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Get Plugged In: Wholesale Forum to Stir Debate

Channel Partners

February 10, 2004

4 Min Read
Get Plugged In: Wholesale Forum to Stir Debate

Topics at todays General Session Wholesale Executive Forum are likely to run the gamut from discussions of VoIP to carrier issues to the regulatory climate to CLEC consolidation.

To echo moderator Judy Reed Smith, CEO of Atlantic-ACM, the debates promise to be interesting and maybe "we can get some good controversy going."

Reed Smith says there are traditional issues, such as price, to consider, and matters unique to 2004 to evaluate, such as VoIP, its standing as a separate wholesale service and its impact on the wholesale telecommunications world.

While wholesale certainly is not a new industry or concept, Reed Smith notes companies are seeing it in a new light.

"It has become a very important channel to most carriers, a more important channel than it was five years ago because it’s become a more consistent source of revenue," she says, adding that wholesale has earned respect during the past couple of years because there’s so much competition in the traditional sales channels.

Among panelists slated to participate in the forum are John S. Foley, president and CEO of City Signal Communications Inc.; Kevin Mulholland, senior vice president of T-Systems; and Danny Bottoms, president and CEO of OnFiber Communications Inc.

Like Reed Smith, Foley says the wholesale industry is more relevant now than it’s been, although he explains that is due to the recent Triennial Review Order.

"The TRO is challenging the cost structure for the competitive industry right now, where they had taken advantage of unbundled network elements, which are relatively inexpensive for their access needs," he says. "Those costs are going to change, they’re going to go up. Some of those unbundled network elements are going to be eliminated altogether, and that’s all flowing out of the TRO."

Meanwhile, Danny Bottoms of OnFiber wants to see competing carriers and wholesalers steer away from price-based competition, and use the CompTel/ASCENT shows as an opportunity to foster business, not try to take it away from one another.

When it comes to the wholesale arena, he says, "If we don’t quit using price-based competition as our only weapon to unseat the incumbent, the industry as a whole is going to continue to struggle through the tough times that we’ve had over the past three years."

He says that being 100 percent wholesale has not worked well for OnFiber, so the company maintains about 40 percent retail operations.

"We’re a mix and, quite frankly, that mix was driven out of necessity," he explains. "And that necessity is the simple fact that if you’re reliant upon other people to sell your products, that’s risk. Unless you have a really special product that is radically going to change the carrier you’re selling to, you’re going to get stuck in a price-based war that doesn’t allow you to differentiate and, as a result, affects your overall company."

T-Systems’ Mulholland, on the other hand, says "tremendous globalization" of the industry during the ’90s made wholesaling a business segment within telecom, it is not more relevant than before. He explains, "Is it still a critical to the delivery of services offered by the many competing carriers/service providers to their customer base? Yes, as much as ever. The number of global providers is perhaps less than in previous years, making wholesaling a key ingredient to provide the many niche service providers or regional players with the service capabilities they offer and their customers expect."

Looking ahead to the Wholesale Executive Forum, Bottoms, like City Signal’s Foley, says the wholesale industry as more relevant now than it’s been in a long time.

"There’s not capital available for everyone to go build their own unique networks," he says. "The sad thing is, we should have learned that 10 years ago instead of three years ago because part of our problem is we’ve got long haul route on top of long haul route and, quite frankly, metro ring on top of metro ring."

Mulholland hopes to talk about issues surrounding partnership and MPLS, as well as the industry remaining focused on voice because it is the "cash cow."

Overall, forum panelists and moderator Reed Smith predict the first combined CompTel/ASCENT show will prove strong for the alliance and its members.

Bottoms sums up his expectations this way: "You can definitely feel the energy at the shows and the participation on the upswing. It’ll be interesting to see how much we can take that raw energy that appears to be channeling toward these shows and actually start turning it into business between competitive providers … What I want them to do as a show and organizers and as a group is really start turning that energy to where it’s driving each other’s business. If it’s just a gathering of competitors who are just looking to … steal business from their other brethren, so to speak, the wind in the sail is going to go out pretty quickly."

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