What's inside counts

While talking to officials from a few prominent data CLECs recently, I was struck by one phrase they repeatedly used to describe their business models: "It's the `Intel inside' approach." In other words, like the ubiquitous computer chip giant, these data CLECs are striving to build a universally recognized brand even though they don't sell their offerings directly to consumers.

It's an interesting connection between the telecom and data worlds, and what made it more interesting was the fact that two people from two different carriers - NorthPoint and Covad - used the same comparison.

Given the wholesale nature of a data CLEC's business, the "Intel inside" approach seems to make sense. Intel has undoubtedly spent millions on its ongoing campaign to grab the average consumer's attention - and it has worked. It hardly matters that Intel doesn't ultimately own the end customer. The company has had such astounding success marketing its Pentium II processor (partially through its ongoing series of commercials featuring those annoying dancing people in lab suits) that customers now know to look for that swirly "Intel inside" insignia when they shop for a PC.

So are dancing telecom technicians soon to follow? How about little "Covad inside" stamps on DSL modems? It could happen.

But for as much attention as the big three data CLECs get within the telecom industry, I have yet to see any real proof that the average Joe customer knows the first thing about Covad or NorthPoint or Rhythms. And I imagine that's partly by design - those carriers aren't targeting Joe customer so much as Joe small and medium-sized business.

But if Covad and NorthPoint really want to become the "Intel inside" equivalent of the carrier world, they have a long way to go. How many people choose an ISP based on which wholesale DSL provider that ISP uses? If data CLECs really want to start targeting business customers indirectly through an Intel-ish advertising blitzkrieg, then where are the TV spots and sports event sponsorships?

The vendors are more on the mark when it comes to marketing their wares to their customers' customers. When Lucent became Lucent in 1996, it undoubtedly spent an obscene amount of money burning its little red ring into the brains of regular folks as well as its carrier customers. And Cisco now regularly touts its Internet infrastructure on TV ads.

But the likes of Covad and NorthPoint probably don't have the marketing budget of a Lucent or a Cisco - or an Intel. So they are faced with an interesting dilemma: How to create strong brand awareness for customers who might not know them. How to ensure that, when those customers switch ISPs, they consciously seek out a new ISP that partners with the same DSL service provider.

A solution to this problem may lie in the data CLEC's current migration from its data-centric beginnings. As carriers such as Covad and Rhythms search for opportunities to expand on their data-only offerings by providing enhanced broadband and even voice services, the lines between behind-the-scenes DSL wholesaler and well-recognized ICP will begin to blur.

Indeed, the arguments for the data CLEC to change its business model are compelling. As the cost of broadband access - including DSL - steadily declines, this is quickly becoming a commodity market in which eking out a sizable revenue base becomes increasingly difficult. In trying to secure its place in the customer consciousness, an Intel mode of thinking might be a good start.