Re: Smoking gun in CA

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

  At 10:43 AM 5/1/96 -0400, Dory Ethan Leifer wrote:
  
  >This is already a problem with leakly PBXs delivering voice calls between
  >cities from and to public networks. The reality is that only public network
  >providers worry about this sort of thing. The existing voice access charges
  >are already causing problems because of Internet phones.
  
  "Leaky PBXs" are covered by an old rule, of course; $25/month/64kbps of
  interstate tie line bandwidth, or funnel all of the links onto FGA trunks.
  The latter is actually a good option for many users, since FGA is LATA-wide
  for no tolls, just mileage (around 1c/min/100 miles) beyond its base rate
  (around 3c/minute depending on where).
  
  I've flamed elsewhere about Internet phones.  They're no different from
  any other interstate transmission.  Leak into the phone network and
  you're an interstate carrier, and owe FGA prices.  The rules are not
  necessarily "perfect" but the Free World Dialup folks are legally just
  phreaks.  You know a sound card can DSP blue box tones too, though the
  network rarely responds to them anymore....
  
  >As you point out, the CCLC payments are out of line already and there will
  >no doubt be pressure to drop the charges much lower, eliminating another
  >source of subsidy for the LEC. Why should AT&T and eventually an end
  >long distance user provide subsidy?
  
  That *is* the question, of course.  But beyond that, "carrier treatment"
  includes two major differences from "end user treatment".  Part of it
  is the CCLC's "universal service fund" payment, which could skyrocket
  under the new Telecom Law if nobody finds an alternative source of revenue,
  and part of it is that carriers pay *both ways* on calls, including to
  receive them.  Even a penny and a half a minute for *incoming* would
  clobber the ISPs, and get into the "who's a carrier?" mess.
  
  >> Of course the demand for net service would not go away.  The CATV companies
  >> would gleefully pick it up, at $30/month flat rate, with a 400 kbps-plus
  >> data rate.
  >
  >My guess is that this is not going happen for a long time. These networks
  >will not be built based on $30 unlimited subscriptions unless the service
  >is a hobby for both the customers and the providers.
  
  That's pretty much what it is now :-( but then so's most dial-up IP.
  Real Business is mostly leased lines/FR, except for road warriors and some
  SOHO.  IF the CATVs get their act together, I think they can make money
  at under $50/month, including upstream ISP charges.
  
  > ISDN is a giant marketing
  >trial. If enough subscribers (or their employers) are willing to shell out
  >$100-$200/month for access, competition will come with faster and eventually
  >cheaper options. 
  
  Not many resi subscribers will pay that much!  But in any case, I don't
  see ISDN as a trial.  It's simply the POTS network, digitized end-to-end.
  Why should there be A/D converters in the local loop anymore?  Why should
  everything be backwards-compatible to Almon Strowger's original step switch?
  ISDN is just "the standard for digital local loops".  And should be priced
  as such!
  
  >Don't hold your breath waiting for residential loop competition. In many
  >areas the line rates are so well (??) controlled, I suspect it would be
  >difficult to make any money considering the expense of competetive  plant.
  >Possibly, some of the IECs will go to HFC providers for local bypass but
  >this will probably end up being a cream skimming technique to grab business
  >customers and possibly wealthy residential areas. LECs will adjust the access
  >and loop resale rates just below the threshold of pain.
  
  Depends on who, what and where.   I wouldn't expect a local competitor
  to do well marketing $9/month "lifeline" service; they'd be better off
  paying into the (TLA alert!) USF to let the ILEC do it.  But if I were
  in charge of Boston-area telephone service marketing for US West, I'd
  be preparing for an aggressive rollout of a modern "high end" (say, $20-
  30 month/POTS) service with a *decent* local calling area, not copying
  NYNEX (which is all a sales agent/reseller can do) with its 1909 tariffs.
  Frankly there are few neighborhoods so poor that a $20 POTS line can't be
  sold to a good percentage of the residents.
  
  >> I cast my vote for a *high* free-hours threshold in order to impose
  >> cost-based charges (I'd market this as "semi-permanent circuit service") on
  >> the few users who never hang up, while leaving 90%+ of users on flat rates,
  >> making efficient use of the telephone network.
  >
  >This is certainly a reasonable idea *if* it could be accepted for all 
  >circuit-switched services. In order to do this, you need to do something
  >that looks like local metering. For example, local calls during the day
  >cost 3 units/min, evening 1 unit/min and nights 0 units/min. Basic service
  >includes 5,000 units. There will be plenty of resistance to this from
  >very vocal groups that oppose any adjustments in local voice. After the
  >AARP and any number of other groups fight this endlessly costing everyone
  >a fortune in legal fees and mountains of paper, little will change. 
  
  I would oppose "mandatory local metering for all" too, except that if
  you set the threshold high enough, even the AARP probably would back off.
  The main issue is the cost of metering, which might make it not worthwhile.
  I'm talking >200 hours/month, and event that "overtime" shouldn't be set at
  toll-like levels.  We're *only* talking about a number designed to get 
  non-voice users to *hang up*  once in a while when idle.  I'd also probably 
  roll out a cheaper (i.e., under $90/month in all areas) FR service aimed 
  to cap the cost of a full-period connection.  US West Communications 
  (not to be confused with US West Media) does that now (in fact I think they
  intentionally overprice ISDN in order to make FR look better than it should;
  they're pathetically over-invested in FR and under-invested in ISDN); in
  fact I think most telcos do, othen than NYNEX of course!
  
  I think all regulators and telcos should repeat this mantra over and over:
     "ISDN is just a digital local loop."
  ___
  Fred R. Goldstein      fgoldstein@bbn.com  
  BBN Corp.              Cambridge MA  USA    +1 617 873 3850