Re: BA's rate change

["Fred R. Goldstein" <fgoldstein@bbn.com>]

  At 07:19 PM 4/15/96 -0400, Renard Martin wrote:
  
  >I found this artical on USA Today after your post.  20 hours for $30 sounds
  >like a ripoff to me. What do you think?
  
  Ripoff.
  
  But when fighting it, I suggest being picky about wording.  There are
  basically four types of service measurement policy:
  
  1)  Flat rate.  Unmetered, period, within a calling area.
  
  2)  Threshold.  Metered if beyond a certain value, but the value is set
  *higher than most users* will ever see.  This is designed to be perceived by
  most users as flat rate, but prevent "7x24" users from throwing off the
  averages.  US West does this for $69 in most of its states, or wants to.
  
  3)  Call Pack.  This is MEASURED service except that the telco pre-sells
  blocks of usage at some minor discount.  The rate is set high enough that
  the user perceives it as measured, but encourages pre-purchasing.  The size
  of the block is thus *smaller* than most people will use, since they have to
  prepay for it essentially at the measured rate.  This is what BA is
  proposing.  It's common for long distance plans, like AT&T's original
  10-hour "Reach Out America" and NYNEX/MA's "Bay State East" 2-hour prepay.
  It's not terribly common for local service but was for years the norm in
  Chicago, where message units could be prepurchased in various quantities at
  various discount levels.
  
  4)  Measured.  Pay for every call as you go.  This is what telcos like best
  since the measured rate is almost always a high multiple (2-10+) of marginal
  cost.
  
  Note that a call pack is *economically* and *functionally* a form of
  measured service.  The usage price is set on an arbitrary, contributory (way
  above cost) basis.  The discount is a marketing gimmick, to encourage people
  to use it to some extent, lest they let their "allowance" (prepay) go unused.
  
  The PUCs should not allow BA to file callpacks as a flat rate.  It is a
  flat-out lie to call this proposal "flat rate".  But then that wouldn't be
  new from BA, would it?
  
  BTW, if the PUC is persuaded that "7x24" users really are a problem, then
  threshold pricing is the correct answer, provided the threshold is set in
  that gray range in the curve above the vast majority of users (avg. 40-50
  hours/month,  not too many >100) and below the secondary mode (600+) which
  they're out to discourage.  I can see a justification for this, especially
  since it lowers the average usage per line by throwing out the few who throw
  off the averages, and flat rates are set on averages.  For instance, if 5%
  run 700 hours and 95% average 40 hours, then those 5% raise the average
  quite a bit!
  ___
  Fred R. Goldstein      fgoldstein@bbn.com  
  BBN Corp.              Cambridge MA  USA    +1 617 873 3850