The Important Role of Facilities-Based CLECs

Like the universe, the telecommunications industry continues an outward expansion; telecom’s expansion, however, is driven by economic forces of market competition, in which facilities-based CLECs continue to be a growing force, with a variety of market strategies.

Today’s facilities-based CLECs are significant in the communications industry for three reasons. First and foremost, they have a physical presence — actual network infrastructure — that is fundamental for the provisioning of service to customers. Companies without facilities can also provide service, but such operators are wholly dependent on the network facilities of another provider.

The CLEC sector’s second role is in providing competitive, viable, and meaningful alternatives to incumbent telecommunications carriers. Although no single CLEC competes with any particular ILEC in all of its customer segments, against all of its services, across all of its franchise territory, one or more among the universe of CLECs does or could choose to do so. A healthy CLEC sector ensures that customers of all types have options available to them, and provides downward pressure on both pricing and margins.

Third, in their quest to identify and satisfy underserved customers, CLECs extend upgraded service to areas or specific locations that would otherwise have no recourse if the incumbent deemed it an insufficiently profitable opportunity. While this in no way guarantees that customers can obtain any service they want at a price they are willing to pay, the explosion of fiber deployment and the development of new services as a result of the Telecommunications Act of 1996 and earlier deregulation is a testament to the catalyzing effect of CLECs.

To read about key CLEC strategies (coast-to-coast, regional and stay-at-home), click here or on the source link below to read the full, in-depth article.

Craig Clausen is the executive vice president of New Paradigm Resources Group, and Joe Kestel is the director. NPRG is a strategic consulting and research firms serving innovators within the communications industry. It identifies, analyzes and forecasts emerging trends and technologies, and provides clients with market data and information on competitive developments affecting their businesses.