ILEC is an acronym that stands for Incumbent Local Exchange Carrier, while CLEC is an acronym that stands for Competitive Local Exchange Carrier. From these acronyms it is not difficult to glean the difference between the two company types. The ILEC and the CLEC concepts came about after the passage of the Telecommunications Act of 1996, legislation that overhauled United States Telecommunications law. The act allowed for essentially unrestricted access to the telecommunications business. According to the FCC’s website, “[t] he goal of this new law is to let anyone enter any communications business — to let any communications business compete in any market against any other.” Note the word communications instead of telecommunications. The act gives broadcasters and cable companies access to telecommunication networks, thus encouraging cable companies to provide local and long distance business phone service as well as high-speed business data service.
The ILEC is a company that existed at the same time as AT&T’s breakup. The breakup, which took effect on January 1st, 1984, left the responsibility of local phone service to the Regional Bell Operating Companies (RBOCs) and the Independent Telephone Companies (ITCs). Both provided their services in previously specified geographic areas. In addition to providing local phone service, they are facilities-based companies that own local loops. The CLECs are companies that provide alternative services by competing with the ILEC. By doing so its customers benefit from the increased competition as it provides more choices and lower prices.
So, it is clear CLECs compete with ILECS. Don’t let “Local” in CLEC mislead you. CLECs are not just local phone companies. Many national companies operate as CLECS. CLECs frequently provide better customer service and better pricing than ILECs.
CLECs vary. Some attempt to provide the same services that an ILEC does, but others may choose to specialize. They may not compete for business phone service, but may compete for T1 or ISDN business. If you are considering VoIP, for example, consider the services of a CLEC. Unencumbered by regulation, CLECs choose the more efficient areas in which to do business. These tend to be large cities and their surrounding metropolitan communities. The number of CLECs in any given metro area is not controlled, so this gives rise to the customer having more CLECs to choose from. If your business is in a small or rural area, you may have to look elsewhere for a competitive service.
As recently as fifteen years ago, business phone service customers had options for long distance voice and data transmission. Competition for calls from one local area to another was fierce. Business phone service customers, however, had fewer choices for local service. As a result, voice transmission within the local long distance area was more expensive, on a per minute basis, than a call that crossed many states.
What this means is that a CLEC may have lower rates because a CLEC has fewer expenses. A CLEC can selectively purchase its services at wholesale prices. This is known as buying services unbundled. As mentioned above, the CLEC may not choose to compete for certain segments of the market. If the CLEC is not interested in selling voice services, it declines to sell a bundled package of services. So if you are looking for competitive pricing for a select service such as business internet service, T1, ISDN, VoIP, etc, a CLEC may be the company to consider. The only way to find out is to ask. Best Choice Technology, LLC works with numerous carriers and many resellers. We will give your business a free comparison. What is the worst that can happen? You find out that you are spending more each month than you need to. Something we may be able to change.