Competitive Local Exchange Carrier (CLEC)

A CLEC is a telephone company that competes with an incumbent local exchange carrier (ILEC) such as Verizon, or AT&T. A CLEC is able to compete with an ILEC by providing its own network and switching for both local and long distance phone service. As a stipulation of the Telecommunications Act of 1996, the goal was to promote competition among phone service providers who had CLEC status. Another option open to CLECs to promote competition is the resale strategy. The Act states that any telecommunications services that ILECs offer at retail, must be offered to CLECs at a wholesale discount. This saves the CLEC from having to invest in switches, fiber optic transmission facilities, or collocation arrangements.