The Cost of ISDN vs. the cost of Social Engineering

[Paul Mullen <75300.263@compuserve.com>]

  Glad you spoke up Bill, it was getting so quiet in this list 
  that I wondered if my name had been deleted!  Since you 
  clearly want to promote discussion here are my thoughts.
  
  > die-hard public-policy advocates grasping at any opportunity to 
  > extend the life of tottering regulatory regimes.
  
  That's just rhetoric. Surely everyone who uses their first amendment 
  rights and expresses an opinion is a public policy advocate. So why 
  add "die-hard"? And I really can't agree that public utility 
  commissions are a "tottering regulatory regime" - not while telephone 
  companies enjoy a local monopoly. Even with the new act it will
  take many years (if ever) for that monopoly to be effectively broken.
  
  > ... Pacific Bell, who, aided by the most reasonable ISDN prices in 
  > the land,
  
  UNTRUE - check the facts and consider overall cost including per 
  minute charges. 
  Bell South in Tennessee and the Sugarland Telephone Co in Texas are 
  far cheaper to name just two companies I am familiar with. Although 
  Sugarland is a very small company it is worth mentioning as it 
  apparently arrived at its tariff without any pressure from regulators.
  
  
  > I guess all those yuppies that moved out to the 'burbs are finding it tedious to
  > check their stock portfolios using "old fashioned" 28.8 kilobit-per-second
  > modems.
  
  > Supporting distant users requires additional loop electronics, a cost
  > PacBell hadn't rolled into its original calculations.  So, how about
  > charging a higher installation fee for remote users?  Nope.  Differential
  > pricing violates a fundamental regulatory tenant under which city dwellers
  > are gouged to subsidize suburban and rural users.  Fixing the "problem",
  > therefore, requires a rate hike for all.
  
  I find the point a good one in that I have long argued that those who
  choose to live in rural areas should have to pay the extra costs of
  doing so.  However your argument has a fundamental flaw in that it 
  appears to assume that telephone "Central Offices" are only located in
  City centers. Obviously not true. 
  
  OK if a subscriber chooses to live out in the middle of the desert
  then I agree he should pay extra. But I suspect that accounts for very 
  few of those residential ISDN users who are more than 3 miles from 
  the CO. In some cases it will be pure chance where the telephone co. 
  chooses to loacte its premises: I happen to own a house in the hills 
  outside Austin TX and if they turned round and told me that because of 
  its isolated location I would have to pay an extra instalation fee I 
  would not complain. But as it happens the CO serving a large part of 
  NW Austin, including, many of the big computer companies, and the venue
  of SW BELL's first experiment with ISDN a few years back, is also
  located on the same rural byway. So strangely my rural retreat would 
  be well within the three mile limit while my friend Beverly, who has
  chosen to live in a high-density condo development in a close-in 
  neighborhood precisely because it was close to shops, schools etc. 
  just happens to be served by the same CO, yet is outside the 3 mile 
  limit! 
  
  Now, are you suggesting that Beverly should pay more than me
  simply because the telephone company decided to serve her neighborhood
  from the newer less crowded CO rather than one of the two other COs 
  that are located within 3 miles of her?
  
  > These tariffs would make ISDN as prohibitively expensive as, 
  > say, America Online or CompuServe.
  
  Quite right. In fact MORE expensive in some cases! Compuserve have
  just introduced a $1/hour Internet rate.
  
  I'm glad you agree that these proposals would be prohibitively 
  expensive. I think so too. And that means that a local monopoly,
  largely concerned at maintaining cross-subsidies, would prefer to
  restrict the growth of a whole area of technology. Now wouldn't you
  agree that preventing this abuse of monopoly powers is a reasonable 
  use of public regulation?
  
  > The long-term remedy, of course, is competition. 
  Yes!
  
  > The whole Rube Goldberg regulatory structure has to go.  The more out of
  > line a Bell company's pricing policies are, the faster they will attract
  > hungry competitors.
  
  WRONG - if monopolies are left to themselves they will use pricing to
  try and kill competition. As a partial monopoly they can use their vast
  profits from areas without any competition to cross-subsidize and 
  price below cost in markets where they face a competitor. Look what 
  the airlines try to do to SW Airline, ValueJet or any new competitor 
  who has the temerity to offer cheap fares! Look what British Telecom
  did when faced with long distance competition from Mercury (charged
  much lower rates for LD calls on routes where Mercury service was 
  available).
  
  Regards,
  	Paul Mullen
  	pcguru@cis.compuserve.com