CLECs struggle to gain footing in the SMB market

How big does a small company have to be to make a blip on its telco’s radar screen?

In Tracy Boyer’s experience, probably a little bigger than the three-person office she works at in downtown Toronto.

Boyer, an executive director at OCCSPA (Ontario Community Colleges Students Parliamentary Association), has spent the past year working in frustration after her organization along with OUSA (Ontario Undergraduate Students Association) switched telephone companies and ISPs.

The two non-profit associations, who share not only office space but also one administrative assistant, said goodbye to Ma Bell early last year after a newcomer to the CLEC market, Norigen Communications, set up shop in their Toronto office tower.

At the time, both Boyer and OUSA’s director were interested in upgrading their Internet access from dial-up to always-on service. Interlog, their provider at the time, said they did not have the technology to accommodate their request, recalled Boyer. And that’s about the time Norigen’s sales rep appeared.

“Norigen came to us first, they were in the building, so we felt because of the close proximity, if we had any problems they wouldn’t be difficult to resolve,” Boyer said of OCCSPA’s decision to test Norigen’s service.

According to Boyer, everything started out well with Norigen. OCCSPA and OUSA agreed to have some demonstration phone lines installed at no charge.

After a couple of months of this service, OCCSPA and OUSA agreed to move from Bell and Interlog completely, and purchase a bundle of services from Norigen.

This included direct Internet access, two business phone lines, Web hosting, and a software program entitled WebTop that Norigen had in trial.

From there, things fell apart. When Boyer received Norigen’s bill, she noticed her company had been charged for not only the previous demonstration lines, but also the installation of telephone and Internet service, items Norigen’s salesperson told her would be free. As well, OCCSPA and OUSA were continuing to be charged by Bell for business phone lines, lines which Norigen were supposed to have switched over.

Norigen had also not set up the WebTop software, which was supposed to provide remote access via dial up to the company’s network. And OCCSPA and OUSA were receiving shared Internet access, not direct, as was agreed upon. Finally, Boyer said her company was being charged monthly for Web hosting, though the salesperson had assured her Norigen would host OCCSPA’s site for free.

“It was one of the conditions of us going over (to Norigen),” Boyer said. Interlog was hosting the OCCSPA site for free as a gesture to the non-profit organization, she said.

From February through July of last year, Boyer met continually with Norigen’s sales rep, who assured her the problems would be fixed. The salesperson, Boyer’s point of contact with Norigen, had also told her not to pay the Bell bills until Norigen resolved the situation.

During the summer, however, Bell began to send credit notices to OCCSPA, and Boyer could not wait any longer. She paid the ILEC the approximately $450 she had been charged since switching over to Norigen in February.

Boyer immediately contacted her sales rep, but never heard back. She continued to contact the sales rep until late October, but never heard any reply. In fact, the sales rep had not been with Norigen for some time, but no one at the company had notified OCCSPA and OUSA to identify their new “One Source” contact.

“I think one of the things you’re seeing is some of the growing pains of growing so fast,” Wendy Tilford, Norigen’s senior vice-president of customer care, said during a recent interview with Network World Canada.

Launched in Toronto in October of 1999, Norigen has since expanded its operations to seven cities across Canada. In 2000, the company raised more than $350 million in financing, which it leveraged for purchases of IT services company Compugen Services Ltd., and e-business consulting firm, Liberty Technology Services Ltd., in September.

Bill Baines, Norigen’s president and CEO, said the company is hoping to use Compugen’s contacts with corporate Canada to begin offering telecommunications services to large companies. However, he said the small- and medium-sized business market is still the company’s primary target.

As for the situation with OCCSPA and OUSA, Baines admitted the companies apparently fell through the cracks.

“In a thousand customers, there’s always going to be one slip-up,” said Baines.

Tilford added the company has lately improved everything from its billing to the amount of time it takes to notify a customer about a change in their sales contact.

“Basically, customer feedback, lessons learned,” Tilford said, adding that companies as dynamic as OCCSPA and OUSA are not frustrating to Norigen. “A small organization is our bread and butter, it really is,” she said.

Lawrence Surtees, a telecommunications analyst with IDC Canada Ltd. in Toronto, said CLECs often experience problems with small companies due to the sheer volume of them in Canada. According to IDC, 90 to 95 per cent of all business firms in Canada can be classed as small business (less than 100 employees).

“I find it difficult to see how any one firm can keep up with all the needs and demands and all the niches of the small business market, given their multitudes,” Surtees said.

He said the level of service for very small businesses isn’t likely to improve as the CLEC market matures. Surtees is forecasting that most telecom firms will begin to offer various levels of service to customers, according to how much they spend on services per month.

Meanwhile, Boyer, who has since resolved the disputes with Norigen to her satisfaction, isn’t planning on giving up on the company.

“I think, in the long term, it’ll be good,” she explained. “It’s just, the beginning was rough and I think they’ve sort of responded to our concerns, and we’ll have to see if they continue to deliver.”