XO Communications will leverage its existing network facilities to offer other CLECs a chance to compete in the residential voice market.

While XO itself remains focused on the business market, the company believes it can offer a more cost-effective way for CLECs to continue to compete with incumbents in the residential market, said Ernie Ortega, president of carrier sales. Since its acquistion with Allegiance, XO now has 950 collocation facilities in 70 major markets, and can use those facilities to provide local switching and interconnection services for other service providers, he said.

Since the Federal Communications Commission eliminated requirements for the incumbent Bells to resell UNE-P, or full-service local loops that included switching, CLECs who want to stay in that business must negotiate commercial contracts with each incumbent.

The CLECs must provide their own switching and acquire the last-mile copper loops, which are still available for resale under FCC rules.

What XO is providing is connection of that loop in the CO and transport to the CLEC’s switching facilities, which enables a CLEC to continue to provide service without the hefty investment in collocation or the increased payment to the Bell companies.

“Even with those three pieces -- the switches, the transport and the local loop -- we believe that we can save them 15% to 30% over what the RBOCs would charge,” Ortega said. “This is a way for us to make use of network-based facilities we have in place all around the country, and provide a better service.”

XO is already working with potential customers, many of whom are under tight time constraints to move their existing UNE-P customers off the incumbents’ network by March, 2006, or face hefty price increases.

"We’ve got about half a dozen wholesale customers,we have started fulfilling customer orders," Ortega said. "We go through a long analysis to determine how much of our network can cover their need. Each deal has to stand on its own merit and a lot of that is contingent on that CLEC’s geographic coverage."

“We will work with [potential customers] to determine where our network facilities will meet their needs,” Ortega said. This isn’t an easy transition – some of these customers have taken 100,000 ports. It will require a three to six-month phased implementation."

XO will offer the new service in pre-determined blocks of DS-0 ports.