There are three important questions service providers need to address for in-market and out-of-market expansion.

Brent Mello

January 29, 2015

2 Min Read
The Telco's Dilemma: Building or Outsourcing?

The IP transition is opening doors for new entrants and smaller carriers alike to a telecom market that is ripe for innovation and growth. To walk through those doors, service providers need to expand within existing markets, while also opening up new markets to acquire new customers and keep their existing customers happy. The key is to provide a feature-rich, high-quality experience at a low cost.

While planning for expansion, service providers will need to answer two very important questions: 1) Should I build out on my own? 2) Should I outsource to someone else? There are three key areas service providers must evaluate to determine if they should build or outsource:

What are your budget parameters?
There are various budgetary items that must be considered. You need to evaluate the one-time and the monthly recurring costs, as well as the operational expense for deploying and supporting local entrance facilities, backhaul and SS7 network elements. Additionally, there are a number of legal, regulatory and certification costs that need to be considered, such as establishing interconnection agreements and filing for CLEC licenses in each state.

What is your time to market?
The key question to ask yourself is: Can I move fast enough to keep my existing customers happy and/or acquire new customers before my competition beats me to it? Even if you have built out markets before, your competitors may be able to move faster if they are already in the market, or are leveraging someone else's network in an outsource arrangement.

Who are the right providers for you?
Whether you choose to build or buy your way into existing markets or open up new ones, quality and the array of available services is key. For example, emergency services (9-1-1 capabilities) are a critical concern for many of your customers, but these services come in an array of options for providers. Your current 9-1-1 provider may meet your existing needs in your current markets, but they may not have the resources or capabilities to scale and grow with you in new markets. You need to consider the present geographical footprint of your existing provider and evaluate all of your options so you pick the best long-term provider for your business.

As customers' telecommunications choices expand, the service provider world becomes more complex. When it's time for providers to expand regional capabilities and service offerings, it's important they consider the business case and make the right decisions to remain competitive in their current market and potential new markets.

— Brent Mello, Vice President, Origination & Messaging Services,

About the Author(s)

Brent Mello

Brent Mello, Vice President of Origination and Messaging Products at, is responsible for the strategy, growth, P&L management, and execution for these product lines. Mello brings more than 15 years of industry experience and has held leadership positions at both Level 3 and IntelePeer, leading strategy, business development, voice peering, direct interconnection, and special access cost management

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