The breakup of AT&T and the BOCs (Bell Operating Companies) was not enough for the U.S. government. They needed to make the U.S. telecommunications system even more dysfunctional (in my opinion) by passing the Telecommunications Act of 1996 (TCA-1996). The TCA-1996 opened what was believed to be the doors of free trade to the once heavily regulated telephone communication industry. It was perceived by some that the separation between IXCs (Interexchange Carriers) and LECs (Local Exchange Carriers) was too restrictive and did not foster competition. So the TCA-1996 removed the separation between IXCs and LECs by allowing them to compete in each other's markets. Now, an LEC could provide long distance and an ISC could provide LATA [Local Area Transport Area] service. This resulted in a long series of mergers between the RBOCs, ITAs, and IXCs, and created a new type of LATA carrier, called the Competitive Local Exchange Carrier (CLEC). Because the original divestiture agreement had handed all Class 4 and lower offices to AT&T, and the Class 5 offices to the RBOCs, neither the LECs nor the ISCs had the infrastructure to provide service in the other's market. So both had to develop "wholesale" pricing to sell network access service to each other to be able to provide service. Wholesale pricing also allows the CLECs to purchase network access at wholesale rates from the LATA's LEC, or what is called the incumbent Local Exchange Carrier (ILEC), and use their own CO switch to provide telecommunications service.
There is a new generation of IXCs constructing new high-speed networks to compete in the CLEC/IXC marketplace. What the long-term results of these different competing carriers will be is still too difficult to predict. What you need to know as a network administrator is that your carrier might or might not own the physical transport your circuits are being provided on, and you need to determine if this situation is acceptable for your company from a service and support perspective.
For more information on Understanding the Network, or to buy this book, see http://emarketplace.techtarget.com/main/0735709777.html.