Why are there only a few CLEC left? XO, windstream,etc..


Was there some kind of apocalypse doomsday situation or did they all just get acquired?

Is there some underline systematic reason that CLEC have a destiny to fail or could they do ok if they were run right?


Thanks.

Like so many business today, mergers and takeovers and such are taking place.
The strong remain and the weak go under.

So it was not because ILEC won some court decision that let them charge CLEC whatever they wanted instead of a controlled price?

So is there any reason that a well run Clec could not survive in today's industry?

Thanks.

Cash flow is key to any business

The Evil Empire (oops, Verizon) is systematically removing copper as FiOS is rolled out. Once an entire street or 'hood is fiber-ized there is no way for a CLEC to provide service.

The CLEC local loop access rules of 1996 apply only to copper and not fiber?

Yep

One thing that Verizon and all the other "evil empires" learned a long time ago is that profit from anything telephony is a slow, decades long process. CLECs tend to be acquired by interests that want to see a return on investment in months or, at worst, a year or two.

Fiber to the home sparked a heated debate among the healthy CLECs and the FCC, however, the "evil CLECs" decided to strike back and merge away all the competition. Eventually, fiber will be treated like copper and then it will be interesting to see how the CLEC market changes.

Rcaman

CLEC's are already reselling Metro E circuits here. Have been for a while.

Their all merging so they'll be too big to fail.

Yea, heard that one before.....

I can see that happening. All it takes is a "contribution" to the right people in the FCC.

-Hal

Why so few?

When the ILECs helped craft the Act, they thought RC was going to protect their monopoly. Instead, the CLECs got smart and started selling service to dialup ISPs, resulting in multimillion dollar per month payments from the incumbents.

Then the payments stopped. They all quit paying, 1.5-2 years before they got a court ruling that effectively killed reciprocal compensation -- knowing they'd eventually get either the decision (or legislation) they wanted, with suitable application of money.

This forced a lot of the CLECs that had become dependent on that revenue to file for bankruptcy and/or consolidate. I worked for a couple of those :p

With the 'new network off limits, that market will continue to decline.

All these above contributed to the fall of the smaller Clecs.
They were also stuck in the perpetual cycle of "Low priced leader" dynamic T1 product. It was great in 2003-2007 but every year they cannibalized the customer base by dropping their price for the product year after year.
They would have been forced to do so by the Cable-co 's integrated offering anyway to stay in the SMB category but they did it so quickly.
I still put in T1's when needed or their budget can take it for the reliability but I always use a Cable circuit for primary internet. That piddly little 1.38 Mgps ATM circuit @300$ per month just cannot compete with a 50Mg ( best effort) for $160/month. It's just economics.

J

Maine seems to have a healthy group of CLECs. Here's the list that I am aware of and have personally seen their equipment in the CLEC cages at various COs:
GWI
Mid-Maine Communications (known as OTT now)
SegTel (known as someone else I think)
ChoiceOne (known as Earthlink Business now)
Oxford Networks
Lightship Telecom (I forget who they are now)
and probably a few more that I am forgetting.

Not bad.