Competitive Local Exchange Carriers (CLEC) Market Segment Forecast

A telephone company which provides services such as telephone, fax, and other to a local area is known as local exchange carrier. Conventionally, in the U.S. prior to “Telecommunications Act 1996”, incumbent local exchange carriers (ILEC) offered calling services in a specific area. In order to enhance competition among the local phone and long-distance service providers, competitive local exchange carriers (CLEC) evolved. CLEC is a telephone company which operates in ILEC’s territory, offering the customers an alternative to the local phone service providers. CLECs are the local area companies which purchase lines and switching space from the ILECs, resulting in better services as compared to ILECs.

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Basically, CLEC is an organization (telecom service provider) that offers telephone services in the U.S. region apart from the traditional service providers. After the implementation of “Telecommunication Act, 1996”, CLEC were allowed to offer data and voice services to the customers through wireless and landline connections. However, depending on the type of service being offered which includes digital subscriber line (DSL) or wireless, wired, and others, the CLEC service type differs accordingly. A data local exchange carrier (DLEC) is a CLEC which provides DSL services. These services are further reseller to the internet service providers after leased from local phone providers. CLECs offer better service in terms of bandwidth and speed as compared to ILECs and are hence, preferred for local data transmission. Although, CLECs need to meet certain regulations which differ according to the rules and regulations set by respective country’s telecom industry. The CLEC infrastructure is similar to ILEC but a switching network which meets the state regulations is required. CLEC service providers’ sustenance in the market is due to the cost savings achieved as compared to ILECs in terms of fax and telephone services delivery to the end-customers.

The demand for CLEC in the market is driven by factors such as deployment of advanced telecommunication services, increased bandwidth, and cost-effective tariff plans for the customers in a specific area. However, reluctance of service providers to expand the network coverage is a key factor hindering the market growth. This is due to the high infrastructure requirement which will increase the initial investment for deployment of CLEC exchange. In addition, new players entering the CLEC market need to comply with the regulations set by the government. Furthermore, development of CLEC market would depend on the growth of technologies such as (DSL), wireless local multipoint distribution service (LMDS), and fiber optical network technologies.

The CLEC market is segmented on the basis of various parameters which include connections type, and connection access technology. Further on the basis of connections type, classification is done as end-user switched access line and VoIP subscriptions. These connections require technologies such as coaxial cable, copper local loop, fiber to the premises (FTTP), and terrestrial fixed wireless in order to transmit the data from one to the other end. Companies across the globe are developing solutions to offer better telephone (calling) and other services, to their customers.

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