|
Tampa, Florida
Known for: Sunshine, "snowbirds," attracting call centers and home of New York Yankees spring training camp Largest businesses: GTE Florida, local telephone company, with 14,000 local employees; Tampa International Airport, with 6,040 employees; St. Joseph's Hospitals, health care provider, with 5,000 local employees Source: Greater Tampa Chamber of Commerce estimates |
Population: 2.24 millionWhile most of the country was shoveling out of 2-foot snow drifts this winter, the only kind of digging that was going on in the Tampa, Fla., area was related to building sand castles along the pristine beaches of Tampa Bay and the Gulf of Mexico. With temperatures averaging around 75 degrees and more than 220 days of sun a year, it's no wonder this part of Florida--the largest metropolitan service area (MSA) in the state with 2.24 million people, second only to Atlanta in the southeast for population--is expected to grow at least another 5 percent by 2001.
List of CLECs in Tampa, Fla. Market
The population growth has spurred an influx of new business development in Tampa, and subsequently attracted competitive local exchange carriers' (CLECs') interest in winning some of those companies' telecom dollars away from incumbent GTE Corp.
Small-town charm, with the benefits of a big city--tourist destinations such as Busch Gardens and Ybor City; professional football, baseball, hockey and soccer teams; and performing arts--are among the reasons the Tampa area has become a hot spot. The sunshine, warm weather and beaches are icing on the cake. But, according to those in the telecom industry here, the influx of CLECs has made life more dynamic.
"The fun thing about Tampa is the competition in this market. It keeps us on our toes and makes our jobs more exciting," says Shawne Angelle, vice president of Florida branch operations at GTE Florida Business Connections Corp., a division of the telco.
New providers in Tampa also enjoy the competitive spirit. "The best thing about it is that we don't have any market share. We have everything to gain," says Andy Drotleff, director of sales for new entrant US LEC of Florida Inc.
In the Beginning
Local telephone competition in Florida began prior to passage of the federal Telecommunications Act of 1996. The Florida state legislature passed its enabling statute in 1995, and local competition officially began Jan. 1, 1996, about a month prior to the federal law's enactment.
Even after three years, the Florida Public Service Commission (FPSC) and state legislature still are keeping their eyes on the development of competition. The FPSC is working on several reports that it was required to submit to the legislature by Feb. 15, 1999. These reports include:
- Determining a forward-looking cost model for basic local telecom service;
- Determining the amount of support for lifeline services;
- Studying the relationship between prices and costs of various services provided by the incumbent telco;
- Determining the "fair and reasonable" rate for residential basic local telecom service; and
- Studying issues related to provisioning of service by telecom companies in a multitenant environment and reporting its conclusions and policy recommendations.
In its publication, "Competition in Telecommunications Markets in Florida," the FPSC reports that by July 1998, there were 191 providers certified to compete across the state. Of the total, 51 of those certified actually were offering local service, either through resale or over their own facilities, to more than 194,000 business and residential lines, the FPSC reports. The FPSC notes that most new entrants have focused on Jacksonville, Miami and Orlando. But the Tampa Bay area is seeing quite a bit of competition develop in its midst.
Sole Provider
GTE is the sole incumbent local exchange carrier (ILEC) in the six-county area that makes up the Tampa MSA. For GTE, Tampa is unique because its service territory is one contiguous area, rather than being spread among various suburbs and rural areas as is the case with the company's other franchise areas across the United States. In the Tampa area, GTE has 92 interconnection agreements with resellers and facilities-based providers, says Beverly Menard, GTE's regulatory and governmental affairs assistant vice president for Florida and Georgia.
To handle competitors' requests in Tampa, GTE has developed two separate channels for its services. One division, GTE Network Services, provides wholesale services to CLECs. The other channel provides retail service to more than 2.3 million residential and business access lines. "In many cases this could be adversarial. Many believe we're difficult to deal with because of the retail business, but that's not the case," says John Ferrell, president of Florida for GTE Network Services.
Difficult Transitions
Competitors don't dispute that in some cases GTE is difficult to deal with. Local number portability (LNP) and electronic bonding for service ordering and provisioning are just a couple of the sensitive subjects.
Permanent, database-oriented LNP is a relatively new phenomenon in the Tampa area. LNP officially began Oct. 1, 1998, and the telecom companies have until early April to move customers using the temporary solution--remote call forwarding--into the master database. LNP "came in like a fog," says Allison Arbogast, branch sales manager in Tampa for e.spire Communications Inc., Annapolis Junction, Md. She relates stories of new customer cutovers that last late into the night because of LNP problems. "It is so complex that people don't realize all that has to take place," she adds.
e.spire isn't the only company finding that switching a customer from GTE to a CLEC is fraught with confusion. "Every one [of our cutovers] has been a problem," says Rich Santoro, vice president and general manager for the Southern region at Time Warner Telecom, Englewood, Colo. "We're not getting concise detail from them" about with whom the problems lie, he adds. For that reason, Santoro notes, customers decide to avoid the hassle of changing local service providers. "It has turned off a lot of customers. I lose them," he says.
Electronic communications between CLECs and GTE for ordering and provisioning of services don't seem to be as advanced as systems between competitors and the Bell operating companies (BOCs), competitors say. "There are a lot of things we can't do online with them that we can do with the BOCs. GTE is so decentralized that they're stuck in their own confusion," Arbogast says. For the Tampa area, CLEC ordering and provisioning is handled through GTE offices in North Carolina.
The electronic bonding and LNP problems are due mostly to the fact that competition is so new and GTE, as well as the CLECs, are still honing their internal processes to be able to comply with local competition-related requirements. GTE says that delays and confusion are not occurring to stifle competition in Tampa. "That's certainly not the intent," Ferrell says. "We're developing new systems, and the process is ongoing." He says that while problems have occurred, GTE is trying to fix the problems.
Many industry watchers in Tampa believe the problems will be resolved as everyone gets more experience with local competition. Despite its initial problems, "GTE is a very competitive player. They're willing to go off tariff," Santoro says. GTE will have to be competitive because major national carriers, as well as regional and local CLECs, have the incumbent in their sights.
Hook, Line and Sinker
At least two major interexchange carriers (IXCs)--AT&T Corp. and MCI WorldCom Inc.--are fishing around Tampa Bay, trying to hook large business customers that want local dial tone, long distance and international calling, as well as advanced data and a host of other services, from one provider.
Tampa was among the first 10 cities to which MCI rolled out its facilities-based local service offering, through its MCImetro subsidiary, prior to the company's acquisition by WorldCom last year. MCI's local exchange service began in spring 1996. WorldCom also acquired the downtown Tampa fiber network of MFS Communications Co. last year. "We're now in the process of pulling the networks together," says Gordon Stark, director of local sales for MCI WorldCom. In addition to having an extensive network locally, MCI WorldCom also has national and international transport facilities. "A customer can come to MCI WorldCom and subscribe to dial tone in well over 350 cities," says Troy Ather, the company's city sales manager for Tampa and Orlando. Currently, MCI WorldCom is marketing its On-Net offering, in which customers get reduced rates when they make calls that terminate on MCI WorldCom's network in other markets.
AT&T Local Services, formerly Teleport Communications Group Inc. (which was purchased by AT&T last year), has been providing competitive local service in Tampa since the third quarter of 1998. "We can offer nationwide local service," says Niles H. Burton, the company's general manager for global accounts in the Southeast region. Currently AT&T Local Services has an 18-mile network built, with another 40 miles or more under construction.
Like MCI WorldCom, AT&T is employing a national service strategy to attract customers. "There are enough CLECs, so the question is how do you differentiate yourself. It's not enough to be cheaper and diverse," Burton says. A national presence and extensive product line are what AT&T believes will set it apart from others. In addition to facilities-based local dial tone, AT&T offers long distance, data services, and wireless to mid-sized-to-large businesses in Tampa.
Home Sweet Home
Large IXCs aren't the only ones making strides into Tampa. Intermedia Communications Inc., one of the oldest independent CLECs, is headquartered in Tampa. Intermedia began in the city more than 11 years ago, when its entrepreneurial founders started the company as a competitive access provider. Over the years, the company has developed a fairly extensive fiber network around the city, and has evolved into a national provider of competitive local exchange, advanced data, frame relay and shared tenant services. "We've been successful here, but we don't focus specifically on Tampa," says Mike Demperio, vice president of market management at Intermedia. "But because we've been in place this long, were stronger here."
In addition to its headquarters, Intermedia also has its main network operations center in Tampa. "This is where the system begins and ends," says Greggory Rosa, Intermedia's network operations support coordinator. From its secure, windowless building about eight miles east of downtown Tampa, Intermedia keeps track of service activation and installation, monitors its network 24 hours a day, seven days a week and provides technical support, among other activities.
Another new company, with ties to Intermedia, just opened its headquarters in Tampa and is planning to begin offering competitive local service over an asynchronous transfer mode (ATM) backbone by August. 2nd Century Communications Inc. was founded by President and CEO Michael A. Viren, formerly Intermedia senior vice president of strategic planning, and three other former Intermedia employees. Among them: Charlotte Baker, Intermedia's former senior director of strategic planning and current chief marketing officer and vice president of market planning and business development; Vince Rocca, 2nd Century's chief technology officer and vice president of product engineering and network operations, who served as Intermedia's director of strategic planning; and Oscar Williams, former Intermedia vice president of administration, now serving as 2nd Century's chief financial officer and senior vice president of business operations.
2nd Century plans to target companies with 10 to 250 lines, a market that Viren believes can be served by one or two T1s. "We're using things that are easy to deploy. We really have a 'keep it simple, stupid,' approach," he says.
By using ATM technology for backbone transport, Viren believes that he can enter the market much more inexpensively than CLECs buying monster telephone switches. "We're now using the Siemens 3690 ATM switch, which is about one-tenth the cost of a traditional central office (CO) switch," Viren says. He adds that 2nd Century's CO will cost only about $600,000 to $800,000 to build, compared to the $5 million to $7 million spent by other CLECs. "That means we can operate at a smaller scale," says Viren, noting that the company will become profitable if it gets 180 small business customers in a city.
Branching Out
CLECs headquartered outside of Tampa also have come in to make a serious impact on the competitive telecom landscape. e.spire; Teligent Inc., Vienna, Va.; Time Warner; US LEC; and WinStar Communications Inc., New York, are among the CLECs that entered Tampa this decade.
Time Warner Telecom has developed an extensive network throughout the Tampa MSA and into Orlando, connecting customers via OC-48 rings. Time Warner Telecom got its start by working with its Time Warner Cable brethren that operates franchises in Tampa and Orlando. Santoro leverages the fiber used by the Time Warner cable operations, as well as its rights-of-way on poles and in conduits. As a result, Time Warner Telecom has an 850-mile network spanning central Florida, that has been in operation since February 1998 (see image, below).
Image: Tampa Bay Area OC-48 Backbone Network
Santoro says that using existing Time Warner Cable rights of way has saved the telecom group time, money and the headaches of dealing with permitting and environmental rules. For example, in Pinellas County, which is flanked by Tampa Bay to the east and the Gulf of Mexico to the west, Time Warner Telecom inherited about 80 percent of its network through the cable group. The other 20 percent it is building has cost about twice the average because of compliance with environmental regulations, Santoro says.
Even with the cable company connections, Time Warner Telecom is only focusing on the business market. Any type of competitive residential service that may develop would be under the auspices of Time Warner Entertainment.
Meanwhile, e.spire has been in the Tampa area for more than two years. The company has about 4,000 route miles of fiber that connects its downtown switch with business parks and other concentrations of corporations around the metro area. US LEC, Teligent and WinStar are fairly new to the Tampa area. Charlotte, N.C.-based US LEC has been offering competitive local service via its switch and leased transport since November 1998. US LEC is targeting mid-size to large businesses, such as hotels and universities.
WinStar and Teligent, which both use fixed broadband wireless technology to provide services, also got their start in Tampa in 1998. WinStar began offering service in May. "We felt this area needed competition. It had a good mix of small and mid-sized business and a good layout for our network," says John Tompkins, WinStar's vice president and general manager for Tampa and Miami.
After much success with its point-to-point wireless service in Orlando, Teligent decided to make Tampa one of the 10 cities across the United States where the company would debut its point-to-multipoint service. The offering has been very successful so far, says Marisol Casablanca, director of Teligent's Northern Florida region. Casablanca's region was No. 1 in sales for the company in the fourth quarter of 1998.
Even with so many competitors established or gaining their footing in Tampa, several more are preparing to jump into the Bay area. BTI Telecom Corp., Raleigh, N.C.; Coudersport, Pa.-based Hyperion Communications Inc.; ITC^DeltaCom, West Point, Ga.; and Orlando-based Florida Digital Network all are at various stages of network development. BTI is getting its switch room ready downtown. Hyperion has leased long-haul fiber, is in the process of installing its local network and plans to be ready to open its doors by this fall. ITC^DeltaCom and Florida Digital expect they will be ready to provide service by the end of 1999.
Wholesale Brokers
The number of facilities-based companies with their own fiber networks in the Tampa area has led to an active wholesale capacity business. The buyers are primarily Internet service providers (ISPs) and other CLECs.
Time Warner, AT&T and MCI WorldCom have become alternatives for some ISPs and CLECs that need transport in and around Tampa. "With the exception of MFS [now MCI WorldCom], all the CLECs here use me. But I use MFS because they have a good network downtown," says Time Warner's Santoro. At AT&T, much of the wholesale business is directed at ISPs, which are looking to get to the Internet backbone via AT&T facilities, or connect their locations with point-to-point transport.
GTE, too, sees much opportunity in wholesale, especially since it has the majority of the imbedded network around the Tampa area. "GTE would like to win the retail business. But if we don't, we want to be the choice provider [for the CLECs]", Ferrell says.
On the Resale Front
GTE has a dearth of competitors that are reselling its service. Most of the resellers are ones such as 1-800-RECONNEX, an Oregon-based company that sells premium priced prepaid local dial-tone service to customers that are credit risks or have been dropped by the incumbent carriers for nonpayment. RECONNEX entered the Tampa market when it purchased US Telco, a similar type of reseller, about a year ago. In Tampa, RECONNEX charges customers a $49 initial setup fee, and $49.95 a month for local service. In comparison, GTE charges residential customers about $12 a month for its local dial-tone service.
Utilicore Corp., a Sarasota, Fla.-based provider of residential telephone service, is using resale as an initial entry strategy into apartment buildings and private communities. "We resell the incumbent only until we have density," says Henry Kavett, Utilicore's vice president. Then, he says, the company will build its own facilities.
Another reseller targeting the residential market is BellSouth Corp., the regional Bell company that is the incumbent on the Atlantic coast of Florida. While BellSouth doesn't have any of its historical franchise locations in the Tampa market, it does have personal communications services (PCS) licenses there. In mid-October 1998, BellSouth's wireless group launched what it calls a "multiple product offering" in Tampa. Wireless customers could purchase unlimited landline local telephone service as part of a package that cost $49.99 a month or more, depending on the number of wireless minutes a customer wanted. "We don't sell wireline as a standalone because of some billing system issues," says Robert J. Burroughs, director of marketing for BellSouth in Tampa. BellSouth uses its wireless service billing system to handle both local landline and wireless invoices. Burroughs adds that the 13 percent resale discount it receives off GTE's retail price makes providing landline service alone unprofitable. BellSouth is considering adding other offerings, such as Internet and digital subscriber line (DSL) services, to the package, but the company is waiting to see what customers will demand. Now, though, Burroughs says, building a facilities-based local service offering would be too expensive.
The Tortoise or the Hare?
In general, competitors say GTE initially was slow responding to competition. "They let MFS and Intermedia come in and take the T1 market," Viren says. But now GTE is shaping up to be a formidable opponent. GTE not only provides basic dial-tone services in Tampa, they offer wireless service, data service for business and Internet access. And unlike the regional Bell companies, GTE can even offer long distance as part of a bundle of services because it is not restricted from that line of business by the Telecom Act.
GTE, for several years now, has been beefing up its infrastructure and bringing advanced network technology to the many business parks popping up across the Tampa landscape. Called "SmartParks," the GTE program works with developers to create redundant entrances feeding into new corporate parks, with the network feeding in from different central offices (see diagram, page 60). It costs GTE about 35 percent to 40 percent more to put in their SmartPark facilities, because all facilities are placed in underground conduits in three to four subducts, says Donna Harak, market development consultant for GTE Network Services. Among the GTE services available to Smart Park inhabitants are ATM, advanced call management, frame relay, integrated services digital network (ISDN), Internet access, long distance, dedicated metropolitan area network (MAN) service, videoconferencing and wireless services.
Telecom infrastructure development, whether it be GTE SmartParks or new networks á la CLECs, has been one of the features attracting major corporations to locate offices and call centers in the Tampa metro area. In fact, the growth of business in the area has been a boon for GTE's and new providers' bottom lines. Like Teligent, e.spire's Tampa office has been one of the company's top producing offices in the United States. GTE also boasts that Tampa is among the company's top three markets, Angelle says.
The good news, it seems, is that growth of telecom services in the area will continue, industry watchers and members of the Greater Tampa Chamber of Commerce believe, as more high-tech companies move into the I-4 corridor between Tampa and Orlando.
