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Re: cost of residential ISDN
>I would welcome pointers to publicly available studies of residential
>ISDN costs. From what I've been told lately, one can think of residential
>ISDN costs as fixed costs (F), and variable costs (VC), which relate to
>demands on peak switching capacity (s) and interoffice trunkage (t).
The usual cost analysis has to have a few more portions - because
"fixed" isn't really totally fixed, it can be fixed with respect to the
usage by an existing customer, but it usually has a stair-step graph for
cost as new customers are added. Variable usually is really variable -
e.g. using up supplies or power when doing something.
The physical facilities (lines, switches, buildings) are usually
considered to be "fixed cost" items - in that they cost essentially the
same (fixed) amount whether or not they are used. So the cost is fixed
with respect to the amount of usage - until the capacity is exhausted
and a new item (new switch or upgrade, new line(s), ...) is needed.
This particularly happens when new users appear or new lines are
requested. That's not usually considered to be "variable cost" -
simply to avoid the undesireable ideas that the variable cost for most
use/users is zero, and then it's $1million for the next use. So to be
precise we really need to talk about incremental (marginal) cost for
extra use by a user (e.g. when I make one more phone call from home), or
for extra users (e.g. when I add a line to my home, or a new home is
What's variable cost in a telco setting? Certainly the time the telco
staff spends talking on the phone to help customers, the extra
electrical power needed for equipment which is actively working instead
of being in idle mode - and some other small items.
>I was also recently told of a cost study of residential POTS which
>indicated that fixed costs were about 93 percent of the total, and
>variable costs were about 7 percent. If this is right (and maybe a
>different number is better)...
This sounds reasonable. But
>then every $1 (per month) in the POTS
>tariff would cover a 100 percent increase peak load capacity of the
I just don't see how this follows. Where does it come from?
>This would suggest that the Consumer Federation of
>America's estimate of $4 per month as the incremental cost of upgrading
>residential POTS to ISDN is quite reasonable.
I also don't see how this follows. (It may be right - I don't see how
one can deduce this from knowing that POTS costs are 93% fixed.)
E.g. 2 scenarios for my home - served by unshared copper pairs from a
CO somewhere not too close. (Note that these pairs represent a "fixed
cost" with respect to my usage.)
I. These are nice pairs, and they go to a CO < 18,000' away, and will
carry ISDN signals with no problems. Incremental cost of upgrade $0/mo.
II. These are crummy, corroded pairs with bad splices, moisture, bridge
taps, and termites - but they work (barely) for POTS, and go to a CO
>18,000' away. To upgrade to carry ISDN signals will take complete
replacement plus added/powered electronics to boost the distance.
Incremental cost of upgrade $much/mo.
My point is that in both cases the costs are fixed - and the upgrade
cost has nothing to do with that at all. We could similarly add to
these scenarios differences in switches regarding cost of upgrade to
handle ISDN, etc. - and still have the %fixed costs provide no useful
information about how much upgrading will cost.
Considering that ISDN was designed to require the minimum possible
upgrading of the telco outside plant, and that for many years the
swtiches have been designed to handle ISDN well and without penalties -
I wouldn't at all be surprised to find out that the "incremental cost of
upgrading residential POTS to ISDN is quite reasonable." I just don't
see that it can be deduced from the numbers given.