The CLEC

The CLEC-ISP Connection: The Beginning

November 19, 1999 -- The worlds of telecommunication, data communication, and Internet continue to come crashing together. In the midst of this communications conflagration are traditional incumbent telephone companies (ILECs), competitive local exchange carriers (CLECs), and Internet service providers (ISPs).

This column is the first of many that will discuss issues facing these communities - especially CLECs and ISPs. It is designed to help both CLECs and ISPs make more informed business decisions about entering the new arenas. As a way of launching what I hope will be both an informative and interactive exchange of information, here are some of the issues I will discuss in greater detail over the coming months. For starters, here's some of the ground we'll cover.

Let's define terms. The telecommunications field is complex with a vocabulary of its own. CLEC, ILEC, and ISP have specific meanings and those meanings may well be different for each of us. Each category has shades of gray. Some vendors in these groups are national or international in scope while others are regional and focus on smaller markets. In the ISP world, some are backbones and own their physical facilities while others are virtual. There are many variations among CLECs and ISPs. We will explore these distinctions in this column and what they mean as you make decisions about your business.

Should ISPs become CLECs? What are the advantages, disadvantages, costs, and time constraints?

Should CLECs become ISPs? , If so, what are the advantages and disadvantages?

If you are an ISP, are you familiar with the public utility commission (PUC) in the states you hope to serve? Are you familiar with the application process? Are you prepared to file tariffs on a regular basis? How will this impact your existing personnel requirements?

If you are a CLEC, what type of Internet services will you offer? Dial-up? DSL? Dedicated access? How are you going to connect to the Internet? Are you planning to provide Web hosting or design services? Do you have a TCP/IP-capable network operations center? Will you offer around the clock customer service and support? All these questions are critical to CLECs entering the Internet world.

Given the coming convergence or CLECs and ISPs, what characteristics exemplify each of these categories? Each of these entities have distinct personality traits. Are they quick to respond? Are they reactive? Telephone industry people sometimes stereotype Internet people as flaky. Internet folks occasionally see telephone people as tortoises in a sprint race. Both stereotypes are a little bit wrong and a little bit right. What do each need to do to excel in the other�s arena?

What is the climate for CLECs and ISPs in other parts of the world? As you grow, you may want to expand internationally. Are specific other countries similar to the U.S. or entirely different? Are there regions of the world that are more fertile than others for these businesses?

From a business planning perspective, do you have -- or need -- an exit strategy? Are you aiming at an acquisition, merger, or IPO? If so, how does becoming an ISP or CLEC affect this decision? If a merger or partnership with an international organization is possible, what are the issues that you need to know?

Of major concern to both CLECs and ISPs are properly trained and motivated personnel. How do you identify what skills you need, find the right people, and retain them?

What value-added services can you offer? Marketing of communications � including the Internet � seems all about packaging these days. In order to compete as an ISP, CLEC or hybrid, you must be able to respond to the market with creative and desirable packages. What are your competitors doing and how successful are their programs?

In short, this column will serve both telephone company people and Internet service providers, and bridge the gap between them as their worlds increasingly converge. We will include examples, case studies, and analysis on these topics and many more. I encourage you to submit topics for comment and discussion to me at joel@maloff.com. Let�s use this column as the forum for your questions regarding the CLEC-ISP connection!

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.