Teleport Communications Group
Encyclopedia
Teleport Communications Group (TCG) was the first Competitive local exchange carrier
(CLEC) in the U.S.
It was formed as Teleport Communications in 1985 by Merrill Lynch as the private sector participant in the Port Authority of New York and New Jersey's "Teleport Project." The Teleport Project envisioned a satellite earth station complex in Staten Island connected to the stock exchanges, financial services companies and corporate headquarters located in Manhattan. Microwave connections were not feasible due to the congestion of New York's airwaves so Teleport Communications decided to utilize fiber optics for a network connecting satellite earth stations at The Teleport to customers in Manhattan. However, the simultaneous advent of national fiber optic networks reduced the need for satellite communications, leaving Teleport Communications' network largely unused. Merrill Lynch hired former AT&T manager Robert Annunziata to develop a new strategy for Teleport Communications. Annunziata's plan was revolutionary: Teleport Communications would use the fiber optic network to compete with the New York Telephone Company, the historic monopoly telephone company in New York, and re-introduce competition for local telecom services.
Teleport Communications' service was very popular with long distance carriers such as AT&T, MCI and Sprint who wanted to connect their long distance networks to their largest customers without using the local telephone companies (the so-called regional Bell Operating Companies--RBOCs) which were perceived as strategic competitors that wanted to get into the long distance business. Teleport Communications' services were also popular with financial services companies that wanted duplicate and independent high speed connections between their New York area offices and the stock exchanges.
The financial services and long distance companies quickly asked Teleport Communications to replicate its services in Boston. Merrill Lynch formed a partnership with Fidelity Investments for Teleport Communications-Boston. Similar expansions followed in Chicago, San Francisco, Houston and other major cities across the United States and the company was re-christened Teleport Communications Group (TCG). Merrill Lynch later sold TCG to the cable TV industry, with Cox initially taking a 20% ownership. The remaining 80% was subsequently sold to TCI, Comcast and Continental Cablevision. TCG and the cable companies then started to deploy jointly built fiber optic networks in many other cities. TCG then added carrier-grade Class 5 switches to the fiber optic networks to become the first and largest Competitive Local Exchange Carrier (CLEC), competing broadly with the traditional local telephone companies.
Critical to TCG's ability to compete with the traditional monopolies were a series of favorable decisions by state regulators, particularly in New York, Massachusetts and Illinois, which allowed TCG and other CLECs to interconnect as "peers" at reasonable rates. These regulatory initiatives were ultimately codified and made applicable nationally through the federal Telecommunications Act of 1996. The success of TCG and other CLECs demonstrated that competition was possible in the local telephone market. This contributed to the passage of the Telecommunications Act of 1996
which eased the entrance of new CLECs by requiring the incumbent telephone companies, the largest being legacies of AT&T
, to interconnect with the new entrants. The company has since merged with AT&T.
In 1998, TCG was acquired by AT&T for $12 billion. At that time the publicly traded TCG (NASDAQ, TCGI) served 65 markets and generated $800 million in revenue. Its largest investors were cable TV companies TCI
, Comcast
and Cox Communications
.
Competitive local exchange carrier
A competitive local exchange carrier , in the United States, is a telecommunications provider company competing with other, already established carriers ....
(CLEC) in the U.S.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
It was formed as Teleport Communications in 1985 by Merrill Lynch as the private sector participant in the Port Authority of New York and New Jersey's "Teleport Project." The Teleport Project envisioned a satellite earth station complex in Staten Island connected to the stock exchanges, financial services companies and corporate headquarters located in Manhattan. Microwave connections were not feasible due to the congestion of New York's airwaves so Teleport Communications decided to utilize fiber optics for a network connecting satellite earth stations at The Teleport to customers in Manhattan. However, the simultaneous advent of national fiber optic networks reduced the need for satellite communications, leaving Teleport Communications' network largely unused. Merrill Lynch hired former AT&T manager Robert Annunziata to develop a new strategy for Teleport Communications. Annunziata's plan was revolutionary: Teleport Communications would use the fiber optic network to compete with the New York Telephone Company, the historic monopoly telephone company in New York, and re-introduce competition for local telecom services.
Teleport Communications' service was very popular with long distance carriers such as AT&T, MCI and Sprint who wanted to connect their long distance networks to their largest customers without using the local telephone companies (the so-called regional Bell Operating Companies--RBOCs) which were perceived as strategic competitors that wanted to get into the long distance business. Teleport Communications' services were also popular with financial services companies that wanted duplicate and independent high speed connections between their New York area offices and the stock exchanges.
The financial services and long distance companies quickly asked Teleport Communications to replicate its services in Boston. Merrill Lynch formed a partnership with Fidelity Investments for Teleport Communications-Boston. Similar expansions followed in Chicago, San Francisco, Houston and other major cities across the United States and the company was re-christened Teleport Communications Group (TCG). Merrill Lynch later sold TCG to the cable TV industry, with Cox initially taking a 20% ownership. The remaining 80% was subsequently sold to TCI, Comcast and Continental Cablevision. TCG and the cable companies then started to deploy jointly built fiber optic networks in many other cities. TCG then added carrier-grade Class 5 switches to the fiber optic networks to become the first and largest Competitive Local Exchange Carrier (CLEC), competing broadly with the traditional local telephone companies.
Critical to TCG's ability to compete with the traditional monopolies were a series of favorable decisions by state regulators, particularly in New York, Massachusetts and Illinois, which allowed TCG and other CLECs to interconnect as "peers" at reasonable rates. These regulatory initiatives were ultimately codified and made applicable nationally through the federal Telecommunications Act of 1996. The success of TCG and other CLECs demonstrated that competition was possible in the local telephone market. This contributed to the passage of the Telecommunications Act of 1996
Telecommunications Act of 1996
The Telecommunications Act of 1996 was the first major overhaul of United States telecommunications law in nearly 62 years, amending the Communications Act of 1934. This Act, signed by President Bill Clinton, was a major stepping stone towards the future of telecommunications, since this was the...
which eased the entrance of new CLECs by requiring the incumbent telephone companies, the largest being legacies of AT&T
AT&T
AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband and subscription television services...
, to interconnect with the new entrants. The company has since merged with AT&T.
In 1998, TCG was acquired by AT&T for $12 billion. At that time the publicly traded TCG (NASDAQ, TCGI) served 65 markets and generated $800 million in revenue. Its largest investors were cable TV companies TCI
TCI
-Medicine:*Transient Cerebral Ischaemic attack, see Transient ischemic attack*Tricyclic antidepressant medication*Target Controlled Infusion, a method for controlling intravenous infusions.-Psychology:*Theme-Centered Interaction, a method of psychotherapy by Dr...
, Comcast
Comcast
Comcast Corporation is the largest cable operator, home Internet service provider, and fourth largest home telephone service provider in the United States, providing cable television, broadband Internet, and telephone service to both residential and commercial customers in 39 states and the...
and Cox Communications
Cox Communications
Cox Communications is a privately owned subsidiary of Cox Enterprises providing digital cable television, telecommunications and wireless services in the United States...
.