Co-opetition Comes to the Local Market

With little to sustain them
in the way of wins on the regulatory front, competitive service providers are getting creative.

AT&T Corp., for example, announced marketing agreements with cablecos Comcast, Time Warner, Cox, Charter and Mediacom which allow AT&T to refer CallVantage purchasers to the appropriate local cable operator for the broadband connection required for the VoIP service. While the arrangement is in competition to the cable operators’ own voice services, the AT&T brand and marketing investment (5 million leaflets going out and prime time TV ads) should drive many new customers to the cablecos, says Dr. Judy Reed Smith, CEO of consulting firm ATLANTIC-ACM.

In another example, Matrix Telecom is offering a new service called Network Matrix that enables CLECs to purchase service from one another in areas where they don’t have a network.

Obviously, what both moves have in common is bypassing the Bell networks.

“Why give it to the RBOC?,” says Dennis Smith, president of Matrix Telecom. “I would much rather see a competing CLEC get the business, even if my margins are minimal, than to turn it over to the incumbent.”

Other CLECs are exploring bilateral agreements with complementary regional CLECs to expand their footprints and, thus, bypass the Bell infrastructure.

With competitors’ ranks thinning after losing their grips on most regulatory accommodations granted to them under the Telecom Act of 1996, these moves appear to be punitive toward the Bells, which seem to have won the war of words at the regulatory commissions and the courts.

It remains to be seen whether they will have deleterious financial impacts on the incumbent telcos. The more likely outcomes will be to stop handing the RBOCs business they would receive by virtue of their incumbencies.

How much business that represents also is unclear.

While the moves are more than symbolic, they may be too little too late for a competitive industry that’s lost much of its strength while fighting on the regulatory front without a parallel joint strategy in the trenches.

Group Editor

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