Becoming a CLEC?

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?"

Comments

Have you considered trying to RTFM?

[Anonymous Coward]

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?

[jaredcat]

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?

[Stigmata669]

It depends how serious your ISP is about continuing down the CLEC path; you might consider buying a professional report. (or consider using google.

Re:Buy research?

[digitaleopard]

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. It's called DSL+IP.

References

[torgosan]

You might start here, assuming you'd be working w/ SBC: CLEC Handbook

first hand experience

[Beatbyte]

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.

don't need to be a CLEC

[austad]

I don't believe you need to be a CLEC. My friend's ISP offers DSL service. There are two parts to the DSL service, the line itself (provided by the LEC), and the internet connectivity for it (provided by the LEC or a 3rd party).

Qwest provides the lines in this area, and by law, when you sign up for one, they have to tell you all of the 3rd parties that offer internet service over it. Any ISP that wants to provide internet connectivity for Qwest lines simply pays for a Qwest WAN circuit to their ISP (T-1 or larger). The CPE's have an ATM PVC which terminates at the particular ISP they signed up to be with. I think Qwest calls this a Megapop or Megacentral line.

In any case, it's not expensive. One can support about 200 DSL customers off a single T-1 because not everyone is using it at the same time. This sounds like a lot, but I've seen it done and the line is very rarely saturated.

So, unless you want to actually provide the physical line too, there's no reason to become a CLEC.

Re:You waited until now?

[squiggleslash]

Surely that wouldn't be being a CLEC, that would be being a reseller?

A CLEC generally leases the local loop lines from the ILEC, renting space in the exchange for the switching equipment. If your ILEC allows CLECs, then you can operate DSL regardless of whether the ILEC implements it, although generally I don't believe most ILECs allow someone to become a CLEC purely to offer DSL (ie you have to provide local phone service too.)

Perhaps now is not quite the time

[DrunkBastard]

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.

companies don't like competition

[Nynaeve]

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 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.

CLECs get the shaft

[CarrionBird]

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.