Getting Connected

By Susan Holly

It's coming. That had long been the mantra in Southwest Florida for telecommunications in the area. Everyone knew the new technology for high-speed voice and data communications existed somewhere -- just not in this little slice of paradise. When would it get here? The answer was always "next year," or, worse, the very ambiguous "as soon as it's feasible."

Getting there. That could be today's assessment of telecommunications in Southwest Florida. The area is just starting to see services,, such as access to broadband, that were hardly in sight one year ago. Sprint, the area's primary phone service provider, is upgrading its service in response to competition from smaller aggressive providers that have entered the local market - and competition begets improvements in service.

Southwest Florida is still heavily dependent upon Sprint's old-technology copper-wire infrastructure. That is slowly changing as both Sprint and its competitors install fiber-optic networks, which carry vastly more information at speeds and volumes mega times faster than old copper wiring. That has opened the doublewide doors to the high-speed services collectively known as broadband - and anyone who hasn't been locked in a closet for awhile knows that broadband is the place to be.

So where does Southwest Florida stand today in terms of delivering these services? "It's improving greatly - by the day," says Steve Ward, president of NeoSmart, an Internet service provider (ISP) in Fort Myers. That thought echoes what many local industry experts feel. Everyone agrees the situation is improving, though maybe not fast enough.

"We are behind other markets," says local network consultant Simon Hatfield, who has worked in the telecommunications field for 12 years. "Southwest Florida is not recognized as the business area it should be recognized as. It should be a lot more up to date. There should be a lot more options.

"The technology will get here eventually," he continues, "but not at the pace business demands. Like everything around Florida, it seems to move slowly."

Local ISPs and networking specialists say they see a huge demand for state-of-the art telecommunications systems, but have a difficult time meeting that demand. "Sprint does not have the infrastructure in place to handle companies like ourselves," says Peter Seif, president of Fort Myers-based Synergy Networks, an ISP offering high-speed Internet connections to local businesses. "This market is incredible, growing so fast, with so many companies wanting to move in," Seif says, "but we're having such a hard time giving our customers the services they need."

How you feel about the level of service here may depend on exactly where you are. If you happen to be sitting on top of some fiber optics, you are in pretty good shape for the future. If not, you are still going to be working with old technology. In North Naples, Hatfield is pretty far removed from the high-tech infrastructure. Ward, based in downtown Fort Myers, is in a more densely populated area surrounded by a fiber-optic network.

The fiber goes in where the market demands. Cost of installation is high (industry estimates to rewire an area for broadband can be as high as $1,000 per hookup), so return on investment for the provider has to be pretty darn good. The demand has finally materialized sufficiently for providers to take notice of Southwest Florida. Pure and simple, if the numbers work, the providers will install the technology. -Tand the numbers are looking more attractive, at least in some areas of Fort Myers and Naples.

Monopoly, Be Gone

Sprint still has a stranglehold on local service in Southwest Florida, but that is slowly starting to change as a result of the Telecommunications Act of 1996. A quick review: For most of telephone history, consumers had no choice in selecting their phone company. That changed in the 1980s with the government-ordered break-up of the Bell system, but Congress saw a need for additional competition and passed the Telecommunications Act in 1996. The post-Act telephone industry consists basically of two sides - the monopoly companies, called ILECs (incumbent local exchange companies, pronounced eye-lecs by those in the know), and the competitors, known as CLECs (competitive local exchange companies, pronounced see-leks). The Act gave CLECs the power to enter a market in three ways: by buying and reselling services from the ILEC; by leasing ILEC facilities to offer their own services; or by building their own facilities.

Although competition has been slow to materialize since the Telecommunications Act, each year competitors take a little more of the market. According to figures from the Federal Communications Commission (FCC), nationwide, the number of CLECs increased from 94 in 1996 to 355 in 1998. Their share of the market over the ILECs - monopoly companies such as Sprint and the Bells - is still tiny, but doubled from 2 percent in 1997 to 4 percent in 1998, says the FCC.

CLECs began to appear in Southwest Florida over the past few years. The one with the most impact so far has been KMC Telecom, a $1.5-billion New Jersey-based company that targets smaller tier-III markets (up to 750,000 population), such as Fort Myers. KMC is in 39 such markets across the country. The telecommunications market in Southwest Florida "is robust," says Greg Brothers, KMC's Fort Myers director. "The business arena is hungry for an alternative. That's obviously very true because we're so well received in the marketplace."

KMC entered the local market in April 1998 and since then has made a $20-million investment here, installing its own fiber-optic network and switching equipment. Its 27-mile fiber network stretches from downtown Fort Myers south to Daniels Parkway. Using this network, KMC can supply a full set of voice and data services to its Fort Myers business customers. It plans to expand into Naples by the end of this year, says Brothers.

Because it has its own equipment, KMC can claim to be the only true alternative to Sprint. Other CLECs in this market are resellers, meaning they simply buy services from Sprint in volume, repackage and sell them, presumably at a lower cost because of less overhead than Sprint. These resellers still use Sprint's infrastructure.

One such company is BTI, headquartered in Raleigh, North Carolina. It resells Sprint services for 10-percent less than Sprint, says Jerry Greenhouse, senior telecommunications partner at BTI. "There's a shortage of capacity in [Southwest Florida] because it's growing so fast," notes Greenhouse, so BTI sees a market opportunity here. BTI has a fiber-optic network that reaches into Florida, and it recently installed a local switch in Tampa. The company anticipates adding Southwest Florida to the network eventually.

Another growing CLEC in the market is Adelphia Business Solutions, a division of the cable company giant Adelphia Communications. It began reselling Sprint services to business customers in February 1999 at a 15-percent discount, according to Adelphia's local sales rep Michael Weeg. The company is installing its own fiber-optic network from North Fort Myers to Naples and will soon be able to offer a full range of local, long-distance, and Internet services over this network. It anticipates that Fort Myers will go online by the end of this year and Naples will follow after that. "We are ramping up our presence in the [Southwest Florida] area significantly," says Todd Bishop, general manager of Adelphia Business Solutions in the Tampa office.

Another presence in the market is Intermedia, a large Tampa-based communications provider. Its reach into the local market has not been extensive, but could grow with time.

The entry of CLECs into the market changed the way Sprint does business, says Ward of NeoSmart, which has a $2-million agreement with KMC to use its network for telephone and high-speed digital access services. Sprint, he believes, is more willing to install fiber-optic networks today than it was a year ago, before the competition got more serious.

Sprint has hardly stood idly by waiting for the competition, however. It built its own fiber-optic SONET (synchronous optical network) ring, and supplies fiber networks for larger companies, such as Lee Memorial Health System. SONET rings are particularly important for businesses,, such as call centers, that depend on absolutely reliablereliable and state-of-the-art phone service. KMC also has a SONET ring.

These developments have been a great advantage for the area's business appeal in the eyes of economic development officials. "We have some of the best [telecommunications] infrastructure around for a market our size," says Beverly Fox, marketing and communications director for the Economic Development Office of Lee County. "The national site consultants we work with tell us they are quite pleased with the quality and amount of infrastructure. We have a lot of new infrastructure, a lot of fiber in the ground. We have two providers of SONET rings and several CLECs. Two to three years ago we did not have as much competition in this market."

Collier County's Economic Development Council agrees that competition is heating up. While most businesses are still working with Sprint, notes EDC director Susan Pareigis, other solution providers are showing an active interest in the local market, and local businesses are seeking alternative solutions. "The need and demand are almost outpacing the supply," she adds.