Hold the phone Featured

9:08am EDT March 31, 2003
The call for competition in local calling services is ringing hollow.

The competition that everyone always wanted has arrived, but competitors of heavyweight incumbent SBC Ameritech are being disconnected by bankruptcies, thin margins and a slow economy.

"There's a huge push from Ameritech to try to win customers back from competitive exchange providers like CoreComm," says Brad Clark, president of SpyGlass Technology Advisors, a Cleveland-based telecommunications consulting firm. "The interesting thing is, from a local perspective, the choices businesses have are going away. Because of bankruptcies, the choices are dwindling.

"There hasn't been from a strictly local perspective one competitive local exchange provider that has been successful. Some are hanging on, but there hasn't been one that's been able to compete with Ameritech."

Competitors have two options when starting out: Build their own networks hoping they land enough customers to justify the costs or lease from SBC Ameritech. When leasing, the companies end up paying rates that aren't much less than what consumers get.

"It's not a business model that can compete on price," says Clark. "Their only choice is to compete on volume."

Even though they are leasing the lines, the competing companies still have to provide service, trucks, accounting and other business functions, stretching thin margins to the limit.

"Ameritech has spent 80 years and trillions of dollars to build up its network," says Clark. "There are competitors out there that can save you a few dollars per phone line, but in our opinion, go with Ameritech. Despite the attitude and service issues, from a financial standpoint, they're a safer bet."

If your phone company can no longer operate, they are only required to give you a 30-day notice.

"You could be put in a position where you get a disconnect notice and pick up the phone to Ameritech, which at that point, Ameritech will face a flood of calls from people looking to gain service," says Clark. "Ameritech doesn't have to, and realistically won't be able to connect you within 30 days, especially if you want to keep the same phone number. You could be facing an outage from one day to 45 days in some cases. The risk of going with a competitor to save a few dollars isn't worth it.

"The good news is over the last few years the competition has forced Ameritech to get lean on its pricing and spurred promotions to get people to come back."

How to reach: SpyGlass Technology Advisors, (440) 716-3400