Competitive Local Exchange Carrier (CLEC)
This glossary was last updated on Jan. 22, 2024.
What is a CLEC?
CLEC stands for Competitive Local Exchange Carrier.
CLECs are local voice service carriers that are authorized to interconnect their local network with the Public Switched Telephone Network (PSTN). Often, CLECs establish local network interconnections with Incumbent Local Exchange Carriers (ILECs) and/or other Local Exchange Carriers (LECs).
There are about 15,000 CLECs across the U.S., and they originated as part of the 1996 Telecommunications Act.
CLEC vs. ILEC
Local Exchange Carriers (LECs) are divided into 2 categories: Incumbents, and Competitive carriers.
An ILEC, or Incumbent Local Exchange Carrier, is a tier 1 carrier that owns the original telecommunications infrastructure. Think of an ILEC as the original owner of telecommunication lines, switching equipment, and other related infrastructure associated with the Local Exchange Carrier.
On the other hand, CLECs are tier-2 resellers. This includes AT&T, Bell South, and any other “baby bells” that held monopolies in various geographical areas before the introduction of the 1996 Telecom Act.
Since 1996, ILECS have been legally obligated to lease out to smaller regional, national, or long-distance competitive carriers, or CLECs.
How CLECs work: The local loop
The most well-known technology of CLECs was the “local loop,” also known as the “copper loop” or “last mile connection.”
The local loop is the local network termination point that is facilitated by switching substations operated by the ILEC and serving local area codes and exchanges in the PSTN. While we usually the “copper loop” with the analog public switched telephone network, the “last mile” can also describe DSL, ISDN, cable, fiber, or other digital services.
Traffic exchange on the PSTN is going between blocks of numbers that are managed by the North American Numbering Administration. There are over 6.1 billion different 10-digit combinations available in the US. Numbering resources can be managed and distributed by the ILECs, CLECs, and Interconnected VoIP service providers.
Currently, the vast majority of interconnection between CLECs and ILECs is via fiber optic connections and services offered are primarily digital services, like digital voice services.
A brief history of CLECs
The telephone network in the U.S. was originally established and maintained by a handful of large carriers. These carriers established a network of “substations” containing equipment to serve smaller areas, or “exchanges.” These are known as Local Exchanges, and until the industry was deregulated in 1996, these would have been operated by one of the “Baby Bells,” or by AT&T.
With the introduction of legal avenues to enable competitive carriers’ entry in 1996, many new regional, national, and long-distance carriers emerged and the FCC established a regulatory framework that required the larger carriers to lease their lines and exchanges to these newer carriers. The result was to provide more choices for consumers through more stringent regulations of telecommunications monopolies.
Benefits of CLECs
Access to Unbundled Network Services
Access to Unbundled Network Services (UNEs), like network switches, colocation, phone and fiber lines, and loops, was another requirement of the ‘96 Telecommunications Act.
ILEC operators have traditionally been required to offer these services for resale at a reasonable discount to possible CLECs. Resellers may choose from among the range of regulated services that may continue to be offered but only those services they need. Primary Rate Interfaces (PRIs), fiber line access, switching, etc.
Wholesale capabilities
Under the ‘96 Telecommunications Act, ILECs have been required to allow resellers to buy services and line access at a discounted rate that also allows the ILEC some margin. Any entity that obtains the approval of the applicable public service or utility commission is eligible to become a reseller. For long-distance carriers, approval must also be obtained from the FCC.
It should be noted that the ILECs have been hard at work, attempting to limit or eliminate the resale requirement, with some degree of success. Generally speaking, ILECs are only currently required to provide local loop (number termination) services, though some ILECs still provide switching and other services. A wider range of services can generally be acquired through other competitive carriers.
How many CLECs operate in the US?
Because of the opportunities presented to competitive carriers by the Telecommunications Act, initially, there was a boom in new local and long-distance carriers. In fact, it exceeded the capacity of existing ILECs. It is currently estimated that CLECs account for about 20 – 25% of the nations’ terminated telephone lines.
There are approximately 15,000 CLECs nationwide. While Verizon and AT&T do still offer a wide range of services to CLEC customers, other competitors have managed to secure a respectable market share by offering regional or national services, like CenturyLink, Windstream, and Frontier Communications. Companies like Cincinnati Bell and Hawaiian Telcom offer limited regional services. The bulk of CLECs serve business customers, while some CLECs, such as Magic Jack, have pursued the residential market with mixed success.
Guidelines/regulations surrounding CLECs
ILECs, like AT&T or the regional Bells, were required to sell any service they provided at retail cost to small competitors at a wholesale cost to allow for competitive entry into the local telecommunications market.
Sections 251–253 of the Telecommunications Act of 1996 “[sought] to foster competition in the local telephone market by requiring incumbent local exchange carriers (ILECs) to make their facilities available to competing local exchange carriers (CLECs).”[1]
Currently, big ILECs have consolidated their market share by restricting a lot of the access to their infrastructure and services that was originally required by the ‘96 Act., limiting their offerings to CLECs, and lobbying to end the leasing rule by 2021.
References
- National Telecommunications and Information Administration, THE TELECOMMUNICATIONS ACT OF 1996
CLEC FAQs
CLEC means Competitive Local Exchange Carrier.
An ILEC, or Incumbent Local Exchange Carrier is essentially the original owner of telecommunication lines, switching equipment, and other related infrastructure associated with the LEC. This would describe, for example, AT&T, Bell South, or any of the “baby bells” that held monopolies in various geographical areas prior to the introduction of the 1996 Telecom Act. Since 1996, ILECS have been legally obligated to lease out to smaller regional, national, or long distance competitive carriers. Those parts of the system are designated as a CLEC (Competitive Local Exchange Carriers).
CLEC operating approvals must be obtained by applicable state Public Service commissions, and the FCC, as necessary.
A facilities based CAP, or Competitive Access Provider is similar to a CLEC established, owned, and operated as a competitor to the Incumbent Exchange Carriers. CAPs provide their own access facilities infrastructure. Many established their own competitive local exchange facilities too, independent from the major ILEC carriers.
A non-facility based CLEC is a competing carrier who is leasing from one of the incumbent carriers, or even from another CLEC. A CLEC can establish a reseller relationship with an ILEC or a CAP.
