There's a fascinating paradox about competitive local exchange carriers that leads to confusion about their role in today's telecom arena.
Most people attribute CLECs' existence to telecom "deregulation." Yet whenever a new issue arises in Washington, D.C., the CLECs invariably argue for more regulation rather than less.
For example, if a Bell company asks for long-distance authority, the CLECs immediately scream no. If a Bell asks for data deregulation so it can build an Internet backbone, the CLECs again shout no.
All year, CLECs have run to the government demanding new rules requiring incumbent telephone companies to maintain their copper loops even if they've replaced them with fiber, so CLECs can still provide DSL service via loop rental.
They've also begged the government for a whole new set of regulations requiring multitenant building owners to let in all carriers, even if no one has asked for them. They plead to have ever-more-complex formulas for intercarrier fee transfers mandated by the government, rather than the marketplace.
Recently I asked John Windhausen, president of the Association for Local Telecommunications Services (ALTS), the CLECs' principal trade group, to explain the paradox of an industry created by deregulation asking for more regulation. He told me it continues to be necessary to regulate what he called the "monopolies" today so as to get to a fully open market tomorrow.
If the Bells are still "monopolies," what does that say about the CLECs' success so far? Windhausen was candid in response. CLECs currently have 6% to 8% of the local market, and he says it will be necessary to keep on the regulatory reins until they reach 20% to 25%.
The implications of this approach are significant. There are now hundreds of CLECs, but they incorporate a variety of approaches. Some build fiber; others don't. Some lead with data service, and a few specialize in metropolitan Ethernet or direct optical connections. Some offer little beyond a voice-oriented alternative to the incumbent over rented loops, outsourced provisioning and barebones customer service.
It's hard not to notice that it's rarely the CLECs with unique services that show up at Washington press conferences, give congressional testimony and pummel me with legal briefings rather than new service announcements.
Except for Netscape Communications Corp. and Oracle Corp.'s attack on Microsoft Corp., no other IT industry segment has had the luxury of crying for government protection. (If they did, all those pathetic consumer dot-coms that advertised last Christmas would still be around.) Users don't need hundreds of telecom competitors - they need a handful of really good ones to beat the Bells' brains in. ALTS should think about whether its current stance as the "No CLEC Must Ever Be Allowed to Fail Association" helps that along, or threatens to tie up telecom in regulatory knots for another century to come.
Rohde is managing editor of The Edge section of Network World. He can be reached at drohde@nww.com.