Dave Rusin, founder of American Fiber Systems, writes in his blog about the light at the end of the tunnel. (Thanks Jason for the nudge!) Rusin was President of Frontier, one of th early CLEC's (1994), so he knows a thing or 2 about the industry. Rusin thinks that DC and the FCC is a vortex of lobbyists and lawyers. We think alike. His other insight is close to my chant, Layer 1 or Layer 7 (own the app or own the network):
"Amongst a host of insights, the one I understood best was this: If you are going to be a long term, innovative, reliable competitor you need to be on your own fiber optic platform to succeed."
Rusin goes on to explain that VZ is now going after businesses with its FiOS offering -- and neither ISP nor CLEC can get access to it!
Rusin thinks that CLEC's won't be able to compete with FTTB (fiber-to-the-building) on copper. Rusin even berates fixed wireless providers as unable to compete with fiber. I think he's wrong. Here's why:
Let's leave out the top 25 cities. CLEC's never got to 15% market share even with UNE-P. Take a CO that has 40,000 lines (medium sized). If you get 400 customers off that CO within 8000 feet of the CO (which is just 1%) you are profitable. You can use not only Ethernet-over-copper, but fixed P2P wireless. (Orthogon and 3650 gear can be your friend if you know RF).
If you only acquired 200 customers at $300 ARPU you would still be doing okay - and that is 0.5% of the lines and Nuvox sized ARPU.
The key is to sell deep within your market. (Milk your own cows.) Expansion is great for Wall Street, but short term stock gains does not make for long term strategy (see Starbucks and Sharper Image).
Historically, CLEC's (all of them combined) did not account for more than 15% of any market, so the numbers still work in their favor. (In the 6 VZ cities for forbearance, it looked like te CLEc's had about 8% of the market). However, they have to stop the stupid stuff they have been doing for 12 years. CLEC's have had 12 years to use the TA96 to acquire a density of clients and convert to facilities, but as Rusin puts it: "If you decided to go wide rather than deep for 12 years in developing a competitive platform, that was a business choice not a government edict."
It isn't just CLEC's. Look at the VOIP Providers. Same thing. (And ITSP's should stop looking at the XO playbook. It hasn't worked for XO, so it likely won't work for you. Pick retail or wholesale and go full bore.)
It becomes about Selling Managed Services. Ma & Pa Bell are already there.
Sell DEEP! The ILEC's do. So does cable. If you are in a MTU (multi-tenant unit also referred to as office building), the second and third customer is cheap. The fourth is gravy.
That light at the end of the tunnel is an ILEC train that is going to wreck your day unless you follow what I have been preaching here for years or what Rusin writes: "I have been very clear why being ILEC indepedent is important over the years."