Jenner & Block

Client Alert: California Opens Rural Areas to CLEC Competition, With Conditions

Since time immemorial, the service territories of California’s 13 rural local exchange carriers (RLECs) have been walled off from wireline competition. Even as wireless carriers and over-the-top voice providers expanded services into these territories over the last two decades, the RLECs continued to enjoy a monopoly over wireline telecommunications services. That is until last week, when, on August 6, 2020, the California Public Utilities Commission (CPUC) voted to open the RLEC service territories to wireline competition from Competitive Local Exchange Carriers (CLECs).

Despite that these markets are now “open,” a surge of new competition is unlikely to happen overnight. In its order, the CPUC erected numerous conditions that CLECs must meet if applying to operate in RLEC service territories. For example, CLECs will be required to serve a proportionate number of residential to business customers, and proportionate number of low-income to non-low-income customers, as well as file geospatial maps detailing the CLECs network architecture. While these additional conditions may dissuade many CLECs from operating in RLEC territories, for the right CLEC this new order by the CPUC will present a ripe opportunity to expand its footprint.