at would face competition from other resellers of R-Net's services. The wholesale discount was only 5%. (Both entities, of course, were subsidiaries of holding company Frontier Corp., SO if the discount were a bit low, the money would remain in the same stockholders' hands.) Although several companies did set up shop as resellers, they had difficulty mak- ing a go of it with such a narrow margin. They also found that the most likely customers to sign up for resale were those who were denied credit by the incum- bents [2]. Nonetheless, resale of incumbent local exchange carrier tariffed services was specifically called out in the Telecom Act. The Act essentially defined two types of CLECs-resellers and facilities-based providers. Most states created separate certification programs for the two types of CLECs, with many early applicants only authorized for resale, which appeared to many CLECs, for a time, to be a viable business model. Resellers only dealt in ILEC-tariffed services, getting a discount based on the avoided costs of marketing, billing, and collec- tions. Some large-scale reseller CLECs such as USN Corp., which had a costly nationwide rollout shortly after the Telecom Act took effect, failed quite quickly; there was little net profit in essentially acting as commissioned sales agents for the incumbents. All other CLECs were deemed facilities-based. That category ranged the gamut, from CAPs and cable companies whose networks were merely interconnected to the ILECs', to UNE Platform providers whose networks were physically the same as resale but which purchased their wholesale services at cost-based rates, and a range of options in between those extremes. CLECs Winning Strategies Are Met by Rule Changes State Commissions Had to Administer Federal Rules The Telecom Act created a most unusual mix of state and federal authority. It set uniform national standards for at least some aspects of competition policy but left the administration of them to the state utility regulatory commissions. This created a hig