CLEC Customers Scramble for Services

With competitive startup carriers such as Teligent crumbling, companies face unsettling choices.

Larry Smiths Fiesta Gourmet Shop, of San Antonio, was like many small businesses looking for a break on telecommunications costs. Smith left the incumbent telco provider in his area to take a chance on a startup carrier that promised lower costs and better service.

Less than two and a half years later, Smith is cutting his losses and going back to his old phone company.

"They had been in trouble for a while, so it didnt come as a shock to us," Smith said of his CLEC (Competitive Local Exchange Carrier) choice, Teligent Inc., of Vienna, Va. Teligent told thousands of customers last week that failing business will force the provider to shut off service Dec. 15. "Weve already transferred back to Southwestern Bell [Telephone Co.]," Smith said.

Fiesta Gourmet joins a list of enterprises that have been left in the lurch by the growing number of crumbling CLECs. Now these companies face two unsettling choices: Take a chance on another competitive startup provider, or go back to the incumbent telco they once dismissed.

Still, despite the CLEC bloodbath this year, some new entrants remain determined to dig deeper into Baby Bells market share and are using the turmoil to their advantage. For example, IntelliSpace Inc. is actively pursuing enterprises that are about to be disconnected by Teligent. The 7-year-old New York-based CLEC is acquiring Teligents customer list, according to officials.

The company also pursued a similar "rescue" strategy for former customers of defunct NorthPoint Communications Inc. and Rhythms NetConnections Inc.

For enterprises with surviving-but-shaky carriers, IntelliSpace offers an "insurance" program. In the approximately 1,000 buildings in which it has infrastructure already deployed, it will run cables from its routers to an enterprise suite for the cost of running the wires.

For Craig Smith, CIO and chief technology officer of My Dollar Store Inc., in Newport Beach, Calif., IntelliSpace offers service quality he said he does not get with the local telco. "I have a bad taste in my mouth about PacBell [Pacific Bell Telephone Co.]," Smith said. "Youre just one number among many with them."

Smith, who uses IntelliSpaces T-1 service at two corporate sites and plans to purchase virtual private network services when the store expands nationwide next year, said he has worked with five service providers in two years.

"Weve been a NorthPoint customer, a Covad [Communications Co.] customer, a PacBell customer," Smith said. "The worst is when you come in to work and try to hook in to the Internet, and all you can say is, Hey, what happened?"

That sinking feeling is the experience IntelliSpace hopes to help enterprises avoid, officials said.

Conversent Communications LLC, which would also like a share of the Teligent pie, is itself offering a special deal for stranded business customers in the Northeast.

With its Quick Connection Program, Conversent will link enterprises to new voice and data services within a few days, according to the Marlboro, Mass., service provider. Additionally, to provide improved backup storage for enterprises with large amounts of critical data, Conversent recently launched a Disaster Recovery Service.