Opening the local loop to competition has created a paradoxical relationship between ILECs and CLECs, one that is both interdependent and competitive at the same time.
"This is becoming an increasingly more complex issue as more competitors seek to enter local markets," says Tim Keefe, an analyst for Probe Research Inc. (www.proberesearch.com), who has written the new study, "FRBOC and CLEC Relations: A Regulatory Overview."
"It is an issue that has directly impacted the fragility of the forced dual ILEC/CLEC relationship," Keefe says.
Keefe provides an up-to-date overview of the results of the Telecommunications Act of 1996 on local loop competition. The Telecom Act, he notes, was designed to increase competition by offering CLECs three different entry strategies: reselling ILEC services; building their own local loop facilities; or leasing network facilities from the ILECs.
"There can be no true competition until it takes place on the facilities-based level," Keefe says.
Currently there are very few CLECs that can offer service entirely over their own networks; the rest must rely on the ILECs, which are also their competitors, for access to customers, according to Keefe, who says that this creates a conflict of interest for the ILECs.
"They are forced to have customers who are also competitors; the better a job the ILEC does in selling access, the more harm to its bottom line," he says.
At the same time, the FRBOCs are faced with the carrot of long-distance entry if they do successfully open up their networks.
Probe Research provides strategic analysis in three primary sectors of the technology industry - telecom, IP and wireless - and their related convergence issues. Probe also just released two studies: "Shocks!" written by Allan Tumolillo, COO, is Probe's response to the wave of terrorist attacks against the U.S. and the resulting implications for the telecom, IP and wireless industries.
"Super Competitor: Dominating the New Era of Telecom/Wireless/Internet" is a strategic study of the future of these industries that's written by Victor Schnee, president of Probe Research, and Tumolillo.
