Although independent telephone companies have long bought wholesale services from larger local incumbents such as RBOCs, the small telco market increasingly is becoming a target market for the wholesale divisions of non-local players ranging from Level 3 Communications to France Telecom. The new interest is being driven by independents' more ambitious venturing outside their existing franchise areas for new sources of revenue.

At the same time, the wholesale market itself has stabilized somewhat, and competition has been galvanized by a series of global acquisitions and mergers that have reduced the number of competitors but turned up the heat on those remaining.

At Global Crossing, for example, the Global Partners Program is finding independent telcos in the U.S., and Tier 2 service providers globally are an increasingly important audience for its Fast-Track service, which provides a means of connecting enterprise customers outside a franchise territory.

“What we are seeing is a lot of activity going on in the U.S., in North America and elsewhere, not only by Tier 1 incumbents in getting market share, but even smaller operators such as the independents,” said Omar Altaji, executive vice president of the Global Partners Program. “They can go to some of their existing customers and have a global solution for them or go into areas they haven't served before because they didn't have the reach.”

The Fast-Track service enables a service provider to quickly offer converged data services, including IP, IP/virtual private networks (VPNs), Ethernet or legacy frame-ATM services over Global Crossing's backbone network.

“What Global Crossing and the Global Partners Program can do is offer a private-label type of solution set,” Altaji said. “A service provider puts their brand on it and now can provide their top customer with a 35-site IP/VPN network in three regions or 20 countries.”

That capability becomes important as smaller telephone companies seek to ward off competition from larger players, such as AT&T or MCI, in serving the larger corporate customers in their footprint.

“We see interest in a couple of ways,” Altaji said. “Sometimes they are trying to serve an important customer, and sometimes they are trying to move out of region. We get a lot of, ‘I didn't know I could do that,’ responses. With the relationship on the Global Partners Program front, now any telco can actually offer a competitive, robust global-type solution. The other big players have nothing on them.”

Global Crossing is in the process of expanding the Global Partners Program to include other managed services capabilities and applications, such as voice over IP, to its roster of offerings.

The company already offers these services through its direct sales to enterprise customers.

“We are now porting that over to the [Global Partners Program] suite,” Altaji said. “We are adding voice, and we are also adding collaboration services like IP video, Web access and conferencing along with advanced security and control features.”

Global Crossing is far from alone in the wholesale arena — AT&T and MCI offer wholesale services, as do major multinational players including France Telecom through its Equant acquisition, and BT, through its purchase of InfoNet. Broadwing, Qwest and Level 3, which most recently acquired WilTel, also have been looking to expand their wholesale operations.

Over the past two years, the merger frenzy has created a more focused set of competitors, even as the entire wholesale market has seen a more stable pricing environment amid slightly higher demand and less desperation on the part of service providers.

Altaji said most of the independent telcos that are moving outside their region, either on a customer-specific or general basis, are doing so quietly, without fanfare or announcement.

“Most of our agreements are being kept private, by design,” he said. “There is desire by both the partner and ourselves to do a measured kind of campaign.”

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