What Is a Local Exchange Carrier (LEC) in Telecom?
Colby Ezell / Telecom / April 28, 2022
When running your own business, there are hundreds of moving parts, and industry-specific jargon makes confusion inevitable. Unless you’re working in the telecommunications industry, it’s probably hard for you to decipher what’s happening on your telephone bill every month — and it’s likely costing you money.
The first step towards a better understanding of your telecommunication bill is figuring out the technical terminology. So, to get started, let’s take a look into the world of local exchange carriers, or LECs. Keep reading to learn what is a LEC in telecom, the history behind them, and why they’re essential for business owners.
A local exchange carrier (LEC) is the local landline telephone company that is responsible for a number of telecom services for both individuals and businesses within a specific region, such as managing local telephone lines and switches.
LECs are one of two categories of wireline telecommunication companies. While LECs handle local calls, an IXC, or interchange carrier, handles long-distance calls. When a phone call originates and terminates in the same local access and transport area (LATA), is it considered a local call. LECs also are responsible for connecting long-distance calls that originate or terminate within their area.
Initially, a LEC was responsible for making the connection from its customers to the local exchange and then routing to the central office or an IXC. With telecom tech constantly evolving, so has wireline structure and terminology. By understanding the history of LECs, we can better understand how it affects us today.
Understanding the specifics regarding local exchange carriers has only gotten more confusing with time, as legislation, mergers, and new technology put the industry in a constant state of change. In order to understand the whole picture, we must go back to the 1800s, when Alexander Graham Bell patented the first telephone.
Bell created his company, which after a series of splits and purchases, came to be known as AT&T. His company enjoyed a monopoly on telecommunications until 1982, consisting of the first long-distance network plus seven regional holding companies that handled local exchanges.
After a successful anti-trust suit against it, AT&T was forced to break apart into seven independent companies. These first LECs were known as Regional Bell Operating Companies or Baby Bells. Continued pressure for competition and options in the telecommunications industry eventually led to the Telecommunications Act of 1996.
With this act came the distinction between two types of LECs — Incumbent Local Exchange Carriers (ILECs) and Competitive Local Exchange Carriers (CLECs). The ILECs refer to the phone companies that held the monopoly on local service at the time the act was passed. CLECs are the new companies that were able to enter into competition thanks to relaxed regulations. The act required these existing carriers to lease their lines and exchanges to new, smaller carriers.
The specific functions vary depending on whether a local exchange carrier is a CLEC or ILEC, but there are primary duties that all LECs have.
For starters, a LEC cannot prohibit the resale of its telecom services nor practice discriminatory conditions. They must also allow access to facilities and rights-of-way to other competing telecommunication providers. On top of that, a LEC must establish arrangements for reciprocal compensation for the transport and termination of telecommunications.
LECs are responsible for managing calls within a region, but they cannot use their position to hinder other competition providers. They operate with the duty to provide dialing parity to all providers without delay. Assistance with porting a phone number is also required, meaning you can switch your service provider but keep the same number.
If your business operates using a landline and makes or receives frequent calls from the area, then you are already working with a LEC. However, in the past ten years, landlines have been disappearing from homes across the country as people become more reliant on cell service. But is ditching your business landline the next step?
There are many logical reasons why your business should hold onto its landline:
Of course, there are always two sides to every story. Many believe that landlines are on their way out. As cellular networks become stronger and more widely available, cell service could now be considered more reliable than landlines.
The complicated system of ILECs, CLECs, IXCs, and LATAs can make your head spin. It could be a full-time job to comb through your telecom bill each month and figure out exactly where your business’s money is going. It’s incredibly easy to overlook overcharges and errors without a solid understanding of how these service providers operate and invoice.
By allowing P3 to run a telecom expense audit and take a look at your current providers, we can decipher where you’re overspending and how we can save you money. Whether we are fighting for refunds or negotiating new service contracts, we typically save our clients an average of 15-30 percent on telecom overcharges.
What was originally a simple term for your local telephone provider, the idea of a local exchange carrier has changed over the years as technology advances. We can now categorize LECs as either incumbent or competitive.
The history of local exchange carriers is not only fascinating, but it shows us how legislation and companies alike have continued to evolve over the years to keep up with the current tech.
What do you think the future looks like for LECs? Are wirelines on their way out, or will there always be a place for them in business?
