CEO Forum: Despite Challenges, Opportunities Exist

While consolidation of the large carriers will create even larger Goliaths for competitive carriers to battle against, these combinations could create benefits for CompTel/ASCENT members, according to executives on Tuesday afternoons CEO Forum titled The Future of CLEC Business Models.

For example, XO Communications CEO Carl Grivner said he expects prices to begin to stabilize in the next year or two as a result of less competition due to the mergers of Verizon Communications Inc. and MCI Inc., SBC Communications Inc. and AT&T Corp., Sprint Corp. and Nextel Communcations Inc., and possibly others.

Theres a lot of change, added ICG Communications President and CEO Dan Caruso, but new opportunities will open up for smaller, focused players.

Grande Communications President and Co-Founder Joe Ross added competitive carriers may be able to move on new business opportunities while their larger peers that have announced mergers and acquisitions are focused on integrating their operations. Acquisitions are tough, he said.

But those windows of opportunity wont necessarily close as integration moves to completion, Looking Glass Networks CEO Lynn Refer said. Bigger companies are slow, he said, creating openings for agile competitors. Still, he added, the investment community now has more reason to be concerned about this sector, noting that could make capital a bit tighter for competitive providers.

Of course, the fact that the door has been virtually shut on UNE-P one of the favorite local market-entry strategies for competitors is another major challenge for the CLEC community. But that, too, can be seen in a positive light if viewed from specific angles, said the panelists.

Competitive services will now flow over competitive infrastructure, and thats not necessarily a bad thing, said Paul Hobby, president of Alpheus Communications (formerly El Paso Global Networks), a Texas-based wholesaler of transport and access.

Hobby called for the creation of a CLEC NATO to share infrastructure. That could include both competitive carriers that have existing network assets and others like those that had relied on UNE-P and new VoIP entities that arent as dug-in from an infrastructure standpoint.

XOs Grivner said the industry needs to look for the next Southwest Airlines of telecommunications. Of course, Southwest started out as a low-cost carrier with a specific geographic focus and not a lot of infrastructure, but later grew to be a major national entity. He indicated that companies like Vonage and the cable companies, which have only 25 percent penetration in the business market but want to grab more, are two possible candidates for this status.

New FCC rules also may be pushing competitive carriers to move on opportunities they may not have otherwise attacked. We had a meeting the other day about putting out an RFP for access, said Grivner. We probably shouldve been doing some things two to three years ago that were now doing because of the order.

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