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What is the demarcation point?

The demarcation point, or demarc, is the point at which the telephone company's wiring ends and the customer's wiring begins.  This point may vary depending on what country you are in, but in the U.S. the demarc is typically on the customers premise.  For businesses, a large punch down block typically exists inside the building perimeter. while for residences, a junction box is located on the outside of the house.

Residential Demarc
The history behind the demarc
The American Telephone & Telegraph Company (AT&T Corporation) was founded in 1886. As AT&T expanded, it evolved into a natural monopoly for telephone service within the United States. Through numerous acquisitions and technological innovations, AT&T grew so large that it even owned the local loop, which included the customers' wiring and telephone equipment.

The 'natural monopoly' status did not sit well with the United States, and in 1956 lawsuits ensued.  Some felt that AT&T had become too powerful and that it should not be allowed to retain this status. In 1974 the United States Department of Justice filed an antitrust suit against AT&T. The United States v. AT&T suit continued until a settlement was reached on January 8, 1982. The settlement, known as the Modified Final Judgment (MFJ), forever changed the telecommunications industry.

Commercial or Business Demarc
Effective January 1, 1984, the MFJ required AT&T to dissociate from its local exchange service operating companies. These local operations were split into seven independent Regional Bell Operating Companies (RBOCs), which were required to provide equal access to AT&T competitors. Companies were also able to sell third-party equipment that would connect to the PSTN and American consumers now had the ability to purchase telephones without going through AT&T.

Because consumers could now own their phone systems (as opposed to leasing them from AT&T) there needed to be a way to delineate that portion of the network which was owned by the customer and the portion owned by the Telephone Company. The dividing line, or meeting point, is now known as the demarcation point.

Today, the Telephone company services the network up to and including the demarc.  Any lines and equipment located beyond the demarc are the responsibility of the customer. This allows consumers to choose a phone system from a variety of third party manufacturers and connect to the PSTN.