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AT&T and Verizon capture the lion’s share of enterprise Wireline services business in the United States.  This year, Level 3 acquired Global Crossing and CenturyTel acquired Qwest (now “CenturyLink”).  These two companies could drive the return of the competitive environment of the mid-to-late 1990s that, unfortunately, collapsed in the wake of the WorldCom accounting fraud.

In some respects, these two companies face greater challenges today as AT&T and Verizon control so much of the market for special access services in addition to having extensive portfolios of voice and data services.  The following are “keys for success” for CenturyTel and Level 3 in pursuing enterprise Wireline customers.

Keys for Success for CenturyTel

  1. Within its local service territories, leverage local services and special access facilities to deliver aggressively priced bundled services.
  2. Focus on enterprise customers having substantial operations in the “Qwest states.”

Keys for Success for Level 3

  1. Leverage its strengthened position as a Tier 1 ISP.  Focus on the most portable enterprise data service: high speed dedicated Internet access services.  This is consistent with its commitment to content delivery service.
  2. Focus on international and rest-of-world services.  As a result of the takeover of Global Crossing, Level 3 has substantial international facilities.

Common Keys for Success

  1. Partner with CLECs and CAPs, including the major cable operators (out-of-region for CenturyLink).  Minimize dependencies on Verizon and AT&T, however challenging.
  2. Commit to VoIP.  The FCC’s USF Order establishes a regime of declining terminating access rates and migration to bill and keep.  Enterprise customers increasingly accept SIP trunking.
  3. Position yourselves as secondary MPLS carriers.  Enterprises are looking for diversity/redundancy at critical locations.
  4. Deliver a positive customer experience.  Strengthen sales, offer management, and provisioning  processes.  When they choose to do so, AT&T and Verizon make very strong impressions in these areas.  Implement best in class billing and “help desk support.”
  5. Adopt more balanced standard services agreements.  The established carriers’ approach creates another hurdle for marketplace acceptance.

Enterprise Customers: Consider the Big Picture

Level 3 and CenturyLink must demonstrate a commitment to enterprise customers.  For the near term, wholesale replacement/displacement of AT&T or Verizon by either Level 3 or CenturyLink is neither likely nor unrealistic.  On the other hand, these carriers warrant consideration for no other reason that continuous reinforcement of a virtual duopoly is not desirable.  Enterprise customers should extend RFPs to these carriers other than as a formality or as straw-man competitors and consider procurement strategies other than the “winner take all” approach.