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Essentially a CLEC can piggyback its equipment to any local telephone company. In plainer English, a Competitive Local Exchange Carrier is in direct competition with a Local Exchange Carrier (LEC) or to put in it simply, the local telephone company. The Telecommunications Act of 1996 mandated that the local telephone companies were to be shared space with their competitors.

The space was to be sold to the CLECs. The CLEC has the option to store their equipment in the space they just purchased from the LEC. Or they could choose utilize the LEC’s equipment that is already in service. If the CLEC chooses to house their servers and other networking equipment at the local telephone company, they have the right to have 24 hour access to the equipment.

If they choose to use the equipment at the LEC than they can only monitor their network remotely: however the LEC is responsible for not only their services but those of its direct competitor. Any new technology or a change in configurations the LEC must first notify the CLEC prior to doing any work.

For the consumer, a CLEC can often lower rates simply because a Competitive Local Exchange Carrier has a lower overhead. A Competitive Local Exchange Carrier can buy unbundled services from a LEC at a wholesale rate. Unbundled services are a reference to the fact that a CLEC does not have to buy all services; they can pick and choose only the services that they need. The LEC is mandated to sell any piece of hardware at wholesale prices as well.

Surprisingly, the CLEC only hold about 18% of the business, even after all these advantages. The LEC did not make it easy for any CLEC to come in and use its network. They appealed the Telecommunications Act of 1996 stating that the main body of the act was unconstitutional. By tying up the CLEC in court and not allowing them access to their network, many of the starting CLECs had to declare bankruptcy.

There are some extremely successful Competitive Local Exchange Carriers out there but they have stored their equipment in their own buildings and do not rely on the LEC unless they have no other feasible way to run their business.

What will be interesting to watch is how this act will come into play as the popularity of fiber optics grows. By law the LEC is only obligated to share their copper wiring. Fiber optics is high speed data traveling down glass. The LEC might seem have the upper hand after all, but weighing the differences carefully is the only way to go.