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Is There a CLEC in Your Future?
By Peter DeHaan
March 2004
CLECs, 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.
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.
To read other articles written by
Peter DeHaan,
go to From
The Publisher or check out his blog,
Musings of Peter DeHaan. In addition to publishing Connections Magazine
and AnswerStat magazine (for
healthcare call centers), Peter
also publishes several websites, including
ArticleWeekly.com.
He may
be reached at 616-284-1305, dehaan@connectionsmagazine.com
or the Peter DeHaan
Publishing website.
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