Editor’s note: Executive Q&A is a regular feature on Tuesdays in LTW.When the subject is brand identification, Aaron Cowell Jr. knows that US LEC is not a household name.

But once businesses discover what the telecommunications provider is all about –from products to services — and they decide to buy, they likely will remain.


Reputation, reputation, reputation, says Cowell.

“For a time, people really didn’t understand who US LEC is,” he says of the Charlotte-based firm which was launched in 1996 and went public in 1998. “We don’t have a swoosh on people’s clothing.

“Our business is word of mouth, our reputation, and we have strong retention (a miniscule churn rate of 1 percent). We’re not just a great voice provider but a great data provider.”

US LEC is a regional telecommunications company providing service across the South and as far north as Pennsylvania with its own network and 23 switches. As a Competitive Local Access Carrier, the company was formed in the wake of telecom deregulation in 1996 that forced Regional Bell Operating Companies such as BellSouth to lease part of their networks to these CLECS in a bid to increase competition and drive down prices.

But the implosion of the telecom market over the past two years sent many CLECs to Chapter 9 or Chapter 7 liquidation. US LEC survived the washout, now has more than 10,000 customers with most of those being businesses, and continues to report growth.

Local Tech Wire recently talked with Cowell about the company.

A telecom analyst recently praised US LEC as being a company to watch. One factor he cited was your low churn rate. How do you keep your churn rate low?

In our field, people have different strategies. There are folks in the industry who believe you try to grow by outpacing your churn. US LEC takes a much different view.

Our core principle is that every customer who comes on our network must stay. Obviously, we can’t force them to stay, but we must do everything well from the time we sign them. This is not only an important part of building a long-term successful company but also a key to our day-to-day business.

Every customer came to us because of our reputation. We’re not an advertising company. From installation to post-customer care, our team knows what it has to do. Our support groups in the field know their job is not to lose customers.

Because of these factors, we believe our retention rate is second to none in the industry.

The recent debate at the FCC about what the large telephone companies must resell to CLECS continues. But since you have built so many of your own facilities (including 23 switches), has US LEC been less affected?

We are fortunate to have maintained our strategy since we started — provisioning customers only over facilities we lease and our switches. We are not relying on an incumbent carrier or a RBOC (regional bell operating company) to be the brains of our network.

Not only do we maintain customer care because we often know about problems they are having before they do, but we also control purchasing rights. Agreements are between us and them and not dependant on government intervention.

It’s such a shifting sand, and we are very fortunate we did not base our business plan on that.

Building your own network was more expensive, however.

The costs were higher, certainly in the up-front capital you have to make. On a unit-to-unit cost structure, our cost structure is a little higher. But we also are not trying to be a lower-cost provider.

If we charge $15 more a month, then we feel the customer gets the benefits of better service from the moment the customer is signed.

If our goal was to be a cost leader, then we had the wrong strategy for it.

You recently have been reporting major gains in data customers.

Several factors are contributing to that. First, our sales force has become much more comfortable with the data solution sale. A lot of them came from a long-distance voice environment. We now have a much broader base of knowledge.

We also have not just come out and said we have an out-of-the-box solution for data. We have to show our customers our solution, whether it be frame relay or VPNs (virtual private networks) or a high-speed connection to the Internet. We have to show a solution the customer is looking for that fits their needs.

Do you have any plans to offer Voice over Internet Protocol services?

We have to educate people about that. We don’t offer VoIP. We have to be able to show why ATM (asynchronous transport mode) is a better solution.

How do you train your sales force to discuss various product offerings?

They have to be able when they are talking to customers — whether they are a lay person or a chief information officer or a business manager — to relate to them and show how our technical solutions are different when compared to what our customers offer.

The customer has to become comfortable with the solution sale. We don’t just know on a door and say ‘Buy it!’ We have to say we have a solution to your problem and here’s why you need to buy it.

Wednesday: In Part Two, Cowell talks about US LEC’s recent debt refinancing and capital spending to expand its network.