Blog Post

Telecom Shakeout ahead?

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Just posted my column from Business 2.0. What I am basically saying is that there are still far too many CLECs cluttering the landscape. Expect their number to shrink by two-thirds at the very least.

The four-year-long telecom downturn has managed to wring out most of the industry’s excesses, but there are still too many players remaining. Anyone can see that the industry needs further restructuring. That’s likely to happen in the next 24 months, and once the dust has settled, there’ll probably be fewer than 10 survivors. Who will they be?

Companies with decent networks, good financials, strong balance sheets, and manageable debt loads, such as Choice One Communications, Pac-West Telecomm, Time Warner Telecom, and US LEC. Among companies that have restructured after bankruptcy, Covad Communications, Focal Communications, and IC Communications have a good chance of surviving as independents, provided they stick to their niches. And who will the losers be? Birch Telecom, McLeodUSA, and XO Communications.

5 Responses to “Telecom Shakeout ahead?”

  1. January 2005, I purchased phone and internet service from Birch Telecom. I was lied to and deceived by Birch. I did not receive what I was promised and was deceived about the internet speed which I purchased. I attempted to resolve the dispute with Birch, and Birch made no effort to resolve the dispute. Customer service is poor. Their attitude is poor. Do not expect any follow up from sales, or service after contracting with Birch. Birch was in bankruptcy as of August 2005.

  2. I found this blog doing research on Birch telecom. I am a consultant and before recommending any provider to my Clients, I do a due diligence examination. Birch has closed sales offices and laid off salespeople. More significantly, they have discontinued their Agent program. This means they are not accepting sales from non-Birch sales agents.

    I wish CD above – (7/20 post) were a client of mine – there are some very good and very quick to install providers in Houston.

    [email protected]

  3. After signing a contract with Birch Telecom for a integrated T-1 (in Houston) on March 28th, 2005 for delivery July 24th, I received a email 8 days prior to moving into our brand new building that we would need to find another supplier of a T-1.

    I’m in complete shock and in a panic. They did this after promising and promising they were “on schedule” for months.

    Is this legal to do this to a customer? We’ve been a customer of theirs for over 4 years. I’ll spend thousands of dollars over the next 20–30 days trying to get re-hooked up.

    I will never ever have anything to do with Birch Telecom ever again.

  4. Telecom Banker

    Have you checked out CWON’s debt and pfd load? About $900 million in debt and pfd, with quarterly EBITDA of $7.7 million. The company will certainly need to restructure. “Survival” is likely, but not terribly meaningful if you’re an equity holder.