls for unity, the diverse competitive carrier space is not necessarily moving in lock step.

The show marked a coming out for CompTel's new look and new logo, unveiled as part of new President and CEO Earl Comstock's opening address. Comstock promised a stronger voice for the organization in Washington, as the single voice for the competitive service provider industry, and unveiled a new initiative, dubbed ACTION, for Advancing Communications Through Innovation and Open Networks.

Comstock also reiterated his group's opposition to the Bell company mega-mergers and said the fight will go on.

In an interview, he admitted there is a “constant challenge” in bringing diverse competitive forces together on the issues but added that there is agreement on the “larger framework.”

“There hasn't been one word of dissent on the macro issue, which is that we have got to get back to the common carrier model,” Comstock said.

He will be challenged to rally his troops to the anti-merger viewpoint, however. Most of the CLEC executives willing to discuss the issue believe the mergers will go through and are now fighting to attach conditions such as divestiture of the local operations once owned by AT&T and MCI where they overlap.

Carl Grivner, CEO of XO Communications, doesn't believe that divestiture will succeed in keeping the competitive market open. Instead, he favors an approach that focuses on establishing fair prices for access.

Many of the service providers gathered at the fall conference were more concerned about the impending expiration of mandated UNE-P access than on the impending mergers. At a morning gathering hosted by softswitch vendor MetaSwitch, CLEC executives conceded that it would be impossible to convert all their UNE-P customers to facilities-based service by the March 2006 deadline, leaving them to balance the higher cost of commercially buying UNE-P connections under individual agreements with the incumbents versus losing substantial numbers of access lines.

“We know we won't be able to convert everybody,” said Thomas Brinkman, senior director of strategic planning and regulatory for Covista Communications, a CLEC in the mid-Atlantic seaboard states that announced it will deploy MetaSwitch softswitches and voice over IP to replace its UNE-P lines. “We have signed commercial agreements on UNE-P. Our margins will take a hit until we get [the softswitches] deployed.”

To ease the pain, Covista focused on converting UNE-P lines in BellSouth territory where the costs are much higher than on Verizon's turf, he said.

Some CLECs have banded together to try to get the FCC to give them more time to convert their existing customers from UNE-P to facilities-based service, said Terry Barnich of New Paradigm Resources Group, consultants to the CLEC industry, but he doesn't think they'll succeed.

“They are wrestling with the issue of keeping customers versus protecting profits,” he said. “But once they lose those customers, they will never get most of them back.”