This doesn't mean the data CLEC model is dead, Davis adds. Instead of becoming national players trying to hit as many customers as possible, data CLECs will sell multiple services to clients in particular regions. These services would include voice, VPN, hosting and security.
Adam Guglielmo, an analyst with consultancy TeleChoice, says Jato had deployed gear in about 400 central offices across the U.S. and was preparing to offer nationwide service.
"My guess is they're not getting as many customers as they want and they're trying to refocus," he says.
The smaller DSL companies that seem to be having the most success are retail-focused, rather than wholesalers, Guglielmo notes.
Ultimately, Guglielmo says, DSL providers can't succeed by offering only high-speed connectivity.
"To start to gain revenue, they need to offer additional services," he says.