Book Review: CLEC

This hard hitting book by an industry insider details the strengths as well as the weaknesses of the average CLEC. Written in a conversational style, it provides the lessons learned from the billion dollar classroom that was the telecoms boom.

by Alex Goldman ISP-Planet Associate Editor [August 9, 2002]

CLEC by Martin F. McDermott III is a book about the business of competitive local exchange. Written in a conversational style that feels like it flowed straight off the Dictaphone and into Microsoft Word, the book is like the answer you'd get if you met a former CLEC C-level executive and asked, "So, what happened?" The answer runs some 325 pages.

The book records the lessons learned in the turbulent years following the creation of this multi-billion dollar industry. During the Internet and telecoms boom, several hundred companies were built. McDermott describes in detail what they did right and what they did wrong. (The book also includes a glossary, but an index would have been more helpful. McDermott includes no suggestions for further reading, but this book may well be the first of its kind.)

Present at the creation
McDermott was Chief Marketing Officer for two CLECs: e.spire and KMC Telecom. In keeping with this role, he discusses the business and marketing side of the equation rather than technical details. If you're about to build a CLEC network and you want to know what to buy and how to hook it up, this is not the book for you. On the other hand, if you're about to start offering CLEC services, you should read this book, because it describes the basic business procedures and management skills you'll need.

The first four chapters of the book describe the legal and regulatory environment that created, in 1996, an instant in time at which it suddenly become possible—and legal—to provide local voice and data services in competition with the traditional giant, the Regional Bell Operating Company (RBOC).

According to McDermott, a significant advantage was afforded to budding CLECs by the RBOCs' refusal to innovate. The RBOCs had no incentive to deploy new technology if doing so would force them to replace expensive equipment currently in use. McDermott notes, for example, that touch tone technology was developed by Bell Labs in 1948, but not widely deployed until the early 1960s. Similarly, DSL technology was developed by Paradyne (AT&T) and PairGain Technologies in the early 1980s but did not hit the market until about 1998. This was late enough in the build-out that early CLECs did not include DSL in their business plans.

Girding for Goliath
Chapters 5 through 12 delve into CLEC business plans, along with the funding strategies and the recruitment of the initial management teams. These chapters go on to examine with a critical eye the strengths and weaknesses of the average CLEC. The folks who were working the long hours learned as they went, through hard knocks and hard work. Even some organizations that were well funded and also invested much "sweat equity" in terms of long hours of hard labor nevertheless failed because of problems in business processes that only became apparent after CLECs opened for business.

Eight chapters (numbers 13 through 20) discuss these difficulties in great detail. McDermott describes a variety of market strategies, and gives particular scrutiny to several areas that were underfunded in many CLECs. For all their flaws, the book points out, the CLECs generally built their networks in an astonishingly short time and, on the whole, the networks worked well. Problems occurred primarily in other areas, such as in incentives and training, and also in billing and Operations and Support Systems (OSS).

If you just want to read the author's conclusion, jump to the final five chapters (chapters 21 through 25). As a former key member of two management teams, McDermott is certain that some CLECs will rebound (although others will succumb) because "they know that the customers are waiting for the right service at the right price."

The lessons imparted by this book cost millions of dollars to learn. The book will likely save surving and future CLECs millions more. The price for this accumulated wisdom is U.S. $45.00.

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