XCHANGE recently surveyed a variety of industry executives about their expectations for The Year Ahead. Here is our interview with H. Russell Frisby Jr., CEO of the CompTel/ASCENT Alliance. The alliance was formed in November 2003, by the merger of the Competitive Telecommunications Association (CompTel) and the Association of Communications Enterprises (ASCENT). With 400 members, the alliance is the largest association representing facilities-based carriers, providers using UNEs, global integrated communications companies and their supplier partners.
X: What do you see as the most significant potential developments in our industry in 2004?
Frisby: By far, regulatory uncertainty and potential changes in key rules governing the opening of the market will have the greatest impact on the competitive telecommunications industry this year. The competitive telecom market stands at a crossroads now. Competitive providers are making great strides by increasing their market share and delivering cost-effective, innovative services that their customers desire. But in many respects, competitors are being held hostage by some regulators who believe the deregulation of a few companies that still wield monopoly power will lead to investment in new network infrastructure and the deployment of advanced services. Unfortunately, with history as our guide, we know that giving the Bells the freedoms they desire will not guarantee increased investment and lower prices for consumers. These are the companies that had access to technologies such as touch tone services, wireless and DSL for years, but declined to introduce these innovative services to their captive customers.
Voice over IP - particularly the regulatory treatment of this evolutionary technology - will continue to attract attention throughout 2004 as state and federal regulators tackle the sticky question of how it should be classified.
X: What do you expect in the year ahead in the way of industry recovery?
Frisby: In 2003, we began to see the initial sparks of recovery. Service providers and vendors alike began reporting positive financial news quarter after quarter. We hope this positive momentum will fan the flames of competition into 2004.
X: In what areas of the industry do you expect to see significant consolidation in 2004?
Frisby: We expect to see some consolidation in the CLEC and IXC sectors as companies position themselves to increase market share and deliver comprehensive bundles of services across ever wider geographic service areas.
X: Do you anticipate a significant number of additional bankruptcies by communications companies in 2004? Why and in what category(ies)?
Frisby: No, we do not anticipate a significant number of bankruptcies in the coming year, but there may be a few. Some companies are still struggling with crushing amounts of debt, and bankruptcy is perhaps the only way to resolve their financial crisis.
X: What new marketing efforts do you expect to see from service providers or vendors in the year ahead?
Frisby: We believe that service providers will continue to bundle a variety of services and add new offerings to those packages as customer interest and technology allow.
X: What, if any, significant new developments on the regulatory front do you expect for 2004?
Frisby: Several regulatory issues will take center stage in 2004. There are more than 100 regulatory and judicial proceedings on the federal and state levels that have resulted from the Triennial Review order. The appeals of this order could take years to resolve. Moreover, the FCC is poised to re-evaluate the rules governing the pricing of ILECs' network elements and address the regulatory treatment of voice over IP offerings. Both of these proceedings could drastically alter the cost and ability of service providers to compete in the marketplace.
X: What customer or service-type areas do you expect service providers to see the most demand from in 2004?
Frisby: We believe that customers will continue to demand a choice of high-quality, innovative, reliable services at competitive rates.
Additionally, we believe that wholesale network providers could see a significant uptick in business as competitive providers are forced to find alternatives to the ILEC networks for transport and access.
X: Any other predictions for 2004?
Frisby: The CompTel/ASCENT Alliance hopes that competition will continue to be allowed to flourish and that regulators will do what is required of them by Congress to ensure that the pro-competitive goals of the 1996 Telecommunications Act are not undermined.
