CLEC trade group ALTS, in its latest annual report on status of c...
CLEC trade group ALTS, in its latest annual report on status of competitive local exchange industry, said CLEC industry continued to grow, albeit at slower pace, but was coming up against “enormous impediments.” ALTS said impediments included investor reluctance…
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
to continue putting money into CLECs that wouldn’t turn profit for years to come, and continuing “refusal or inability” of incumbent telcos to provide problem-free interconnection services to CLECs. ALTS said future CLEC growth would come mostly from broadband data and DSL services, projected to grow to $13 billion in 2004 from under $1 billion in 1999. ALTS report said that of 36 publicly held CLECs in 2000, only 4 (Intermedia, Ntelos, Pac-West and Time Warner Telecom) showed profit last year and only one, General Communications of Alaska, saw an equity value increase over last 52 weeks. Most publicly held CLECs (33 of 36) saw their equity values fall more than 50% in last 52 weeks, with some companies’ shares becoming nearly worthless, report said. Overall CLEC market capitalization fell more than 50%, to under $32 billion from 1999’s $86 billion. On good side, report said CLEC market share reached 8.2% of access lines (16.1 million in 2000 from one million in 1996), serving 1.15 million customer buildings. CLEC revenue share increased to 8% ($39.1 billion, including $7 billion from access) from 1% in 1996. CLEC industry employment jumped to 94,494 from 70,000 in 1998, but ALTS said it expected “sharp” cutbacks in CLEC industry employment this year. Report said data CLECs had colocated more than 8,000 pieces of equipment in incumbent central offices and had 2,071 data switches in service, while full-service CLECs had more than 1,000 voice switches in service. ALTS said 2000 was first year CLECs failed to double their market shares over previous year, amid increased bankruptcies, maturing services and general economic slowdown. ALTS reported CLECs were split about evenly among facilities-based service, local resale and unbundled network elements (UNE). Facility-based and UNE entry accounted for 69% of CLEC services. ALTS said CLECs got $3.4 billion of $6 billion that venture capitalists directed at telecom service providers in 2000, with top 15 receiving $2.7 billion of that $3.4 billion. But strategic mainstream investment in CLEC industry last year plummeted to just $1.63 billion from $7.43 billion in 1999, ALTS said. CLEC industry also saw 14 major mergers in 2000 with combined asset value of $19.6 billion. Report said CLEC capital expenditures, which had increased about 50% each year since 1996, were projected to decline slightly in 2001, from $24.9 billion in 2000 to $23 billion this year.