Gregory Giagnocavo presented Co-opetition at ITEXPO East 2010

With the passage of the Telecommunications Act of 1996, becoming a CLEC was the cool and financially viable thing to do. The Act allowed companies with CLEC status to use ILEC infrastructure in three ways: access to UNEs with the most important as the “local loop” or buying telecommunications services from ILECs at wholesale rates and then reselling them retail or a combination of both. The second option helps CLECs to avoid buying switches, fiber optic transmission facilities or colocation facilities.Many have hinted at the fact that hosted voip providers have much in common with CLECS and in fact, could be the new CLECs.

What is a CLEC? It is a company which provides local telephone service — other than the incumbent Local Exchange Carrier (LEC). Much like a LEC, a CLEC will provide telephone service within a LATA. To handle InterLATA long-distance calls, the CLEC will connect to an IXC (IntereXchange Carrier). Quite often, CLEC’s will use the local loop (UNE-L) belonging to the incumbent Local Exchange Carrier.

What is hosted VoIP? Cindy Waxer, in VoIP-News, describes hosted VoIP as the “method is best suited for small and medium-size businesses with limited IT resources and budgetary funds that want the perks of a powerful VoIP system without the hefty price tag.” (In fact Cindy explains the pros and cons among hosted VoIP, on the premises VoIP and managed VoIP in VoIP-News.)

Huw Rees, Vice President of Business Development at 8×8, states in the 2010TMC interview that 8×8 is a hosted VoIP provider who “supplies hosted PBX to the SMB market with an expansion into medium and large enterprise.”

Candice Malmstrom, marketing director at FreedomVoice, shares on podcast interview, information about their hosted services.

What do CLECs and Hosted VoIP Providers have or not have in common?

1. Compete with established local telecoms who often continue to do business same as it ever was
2. Have their own network and switch
3. Integrated access: voice & data via IP or IP/TDM
4. Seen as disruptive by traditionals
5. Often using open source technologies
6. Tend to know their market niche and do a great job at serving it

In a conversation in the ITEXPO East 2010 press room, several speakers and press discussed: Did the following June 1, 2009 prophecy for a CLEC and other business entities to combine and become all IP by 2010 come to pass? ENMR Plateau would be three companies in one. This would include a rural telephone co-op that served 13,000 access lines in a 25,000-square mile segment of eastern New Mexico, a business CLEC competitor for Qwest Communications and Windstream, and a broadband wireless company that would offer broadband access to a wide geographic area.

Another example of hosted VoIP versus CLEC or the same is Bandwidth.com, a nationwide CLEC and supplier of VoIP and SIP Trunking services who run wholesale voice on an all-IP network. The lines are blurring between CLECs and hosted VoIP providers who combine forces in such platforms as Arbinet, CarrierCloud, DIDX, VPF, Xconnect, and other peering, collaboration and consolidation could turn VoIP providers into the next great CLEC class.

Listen to an expert… “Companies will come together to pool resources against the larger companies,” said Ari Rabban, CEO of Phone.
Rehan Ahmed, CEO of DIDX shared once, “DIDX is a laughable idea and I’m a clown in 2005, but I believe DIDX will help thousands around the world start and run a successful business in hosted VoIP. DIDX removes the phone number acquisition problem.”

For more information, read the CLEC archives on TMCNET.com at http://blog.tmcnet.com/on-rads-radar/clec/. Check out VON’s article at http://www.von.com/articles/are-hosted-voip-players-next-great-clec-class.html. Browse lists of hosted PBX and hosted VoIP (wholesale and/or retail) providers such VoIPSWITCH on the net: Zippy Grigonis’s 2008 list includes a diverse set from Vonage to Cox Communications to Sunrocket (now out of business).

Co-opetition is a major key to hosted VoIP providers’ success. A walled garden can only expand so far and with only so much innovation. Gregory Giagnocav0 of Carrier Cloud, Ari Rabban of Phone.com, and Rehan Ahmed of DIDX may very well be some of the wisest men in telecommunications.