From No Jitter
“Three Factors CLECs Must Consider Before Expanding Out of Network”
As customer’s telecommunications choices expand, a regional carrier’s world becomes more complex. While the transition to IP networks diminishes the relevance of geographic boundaries, it also creates new opportunities for carriers that wish to expand their boundaries and services.
Regional carriers also must consider the business case for expanding their territory. Whether a carrier has just won a new corporate contract, or its customers are requesting phone numbers in new markets, expanding services comes with key caveats and questions. Here are a few considerations CLECs must consider when expanding out of territory:
The critical question with any expansion is building in-house vs. buying through a full-service vendor. When it comes to building your own network, there are various budgetary items that must be considered:
- Legal and filing fees
- Local entrance facilities and backhaul
- Capital investments: SS7 point codes, switching equipment, geo-diverse colocation
Additionally, there are a number of regulatory and certification costs that must be considered, including ICAs and PUC findings. It’s especially important to consider the associated due diligence that comes with building the network yourself. Do you have the resources and capabilities? Will you need to hire new employees?
Going through an external provider can help alleviate the logistics and costs associated with this expansion – they’re consolidated into a broader monthly fee and handled through one contract with your vendor.
If a market expansion is driven by a particular business need, then it comes with its own timeframe and deadlines. When it comes to any new project, a flexible timeline is always preferred – but in a territorial expansion, it’s critical to allow for necessary time if you plan on building yourself. Securing new licenses can be a challenging process, depending on the number of new markets you’re entering. So can the building of APIs or the manual processes that interact with the new networks and carriers. You need to consider whether or not your current workforce has the time and resources to meet your project deadlines.
Whether you choose to build or buy your way into new markets, providing the same quality and array of services is a major consideration. This is especially important with emergency services, as expanding 911 service geographically may not be possible with an incumbent service provider. In fact, it’s common that existing third-party providers cannot access the new markets for your planned expansion.
In this case, you need to consider the present geographical footprint of all third party vendors in order to ensure the expansion can be managed with an existing provider.
Some CLECs also consider out of territory expansions as a vehicle for launching new services. Consider TDS Telecom, the seventh-largest CLEC in the country. They used a territory expansion to launch a new product, called Remote Teleworker, which provided their existing users the option to use their TDS services remotely from anywhere in the country. A nationwide expansion not only benefitted TDS’ existing user base, it provided them the opportunity to target new users far beyond its existing regional presence. The reach and capabilities of a nationwide footprint can be a valuable lead generator.
For regional carriers, entering new territory is a journey whose path is littered with unknown challenges – but unknown opportunities as well. The IP revolution has made it necessary for many providers to expand their services and compete on a national scale. For telecommunications providers, our customer landscape is getting smaller – and carriers who wish to capitalize on the potential for new customers must look at expansion with the open mind and discipline to make the journey a success.
Brent Mello is vice president of Origination & Messaging Services at Bandwidth.