The Telecommunications Act of 1996 incorporated the successful results of the state-by-state authorization process by creating a uniform national law to allow local exchange competition.
The formation of these CLECs, with easy financing from equipment vendors and IPOs, was a significant contributor to the "telecom bubble" of the late 1990s which then turned into the "bust" of 2001–2002.
[2] While not trivial dependencies, the original "facilities-based" CLECs such as TCG and MFS were beginning to become profitable by the time the Telecom Act was adopted.
With the Triennial Review in August 2003, the FCC began to rewrite a large portion of the rules implementing the Telecommunications Act of 1996.
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.
In October 2004, the U.S. Supreme Court allowed a lower court's ruling to 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.