UNE-P Coalitions Spell Buying Power

Coalitions of local phone companies are forming to secure lowcost access to networks in the wake of changing regulations.

Sue Platner, president of consulting firm The Northridge Group, says one group of phone companies on the East Coast and a separate group of companies in the Midwest are organizing to secure network services from wholesale carriers. It is a simple and old concept: a group has more clout to negotiate favorable prices with a wholesale supplier than a single entity.

Local phone carriers across the country are exploring different roads to continue supporting residential and small business customers after federal regulators voted to phase out UNE-P - the government-mandated resale platform. They have a few options: pay the Bells higher rates for wholesale access to their networks; install their own switching equipment to route local phone traffic; or lease switching gear and other infrastructure from alternative carriers like Covad Communications Group Inc., McLeodUSA Inc. and Volo Communications.

UNE-P providers are seeking to offer consumers and businesses traditional phone service as well as VoIP. John Wind, senior director of marketing with Volo, a wholesale carrier, says a group of approximately 50 telecom providers has approached Volo to negotiate an agreement that would allow the companies to offer IP phone services to consumers and businesses.

Although many of the companies are UNE-P providers, Wind says the group has been around for a while and did not form in direct response to the changing government rules. During an interview March 2, he said Volo was in negotiations with the group, which had approached the company within the last 60 days. Coalitions in general have more clout to negotiate with a wholesale supplier, Wind says, and small companies may receive more attention as part of a larger group then they would individually.

Covad learned that such groups were being formed at the CompTel/ASCENT convention in February, but the broadband carrier has not heard directly from the groups. Covad spokesman Pavel Radda says the company is interested in talking to such coalitions.

Karen Fox, director of marketing with McLeodUSA, says the company would not comment on whether or not it was approached by a consortium, but added: “If a consortium did approach us and it was credible and it made sense … to provide wholesale services, we would certainly consider that.”

There are questions, however, over whether such groups can work out deals with wholesale suppliers. For example, how would the wholesale supplier handle billing and other services on behalf of an entire coalition? Says consultant Platner: “It’s a challenging concept because if you’re Covad, you’re used to providing services to a single client. The challenge here is, how do you deal with this coalition of UNE-P CLECs.”


BellSouth Corp.
Qwest Communications International Inc.
SBC Communications Inc.
The Northridge Group
Verizon Communications Inc.
Volo Communications

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