A
Competitive Local Exchange Carrier (
CLEC), in the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
, is a telecommunications provider company (sometimes called a "
carrierA common carrier is a business that transports people, goods, or services and offers its services to the general public under license or authority provided by a regulatory body. A common carrier holds itself out to provide service to the general public without discrimination for the "public...
") that competes with other, already established carriers (generally the
incumbent local exchange carrierAn ILEC, short for incumbent local exchange carrier, is a local telephone company in the United States that was in existence at the time of the break up of AT&T into the Regional Bell Operating Companies , also known as the "Baby Bells." The ILEC is the former Bell System or Independent Telephone...
(ILEC)).
Local exchange carrierLocal Exchange Carrier is a regulatory term in telecommunications for the local telephone company.In the United States, wireline telephone companies are divided into two large categories: long distance and local...
s (LECs) are divided into incumbent (ILECs) and competitive (CLECs). The ILECs are usually the original,
monopolyIn economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it...
LEC in a given area, and receive different regulatory treatment from the newer CLECs.
A
Competitive Local Exchange Carrier (
CLEC), in the
United StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
, is a telecommunications provider company (sometimes called a "
carrierA common carrier is a business that transports people, goods, or services and offers its services to the general public under license or authority provided by a regulatory body. A common carrier holds itself out to provide service to the general public without discrimination for the "public...
") that competes with other, already established carriers (generally the
incumbent local exchange carrierAn ILEC, short for incumbent local exchange carrier, is a local telephone company in the United States that was in existence at the time of the break up of AT&T into the Regional Bell Operating Companies , also known as the "Baby Bells." The ILEC is the former Bell System or Independent Telephone...
(ILEC)).
Local exchange carrierLocal Exchange Carrier is a regulatory term in telecommunications for the local telephone company.In the United States, wireline telephone companies are divided into two large categories: long distance and local...
s (LECs) are divided into incumbent (ILECs) and competitive (CLECs). The ILECs are usually the original,
monopolyIn economics, a monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it...
LEC in a given area, and receive different regulatory treatment from the newer CLECs. A Data Local Exchange Carrier (DLEC) is a CLEC that specializes in DSL services by leasing lines from the ILEC and reselling them to
Internet Service ProviderAn Internet service provider is a company that offers its customers access to the Internet...
s (ISPs).
CLECs evolved from the Competitive Access Providers (CAPs) that began to offer private line and special access services in competition with the ILECs beginning in 1985. The CAPs (such as
Teleport Communications GroupTeleport Communications Group was the first Competitive local exchange carrier in the U.S. First formed in 1985, it competed with the existing telephone companies to provide dial tone and related services in the largest U.S. markets. The success of TCG and other CLECs demonstrated that...
(TCG) and
Metropolitan Fiber SystemsMetropolitan Fiber Systems Inc, later known as MFS Communications Company, was a last mile provider of business grade telecommunication products such as long distance, and Internet access through its own fiber rings in major central business districts throughout North America and Europe...
(MFS)) deployed
fiber opticAn optical fiber is a glass or plastic fiber that carries light along its length. Fiber optics is the overlap of applied science and engineering concerned with the design and application of optical fibers...
systems in the central business districts of the largest US cities (New York, Chicago, Boston, etc). A number of state
public utility commissionA Utilities commission, Utility Regulatory Commission , Public Utilities Commission or Public Service Commission is a governing body that regulates the rates and services of a public utility...
s, particularly New York, Illinois and Massachusetts, encouraged this competition. By the early 1990s, the CAPs began to install switches in their fiber systems. Initially, they offered a "shared PBX" service with these switches and interconnected with the ILECs as end-users rather than as co-carriers. However, the New York Public Service Commission authorized the nation's first CLEC when it required the
New York Telephone Co.The New York Telephone Company was organized in 1896, taking over the New York City operations of the American Bell Telephone Company.-Predecessor companies:...
(the ILEC) to allow
Teleport Communications GroupTeleport Communications Group was the first Competitive local exchange carrier in the U.S. First formed in 1985, it competed with the existing telephone companies to provide dial tone and related services in the largest U.S. markets. The success of TCG and other CLECs demonstrated that...
's switches in New York City to connect as peers. Other States followed New York's lead so that by the mid-1990s most of the large states had authorized local exchange competition.
The
Telecommunications Act of 1996The Telecommunications Act of 1996 was the first major overhaul of United States telecommunications law in nearly 62 years, amending the Communications Act of 1934.-Prior regime:...
incorporated the successful results of the state-by-state authorization process by creating a uniform national law to allow local exchange competition. This had the
unintended consequenceUnintended consequences are outcomes that are not the results originally intended by a particular action. The unintended results may be foreseen or unforeseen, but they should be the logical or likely results of the action...
of stimulating the formation of many more CLECs than the markets could bear. The formation of these CLECs, with easy financing from equipment vendors and
IPOAn initial public stock offering referred to simply as an "offering" or "flotation," is when a company issues common stock or shares to the public for the first time...
s, was a significant contributor to the "telecom bubble" of the late 1990s which then turned into the "bust" of 2001-2002.
The original CAP/CLECs spent the decade from 1985-1995 deploying their own fiber optics networks and digital switches so that their only reliance on the ILEC was leasing some DS-1 loops to locations not served by the CLEC's own fiber and interconnecting the CLEC's switches with the ILECs' on a peer-to-peer basis. While not trivial dependencies, the original "facilities-based" CLECs such as TCG and MFS were beginning to become profitable by the time the Telecom Act was adopted. In contrast, many CLECs formed in the post-Telecom Act "bubble" operated using the unbundled Network Element Platform (UNE-P), in which they resold the ILECs' service by leasing the underlying copper and port space on the ILEC's local switch. This greater dependency on the ILECs made these "UNE-P CLECs" extremely vulnerable to changes in the UNE-P rules.
In the meantime, the largest facilities-based CLECs, MFS and TCG, had IPOs and then were acquired by Worldcom and AT&T, respectively, in 1996 and 1998 as those long distance companies prepared to defend their business customers from the Regional Bell Operating Companies' (RBOC) incipient entry into the long distance business.
With the Triennial Review in
August 2003August 2003 : January - February - March - April - May - June - July - August - September - October - November - December-August 1, 2003 :...
, the FCC began to rewrite a large portion of the rules implemented by the Telecommunications Act of 1996. One alternative to the UNE-P is unbundled network element loop (UNE-L), in which the CLEC has access to or operates their own local switch. The underlying copper (loop) that runs to your house is then leased by the CLEC, and cross-connected to the CLEC's switch. Both UNE-P and UNE-L have their own unique advantages and disadvantages. Other CLECs bypass the ILEC's network entirely, using their own facilities. These facility-based LECs include cable companies offering phone service over
coaxial cableCoaxial cable, or coax, is an electrical cable with an inner conductor surrounded by a tubular insulating layer typically of a flexible material with a high dielectric constant, all of which are surrounded by a conductive layer , and finally covered with a thin insulating layer on the outside...
.
In
October 2004October 2004 : January - February - March - April - May - June - July - August - September - October - November - December
See also: October 2004 in sports-Events:...
, the U.S. Supreme Court allowed a lower court's ruling to stand (by refusing to hear the
appealIn law, an appeal is a process for requesting a formal change to an official decision.The specific procedures for appealing, including even whether there is a right of appeal from a particular type of decision, can vary greatly from country to country...
) that
voidedIn law, void means of no legal effect. An action, document or transaction which is void is of no legal effect whatsoever: an absolute nullity - the law treats it as if it had never existed or happened....
rules requiring ILECs to
leaseA lease is a contract conferring a right on one person to possess property belonging to another person to the exclusion of the owner landlord, and all others except with the invitation of the tenant. It is a rental agreement between landlord and tenant...
certain network elements (such as local switching or the high-frequency portion of the loop) at a cost-based regulated
wholesaleWholesaling, jobbing, or distributing the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services....
price to CLECs. The FCC agreed earlier in the year to rewrite rather than appeal the validity of the rules. In December, 2004, the FCC released another set of rules which phase out, over a year, all CLEC leasing of ILEC local switching, while preserving access to most copper
local loopIn telephony, the local loop is the physical link or circuit that connects from the demarcation point of the customer premises to the edge of the carrier or telecommunications service provider's network...
s and some interoffice facilities.
See also
- Liberalization
In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy...
- Oligopoly
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek oligoi 'few' and poleein 'to sell'. Because there are few sellers, each oligopolist is likely to be aware of the actions of the...
- Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
- Regional Bell operating company
The Regional Bell Operating Companies are the result of the U.S. Department of Justice antitrust suit against the former American Telephone & Telegraph Company -History:...
- Local loop unbundling
Local loop unbundling is the regulatory process of allowing multiple telecommunications operators to use connections from the telephone exchange's central office to the customer's premises...
External links
- FCC Carrier Search -- select "CAP/CLEC" under Principal Communications Type for a complete list of CLECs