What about the Independents?

What will become of small Independent telcos in the newly competitive telecom industry?

At first glance, they might appear to be an endangered species. Without widespread name recognition, Independents could face difficulty expanding-and although bigger carriers are likely to target larger metropolitan regions initially, Independents ultimately may face competition in their own markets.

Recently, though, I've run across substantial evidence that Independents are not doomed. In fact, the new competitive environment could open significant opportunities for them. One interesting trend is for Independents to begin offering service in adjacent communities, where many potential customers already know them.

Some Independents, such as Century Telephone Enterprises, have purchased neighboring rural exchanges from Bell regional holding companies, which to a large extent are concentrating on more densely populated areas. Other Independents are expanding their boundaries by becoming competitive local exchange carriers. Mid-Rivers Telephone Cooperative, based in Circle, Mont., has gone so far as to do a complete facilities overbuild into one adjacent community and, in the process, has installed cable TV infrastructure.

By providing services not offered by incumbent telco U S West, such as caller ID with name delivery, and by offering more channels than incumbent cable operator TCI, Mid-Rivers has attracted a "high majority" of telephone and cable customers, says Member Services Coordinator Dick Melvin. The company now has similar plans to expand into other neighboring exchanges.

Another Independent-turned-CLEC is CT Communications, formerly Concord Telephone. Earlier this year, the company, which has served three North Carolina counties for decades, began offering service in three adjacent counties.

Outside its territory, CT plans to resell the incumbent carrier's network and will install some of its own switches, says CT Senior Vice President Nicholas Kottyan: "Our strategy is to radiate out from our current territory. We believe we can become a strong regional player."

Kottyan points to CT's success with earlier forays into long-distance, where the company has acquired 65% of the customers in its original territory, and into personal communication services. CT's PCS territory includes communities outside its original wireline serving area, which means its name already is recognized there.

Another Independent that has used wireless licenses to expand its territory is ENMR Telephone Cooperative in Clovis, N.M. The company was so pleased with the 65,000 new customers it acquired in that state and in Texas, where it obtained cellular licenses, that it decided to bid on-and won-local multipoint distribution services licenses in some of those same communities. Plans may include fixed wireless voice service, high-speed Internet access and video, says ENMR Executive Vice President and General Manager Tom Phelps.

Finally, some Independents are learning to find strength in numbers. Small telcos in several states have formed consortiums to obtain the best pricing from long-distance carriers and to construct statewide fiber networks.

Many smaller telcos have been ahead of the RHCs in installing fiber optics, says Dave Kelley, president and CEO of MEANS Telcom, a consortium of Independent telcos in Minnesota.

"What a lot of people don't realize is that the manager of a small telco tends to be a very active civic leader within the community," says Kelley. Often, such telcos have built high-speed networks to support applications such as distance learning. Consortiums such as MEANS build whatever additional links are required to interconnect those networks.

Such statewide networks enable participating telcos to offer services such as ISDN without the expense of upgrading all their own switches; instead, participants share centrally located resources. Ultimately, those networks also could enable member companies to offer data lines between customer locations in separate member communities. MEANS also has begun to connect with similar networks in other states.

"Over time, as the network builds, we'll put more and more [services] on our own network," says Kelley.

That sounds a lot like the in-region data networks that the Bell companies want to build. But because the Independents don't need regulatory approval, they may have a head start.