How much working capital should a CLEC be generating?

I have a question for Yahoo Answers. I worked for a CLEC, named Globalcom, which was stationed here in Chicago. The CEO sold the company. The reason he stated for selling the company was that he simply lack the working capital to continue. He stated that you need roughly 100 million in yearly working capital to compete. In the telecommunications industry, given the new technologies of today and the giants such as AT&T, Paetec, would you agree that a CLEC would need that amount of yearly capital to continue?


To further give more information, Globalcom sold T1's to small businesses in the Chicago land and suburbs, and nearby Wisconsin. They were acquired by larger CLEC that serves in Ohio, Mich, Penn, area, which sells legacy services.

1 Answer

  • 1 decade ago
    Favorite Answer

    Well. It depends on what services they are offering. A clec could be a local phone provider to a small town. Or leasing PBX's to a university or large building is kind of a clec. How about a voip business solutions provider? All three of those business models could be sustained for a tenth of his estimate.

    On the other side of the coin..

    Offering telco, data and streaming mpeg to a national base - would require 10 times as much as he suggests.

    I worked for a DSL provider called Rhythms years back. They went out of business in 03(ish).

    Many in that company blamed our relationship with AT&T and support of their loops.

    That's the real riddle. How in the heck can a small company compete with AT&T or Verizon?

    It's tough. They are a monopoly and run by some of the most cut throat executives in business. Very politically active execs also.

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