Understanding The Local Exchange Carriers

Telephone Companies

Local exchange carriers was a concept introduced to grow and expand the telecom business through competition by the US regulator. Since then, however, it has come a long way; today there are two categories of local exchange carriers or LECs: incumbents and competitors. These have come about as the telecom landscape has evolved and developed.

The very first concept of LEC was an offshoot of the US regulatory mandate to split the monolithic telephone company into local service providers and the long distance ones. The former was termed local exchange carrier and the latter was interexchange carrier. This initial differentiation split further into other classifications with time.

The LECs started gaining a lot of prominence and dominance in the regional market as they had the monopolistic ownership of the last mile. As a result, they could set the prices for the services and also kill the competition by over pricing the last mile leasing rates. As a result, there were some regulatory steps taken to eliminate this monopoly.

The original LECs came to be known as incumbent LECs or ILECs. They owned the last mile as well as the core. The other operator was the CLEC or competitive LEC who just owned their core network. They had to lease the last mile from the ILEC.

In the wireline market, the CLECs have gained a good foothold in the retail market. The competitive pricing and the ability to introduce newer technology has meant that retail customers have found their services very attractive. On the large enterprise side, though, price points are not the top reason for selecting a service provider, hence ILECs continue to dominate that market section.

In summary, the concept of LEC has quite a significance in the modern telecom industry. What started as a way to differentiate local and long distance calls today has helped shape telecom policies and regulations. With the definition and duties of ILECs and CLECs clearly defined, customers as well as service providers have a well-defined framework within which to request and deliver service.


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