Comptel 2010: CLEC consolidation isn't easy

As Comcast put the final touch on its acquisition of Chicagoland-based CLEC Cimco with the FCC giving its approval of the deal last week, it signified the entrance of another major non-traditional player into the competitive telecom services market.

For Comcast, the real work now begins. Okay, Cimco is not a very large carrier, but Comcast has the challenge of integrating the operations, networks and perhaps more importantly company culture into its own fold. What's more, Comcast now has the task of making sure Cimco's customers don't suffer poor customer service in the transition process. That means that they will need to come out quickly with a message to Cimco customers that its takeover will come with limited, if any, effect.

Although cable operators aren't strangers to providing business services, Comcast's main business play has been focused on providing SMBs triple play services via its existing coax network. The acquisition of Cimco advances its move into the medium to larger business segment. Comcast's acquisition of Cimco of course only one of two major deals in the ever-consolidating CLEC market.

The other major service provider to enter into the competitive fold is Windstream's acquisition of Southern-based NuVox Communications. Like the rest of the traditional landline industry, Windstream is also seeing its traditional landline services continue to decline so it wants to break out of its traditional POTS service shell by targeting the competitive business services market.

Windstream already provides business services, but with the NuVox acquisition in place Windstream instantly gains a sizeable expanded 90,000 SMB customer base in 16 states in the Southeast and Midwest. Just like Comcast, Windstream now has to integrate not only network operations, but also ensure that as it integrates NuVox under its umbrella its customers will get a consistent level of service and support from a team that understands their needs.

At the same time, the idea of an independent ILEC or cable operator branching out into an adjacent market is nothing new. Over the years, I have met a number of smaller independent telcos, including Ritter Communications, which branched out of their traditional POTS line ILEC territories to deliver business services in markets they traditionally never served.

After getting their feet wet with providing voice services by purchasing UNE-P circuits from AT&T outside of its traditional ILEC area in Jonesboro, AR, Ritter has transitioned to a Fiber to the Business-based service model.  

Getting back to Comcast and Windstream for a minute, their acquisitions show the continual consolidation of the competitive telecom market, but these deals  

When I think of the challenges of any company integrating another into their own, I always think of a conversation I had with Howard Janzen, now president and CEO of ONE Communications in 2007. For anyone that remembers, ONE Communications was formed with the merging of three former Mass.-based CLECs (CTC Communications, Choice One Communications and Conversant Communications). So when I asked him what was the biggest challenge of merging the three companies into one, his answer was quite simple: understanding the 'tangibles' and the 'intangibles.'

Okay, what are these so-called tangibles and intangibles, I asked? While integrating and operations networks of three disparate companies are tangible elements that one could put a hand on, the intangibles are dealing with getting employees to buy into a common set of goals.
"It's easy to point to the tangible integration elements, but the intangibles are equally important," says Janzen. "One of the critical issues is around the culture and around making sure everyone has a shared vision around what the company is trying to accomplish."

CLEC consolidation may be inevitable, but gaining that shared vision when companies do merge is by no means easy and needs to be done in a careful and diligent manner.  --Sean

Suggested Articles

Despite some challenges, organizations of all sizes are using containers in more of their initiatives, including AI and machine learning.

On Monday the FCC announced that it had it authorized more than $563 million in funding to expand rural broadband services in 24 states.

Driven by 200 Gbps wavelength shipments, coherent DWDM revenue will reach $16 billion by 2023, according to a report.