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A Brief History of Telecoms in the United States: Understanding ILECs and CLECs

12 June 2023
Melanie Gomersall

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The telecommunications sector in the United States has witnessed a compelling evolution over the last century, beginning with the birth of the Bell Telephone Company in 1877, now known as AT&T.

A Brief History of Telecoms in the United States: Understanding ILECs and CLECs

The Emergence of Big Telecom

AT&T quickly established a near-monopoly in the US telecom market, initially focusing on long-distance services. However, as technology evolved, the company expanded its footprint into local markets. By the mid-20th century, AT&T’s Bell System encompassed many regional operating companies providing local service, collectively known as the ‘Baby Bells.’

The Breakup of AT&T and the Rise of ILECs

In 1984, following an anti-trust lawsuit against AT&T, the company was mandated to divest its local exchange services. This led to the breakup of AT&T into seven regional Bell Operating Companies (RBOCs) – ‘Baby Bells.’ These companies, now known as Incumbent Local Exchange Carriers (ILECs), were given control over the local telephone lines and infrastructure in their respective regions.

ILECs, such as Verizon and CenturyLink, primarily provide local telephone services, although many have diversified into other telecom areas like broadband and mobile services. They operate vast networks of telephone lines, switches, and other infrastructure, offering services to both residential and business customers.

The Emergence of CLECs

The Telecommunications Act of 1996 introduced significant reforms to encourage competition. It allowed new entrants, known as Competitive Local Exchange Carriers (CLECs), to compete with ILECs. CLECs could either build their own telecom infrastructure or lease network elements from ILECs, offering customers an alternative for local telephone services.

CLECs, such as XO Communications and EarthLink, have played a critical role in fostering competition, leading to improved service quality and lower prices for consumers. Over the years, many CLECs have also expanded their services to include broadband, VoIP, and other telecom services.


ILECs and CLECs: The Interplay

While ILECs and CLECs operate independently, their interaction is integral to the functioning of the US telecom market. CLECs often rely on ILECs’ infrastructure, renting parts of their network to provide services. This cooperation, although sometimes contentious, has resulted in greater competition and choice for consumers.

Looking at Tomorrow: The Journey Continues

From the inception of the Bell Telephone Company to the breakup of AT&T and the rise of ILECs and CLECs, the history of telecoms in the US reflects a journey of constant evolution. As new technologies continue to emerge, it’s certain that the landscape of ILECs and CLECs will further evolve, shaping the future of the telecom sector in the US.