In the United States, wireline telephone companies are divided into two large categories: long distance (interexchange carrier, or IXCs) and local (local exchange carrier, or LECs). This structure is a result of 1984 divestiture of then regulated monopoly carrier AT&T (American Telephone and Telegraph).
The divestiture created local exchange carriers for management of local telephone lines and switches, and provision of local phone services within their business area, as well as the long-distance calls originating or terminating in their business area. The companies are called Baby Bells, or RBOCs (Regional Bell Operating Companies).
The local phone calls are defined as calls originating and terminating within a LATA, local access and transport area, which is defined by the Federal Communications Commission. All the Baby Bells, as well as other LECs, typically operate businesses in more than one LATA. Yet their services of local telephone calls are still defined by LATA boundaries, not their business areas.
The following information applied to residential telephone service in the Detroit, Michigan area during the 1970's and 1980's. Much about this subject has changed dramatically since that time, and continues to do so.
A local exchange carrier is a carrier of telephone calls and other communication services carried by telephone lines. A local exchange is generally either an exchange within one's own local access transport area (LATA) or in an immediately adjacent LATA. A call that is neither local nor long distance is called a local toll call. A local exchange carrier normally sells package deals that include local and local toll calls. Local calls are customarily billed in by the call, or in blocks of calls. Residential local exchange carrier service typically charges m+p(q+|q-n|)/2, where m is the monthly minimum and covers the first n calls, p is the price per local call, and q is the total quantity of calls consumed. Local toll calls are each billed at m+(t-1)p, where m is minimum charge for a local toll call, p is the per-minute charge, and t is the duration of the call in minutes. Local toll calls are traditionally grouped into two price ranges, called "near zone" and "far zone", with values of m and p higher for far zone.
See also : competitive local exchange carrier.