CLEC defense prompts strong reaction

Last week's missive on CLEC survival clearly touched some nerves. Along with a few general pats-on-the-back for a short, balanced commentary came several impassioned emails, from those for whom this is clearly a personal matter.

To recap the original comment, for those of you who vacationed before Christmas, I offered up the opinion that some CLECs will survive the regulatory changes now taking place in Washington, by making the transition to facilities-based carriage and working a solid business plan.

It's not that radical a viewpoint, but it earned me this scathing comment from one reader who admitted a close relative had, until being laid off, worked for Z-TEL, one of the CLECs mentioned.

"I can't believe that you believe what you wrote in today's editorial, specifically that a company like Z-TEL has been moving toward a facilities-based network and has been planning for a future without UNE-P," wrote one reader. "In Z-TEL'S case, that CLEC now believes that it has a future in providing VOIP over its own network and leased DS-1 and DS-3 links. Of course, this new business plan is so promising that Z-TEL changed its name (to hide any ties to its past?)."

I can't address Z-TEL's specific chances of surviving, although the company doesn't lack for effort and innovation. Changing its name to Trinsic is the latest in a string of moves, including a management turnover and a strategic shift, first away from and now back to the residential market. But I do believe in what I originally wrote, which is that CLECs will survive, based on the success of their transition strategies and solid business plans.

Another reader, Jim Bellina, President and CEO of Dialog Telecommunications, offered an equally impassioned response questioning whether any CLECs would survive to serve rural areas and less densely populated communities. As Bellina points out, the Federal Communications Commission is relying largely on intermodal competition from wireless carriers and VoIP providers to reach customers not served by CLECs.

"In the rural areas, to get VoIP, the customers usually must add broadband, assuming that it is even available, and then purchase their voice service on top of that," Bellina points out. "As current broadband users, we tend to forget to add the cost of the broadband to the cost of this voice service, but it is truly incremental for these customers, and the total cost of this 'competitive' product quickly becomes $75+ per month -- not very competitive. There is a different problem with wireless service, the prices are the same as in the urban areas (too high), but the coverage is also very poor."

I believe Bellina has a valid point that rural areas might be better off, had the FCC left UNE-P regulations in place there to allow CLECs more time to establish a customer base.

Of course, that's likely to earn me another sarcastic response from this reader, who sent his message from an SBC email address:

"Hopefully, as the FCC regulates the Bell Companies out of existence the CLECs will prepare to pay taxes, benefits, and pensions in the communities where they do business," he wrote. "That way we will only have a twenty or thirty year shortfall."

It's nice to know I can still anger people on multiple sides of an issue at the same time. And I love hearing from readers.

Email me at cwilson3@primediabusiness.com.