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Long
Distance Resale Rules Change, But Market Still Booms
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BOONTON, NJ. March 27, 1998:
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The companies that resell long distance
services have found the sweet spot in the long distance wars, says a new
market research report from Insight Research. While the major leaguers
selling long distance can expect to see their LD revenue growth stall during
the next four years, reseller revenue will climb at a compounded rate of
over 13 percent through 2002. At the same time, the resale industry is
starting to mature as intense competition and consolidation take hold:
aggregators--the first resale segment to give LD carriers major
headaches--are facing extinction in 1998.
According to Insight's report, The US Resale Market
1997-2002, the number of resellers in the United States has jumped from
500 in 1994 to nearly 1,000 by the end of 1997. But for resellers to
continue making headway in the long distance battle, they must diversify
their product offering to match the one-stop shopping available from the big
LD carriers--even when investments in local service or Internet aren't
profitable today. At the same time, consolidation among the larger
resellers is making survival for the smaller resellers increasingly difficult.
"Reselling boomed over the last four years because the barriers to entry
were so low," says Robert Rosenberg, president of Insight. "Now resellers
are having to ante up the price of a central office switch, their customers
want it all from a one-stop shop, and competition is squeezing the arbitrage
opportunity. All this means a bigger overhead for the resale company, and a
more risky future," Rosenberg concludes.
According to Insight, the retail value of long distance resale will reach
$17.22 billion this year in comparison to the actual wholesale cost of $7.84
billion. By 2002, revenue from resale services will still be growing at 9.5
percent annually, spurred by lowered access charges, international
deregulation, and reduced consumer prices.
Further insights into long distance wholesale strategies, five-year forecasts of retail revenue, and future resale trends are published in
The US Resale Market 1997-2002.
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Donna
Savino
at Insight Research
973-541-9600
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Telecom
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