TMCnet Feature
September 22, 2014

DSL Extreme Bucks CLEC Traditions, Gains U-verse Resale Agreement

By Joan Engebretson, Contributing Editor

When I talked to DSL Extreme Chief Operating Officer George Mitsopoulos in late August, I was wondering how the company made its business model work. Unlike most of its peers, the competitive local exchange carrier (CLEC) focuses more heavily on the residential market than the business market, with a 70/30 residential/commercial revenue mix.

The company also relies more heavily on reselling incumbent carriers’ networks than a lot of competitive carriers – an approach many competitive carriers moved away from after regulators relaxed incumbent carriers’ unbundling requirements, narrowing competitive carrier margins in that business.

As Mitsopoulos explains, DSL Extreme, which serves 21 major metros nationwide, was already doing a considerable volume of business with the incumbents when regulations were relaxed and therefore was able to negotiate better terms than some of its peers. The company today is one of the incumbents’ largest resellers and has maintained its special status over the years -- so much so that AT&T (News - Alert) has agreed to let the company resell the fiber-to-the-neighborhood-based broadband offering that AT&T sells under the U-verse name.

DSL Extreme won’t be able to use the U-verse name. Nevertheless this is an important development as AT&T and Verizon (News - Alert) fought hard not to be required to make their fiber-based last-mile infrastructure available to other service providers.

Reselling the FTTN-based offering will boost DSL Extreme’s top data rates to as high as 75 Mbps downstream in AT&T territories – a substantial increase from the 20 Mbps maximum speed that DSL Extreme currently offers with an ADSL2+ offering. (For that offering DSL Extreme co-locates in the incumbent carrier’s central office and installs its own transmission equipment but for lower-speed DSL services, the company leases the incumbent’s DSLAM.)

Other success factors

DSL Extreme’s success isn’t all about negotiating favorable deals with the incumbents, however.

“We’re able to succeed by putting automation in place,” said Mitsopoulos. DSL Extreme has interfaces into incumbents’ operation support systems that, among other things, enable the company to check a potential customer’s loop length, which determines the maximum DSL speed the customer will be able to receive.

When an order for DSL is taken, DSL Extreme’s system not only establishes the connection; it also prints out a label with the customer’s address, which an employee affixes to a package containing the customer premises equipment and sends off to the customer.

And while the underlying last-mile facilities have a substantial impact on the quality of a customer’s service, those facilities are not the only factor impacting service quality.

Mitsopoulos notes, for example, that DSL Extreme has aggregation network infrastructure of its own and that the company has agreements with content providers like Netflix and Google, owner of YouTube (News - Alert), that enable streaming video content to be stored locally. Companies such as those have been striking deals such as these to improve video quality by minimizing the distance content has to travel to reach an end user in exchange for a free traffic exchange agreement from the last-mile provider. But incumbent carriers such as Verizon and AT&T and some cable companies have refused to make such deals – even though video quality has sometimes suffered.

Business customers with locations in multiple metro areas also may see an advantage to using DSL Extreme instead of the incumbents, even when DSL Extreme basically resells the incumbents’ network. One reason is that DSL Extreme can provide a single bill for all services, even if multiple underlying carriers are involved.

Additionally DSL Extreme does more “hand holding” with customers, Mitsopoulos said. And if there is a service problem, the company takes care of working with the incumbent to resolve it.’

“We know how to deal with the telcos,” said Mitsopoulos. “If there is a problem, customers know we’ll deal with it and they don’t have to.”

Edited by Stefania Viscusi
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