Let a Thousand Federations Flourish

Today's news that XConnect has brought nine competitive service providers (CSPs) into its trial HD peering alliance confirms that, like a solar system in process of forming, the telecom industry is cohering into a system of federations and alliances among erstwhile competitors.

Historically, political federations of distinct sovereign states arise in response to outside pressures, often from hostile powers; the United States, for instance, grew out of the desire of the colonies to be free of English rules, in the late 18th century (not for nothing were they called "The Federalist Papers"), while the 16 states or Länder of Germany united in the Franco-Prussian War of 1871.

In a similar way the competitive telcos, from small, local business-voice providers to rapidly growing VoIP and hosted communications providers, are coming together to create alliances to counterbalance outside pressure from the major carriers. The XConnect Global Alliance, of which the HD trial is part, is one example on a list that includes the IP peering fabric created last fall by CSPs Alteva and SimpleSignal, the Cloud Computing Alliance, announced today and also spearheaded by Alteva, and the Carrier Ethernet Exchange, or CENX.

The rationale behind such bodies is not hard to glimpse: "By ourselves, each of us is not big enough to do anything" in terms of competing with, and exchanging traffic with, the major carriers, SimpleSignal CEO Dave Gilbert said at an early meeting to form an IP peering alliance, at the VON Conference & Expo last fall. "Together, that's when we start to have some real numbers."

Of course, such federations splinter as easily as they form, and it will be interesting to see which of these gains real traction and membership over the next couple of years. But it's a good thing that next-generation telcos have realized that going alone is not always the way to success.