CLECs as ISPs – Value-Added Service Opportunities

March 27, 2000 – As CLECs rapidly transition from telephony to enhanced data and Internet services, there are an unlimited number of opportunities and challenges. In this article, we will explore two examples of “telco-to-Internet cross-pollination.”

From Telephones to Internet

CLECs should consider how Internet affects their current offerings. Many CLECs strive to identify with their local communities by introducing localized services. Look at services designed with traditional telephony in mind and consider how Internet can add value.

A great example of this is the RealTour Real Estate Audio Service offered by KMC Telecom. Callers can enter a house code (obtained from a "for sale" sign in front of a house, newspaper, TV, etc.) and receive a "Virtual Tour" from the number of bedrooms to the color of the wallpaper.

This sounds like a great service, but wouldn’t it be more effective if coupled with the visual display of a Web site? Integrated voice response systems are great, but nothing beats a visual representation other than physically being there.

The Internet offers other advantages to CLECS that serve multiple cities. Using RealTour as an example, people from one city can phone in and get a tour of a particular property. If I am not living there today, however, and am planning to relocate, the service is less useful. That’s not true with the Internet; I can “virtually tour” from anywhere in the world.

So how does the CLEC make money from an Internet-based version of the real estate tour? Simple. Real estate companies can be charged a fee to be hosted on the CLEC service. Advertisers may pay you to post banner ads on the site. Lastly, your CLEC name and reputation continues to be visible in the community.

The message here is simple: A good idea like RealTour can quickly become obsolete if you fail to move into the Internet space in an efficient fashion.

Straddling the ASP Line

Applications Service Providers (ASPs) are the current rage in Internet space. Predictions from Forrester Research and others peg the ASP market at more than $11 billion over the next three years. Outsourcing has become a strategic tool for rapid entry into new markets. Hosted voice communications has jumped into the arena recently with companies like Accessline Communications.

AccessLine asserts that they offer carrier grade outsourced solutions ranging from simple voicemail, faxmail and conference bridge services to Virtual PBX and fully integrated telephony/web communications services. These services are hosted at AccessLine's Communications Centers on their highly available and partitioned switch/servers. This allows for rapid integration and fast time to market for new and enhanced services.

Accessline’s Web site indicates that they are looking for resale partners in numerous cities throughout the United States. No mention is made of the desire for international partners, although this seems like the next logical step. For CLECs that have not fully committed to rolling out these services themselves, using an ASP like Accessline seems worthy of consideration.

Using this approach, CLECs can implement a variety of services with a clear cost of goods sold and immediately begin generating revenue. This approach also allows for more rapid introductions into new cities as your footprint expands.

From a business perspective, don’t get locked into the “not invented here” syndrome or have your strategic business decisions made by technicians seeking to “protect their turf.” Make informed decisions based on all available information. Consider outsourcing and ASPs where appropriate. Use that information to attack the market and capture market share as quickly as you can! Remember, we all live in “Internet time” today.

Building for the Future

The examples in this article demonstrate how the lines separating traditional telephony and online services are rapidly becoming blurred. Take a look at what you are currently offering and see if there is any advantage to building in an Internet connection. You may also want to take advantage of outsourcing ASPs to “get you into the game” more quickly and efficiently than you might otherwise be able to achieve.

In our next installment, we will investigate some of the other interesting value-added Internet services that CLECs can offer.

Joel Maloff is founder of Maloff Group International, an Internet business consulting organization. Maloff has been an executive in local exchange and interexchange telecommunications since 1973, and has been involved in various aspects of the Internet since 1987. Maloff is the author of four books and hundreds of articles regarding Internet.