Bundles of JY: CLECs can play stork, delivering service bundles to expectant users

The meek shall inherit the earth. With a little help from integrated access. Small business customers want bundled voice, data and video. CLECs can make it happen.

This market opportunity comes with a free side of deja vu. Local exchange companies were once ready to adopt small businesses as if they were orphans. Every customer counts, they said.

But it takes a lot of 25-employee offices to make a Fortune 500 colossus. The cost of delivering data and voice was too high. In LEC realms, cost-prohibitive was a fate worse than death. The small business market was left with a faint pulse.

Then along came ISDN. Brief hope for the huddled masses. Now we can sell data, or even voice/data packages, to small businesses-less expensively, carriers thought.

The meek didn't respond. Too confused, they were, about how to buy it and work it once they had it. LECs didn't learn how to market to this market. They also found provisioning complicated and time-consuming.

Oh well, data wasn't their main business anyway. No harm, no foul. In the end, small businesses got plenty of lip service but no services. Again.

However, a little regulatory upheaval turned the industry upside down, if you haven't heard. The whole bit: Hundreds of new competitors, prices dropping fast, data taking on competitive value, dogs running wild in the streets.

Retribution for the meek. They are now powerful.

Regulatory change coincided with a boom in data and Internet usage among small businesses. Some also use videoconferencing and wireless. This makes them prime candidates for multimedia service bundles.

Meanwhile, data has become a core business for LECs. In fact, the core business is now voice/data integration.

Most incumbent LECs still have trouble understanding this. All factors make voice/data bundles for small businesses a pivotal bounty for new carriers.

Hopeful vendors like the sound of that. They say small businesses are the most ready to churn after all those years of incumbent LEC indifference.

"This takes the CAP model down to the small customers. They're the most frustrated, having never had a choice of services before," says John Phillips, vice president of marketing at Synaptyx. The Maryland firm formed earlier this year to address the burgeoning market.

"Small businesses always had to pay service tariffs," adds Jim Diestel, senior director of market planning at Premisys. While incumbent LECs catered to the Fortune 500 with volume sales agreements.

CLECs have recognized the opportunity, too. They've taken on new identities as integrated communications providers (ICPs). Integrated access is the specialty. To feed the beast, they want simple but multitalented boxes that won't bring new network complexity.

In networks of old, this wouldn't be possible. In the era of the integrated voice/data infrastructure, it is.

One box, an integrated access device (IAD), offers the simplicity both carriers and users need:

* Easy installation

* Easy upgrades

* Easy management

* Cost easy on the eyes.

Vendors have responded. Vitts Networks, a New Hampshire CLEC, puts the Synaptyx ISU at the customer prem connected by a DS-1 groomed from Advanced Fibre Communications' UMC 1000 digital loop carrier, connected by fractional T-1 to the carrier's backbone (see figure).

The project is in beta now. Vitts, which targets small business users, hopes to finish that phase this month, says Bret Clark, director of product management at Vitts.

Elsewhere, vendors as varied as RAD Data Communications, Adtran, ADC, DSC Communications, Premisys, GVN Technologies and others make their mark. "There are IAD vendors on IAD vendors out there," says Dan Endries, AFC business development.

"Most CLECs don't need convincing," says Amnon Presler, president of RAD's U.S. operation. "They know they can put a box in at a customer site to handle Internet service, then come back later and try to sell them voice on the same box."

Some of the new boxes-most have come out in the last two years-offer different combo plates. One combines a router, channel bank, frame relay access device and DS-1 CSU/DSU. Others are slotted to divvy up T-1s or DSL. Still others have direct asynchronous transfer mode interfaces. They all have same intention: integrate voice and data any way users want it.

Some also allow user upgrades through quick card swaps. Perfect for the low-cost/high-bandwidth conundrum all carriers are facing.

Some industry watchers believe the voice/data integrated access game is the only one worth playing for CLECs. Users won't switch carriers based only on voice, but they'll buy the bundle.

A recent Strategis Group report says so. Among small fry businesses with 50 employees or less, 51% said they'd buy bundled services-without even a discount. A 10% discount would win over the rest.

Now that's easy.

But the opportunity may grow beyond the small biz niche. Some ICPs already are targeting the home office crowd and even plan to pitch homes without offices. This could stretch the cost model a bit. However, Tony Surak, VP of sales at Synaptyx, sees integrated access devices installed as neighborhood nodes.

Meanwhile, another side of the market may show interest. Some businesses are large enough to have network managers. These managers justify their jobs by hunting down bargains that won't put their mission-critical data in jeopardy.

In fact, the Strategis report says 79% of managers of all business sizes said they'd prefer bundled services. The emerging profile of integrated access products has not gone unnoticed.

IADs are right for all types of applications, says John Bartell, product manager at Adtran. This includes carrier central office uses, such as collocation. ABout 50% of CLECs will collocate at one time or another. They need a box that fits in a collocation cage-10 feet by 10 feet or smaller-but can haul bulk capacity to their own switches, says Umesh Kukreja, senior product manager at DSC.

Business Telecom Inc., a Raleigh, N.C., CLEC is using DSC's Litespan to reach small business customers.

The meek, it seems, could be trend-setters.