Wholesalers should push services, not access

 

 

Why should carriers bother to enhance their wholesale products when they could just go after the customer's market themselves? The reasons range from maintaining diversified portfolios, tapping no-frills and marketing-free revenue streams, needling the competition, and good old regulation-phobia.

 

Even in wholesale telecom services, the enemy of your enemy can be your friend. Sprint's wholesale relationships with cable operators help buttress formidable competitors to AT&T and Verizon in markets in which Sprint doesn't play, Smith said. The cable operators can offer Sprint's wireless service under their own brands as part of a larger quadruple play.

 

"We share common enemies -- Verizon and AT&T," he said. "We felt there was more net opportunity for us to enable the cable companies with wireless and enable them to more effectively compete with AT&T and Verizon because [the cable operators] will take more share from them than they ever would from us."

 

Although they've taken a dive in recent years, wholesale telecom services have been a reliable source of income for Tier 1 operators, Whelan said. Service providers enjoy being able to use their existing infrastructure to reap the rewards without having to spend money on sales and marketing in those regions, she said.

 

Under the Telecommunications Act of 1996, incumbent local exchange carriers (ILECs) are required to wholesale network access to new CLECs. Any attempt to stifle wholesale offerings may attract the attention of federal regulators, Whelan said.

 

"[ILECs] don't want to come down really hard because it's not in their interest, from a regulatory perspective," she said. "As long as they can negotiate a deal [with CLECs] … it's still a viable and potentially strong business for them."