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News and comments on community broadband networks, the communities deploying them and the technologies that support them. Published by Denise Frey and Al Bonnyman.

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Friday, June 06, 2003


CLEC market weak but not dead yet

CLEC market weak but not dead yet

According to KMI Research's new report, U.S. CLECs: Market Developments and Fiberoptic Systems Deployment, the competitive local exchange carrier (CLEC) market in the United States has continued to show signs of growth, despite retrenchments in other areas of telecom services."

Summary of the KMI report.

What's especially interesting is how little the CLECs have penetrated "Tier 3" and smaller markets. (Tier 1 consists of the largest 26 markets; Tier 2, the next 77; and Tier 3 consists of the next 277). That underscores the fact that there's likely to be little choice other than the incumbent phone company in smaller towns and, in the absence of much competitive pressure, little investment by the incumbent in high speed services to businesses.

Power utilities already link together their own facilities with fiber that also happens to run by many of their largest customers in these smaller towns. They can cost-effectively and profitably fill in the competitive gap. Furthermore, they're unlikely to face much competition (other than a disinterested Bell company that's preoccupied with business in the big city.)

Also, there can potentially be a partnership between CLECs interested in smaller towns and some of these utilities. Some utilities don't really want to get into switching and routing -- they just want to lease dark fiber to others, make some money and further local economic development. A CLEC can in turn use the utility's fiber with little upfront investment and supply network routing and switching infrastructure (in use elsewhere) for less than it would cost the utility to replicate it themselves.


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