Despite federal regulation changes that undermined a large segment of its original business plan, Z-Tel Communications is not fading away as some might have thought. Instead, the company is regrouping with a new name and a new strategy.

As of Jan. 1, 2005, Z-Tel becomes Trinsic Inc., a provider of consumer and business voice and data services that is focused on building out its own network facilities and making a transition to voice over IP.

The company has already deployed VoIP in Tampa, Fla., where it is based, and will do so in New York City beginning in January.

Z-Tel is collocating Integral Access PPN broadband loop carrier systems in telephone company central offices and buying UNE loops to connect to residential customers and provide analog voice and high-speed data via ADSL2+ technology, says Chief Engineer B.J. Neal. It will lease broadband capacity from other service providers to link the COs to a regional POP, where Z-Tel is deploying Cisco BTS 10200 softswitches to provide call-control, voice features and data services.

"To start with, we will mirror the voice features we are offering now, but as we mature and get customer feedback, we think we can offer a more feature-rich service," says Neal. "And we will offer ADSL2+ service to customers who want that."

Z-Tel also offers service to small-to mid-sized businesses over an all-packet network, using leased T-1 lines linked to integrated access devices at the customer’s premises.

Prior to this transition, Z-Tel was heavily dependent on buying UNE-P loops from incumbent telcos, basically reselling the existing voice services with added features and discounted pricing. Since last March, however, the CLEC industry has long expected what the Federal Communications Commission confirmed yesterday--that it would no longer require the Bells to sell UNE-P facilities, which include their switching capabilities, to competitors at a discount.

CLECs who expect to survive must transition to facilities-based networks and the logical transition is to VoIP, says Craig Claussen, analyst with New Paradigm Resource Group.

"I think we’ll see a lot of what Z-Tel is doing--partnering with Integral Access and building out access facilities," he says. "CLECs are going to have to innovate to survive."

Z-Tel’s original innovations included a user-friendly Web interface for ordering and changing service, a low-cost service bundle that provided caller ID and other advanced voice services as part of the basic offering and a personal voice assistant that provides customized support and service.

In the current transition, the company is adding talent in the IP networking and Unix server areas.

"Z-Tel has been a UNE-P based CLEC and we didn’t have our own network to manage and monitor," says Neal. "That all changes now. We have hired folks that have experience in facilities-based networks, and we brought on some with experience in softswitches and VoIP, which requires Unix expertise."

The name change and network strategy change come as Z-Tel is making other changes, as well. Trey Davis and Frank Grillo are running the company as CEO and COO, respectively, following last fall’s departure of CEO Gregory Smith and Chief Technical Officer Charles McDonough.

As Trinsic, the company will have to make additional choices on how to transition its existing UNE-P customers onto the VoIP network in keeping with the FCC’s 12-month transition period, but those plans are still in the works, said Neal. The total cost of the transition has also not been determined.