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ings. In fairness, they have good reasons for this strategy; the ILECs have realized that with long-distance relief pending, they must create a wide area presence for themselves. Their larger business customers are not necessarily local companies; although they may have a local presence, they tend to be national or even global. If the ILECs are to become full-service service providers, they must be able to serve those customers on an end-toend basis, thus eliminating the need for intermediaries. Without a wide area data network, they cannot accomplish this. The fact is the market is the ILECs to lose. Many analysts believe that customers will buy all services from the local service provider, if the local service provider has the ability to provision them. The holder of the access lines rules; consequently, much of the company convergence activity of late has revolved around acquisition of access lines. Consider Qwest s acquisition of USWest or Global Crossing s acquisition of Frontier. On a slightly different level, AT&T s acquisition of TCI is clearly a gambit for local loops and more will follow. So are ILECs a dying breed Will they be brought down by the smaller, more nimble CLECs that are nibbling away at their longstanding customer bases There is no question that they face some serious challenges. Their networks were designed around the idea that they would control 100 percent of the market and are therefore not the most cost-effective resource in an open and competitive market. Other models are far more cost-effective than the ILECs circuit-switched infrastructures. As a result, the ILECs are reinventing themselves a piece at a time and are, of course, expanding their market presence in a variety of ways. ILECs stand to benefit from the evolving nature of the network edge primarily due to simplification. By reducing the number of layers and network elements that they manage, they will be able to reduce provisioning times and improve overall customer service quality. As their customers clamor more for IP services and less for legacy circuit-switched transport, the evolution will enable them to migrate efficiently to a common network fabric for all services in response to the call for convergence. Furthermore, they will enjoy enhanced efficiency as they move away from the largely overprovisioned networks that are characteristic of SONET and SDH.
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Because of their overall focus on the metro area, CLECs will modify their networks to enable them to efficiently interconnect with interexchange carDownloaded from Digital Engineering Library @ McGraw-Hill (www.digitalengineeringlibrary.com) Copyright 2004 The McGraw-Hill Companies. All rights reserved. Any use is subject to the Terms of Use as given at the website.
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rier points-of-presence (POPs) so that they can offer a full suite of services to their customers. In their minds, the edge of the network is slightly different than their ILEC relatives they see it as the ILEC central office where they interconnect, the collocation cage, or the customers equipment closet where they terminate their service. The CLECs are similar to the ILECs in that they sell a commodity. They differ from the ILECs, however, because they tend to sell the more lucrative products and avoid the markets and services that don t enjoy high returns. For example, many CLECs focus on residential voice customers, whereas others go after business customers. All CLECs are not created equal; their business strategies and business plans for carrying out those strategies and satisfying customers vary dramatically from company to company. They are, however, good performers within their identified market niches. The CLECs are obviously after the same access lines that the ILECs want to protect; the ongoing convergence of medium-size CLECs is nothing more than a positioning move. CLECs face significant obstacles by virtue of the fact that they are CLECs. As alternatives to the ILECs, they rely on interconnection agreements with them because they must have a collocation presence within the ILECs central offices to provide service. The 1996 Telecommunications Reform Act mandates that before the ILECs will be allowed into the longdistance market, they must demonstrate that they have opened their local market to competitors, providing equal access to unbundled facilities, such as local loops and certain services. CLECs often complain that, although the ILECs have agreed to the stipulations, they are not particularly quick to respond to CLEC requests for interconnection service and therefore have the ability to exert some control on the pace at which CLECs can enter their markets. Of course, some checks and balances are in place, such as Section 251 of the 1996 Communications Act. This component of the law requires that ILECs sell circuits, facilities, and services to their competitors that are at least equal in quality to that provided by the local exchange carrier to itself or to any subsidiary, affiliate, or any other party to which the carrier provides interconnection. The ILECs control 90 percent of the access lines in the United States, so CLECs face a significant challenge. Many CLECs claim to be able to offer better, more customized service than their ILEC competitors. Most customers agree that the technology products sold by the ILECs and the CLECs are identical. The difference, they claim, is the way they deal with their customers. CLECs believe themselves to be more customer focused, claiming that the ILECs are still plagued by legacy monopoly mentality.
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Downloaded from Digital Engineering Library @ McGraw-Hill (www.digitalengineeringlibrary.com) Copyright 2004 The McGraw-Hill Companies. All rights reserved. Any use is subject to the Terms of Use as given at the website.
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