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Businesses Communications The Internet

Becoming a CLEC? 42

Posted by Cliff from the dial-up-ISPs-gone-DSL dept.
eric76 asks: "It finally happened. DSL has come to the town where I work in Texas. While most would see that as a plus, the problem is that I work for a small ISP offering dialup and fixed wireless. The $26.95 / month DSL could drive us out of business. So I'm looking at what it takes to become a CLEC (Competitive Local Exchange Carrier). That is, we'd become a local telephone company purchasing telephone service, particularly DSL, at wholesale from the ILEC (SBC) and reselling it at retail prices. Has anyone else gone through this? What did it cost? How long did it take? Is there a minimum size to make it worthwhile?"
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Becoming a CLEC? More

Becoming a CLEC?

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  • Have you considered trying to RTFM? (Score:5, Informative)

    by Anonymous Coward on Wednesday June 02, 2004 @11:38AM (#9315273)
    https://clec.sbc.com/clec/

    And then calling up some of their existing CLECs?

    The rules and procedures vary by ILEC, state, and time of day. You need to get information from a local source.

    • Re:Have you considered trying to RTFM? (Score:5, Informative)

      by jaredcat ( 223478 ) on Wednesday June 02, 2004 @04:29PM (#9318709)
      I believe SBC's guide to becoming a CLEC is specifically written to confuse or dissuade anyone wanting to do so. I strongly suggest NOT using SBC's CLEC guide as your main point of reference. SBC doesn't want more CLECs because you being a CLEC means SBC has to pay you whatever you want for CABS billing when they send calls to customers who use your local service. Of course, you have to pay them whatever they want too, so you can't charge anything too crazy.

      Suggestion 1: Get yourself a copy of Newton's Telecom Dictionary, 20th Edition, and read everything in there about CLEC, CABS, UNEP, Filing ASRs, and How To Read The LERG (for you non-telecom nerds thats
      The Local Exchange Routing Guide, a monthly database published by Telcordia).

      Suggestion 2: Go to NANPA's website and get your company a CIC code. This is going to be a big paperwork nightmare but you need to do it before you go ANYWHERE with the ILECs.

      Suggesiton 3: Go to Telcordia's website and buy yourself a subscription THE LERG database *spooky music*.

      Suggestion 4: Find someone who has done it before, and bring him on board as a consultant. Dealing with the PUCs for each state, filing the UNEP paperwork, ordering ASRs with the ILECs (if you thought tax forms were bad, wait until you need to find values for PIU, CLLI, and ACNA), and trying to make heads or tails of LERG data is going to take any intelligent person a very long time to learn from scratch.

  • Buy research? (Score:3, Informative)

    by Stigmata669 ( 517894 ) on Wednesday June 02, 2004 @11:41AM (#9315318)
    It depends how serious your ISP is about continuing down the CLEC path; you might consider buying a professional report [gii.co.jp]. (or consider using google [google.com].

    • Re:Buy research? (Score:4, Insightful)

      by nocomment ( 239368 ) on Wednesday June 02, 2004 @11:55AM (#9315488) Homepage Journal
      I'd actually just call covad and have them do your DSL for you. It will save you the headache of becoming your own phone company. It's not like providing DSL service is all that hard either. You can have that setup through your phone company. There's no reason to go off and be your own CLEC when your local phone company should be able to provide DSL to your customers.

      Look at it this way. Earthlink DSL == Covad

      MSN DSL == Qwest (at least here)

      I would take the covad route though. It will mean you will have to setup a redback server to take care of the authentication, but it really saves a lot of headaches.

      • Re:Buy research? (Score:3, Informative)

        by digitaleopard ( 95117 )
        Two points: One, if the ILEC JUST arrived with DSL in the area, it's not likely that Covad has a presence here. Nationwide coverage does Not mean that they are in every CO out there - it's not commercially feasable. You can check with Covad and find out if they have a presence in your area.

        Two, no, you don't have to set up a Redback server. You can have Covad provide that for you one one of their existing servers. Essentially, this means that Covad is providing Layer 3 in addition to Layer 2 for you.
        • Correct on both points. I guess if he's already checked out the solutions I mentioned (the asker didn't say) then really, their option is to become their own CLEC if they want to compete in that market. That would really suck though. Having to manage your own DSLAM's on top of everything else?

  • References (Score:5, Informative)

    by torgosan ( 141603 ) * on Wednesday June 02, 2004 @11:49AM (#9315427) Homepage
    You might start here, assuming you'd be working w/ SBC: CLEC Handbook [sbc.com]

  • first hand experience (Score:5, Informative)

    by Beatbyte ( 163694 ) on Wednesday June 02, 2004 @11:49AM (#9315428) Homepage
    Over $500k to become operational.

    First step: Get a CLEC consultant to help with the ICA.

    Second step: Get a lawyer.

    Third step: Spend all your money on what the consultant says.

    The large portion of the technical end is the switch (most likely a softswitch if you're worried about money) which are around $300k. The rest will be in facilities and personnel.

    Good luck. Most of them just go out of business.
    • We're thinking more of the reseller route.

      For a long time, the telephone company said that they had no intention of replacing the old switches with new switches unless they were completely destroyed by fire or something.

      So it kind of caught us by surprise when they suddenly started advertising DSL the other day.
      • Most likely they didn't replace the switch. They setup a DSLAM and REDBACK then routed that into their current switch.

        Get in touch with your state's ISP association and get setup to resell DSL for all the larger Telco's.

  • You waited until now? (Score:3, Insightful)

    by Cranx ( 456394 ) on Wednesday June 02, 2004 @11:50AM (#9315438)
    You waited until there was already established competition to do this? Why didn't you do this when the DSL market was unfulfilled?
    • You waited until there was already established competition to do this? Why didn't you do this when the DSL market was unfulfilled?

      He's trying to buy DSL service from the phone company and resell it to end users. Pray tell, how would he be able to do that before the phone company offered DSL in the first place?

      That would be a pretty impressive trick.

      • Re: (Score:3, Informative)

        by account_deleted ( 4530225 )
        Comment removed based on user account deletion
        • Yes, you can do this - but it means providing your own DSLAM (The device in the CO that aggregates all the xDSL lines into frames on a fat pipe, as well as buying the pipe. Problem is, that's a LOT of money.

          DSLAM's come in two varieties - Big and Expensive, and Small and Crappy. A good DSLAM is a high cost capitol goods item that takes up a lot of space in a CO (high monthly colo fees) requires a T1 management line for remote troubleshooting and alerts (no, you cannot use a dialup just to call you when it
      • He simply needed a McKinsey consultant to explain virtualization paradgims which whould have allowed him synergistically combine his resources to offer new products and services.
      • I thought he wanted to lease lines so their company could offer DSL over it. He wants to buy DSL service from the local telco and then re-sell it? I didn't know you could do that. I know you can lease copper pairs, and you are free to set up DSL on them if you want to, but I've never heard of actually buying the DSL services and re-selling it.
      • He would establish himself as a CLEC. This would allow him to colocate a DSLAM in the ILEC's CO. This is exactly what DSL.net did when it offered SDSL to customers in Connecticut before SNET/SBC was offering ADSL to it's customers.

        -- ecks

  • Comment removed (Score:5, Informative)

    by account_deleted ( 4530225 ) on Wednesday June 02, 2004 @11:51AM (#9315447)
    Comment removed based on user account deletion
    • Assuming standard DSL speeds in eastern Canada, that T-1 wouldn't even be enough to support ONE DSL user. DSL downstream here is 3mbit (~22$ US/mth), with "lite" 128kbit and "ultra" 4mbit packages available.

      Now, I know US DSL is a bit slower than Canadian DSL, but 200 users on a single T1, and assuming you oversell it 10:1, you're talking about 77kbit DSL here.

      Since you claim your friend's T-1 is very rarely saturated, he must be targetting web-surfing grannies as his customers.

      My DSL ISP had an OC3 when
      • Most Qwest residential packages are in the 256-512kbps range. 200 users on a T-1 is pretty light surfing, but feasible (in most of Qwest's regions). The rocky mountain area is retiree heaven (those social security and pension checks are pretty decent to great money here) if you can put up with the cold. Incidentally health care for retirees is top notch as well (all the retirees have attracted lots of arthritis doctors and such).

  • Perhaps now is not quite the time (Score:3, Informative)

    by DrunkBastard ( 652218 ) on Wednesday June 02, 2004 @12:51PM (#9316146) Homepage
    If all you are wanting to do is resell wholesale dsl, then there is absolutely no need to become a CLEC. If you want to start offering your own brand of DSL, collocating equipment, buying UNE's form the local LEC, pushing your own signal, by all means, become a CLEC. But I'd suggest a bit of market research into such a task.

    First, the FCC is undergoing quite a bit of change of policy right now in regards to forcing ILEC's to provide access to unbundled products, as well as relaxing the need for artifically deflated pricing on products for those with Interconnections.

    Second, lets examine a quick price scheme here. I'm not positive what the prices are like down in SBC land, as I'm over in Qwest land, but for me, a standard xDSL capable loop (UNE, not UNE-P) costs around 23 dollars. So, the loop itself costs almost as much as you will probably need to charge for DSL service. Add bandwidth and administrative costs, and you find why dedicated DSL service isn't all that popular. Well, what about shared-line services you ask? IMO, you might as well resell SBC DSL, as it will be more profitable.

    CLEC's are dropping like flies. It's actually quite impressive how many go bankrupt every year.

    If you are seriously interested in becoming a CLEC, I'd recommend looking into providing more than just DSL. You would have the ability to offer Voice along with the Data. Some even go so far as to do the triple play packages, Voice Video Data.

  • Don't Play Their Game - Make a New One! (Score:3, Insightful)

    by Doug Dante ( 22218 ) on Wednesday June 02, 2004 @01:07PM (#9316386)
    Becoming a CLEC is a loosing proposition. You play on your competitors network, on his terms. You're a sharecropper [tbray.org].

    Do something different. For example, follow the lead of Hometown Wireless [hometown-wireless.com] and expand as a wireless ISP. Focus on areas without DSL, cater to customers who don't want home voice service by offering optional VOIP, or who may want a dedicated 54Mbps wireless pipe.

    Another example. Focus on the "triple play" of voice, video, and data services. Deploy high speed VDSL gear or ethernet, get your own T1s and your own phone numbers for voice. Use Cisco voice termination equipment over VDSL or ethernet, ang get video feeds from Direct TV.

    Someone in another comment said that becomming a CLEC will cost you $500,000. I don't doubt it. There are a lot better and cheaper investment and growth strategies out there for you.

    • I was also thinking why he didn't offer wireless internet instead of DSL.

      You could put the wireless antennas on the same contructions that hold the mobile phone antennas.

      This way you rent a space on the mobilephone antenna and only pay for your devices on it. No new infrastructure/contructions needed.

    • Actually, we do sell wireless services in the area.

      It's kind of strange, though. Very few of our wireless customers live out of town. The ones who want the extra speed live in town where DSL is just now available. For every wireless customer we have too far for DSL, we have about 15 within the DSL coverage area.
      • This is kinda sneaky but you could pull a Microsoft and offer free wireless to everybody until the DSL competition dies out. :)
        'Course you'd have to have the bandwidth and the financial cojones to stick it out but it might still be less than $500k...
        • This is kinda sneaky but you could pull a Microsoft and offer free wireless to everybody until the DSL competition dies out. :)
          'Course you'd have to have the bandwidth and the financial cojones to stick it out but it might still be less than $500k...

          Free wireless to build a user base may not be a bad idea, especially if those people are serving as relays to increase your service footprint [pbs.org].

          But waiting until the DSL competition dies out? You realize, of course, that his main competitor will be the

  • companies don't like competition (Score:3, Informative)

    by Nynaeve ( 163450 ) on Wednesday June 02, 2004 @01:16PM (#9316505)
    From what I've seen, big phone companies don't like competition. A local phone company here (similar to your situation) spent six months in litigation against SBC to make it resell lines as required by law. Not only did it have to expended resources in pointless litigation, it effectively lost six months of revenue. They survived and are the best telco in my area.

    Read the slashdot story about the recent SBC strike [slashdot.org] to hear more stories of SBC shafting CLECs.

    Based on the comments in that story, be prepared for a fight to get started and a constant struggle for every dollar you earn. Get a _good_ lawyer.

  • Is there a minimum size to make it worthwhile?

    Call this flamebait or a troll, but in my personal opinion there's no minimum size -- if you can get something from the phone company at wholesale rather than retail, it's worthwhile, if only to deny them just that little bit more profit. I don't know about SBC, but since every other phone company I've ever delt with has been the same ("we don't care -- we don't have to"), I say screw 'em if you can.

    I'm assuming your cable company doesn't offer internet access

  • Can anyone compete at $27/month ??? (Score:3, Insightful)

    by shoppa ( 464619 ) on Wednesday June 02, 2004 @02:43PM (#9317554)
    Can anyone compete with $27/month broadband access? Say that's 384kbit or 512kbit... that's one third of a T1. How can you sell 1/3 of a T1 for that little?

    Yes, I know the answer is "oversubscription", and maybe you can justify getting a T3 where you'll get some discount, but still it's a tough business. I have a very hard time seeing how the big boys stay in business, much less the small-timers.

  • Changing market (Score:2, Interesting)

    by canolecaptain ( 410657 ) *
    The market is changing fairly dramatically with respect to the last mile connectivity and services.

    I work for a company building triple play (phone/tv/internet aka voice/video/data) hardware/software for rural ILECs and CLECs using ethernet over ADSL2+ and VoIP. One of the things we're finding is that the takeup rate for more advanced services is surprisingly low. Many people are sticking with their POTS phones until the phone company they've used for 2 decades forces them to switch. While you will lose m

  • CLECs get the shaft (Score:3, Informative)

    by CarrionBird ( 589738 ) on Thursday June 03, 2004 @04:07PM (#9329110) Journal
    ILECs routinely have lapses (i'm tellin' all yall it's sabotage!) in service quality with CLEC customers. "Paperwork errors" are standard procedure. I'm not saying don't do it, but know what you're dealing with.

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