Competitive Local Exchange Carriers

From the 1880's to the late 1980's, the American Telephone and Telegraph Company (AT&T), was providing local, long-distance and international telephone service to almost all residents of the United States of America under a regulated monopoly arrangement, which allowed a certain amount of guaranteed profit in return for an obligation to serve all areas. Following a lengthy court proceeding, AT&T agreed to break up into 8 companies: 7 regional companies that would provide local telephone service (the regional Bell companies), and a long-distance company (AT&T), which would be de-regulated and subject to competition. In the technical and legal discussions, these companies are known as Local Exchange Carriers (LEC's) and Inter-Exchange Carriers (IXC's) respectively.

We are now entering a new phase of re-structuring, under which new companies are invited to compete in the local service areas, subject to rules set forth in the Telecommunications Act of 1996. This transition is very complicated, and all parties are trying to "tweak" the interpretation of the rules to gain a unique advantage.

The local telephone system represents a very large investment. It is impractical to expect that several new companies each would lay new cables to all residential areas. In order to allow new companies to start gradually, the rules

One interesting consequence of these rules has been that it is profitable to be a specialized LEC serving a class of customers that receive a lot of calls but make no calls of their own. Internet Service Providers. Three years ago, the telephone companies did not want ISPs as customers, and tried to charge them unreasobaly high rates. Today, some CLECs are offering ISPs to install free lines in order to collect the call termination fees.

This website discusses these issues in some detail.

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Revision 1.1  1999/08/13 06:29:00  lars
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