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Getting past the telecom mess

A 1996 telco bill that was supposed to be a boon for consumers has instead been a disappointment, Jon Oltsik says. His advice: Companies need to take their communications destiny into their own hands.

The war is over. Goliath beat David, and now the citizens are faced with continued tyranny. I'm talking about the battle over telecommunications.

The 1996 Telecommunications Act was developed to free businesses and consumers from the monopolistic grip of the Incumbent Local Exchange Carriers (ILECs) like Ameritech, Bell South and Verizon Communications. New Competitive Local Exchange Carriers (CLECs) like MFN, XO Communications and Yipes were supposed to reinvigorate the telecommunications market with better service and enhanced support.

Ah, cruel reality. The CLECs spent big on networks and burdened themselves with debt. Demand never took off. The promise of CLEC-driven telco nirvana now lies in the economic scrap heap.

It's obvious that investors in these companies are big losers, but enterprise companies also came up on the short side here. With the death of the CLECs, large companies will continue to give the ILECs their valuable business and to live with poor service, slow execution, and limited support.

Telecom customers should be outraged! Think about it. In the rest of the enterprise, vendors are killing themselves to prove that they have the best product or most comprehensive service so they can earn your business. Not in telecommunications. In spite of their poor track record, ILECs spend little time, effort or money to improve service or support. Instead, they remain preoccupied with new revenue-producing initiatives, like long-distance permits or wireless networks, to get their captive businesses and consumer customers to part with more of their hard-earned cash.

Is mediocrity inevitable? No. Author and political activist Toni Cade said that "revolution begins with the self, in the self." Exploited companies must bring a self-help, revolutionary mentality to their telecommunications issues through strategic planning and intelligent application of new technology innovation. Where do you start? Here are a few suggestions:

• Consolidate telecom needs
Companies typically purchase telecom circuits willy-nilly on an as-needed basis. Before long, there are dozens if not hundreds of wires in the building. These circuits are expensive to lease, impossible to manage, and make companies overly dependent upon the service-averse ILECs.

The promise of CLEC-driven telco nirvana now lies in the economic scrap heap.
To improve costs and operations, companies should consolidate needs with high-bandwidth pipes that improve the ratio of dollars per megabit per month. This strategy does involve an upfront investment, but generally begins to offer a return on investment (ROI) within 24 to 36 months. Besides, "fat pipes" tend to be far more reliable and provide a single aggregated bill instead of a mountain of monthly paper.

• Explore your IP options
Voice over IP (VoIP) has matured from the Internet hacker to the enterprise-ready phase. Its pricing is extremely attractive. At a recent seminar in New York City, the CIO of a hedge fund mentioned that his firm enjoyed a 10x savings using VoIP between its offices in the United States and United Kingdom. Voice over IP also enhances other applications, such as call centers, and capitalizes upon existing internal networks and operations. Bottom line, this technology shifts the balance of power--and expenses from the ILEC to the enterprise where management and service is far more controllable.

• Partner with your neighbors
Companies in multi-tenant buildings should realize that the folks who share the elevator each day need telecommunication services too. Tenants should unite to encourage landlords to get

Except for a few healthy CLECs, the white knights have disappeared.
high-bandwidth services into buildings. Everyone wins here. Tenants get to modernize and consolidate their telecom infrastructure while landlords get 'gotta have' 21st century perks in their buildings. Split the costs if you must--again, you'll see an ROI over time.

• Invest in the future
All telecom services are not created equal. In spite of the carnage, there are in fact, a few well-funded CLECs out there with a goal of nothing less than reinventing telecommunications. How? By offering customers improved network management, online billing and trouble ticketing, and next-generation services. These are the exact services customers crave, and they aren't coming anytime soon from the ILECs. When it comes time to buy your next circuit, remember the old IT adage that a dollar of capital spending carries three dollars of operating cost. Invest today in those companies with credible ideas and services that attack the three bucks.

The conclusion here is simple. Communications is too important to the business to treat cavalierly, and except for a few healthy CLECs, the white knights have disappeared. Companies have a simple choice: Watch their businesses suffer because of ILEC mediocrity or take matters into their own hands.