Allegiance's managed modem offering provides reliable access in 36 markets nationwide. It won't give you ubiquitous coverage, but it will give you highly dependable service.

by Jeff Goldman [December 30, 2002]

Note: Allegiance is being purchased by XO Communications, which is already running the Allegiance network.

Allegiance Telecom was founded five years ago, following the passage of the Telecommunications Act of 1996. The company's network now covers 36 major cities nationwide. According to John Dumbleton, Allegiance's Vice President of Wholesale Sales, the original plan was to target the retail marketplace—with the wholesale telecom offerings following a few years later.

"We started off, in 1998, just selling PRIs and colocation space for people like Genuity and EarthLink," Dumbleton said. "We'd give them power and space, we'd plug in some PRIs—and have a nice day. Then in 1999, we started exploring a managed modem port offering, and in December of 1999 we actually rolled it out."

Allegiance Telecom 9201 North Central Expressway Dallas, TX 75231 Voice: (214) 261-7100            (800) 553-1989

The original managed modem offering, Dumbleton says, was much like any other. "It was pretty vanilla," as he put it. "Initially, we actually offered it with and without IP transit, if you can believe that. We had customers that had their own IP infrastructure and their own IP networks, and they just wanted us to provide the managed modem service."

Since then, the offering has evolved substantially. "We still offer it today on a per-modem basis, but we now offer it on a per-hour basis as well," Dumbleton said. "And then we allow customers to buy dedicated modems from us, but provide the ability to burst—and charge for that bursting on a per hour basis."

Allegiance first offered the bursting option in 2000; the idea was to help customers optimize their usage of the network. "Essentially, you can undersize your network infrastructure buy, doing it 20 to 30 percent lower than what your busy-hour forecast would be," Dumbleton said. "It's a way to maximize infrastructure, and not sacrifice quality of service."

According to Dumbleton, the bursting offering has been a great way for customers to grow in increments as they work with Allegiance. "A lot of folks will start off on a per-hour basis with us today, and as they see volume and traffic in a specific market, they'll convert and roll that into a dedicated modem with a per-hour bursting scenario," he said. "It lets us offer them the best of both worlds."

Quality, not quantity
Standard pricing is in the mid-$20s per port per month for dedicated modems, or approximately $0.18 per hour, with volume discounts available. "We've been on the mid to high side in terms of pricing, to attract the right type of customer," Dumbleton said. "Lately, we've gotten more aggressive: We have an initiative under way to drive more traffic, now that some of the consolidation has settled out in the marketplace."

Furthermore, Dumbleton says he's extremely flexible regarding the structure of each customer relationship. "We'll sit down with a customer and determine what the challenges are," he said. "We'll get creative to get the right business relationship in place. We're able to sit down and get a very specific deal done with somebody to solve a problem or to fill a specific need."

The fact that Allegiance is a certified CLEC in each of the 36 cities it covers, Dumbleton says, helps to differentiate it substantially from competing offerings. "In all those markets, and all that coverage area, we are a peer to the ILEC—so there's no cost, for example, to add another PRI," he said. "That's important from a quality of service perspective, and it's important from a cost perspective."

And Allegiance's purchase of Intermedia's Digex backbone (now called the Allegiance Internet Backbone) from WorldCom in December of 2001 gave it similar assets in the IP world. "We're now a Tier 1 backbone provider," Dumbleton said. "We peer with all of the largest national ISPs in the country. That has certainly made a difference for the large ISPs out there; it's a big differentiator."

On the other hand, because Allegiance focuses on high quality of service in 36 specific markets, it doesn't offer ubiquitous nationwide coverage. "We don't cover a lot of Tier 2 or Tier 3 markets," Dumbleton said. "What we bring to the table, instead, is extremely aggressive pricing and a very high-quality product in the territories that we serve."

A reputation for reliability
Howard Bloom has been working with Allegiance for three years at three different companies, starting at the free ISP 1stUp.com, then at PeoplePC, and now at EarthLink, where he's now Director of Global Sourcing. He first was attracted to Allegiance by their reputation. "They're known as a reliable provider in the industry, as opposed to some of the fly-by-night operations out there," Bloom said.

When he was first looking into providers while at 1stUp, he recalls, he was able to take the time to study Allegiance's offering closely. "Once I fully understood their infrastructure and their operations, I became very comfortable with the reliability and the stability of the network," Bloom said. "Then we fully tested the network, and it passed with flying colors, so we decided to go forward and integrate with them."

Since then, Bloom says, the working relationship has been a comfortable one. "They're very easy to work with," he said. "Allegiance is definitely a partner to us, and isn't out to get the best of us. They're out to make sure we're successful. It's that partnership kind of mentality that attracted us."

The reputation for reliability that first attracted Bloom to Allegiance, he says, remains its greatest strength. "They don't have unique coverage; that's not their strong suit," Bloom said. "Their strong suit has always been that they're just a very reliable provider, one that you can always count on."

— End

Related articles:
	[Sept. 10, 2002]	NuVox Sticks to Tried and True Plan
	[Feb. 14, 2002]	A Statement on Competition
	[Aug. 24, 2001]	Staying With CLECs