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.
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.
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?
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.