Three Challenges for Non-LECs


 

In telecommunications, a Local Exchange Carrier (LEC), is simply a public telecommunications company. Most consumers are aware of the giant LECs dominating the industry, such as Verizon, AT&T, T-Mobile, and Sprint. However, these are not the only companies trying to gain access to the right-of-way. Non LECS are companies not registered as Local Exchange Carriers and are considered private companies.They entered the market to build networks in 1996 and have no intention on slowing down.

These non LEC companies are, in general, firms whose sole focus is to build networks to support their company’s activities.Unlike the traditional LECs, these companies face issues with gaining access to the right-of-way, permitting, and increased costs.

Background

The Telecommunications Act of 1996 was passed to increase competition in the communications sector by allowing any communication firm to compete in any market.  The hope was by removing barriers to entry, more firms would enter the market to create more options for consumers. This allowed non-traditional companies to offer services that previously they were unable to. Non LEC companies emerged from the act taking advantage of the new legislation. For several years following the new legislation the market became saturated with companies, both LECs and non LECs. This aided in creating the telecom bubble which burst in the early 2000s. Since then many LECs have consolidated reducing the number of firms considerably.

Why Build Networks

The main reason? To get out of lease agreements with utility companies. Some private companies lease “dark fiber” from other companies (LECs and non LECs) in order to fulfill their fiber needs. These leases can be long term – around 20 years and exceedingly costly in the long run. However, by building their own networks, firms can decrease overall expenses by paying a one-time capital cost to install the networks, and future minimal maintenance fees. Non LEC companies ultimately have to make the decision to lease or to buy.

Some LECs build their own networks in order to have more flexibility. When leasing dark fiber, firms are locked into pre-set routes. By creating their own route, companies can choose where and what to connect. This also allows them in the future to add routes that previously would not have been possible.

Issues for Non LECs

As stated before, non LEC companies can face problems that traditional LECs do not. These challenges, such as accessing the right of way, permitting, and increased costs can be time consuming and hard to overcome. For these reasons, the return on investment (ROI) must be high as an incentive to perform the work.

  1. Access to the Right-of-Way– Non LECs are not always granted immediate access to the right-of-way. Mainly because they do not provide a tangible direct benefit to the community. These additional restrictions can be costly and confusing for firms.
  2. Permitting– Permitting for non LEC companies can be difficult to say the least. Most firms have to allocate additional resources to attain the permits required for construction. For this reason, some companies hire engineering firms that have established relationships with local governments. Permits can be seemingly inexpensive; however, some municipalities require several hundred permits, which can add up over time.
  3. Increased Cost– Non LECs do not experience the same monetary benefits that LECs do. Depending on the state, LECs can expect cost reductions on services and permitting fees can be waved, which is unlikely for a non LEC.

Because this process can be confusing, many outsource aspects of the project. Once a third-party is hired to complete the feasibility and the design of the project, the owner’s responsibility shifts to maintaining their desired standards and confirming the proposed design is compatible with their needs.

On-site utility coordination

The Future of LECs

It’s important to keep in mind that every municipality is different. Different needs, wants, and ideas shape the course of that jurisdiction’s future. There will be no “cookie-cutter” solution and engineers will have to be agile when working with non LECs and local governments. These challenges are allowing for growth and innovation within a growing industry.

 

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