Posted: 11/1998
Attacking the Data Opportunity
A Day in the Life of a Data-Centric CLEC
By Ann Zeichner
The most successful data CLECs have architected their networks and operations centers specifically to optimize the delivery of data. They lease or purchase certain network elements, such as local copper loops, from incumbent local exchange carriers (ILECs) under the auspices of the Telecom Act and combine them with their own network facilities to create new types of services. The business model of these data CLECs is straightforward: They act as a carrier's carrier, marketing data transport services through wholesale agreements with network service providers (NSPs). In most cases, the initial technology of choice is one of the various flavors of digital subscriber line (DSL), but many data CLECs plan to offer other types of data transport, as customer demand warrants. NSPs serve as local distributors, reselling the high-speed connections to business customers for Internet access.
By working with a data CLEC, NSPs can focus on their own core competencies--value-added Internet protocol (IP) services--while eliminating the costly and complex burden of developing their own access infrastructure to reach out to new subscribers. And the data CLEC acts as the single point of contact for the NSP, buffering them from all day-to-day interactions with the ILEC.
The Data CLEC
The data CLEC business begins with collocation in multiple COs in targeted metropolitan areas throughout the nation. Within each CO, the data CLEC installs data networking equipment, which in the case of DSL, is a DSL access multiplexer (DSLAM). The DSLAM terminates each local loop and forwards all packets to a single, centralized network control center centrally located in the region.
The data CLEC's NSP customers need only make a single fat-pipe connection to the centralized network node to gain immediate access to the entire metropolitan network. The data CLEC coordinates all local loop provisioning and end-user customer premises equipment (CPE) installation and testing, so the NSP does not have to manage subcontractors and service contracts for customer equipment. The result is not only a much simpler approach to DSL service offerings for the NSP, but also much greater coverage and a substantially lower cost of entry.
"Using a data CLEC means we can rapidly deploy DSL services in a matter of days in multiple COs across the nation without having to build out the infrastructure on our own," says Brian Scholte, director of product management, Epoch Internet (Irvine, Calif.).
Because DSL delivers more bits-per-second per dollar than circuit-switched solutions, the NSP can target the potentially lucrative but largely ignored small and medium-sized business market with the ability to compete with larger companies who already have fast Internet access. "The Yankee Group's small and medium business market research indicates that conventional telecom service offerings, such as analog or ISDN (integrated services digital network), cannot adequately support today's business-to-business applications nor scale to meet long-term Internet commerce and data networking needs," says Berge Ayvazian, executive vice president of the Boston-based consulting company. "DSL services fill the service gap at a price that just about any business can afford, and the choice of speeds gives users a natural migration plan."
In the past, a great challenge for NSPs reselling data access to business customers has been dealing with the ILEC as a third-party connection provider. Because the legacy local infrastructure was not optimized for data carriage, NSPs offering data services have been forced to cobble together networks from piecemeal voice- oriented transmission components. In addition, support of these piece parts remained the purview of the ILEC; the NSP had no direct control of the provisioning or maintenance of these links, leaving the end user in the unenviable position of dealing with multiple service providers for data access.
The NSP, however, gains nothing by being the local network architect. Instead, the NSP adds value by managing its backbone to optimize network availability and then offering a range of IP services. Data CLECs offer their services directly to the NSP as an integral part of their Internet access service.
"The data CLEC model allows Concentric Network Corp. to expand our business into the area of DSL services while mitigating the risk of stranded capital investments. For the price of a single DS-3 connection to the data CLEC, we get the leverage of its extended collocation facilities within a region," says Mark Fisher, vice president of marketing, Concentric (Cupertino, Calif.). "This relationship gives us the benefit of access to a DSL network infrastructure while letting us continue to focus on our core business of value-added IP network services."
All order entry, installation, management, upgrade, accounting and billing issues are handled directly by the data CLEC, which buffers the NSP from all ILEC interactions. The NSP has full visibility into service setup, installation and maintenance, and acts as a single point of contact for all the Internet access concerns of the end-user subscriber.
"Service providers are anxious to deploy high-speed data services without having to rely solely on the ILECs," says Hilary Mine, senior vice president of Internet coverage at Probe Research Inc. (Cedar Knolls, N.J.). "Based on our own research with ISPs, we believe that emphasis on operations and support systems (OSS), network reliability and customer support will give the data CLEC an edge in the lucrative local data loop market."
In a typical business day, the data CLEC might be filing for Public Utility Commission (PUC) certification in new states, negotiating interconnection agreements and submitting collocation applications with various ILECs, taking orders for new NSP subscribers, turning up service, troubleshooting a connection, or providing billing and accounting information to its NSP partners.
The first step to building a data CLEC business, however, is understanding and overcoming the legal and regulatory hurdles.
Initially a data CLEC must gain CLEC certification from the regulatory commission of each state in which it desires to do business. Nationwide, these requirements vary greatly; few states have standard operating procedures to help the process. It often is necessary to employ local counsel to interpret each state's unique regulations.
Next, the CLEC must negotiate interconnection agreements with each ILEC and begin the process of ordering collocation space. However, each regional incumbent has its own unique interconnection template and collocation ordering procedures. Compounding the problem, the ILECs typically have limited interest in encouraging CLEC partnerships and frequently erect barriers to CLEC entry.
Once it has overcome the legal hurdles, the data CLEC faces significant operational challenges. Collocation also can be expensive, with initial agreement fees of $25,000 to $75,000 or more per central office, in addition to monthly leasing and power fees. Equipment installation and operational requirements involve compliance with certain National Equipment and Building Standards (NEBS) safety guidelines originally developed by Bellcore, formerly the research and development arm of the Bell companies. Interpretation of these requirements varies from state to state and across ILECs.
CLEC-NSP Interaction
The ongoing operational challenges of provisioning and managing data transport services begin after the data CLEC has established its network facilities in the central office. The state of the OSS for accommodation of CLEC business varies widely across ILECs nationwide. One ILEC might provide access to customer or network information through a terminal-based application, while another may do it through a facsimile paper trail. The lack of effective electronic interfaces or human protocols can result in excessive--and sometimes redundant--paperwork for both sides.
Rather than pass on these inefficiencies to their NSP customers, savvy data CLECs are developing state-of-the-art support systems that take advantage of web-based and other electronic interfaces. The sophistication of the OSS simplifies the day-to-day interactions with the NSP and greatly speeds the deployment, troubleshooting and back-office support of its data transport services.
The descriptions of the data CLEC-NSP interaction that follow use the NorthPoint OSS as a model. The interactions with the ILEC remain transparent to the NSP--and to the end user--throughout the entire ordering, installation and provisioning cycle.
To find out what services are available to a subscriber in a given area, the NSP enters an address and telephone number into a password-protected web-based interface and receives instant verification of the service options. The NSP can order the service immediately through the interface with specific criteria such as throughput speed and service-level agreements. Upon confirmation of the order, the data CLEC acquires a high-quality, unbundled local loop from the incumbent and tests the line within its own network.
Working in conjunction with the NSP, the data CLECthen arranges for the installation of the DSL device at the customer premises. While on site, the installer confirms the quality of the DSL connection. The NSP can verify the status of the installation process at any given time.
When the NSP has turned up Internet service for the end user, it can use the same web-based interface to monitor the performance of the connection--from the CPE through the central office and back to the data CLEC's centralized hub. This oversight capability allows the NSP to provide customer service proactively, tracking and fixing performance issues before the customer is even aware of them. Two-way trouble ticketing tracks all problems through to satisfactory resolution.
Network statistics allow the NSP to track historical usage and suggest service upgrades based upon customer need. Higher margin services can be enabled immediately with a single phone call. The NSP implements the change simply by updating the configuration profile in the management application. This information is then forwarded electronically to the data CLEC, who effects the change through a simple software upgrade. No hardware changes are required at the subscriber end or at the CO.
A major additional benefit to the NSP is greatly simplified order entry, tracking and billing procedures. The automated OSS facilities interface directly with the NSP's existing provisioning, management, accounting and billing systems. The data CLEC provides the NSP with a single invoice covering all of the digital connections, regardless of the number of COs in service. Billing is straightforward, based on the number of end users.
A Winning Solution for All
Several factors give the data CLEC an advantage over traditional exchange carriers. The creation of a data-only network means the data CLEC can forego the burden of supporting the legacy voice/data dual-purpose infrastructure. This means fewer management personnel, fewer outlays in equipment cost and a simplified support structure for provisioning, maintaining and billing data services. The data CLEC can tune its network specifically for packet-based data transmission and explore new data communications technologies, such as digital subscriber line (DSL), that combine high performance with greater service economy for the subscriber.
The data CLEC's NSP partners can begin offering enhanced services immediately with an affordable one-time connection, while being spared the administrative and operational overhead of interacting with the ILEC. Finally, the data CLEC can offer tighter integration with NSP back-office systems to speed service deployment and enhance service quality.
Ann Zeichner is vice president of sales and marketing for NorthPoint Communica-tions Inc. She can be reached at (415) 403-4003 or info@northpointcom.com
