A competitive local exchange carrier (CLEC), is a telecommunications provider company (sometimes called a "carrier") that competes with other, already established carriers (generally the incumbent).

Local exchange carriers (LECs) are divided into incumbent (ILECs) and competitive (CLECs). The ILECs are usually the original, monopoly LEC in a given area, and receive different regulatory treatment from the newer CLECs.

Made possible by the Telecommunications Act of 1996, some CLECs face a difficult future. Many CLECs operate using the unbundled network element platform (UNE-P), in which they lease the underlying copper and port space on the local switch. The UNE-P, as it currently exists, is being called into question by the Federal Communications Commission (FCC). With the recent Triennial Review in August, 2003 , a large portion of rules set forth by the Telecommunications Act of 1996 began to be rewritten. One alternative to the UNE-P is unbundled network element loop (UNE-L), in which the CLEC has access to or operates their own local switch. The underlying copper (loop) that runs to your house is then leased by the CLEC, and cross-connected to the CLEC's switch. Both UNE-P and UNE-L have their own unique advantages and disadvantages. Other CLECs bypass the ILEC's network entirely, using their own facilities. These facility-based LECs include cable companies offering phone service over coaxial cable.

In October 2004, the U.S. Supreme Court allowed a lower court's ruling stand (by refusing to hear the appeal) that voided rules requiring ILECs to lease certain network elements (such as local switching or the high-frequency portion of the loop) at a cost-based regulated wholesale price to CLECs. The FCC agreed earlier in the year to rewrite rather than appeal the validity of the rules. In December, 2004, the FCC released another set of rules which phase out, over a year, all CLEC leasing of ILEC local switching, while preserving access to most copper local loops and some interoffice facilities.

See also: liberalization, desoligopolization, deregulation, regional Bell operating company, local loop unbundling