How many CLECs never had a layoff and want to be called a CLEC these days? US LEC (news, chart) is one such company. I had a chance to speak with their CEO Aaron Cowell, who tells me their goal from the inception has been to become the premier competitive carrier in their footprint. The last three words of this simple mission statement are probably what allowed the company to make it through the telecom downturn, as many other CLECs were trying to be the largest competitive carrier and not the best.
Another interesting differentiator is that this company has deployed triple-play services to its business customers. Whereas we often hear of triple-play services to the home, Cowell explained his services are being rolled out to the hospitality market, the medical field and time-shares. While on the topic of enhanced services, he mentioned data backup/storage and training as other services his company is providing customers.
Services such as Find-Me, Follow-Me are also being delivered by the company and US LEC is proud to say they aren't just selling pipes anymore. Other services are more mundane but useful, such as allowing a single bill for multiple locations with built-in analysis tools allowing companies to really understand what is happening with their telecommunications. Cowell is quick to point out that this service is free.
I found the progress the company has made in the last few months to be good, as I wrote about US LEC's VoIP services in June of this year.
I asked Cowell what he would change about his business if he could. The response is that he would like to be in an unregulated industry, as you need stability to run a business. You need to understand the rules of where to invest -- what has a future and what doesn’t. Perhaps the most chilling statement was that he and others in the industry spend enormous amounts of time dealing with regulation and this detracts from making things better for his customers.
(As a side note, you know that when CEOs in some of the industry's top companies start talking about going into different industries because of ever-changing government regulation, there is a major problem afoot.)
"So much for breaking up AT&T"
I asked if the Telecom Act has been repealed, and he said the point of the act was to ensure the BOCs had vibrant competition in the long-distance market. Now that is going away, and we are entering a world where three companies will dominate the landscape. "So much for breaking up AT&T," he said. He mentioned this consolidation coupled with the rumors of SBC/AT&T purchasing BellSouth as factors that could result in more expensive telecom bills, reversing a trend that has been saving millions.
My next question was what are your thoughts on government regulations and the FCC -- to which he responded, "Does the government know the Internet is not a cloud -- it is really pipes and computers? If you don’t have access to the pipes, the phone or cable company can control the pricing." He continued, "How does Vonage compete if the Bell and Cable companies are able to bundle?" Thankfully Cowell was quick to add at the end of this topic that he isn't predicting doom and gloom, but Congress needs to see that the pipes are owned.
"Does the government know the Internet is not a cloud -- it is really pipes and computers? If you don’t have access to the pipes, the phone or cable company can control the pricing."
I asked about WiMAX and broadband over power line or BPL, to which he responded that US LEC is working on both. As far as unlicensed wireless spectrum goes, there is no guarantee of quality for voice at the moment.
The most insightful question in many interviews is asking what a company will be known for in five years. In this case the answer was, "Look back five years. We have grown our customer base eight-fold and revenue three-fold. 1,100 people have careers at US LEC. We want to continue to be a quality business, with very strong, diverse and feature-rich products. Finally he said they want to be a premier business, not just a communications company.
I probed more about the future, and Cowell mentioned they are seeing more change than at any time before.
"It is important that we keep an eye on regulatory, technology and customer changes."
He ended by saying, "It is important that we keep an eye on regulatory, technology and customer changes." Cowell continues by saying that Verizon and SBC are much larger companies that could bring competition between RBOCs. He finished his prognostication by saying, "If you are not holding on tight already, it's probably too late."
Rich Tehrani is President and Editor in Chief at TMC.
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