Is There a CLEC in Your Future?

By Peter DeHaan

Peter DeHaan, Publisher and Editor of Connections MagazineCLECs, or Competitive Local Exchange Carriers, are local, regional, or even national telephone companies which offer an alternative to the traditional phone company. Generally they purport to provide better customer service, be more responsive, and charge less then the traditional phone company or ILEC (Incumbent Local Exchange Carrier). CLECs fall into three main categories: resellers, agents, and facility-based.

Resellers do not own their own telephone switching equipment but buy services from another phone company, at wholesale prices, and resell them at or below the retail price. Being a reseller allows a company to expand quickly into a market, as there are no capital requirements for equipment. However, they are also at the mercy of their supplier in terms of installation, repairs, and cost. Resellers generally match the geographic area of their supplier.

Agents are companies who form a business relationship with a phone company to sell their telecommunication services. For example, Chuck Boyce, a frequent advertiser in Connections Magazine, is an authorized agent for Focal. (He can be reached at 888-563-0040.)

The line of distinction between an agent and reseller is often blurred.  In general, an agent is paid a fee (be it a commission, residual, or fixed amount) to represent a phone company in a certain geographic area or to a specific industry, whereas resellers buy phone services at wholesale, mark them up, and resell them for a profit.

Contrasted to resellers are facilities-based phone companies. As their name implies, facilities-based carriers, have bought and installed their own equipment, in their own facility, which they use to service their customers. Unlike ILECs, which are mandated to provide service to everyone in a large geographic region, facilities-based CLECs select smaller and more profitable areas in which to conduct business. Generally these are larger cities and metropolitan areas. As such, larger markets often have the benefit of several CLECs to select from, whereas smaller markets and rural areas may have none. Also, be aware that even though a CLEC may indicate that they provide service in a particular state, it is most likely that they only do so for select markets within that state.

CLECs generally provide the same types of service that the ILECs do. However, some elect to be access providers. Access providers focus on providing high-capacity trunks (such as T1 or ISDN) for companies with high usage requirements, such as call centers. Often, high-speed Internet access can be included. Access providers typically do not provide standard phone service. Another twist is that this service could be, but doesn’t have to be, VoIP (Voice over Internet Protocol). Depending on who you talk to, VoIP is either the next big thing or a curious anomaly. I believe that VoIP will continue to become more viable, reliable, and pervasive. As such, it will change telecommunications as we know it.

With the level of frustration that telecommunication users have towards their providers, reaching hereto unheard of heights, there is increasing interest and demand for alternatives. While choices for long distance have been available for years, variety for local service has been far more limited. To investigate the options, possibly saving money and reducing frustrations, the first step is to see what might be available in your area. To do so, look in your yellow pages for local options or start by consulting the Competitive Local Exchange Carriers chart.


Terms and Acronyms

The telecommunications industry is riddled with acronyms and terms that can make the uninitiated tremble. Although it would be nice if telephone company personal would avoid using insider terms and slang, they do not. So to level the playing field, here is a primer to help you keep up.

Access Provider: An access provider is a local phone company that provides high-capacity trunks (such as T1 or ISDN) for companies with high usage requirements, such as call centers. Often, high-speed Internet access can be included. This service could be, but doesn’t have to be VoIP (Voice over Internet Protocol). Access providers typically do not provide standard phone service (also known as POTS).

Agent: Among other things, an agent is a company that is an authorized distributor for another phone company. Typically an agent is a single point of contact for the end-user. The benefits of using an agent can be lower cost and/or better customer service. Some agents represent only one phone company, whereas others have made arrangements with multiple companies (this is more common for long distance service). Contrast this to Facilities-based Carrier and Reseller.

CAP (Competitive Access Provider): Essentially this is an alternate name for a CLEC (Competitive Local Exchange Carrier).

CLEC (Competitive Local Exchange Carrier): This term describes a phone company that competes against the traditional, or incumbent, phone company. Contrast CLECs to ILEC (Incumbent Local Exchange Carrier).

CO (Central Office): A central office is a site where a facilities-based phone company has installed their equipment or “switch.”

Facilities-Based Carrier: This term describes a phone company that installs their own equipment (a phone “switch”) to serve their customers. Contrast this to an Agent and a Reseller.

ILEC (Incumbent Local Exchange Carrier): The initial list, circa 1984, included the seven RBOCs and GTE. Because of consolidation and mergers, there are now there are four ILECs: SBC, Qwest, Bell Atlantic, and Verizon. See RBOC (Regional Bell Operating Company).

LEC (Local Exchange Carrier): An LEC is any company that provides local phone service, which includes both ILECs (Incumbent Local Exchange Carriers) and CLECs (Competitive Local Exchange Carriers).

POTS (Plain Old Telephone Service): This describes a regular phone line with standard dial-tone.

RBOC (Regional Bell Operating Company): Initially there were seven (as a result of the divestiture of AT&T in 1984). Although they are different in their original meaning, the term RBOC is now often used interchangeably with ILEC (Incumbent Local Exchange Carrier).

Reseller: A telephone company that does not own their own equipment but buys services from another phone company, typically an ILEC, at wholesale prices and resells them at or below the retail price of the ILEC. Contrast this to an Agent and a Facilities-based Carrier.

Switch: A term that refers to equipment that routes or “switches” phone calls. Both the phone company and businesses, such as call centers, can have a phone switch.

Telco: Slang for Telephone Company.

VoIP (Voice of IP or Voice over Internet Protocol): Audio phone signals that are digitized and sent as data packets over a network or the Internet. Some experts predict that all phone service will migrate to VoIP in the future, while others claim it will never be robust enough to become widely accepted.

Peter DeHaan PhD is the publisher and editor-in-chief of Connections Magazine and a passionate wordsmith. Connect with him on his personal blogs, social media sites, and newsletter, all accessible from peterdehaan.com.

[From Connection MagazineMarch 2004]

One thought on “Is There a CLEC in Your Future?

  1. Pingback: Connections Magazine: The Mar 2004 Issue | Connections Magazine

Leave a Reply