One of the most common questions confronting businesses shopping for a telecom service is the difference between ILEC and CLEC. The answer to this question helps in decision-making regarding which service provider is most appropriate for a particular business.

What is ILEC & CLEC?

Starting at the very beginning, there are two types of telecom companies that utilize the Public Switched Telephone Network (PSTN). One is the Incumbent Local Exchange Carriers (ILECs) and the other one is Competitive Local Exchange Carriers (CLECs).

ILECs are also known as incumbents, tier-one providers, or phone companies, while CLECs are the phone company’s competitors; they’re tier two providers or resellers. For example, AT&T, CenturyLink, and Verizon are ILECs, while Windstream, TW Telecom, XO, Integra, and Telepacific are CLECs.

Below are some points of difference between ILEC and CLEC:

Size of the company:

It is evident that ILECs are more prominent companies that own the local PSTN –  from the local loops to the central offices and all the wiring in between.  While CLECs are smaller companies that lease local loops (access to end-users) and colocation space in the ILECs’ wire centers.

In some regions, the ILECs might not have a more significant presence and could be considered as CLECs; However, CLECs can never be as big as to be regarded as ILECs.

Customer base:

Another point of distinction is that ILECs cater to both residential and business customers, while CLECs primarily stick to servicing business customers.

With this understanding, there are some natural questions that any business would have while shopping for a Business phone and internet service from a CLEC provider. These indirectly also point to a situation why or why not ILEC could be a better option. Below are some common doubts forming the ILEC vs CLEC debate.

CLEC Challenges: Why ILEC Could Be A Better Option For Your Business

CLEC Challenges: Why ILEC Could Be A Better Option For Your Business

There are certain limitations to the CLECs, stemming from their lack of ownership of PSTN. These need to be considered in the context of the business requirements to make the right decisions.

Lack of end to end solutions:

CLECs don’t provide end-to-end solutions.  Because They resell a portion of the incumbents’ network, there’s potential for finger-pointing, should there be a service interruption. However, ILECs own the network, so they can provide end-to-end solutions without any intermediaries. Further, ILECs have greater control when it comes to service interruption due to ownership of the network.

Limited service areas:

CLECs limit their service offerings to larger, more metropolitan cities.  Some restrict their services to just a few states. ILEC’s, on the other hand, are required by law, to provide and maintain services in the entire nation. Therefore, the services in the rural areas are still provided by ILECs, where CLECs don’t operate.

Limited service offerings:

Most CLECs limit their service offerings to T1s and integrated T1s.  Some offer fiber and Ethernet, but none of them provide the comprehensive list of services that ILECs provide.

Limited experience:

They have limited expertise servicing the enterprise customer being relatively newer and smaller players in the market. However, as ILECs are legacy companies, they have a greater experience in providing services to  enterprise customers.

Therefore, if a business requires the same service provider in all its offices across a larger geographical area, CLEC is not the right choice. It should go with an ILEC. However, there are still a lot of benefits of choosing a CLEC.

CLEC Strengths: Why Pick CLEC Over ILEC?

CLEC Strengths: Why Pick CLEC Over ILEC?

If all the business requirements are being met via CLEC, then why go for ILEC. At times, businesses can do with CLEC services, and at times, these are better-suiting. Therefore, CLECs do have advantages over ILEC:

Lower pricing:

CLEC pricing is almost always less expensive than the pricing offered by the incumbent carriers (ILECs).  CLECs are more aggressive with their pricing and have more pricing flexibility than incumbents because they’re not restricted by tariffs and aren’t required to deliver services to undesirable locations or customers

CLECs are more experienced with integrated T1:

If you have a small business and can’t receive DSL or Cable internet, integrated T1 is your next best low-price option.  CLECs are experts at delivering the service because it’s how they got started.

CLECs are the ILECs’ biggest customers:

Typically, CLECs are more responsive and flexible than ILECs in troubleshooting. CLECs can get their issues resolved much faster than the typical ILEC customer. Therefore, having an intermediary dealing with the ILEC could be beneficial if your business requires some quick fixes and solutions.

Greater hands-on installation experience:

CLECs conduct site surveys and work hand in hand with a customer’s phone and IT vendors to ensure an installation goes smoothly.

Above are reasons enough for CLEC’s existence in the telecom industry. They help keep the telecom industry competitive.  However, some businesses still consider it riskier to opt for a CLEC. Still, there are many good ones, and they shouldn’t be penalized for delivering services in a manner set forth by the FCC and Public Utility Commissions.

However, if there is a genuine concern, then there are ways to reduce the risks too while availing the benefits of CLEC services:

Risk-Reducing Mechanisms of CLEC:

Below are some ways in which you can reduce the inherent risks in opting for the CLEC:

  • Use a telecom consultant experienced with CLECs
  • Test out a CLEC by moving a single circuit or location to them
  • Limit the use of a CLEC’s service to providing redundancy for the primary services you purchase from an ILEC
  • Limit CLEC services for less critical portions of your voice and data network
  • Move a limited amount of business, like a few Internet T1’s or PRI’s, to the CLEC and gradually move more services as confidence grows

Most of the time, ILEC makes use of these risks to scare the businesses from choosing CLECs. However, the real intention behind this is to keep the market share intact. ILECs would prefer that companies remain ignorant and fearful of CLECs.

Risk-Reducing Mechanisms of CLEC

CLECs should be part of every company’s telecommunication portfolio. The presence of CLECs make the ILECs keep customer’s interest at the top. Below are some ways how a business can use the competitiveness of the industry to its advantage:

Ways to Maximize the Effectiveness of CLECs:

  • Include CLECs in RFQs: The inclusion of CLECs participating in your RFQ will force an incumbent to be more aggressive with their pricing and terms.
  • Use CLECs to diversify your telecom service portfolio for bargaining power and as a safeguard against ILEC misconduct
  • Use CLECs as a way to gauge service levels.  Maybe, there’s a whole other level of service that you’re missing out on?

In Conclusion

CLECs are an excellent alternative for many of the business telecom requirements. Their presence keeps ILECs in line. What they lack in terms of the suite of services, they make up for them in terms of onsite and customer services. CLECs are experienced in niche services and offer highly competitive pricing in these. Therefore, if a business requirement is not hindered using them, then opting for CLECs makes sense.

However, don’t push the situation beyond the limits. If you need to service large geographical areas or require a broader suite of services, then there could be a point where you might have to transition from Competitive Local Exchange Carrier to Incumbent Local Exchange Carrier because of the advantages of ILEC.

Now you have enough knowledge to choose the right one for you and the CLEC vs ILEC debate should end here. But, the choice ultimately depends on the nature of business requirements. If you need help analyzing your business’ requirement, please call CarrierBid telecom consulting today or fill the web form for any queries; we will be happy to help you.

Call us at


for immediate service or fill out the
form and we’ll be in touch right away.

  • Please describe how we can help:
    What services are you considering to drive your business higher?
    What challenges are you currently facing?