San Jose, Calif. – November 17, 2008 – Covad Communications Company, a leading national provider of voice and data communications, today launched into its indirect sales channel the new Covad Integrated Access service with an innovative
online quote and order system that streamlines pre-qualifications and speeds the sales process. Read More ...

HERNDON, VA - October 20, 2008 - XO Communications announced that its industry-leading business voice over IP services bundle, XO IP Flex, has been deployed by more than 15,000 businesses and supports more than 475,000 customer employees. Read More ...

MIAMI, Oct 15, 2008 (BUSINESS WIRE) -- Cbeyond(R), Inc. (NASDAQ: CBEY), a leading IP-based managed services provider to small businesses, today announced it has expanded services into its 11th market, the South Florida metropolitan area, which includes Fort Lauderdale, Miami, Miramar, Hollywood, and BocaRaton.

"With South Florida's large entrepreneurial community, we are excited to grow our presence and deliver services that will benefit the local small business community," said Jim Geiger, chairman and CEO of Cbeyond. "We pride ourselves in providing productivity-enhancing communications solutions that help small businesses successfully run their companies, especially within a challenging economy." Read More ...

Qwest recently told the FCC that there is plenty of competition in several of its major markets, so the FCC should let Qwest tell their competitors who want continued wholesale access to their last mile network to “go fly a kite.” Forgive my paraphrasing Qwest. The FCC respectfully denied the request. Qwest argued that sufficient competition existed from CLECs, cable companies, and wireless providers to warrant suspension of unbundling requirements for local loops and transport facilities. Qwest was hoping to repeat the forbearance relief (albeit partially) it received for Omaha, Nebraska in 2005 for its key markets of Denver, Phoenix, Minneapolis, and Seattle. The FCC disagreed, saying “…we find that the record evidence does not satisfy the section 10 forbearance standard with respect to any of the forbearance Qwest seeks, and, accordingly, we deny the requested relief in the four MSAs.” Ouch.

XO Communications CEO Carl J. Grivner testified before Congress, and labeled AT&T, Qwest, and Verizon a “copper cartel” that practices anti-competitive and anti-consumer tactics. Grivner testified before the U.S. House Telecommunications Subcommittee on Telecommunications and the Internet, stating that the “…competitive [telecom] industry has been a major source of billions of dollars in investment for broadband deployment and innovation. But we continually face incumbents’ efforts to restrict access to essential last mile links that are critical to competitive broadband offerings.” Grivner raised alarm about the “cartel’s” increasing tactic of removing or cutting copper lines to customer premises, a practice which Verizon has been accused of when converting customers to FiOS. Grivner also ridiculed the “cartel” for trying to duck competitive obligations through the use of the Telecom Act forbearance statute to “end-run pro-competitive wholesale pricing rules for last mile connections.”

Grivner has reason to be concerned. The traditional CLEC who relies on leased capacity from incumbents, can at times, seem like an “endangered species.” CLEC line counts, on average, are in decline, and the incumbents are leveraging their market dominance like never before. The competitive “mojo” has shifted to the cable industry, which owns their own last mile broadband network. Upstarts in the wireless industry including DigitalBridge and Open Range also hope to take up the competitive slack. While these cable and wireless alternatives are initially focusing on residential services, they too hope to capitalize on the lucrative SMB and enterprise market - the specialty of companies like XO. These “new” competitors can’t join the “copper cartel,” but they are adding even more competitive pressure to an already challenging scenario for XO and their CLEC brethren.

The U.S. Supreme Court has agreed to hear a case involving AT&T and LinkLine Communications Inc. LinkLine is an ISP which buys wholesale broadband circuits from AT&T and then uses those circuits to compete with AT&T in some California markets. It’s a scenario played out all across the country with other incumbents and competing ISPs and CLECs. LinkLine sued AT&T, citing unfair and anti-competitive pricing for those wholesale broadband circuits. AT&T says it’s not obligated to provide wholesale circuits to competitors at favorable pricing. LinkLine obviously disagrees and so did the 9th U.S. Circuit Court of Appeals in San Francisco, who ruled in LinkLine’s favor. So on to the Supreme Court for a case that will be closely watched by telecom’s competition interests.

Cavalier Telephone, a Richmond, VA based CLEC, announced the availability of Google Apps to its high speed Internet subscribers. The Google application suite will be offered through a Cavalier web domain and will provide Gmail e-mail services, Google Calendar for shared scheduling, Google Product Search for shopping, Google Picasa for photos, and the Google Start Page feature which will allow subscribers to create a customizable home page. Cavalier claims to be the first company in the communications industry to launch these services.

RCN, a Virginia based CLEC, announced the launch of VoIP services, branded as Starpower Internet Phone Service. RCN will be using a hosted VoIP platform offered by deltathree for the service. They plan to target customers both inside and outside of their existing footprint. The service will start at $24.95/month for unlimited local and long distance calling. They will also offer an annual plan, with discounts off of the monthly plan pricing.

The FCC recently released their annual “Local Telephone Competition” report, which offers insight into the competition for local telephone service through 2006. The numbers weren’t terribly surprising. CLECs continue to lose market share for local loops, and as of December 2006, provided 17.1% of the 167.5 million local access loops in the U.S. That percentage is down from December 2005’s number of 17.9%. According to the FCC’s numbers, CLECs peaked with 19.1% of local access loops in June 2005. Of course local loops are declining in general, thanks primarily to wireless substitution. There were 175.1 million local loops in December 2005, compared to December 2006’s 167.5 million. RBOCs continued forbearance efforts, where they attempt to escape competitive mandates, aren't helping either. CLECs highest penetration of local loops occurred in Rhode Island (46%) and lowest penetration occurred in New Mexico (8%). Even though it's a year old, this FCC report provides a wealth of information about local telephone competition and includes extensive data about ILECs, CLECs, and wireless carriers.

Paetec and McLeod reached an agreement over the weekend to merge. The combined company will create one of the largest CLECs in the country – one that can more competently compete with the likes of AT&T, Verizon, and XO. Paetec is buying McLeod for $557 million, including $65 million of McLeod debt. The combined company will have approximately 3.4 million access lines. Consolidation in the telecom sector continues. Carriers (and vendors) of all sizes are beefing up their scale in order to compete in the changing telecom landscape. We suspect these mergers to continue. The movement to an all Internet protocol (IP) world makes it much more difficult for carriers to operate as an “island.”

The TDM world allowed carriers to carve out their own footprint and operate as independently as they cared to. But the continuing migration to an all IP broadband network now makes such a strategy much more tenuous. IP opens all networks to competitors from far and near. Carriers will continue to look for ways to strengthen their position through strategic mergers, alliances, and coalitions.