Incumbent Local Exchange Carrier (ILEC) are carriers in the U.S. that were providing local telephone service when the Telecommunications Act of 1996 was enacted. The ILECs are the service providers that are part of the old AT&T telephone system. When the government split AT&T up into separate entities, the separate operating units were called the RBOCs (regional Bell operating companies) which were also known as the Baby Bells.
The Telecommunications Reform Act of 1996 allowed the RBOCs to merge, so today it is more appropriate to refer to the incumbent carriers as ILECs. The current ILECs are SBC Communications, Bell Atlantic (now called Verizon), Qwest Communications, and Bell South.