Competitive Local Exchange Carrier

What is a competitive local exchange carrier?

A competitive local exchange carrier (CLEC) is a telecommunications service provider operating in the same region where a local exchange carrier (​LEC) operates. It serves as competition for the LEC. 

How did local exchange carriers and their variants arise? 

Historical context will shed light on how LECs operate and how their variations, ILECs and CLECs, originated. After Alexander Graham Bell invented the telephone in the late 1800s and began the Bell company, the organization held a monopoly on the telecommunications market in the United States. 

In 1982, an antitrust suit broke the business up into independent parts known under names such as local exchange carriers, Regional Bell Operating Companies (RBOCs), and “Baby Bells.” Each would serve an individual region, a local access and transport area (LATA). 

The distinction between Incumbent Local Exchange Carriers (ILECs) and Competitive Local Exchange Carriers (CLECs) arose in 1996 with the passing of the Telecommunications Act. Some LECs were “incumbent” because they were a direct result of the Bell schism, but the Act added new LECs operating as competition for the ILECs. These new businesses, which received legal support to ensure they remained competitive, became CLECs. Approximately 15,000 in total started up because of the Act. 

The United States Federal Communications Commission (FCC) established a regulatory framework to maintain market competition. Before then, consumers suffered from market stagnation due to lack of options and the telecommunications monopoly. 

The majority of ILECs run under AT&T, which the Bell company rebranded to at one point. Many people use the terms LEC and ILEC interchangeably. 

How do ILECs and CLECs compare? 

Because ILECs are the original phone companies, they are “tier 1 suppliers” of telephony services. CLECs lease out the equipment to customers and function as “tier 2 suppliers” or resellers. 

CLECs are typically much smaller than ILECs and don’t have direct ownership of the local PSTN system. CLECs also cater mainly to business customers, whereas ILECs often work with both residential and commercial clients. 

Are there potential advantages to working with CLECs? 

CLECs started off as part of the government’s attempt to make telecommunications more competitive and to give consumers more options. By law, they have access to the equipment of the ILEC to provide these services. The result is that CLECs are a viable alternative to the region’s LEC for several reasons. 

• Pricing or feature set. Compared to a region’s “standard” local exchange carrier, a CLEC might offer more competitive pricing or extra features like fiber networks or VoIP cloud services. 
• Unbundled services. A CLEC may resell unbundled network services so end users have to purchase only the services they need, saving money. 
• Faster customer support. CLECs are organizations serving smaller client bases. They can achieve a faster response time for customer service as a result, and businesses in need of quick solutions to minor issues should look to CLECs. 
• PSTN compatibility. CLECs retain interconnectivity with the Public Switched Telephone Network (PSTN), enabling calling capabilities with the world’s phones. 
• DSL support. Users looking for digital subscriber line (DSL) services to transfer digital data over phone lines must look to a data local exchange carrier (DLEC), a variant of CLEC. A DLEC leases ILEC lines for use with Internet service providers. 

Many CLECs offer more competitive pricing than their regional counterparts and may be a more attractive option for businesses compared to ILECs. 

Are there potential drawbacks to CLECs? 

The fact that competitive local exchange carriers do not directly own the PSTN results in several potential drawbacks for businesses. 

• Direct ownership. Purchasing from an ILEC results in direct ownership which cuts out the middleman, whereas a CLEC functions as a tier 2 vendor. Should there be any service interruptions, it may be more challenging to take control of the network for maintenance or repairs. An ILEC offers direct communication with the company for technical support. However, pricing is typically more competitive from a CLEC. 
• Feature set. While CLECs often have exclusive features, other functions may still be specific to ILECs. It’s worth checking with your service providers. 
• Service coverage. The smaller size of a competitive local exchange carrier results in a smaller area of coverage for service. Rural areas or places with limited populations may not have CLECs operating in their borders. 

CLECs remain a viable option for business users, providing more options in the market for more choice. 

How does an organization begin using a competitive local exchange carrier? 

To mitigate the risks of choosing a CLEC over the incumbent local exchange carrier, companies can look to these best practices when picking up new telephony services. 

Do a test run first. Start by moving a limited amount of business activity to the CLEC and expand from there if no issues arise. Entrust the CLEC with less critical communications first and go up from there as confidence builds. You can also implement CLEC service as a redundancy alongside ILEC service at first. 

And don’t forget to negotiate better agreements for your business telephony. The presence of competitors allows you to leverage more in this regard. Should an ILEC cause problems or charge too much, bring up the fact that you have alternatives. 

What are the benefits of CLECs? 

• Increased competition: CLECs introduce competition, leading to better service quality and lower prices. 
• Choice and flexibility: CLECs offer alternatives, giving consumers and businesses more options. 
• Innovation and technological advancement: CLECs bring new services and advanced technologies to the market. 
• Improved customer service: CLECs prioritize customer satisfaction with personalized attention and prompt support. 
• Expanded coverage: CLECs extend services to underserved areas, including rural communities. 
• Stimulating economic growth: CLECs drive investment, job creation, and economic development in the telecommunications sector. 

How does Sinch work with CLECs? 

Sinch enables businesses to connect with their customers through voice, video, messaging, and verification services. At Sinch, we work with Competitive Local Exchange Carriers (CLECs) to provide ​local phone numbers​ and network access in different regions.