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Contemporary carrier and service provider domains can be categorized as local exchange, interexchange or national, and international. Competitive Access Providers (CAPs) are a relatively recent breed of carrier, typically focusing on the provisioning of direct access to the interexchange carrier through bypassing the local exchange carrier. Overlay carriers and wireless carriers also are relatively new entrants. While the domains can be segmented cleanly along these lines, changes in regulation are blurring the lines to a significant extent. This is particularly the case in the United States as a result of deregulation, culminating in the Telecommunications Act of 1996, which will be discussed in some detail in Chapter 16.

Customer Premise Equipment (CPE)

As was have noted, CPE is the terminal and switching equipment located on the customer premise. While such equipment, traditionally, was rented to the subscriber by the LEC, deregulation generally places the responsibility and privilege of ownership on the customer. Similarly, inside wire and cable generally is deregulated.

Demarcation Point (demarc)

This constitutes the boundary between the end user and carrier domains. In a residential environment, the demarc is in the form of a Network Interface Unit (NIU). NIUs include a protector, which serves to protect the premise wiring and equipment from aberrant voltages which might be induced by carrier power supplies, power utility transformers, or lightening strikes. Contemporary NIUs also are intelligent, allowing telephone company technicians or automatic test systems to regularly test the local loop from the central office to the customer premise. The NIU is located outside the residence, perhaps on an outside wall or in the garage, as the telephone company is not allowed to place equipment inside the premise under the terms of the MFJ.

In a business environment, the demarc is defined as being the closest logical and practical point within the customer domain. In a high-rise office building, for instance, it typically is defined as being a point of the entrance cable 12” from the inside wall. Newer entrance cable facilities involve a physical demarc, while older facilities typically are tagged by telephone company technicians in order to indicate a logical point of demarcation. From that point inward, the cable and wire system is the responsibility of the user and/or building owner, as appropriate.

Local Exchange Carriers (LECs)

LECs are franchised to provide local service, usually within the boundaries of a metropolitan area, state, or province. Their primary charter is to provide local voice services through a network of local loops and Central Offices (COs), which can be connected either directly or through a tandem switch, as depicted in Figure 6.2. The LECs also provide short-haul long distance service, Centrex, certain enhanced services such as voice mail, and various data services.


Figure 6.2  LEC metropolitan serving area, with COs interconnected directly and through a tandem switch.

The LEC landscape is dominated by the Bell Operating Companies (BOCs), which originally were wholly owned by the AT&T Bell System and which reported directly to AT&T general headquarters. Effective January 1, 1984, those 22 operating telephone companies were spun off from AT&T as a result of the Modified Final Judgement (MFJ). Also known as the Divestiture Decree, the MFJ was rendered by Judge Harold H. Greene of the Federal District Court in Washington, D.C. on January 8, 1982. The MFJ, in fact, was a negotiated settlement representing the culmination of the U.S. Justice Department’s long efforts to break up what it characterized as an oppressive monopoly. As a result, the BOCs were reorganized into seven Regional Bell Operating Companies (RBOCs), also known as Regional Holding Companies (RHCs) as noted in Table 6.1. Over time, several of the RBOCs (e.g., U.S. West) have fully absorbed the individual BOCs, creating a single entity with a centralized management structure. Cincinnati Bell and Southern New England Telephone (SNET) were not fully affected by the MFJ, as they were not wholly-owned subsidiaries of AT&T.

Table 6.1 Bell System operating company organizational structure, before and after the MFJ

Bell Operating Companies (BOCs), Predivestiture Regional Bell Operating Companies (RBOCs), Postdivestiture
Illinois Bell Ameritech (IL)
Indiana Bell
Michigan Bell
Ohio Bell
Wisconsin Telephone
Bell of Pennsylvania Bell Atlantic (PA)
Diamond State Telephone
The Chesapeake and Potomac Companies (DC, MD, VA & WV)
New Jersey Bell
South Central Bell BellSouth (GA)
Southern Bell
New England Telephone NYNEX (NY)
New York Telephone
Pacific Bell Pacific Telesis (CA)
Nevada Bell
Southwestern Bell Southwestern Bell Corporation (TX)
Mountain Bell US West (CO)
Northwestern Bell
Pacific Northwest Bell

In addition to causing AT&T to divest the BOCs, the MFJ effectively limited the BOCs to providing basic voice and data services within defined geographical areas, known as Local Access and Transport Areas (LATAs). These services included Intra-LATA toll service, also known as local long distance, within the confines of the 196 defined LATAs. Additionally, the BOCs and RBOCs were prevented from engaging in certain other activities such as manufacturing communications equipment, and providing enhanced services such as voice mail (the voice mail restriction was later lifted).

AT&T Long Lines, which became AT&T Communications, was restricted from providing Intra-LATA toll, as were MCI, Sprint, and the balance of the Other Common Carriers (OCCs). Those companies, which became known as Interexchange Carriers, were limited to providing long distance service on an InterLATA basis (across LATA boundaries). Further, AT&T was prevented from entering the local service business, although the OCCs were not limited in that respect.


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