Arguments against BA-style Resi ISDN rates

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

  Since "NYNEX" (not yet technically owned by Bell Atlantic but largely
  staffed at management levels by BA-hired contractors, and under a
  purchase-and-sale
  agreement to BA) is rumored to be filing a new ISDN tariff for its entire
  region, I've put together a few "talking points" to be used against them.  I
  do hope to see a MASSIVE intervention against them here in Mass., and since
  I probably can't fund it myself, I'll throw in what I can afford (e.g., talk
  is cheap).
  
  So here's a quick list of points that I'd like to flesh out into a full
  scale attack come intervention time.  Others might find them handy to adapt
  to other states.  Certainly the Delaware commission seemed to have similar
  feelings.
  Would that they all did!
  
  *note:  The following are provided for informational and enterntainment
  purposes only, and reflect the view of the author.  Standard disclaimers apply:
  
  Points to be made to regulators in an Intervention against potential NYNEX/BA 
  rate hikes in MA, and adaptable elsewhere:
  
  ISDN IS STILL A MONOPOLY
  Competition may be permitted but only a miniscule percentage of potential Resi 
  ISDN subscribers have a choice.  Resale based on ILEC tariffs doesn't count.
  CATV data is not functionally equivalent, though it overlaps for a category
  of users.
  
  VALUE OF SERVICE IS AN INAPPROPRIATE PRICING MECHANISM
  Telco appears to be basing its pricing of ISDN on its perceived "Value"
  over and above POTS, rather than on its "cost".  In a truly competitive
  market, price tends towards cost (per Adam Smith; witness the LD market)
  while in a monopoly, regulatory action is a substitute, especially
  when transition to competition is intended.  "Value of service" pricing
  went out with bell bottoms and should not be restored in this instance.
  
  ISDN IS JUST AN INTERFACE TO THE PSTN
  As made clear in the 1992 NYNEX/MA case (D.P.U. 91-63-B), ISDN is simply a 
  new digital interface onto the existing network.  Per-line pricing should 
  reflect the differential in costs.  A voice call made on an ISDN line 
  is indistinguishable, within the network, from a call made on an analog 
  line.  A data call is functionally similar; the same resources are used, 
  even though the trunks used for data are supposedly all 64-clear and 
  SS7-linked.  That is the norm now anyway.
  
  SWITCHWAY TREATMENT IS NO LONGER APPROPRIATE
  In 1991 ISDN data was carried on Switchway, an older Switched 56 network
  built out of 1AESS adjuncts.  The 1As are history; data is just another
  call that avoids AMI/ZCS/RBS trunks.
  
  NAILED USAGE IS NOT AN ISDN-SPECIFIC PROBLEM
  Telco may assert that ISDN users are prone to nail flat-rate lines, but
  that, if relevant, is not a reason to impose measured service.  If this 
  can be demonstrated to have a cost impact at all, then it can be taken
  care of with a threshold price set at a level which is *essentially* flat
  to all users who do not nail calls.  A threshold should be at least 200
  hours/monthly.
  
  Average users are +/- 40 hours, few between 200 and "nailed" levels.  This
  distinction allows the typical rate-averaging of POTS flat rates to 
  continue absent the distortion of averages caused by nailed users.   In
  any case analog lines with modems are also prone to this.
  
  A higher "semi-permanent" rate for "nailed" calls may be appropriate.  But
  even this should be based on cost, not imputed from measured rates.  Since
  most usage is between two dedicated points, a rate could be offered for calls
  nailed to a single designated destination CO.  Leased-line alternative.
  
  CALLPAK RATES ARE MEASURED SERVICE
  Multiple block-of-usage (Callpak) options are simply a prepaid measured 
  service. Users must estimate future usage, enter service orders when it 
  changes. Users perceive this as measured and will move to flat rate options,
  even POTS.
  
  MEASURED TARIFF IS DESIGNED TO ENCOURAGE GRATUITOUS CENTREX
  Telco is attempting to move inappropriate users to Centrex tariff, which 
  provides unlimited intercom usage.  Only low users will want measured ISDN,
  but low users are least likely to want to invest in ISDN's up-front cost.
  
  Much ISDN data is to a fixed destination, ISP or employer, who is 
  encouraged to own Centrex.  Most users are in different COs and Centrex 
  SOPs require costly leased interoffice facilities (3 DS0 channels, BRITEs).  
  This is a poor way to save the resources allegedly wasted by "excessive" 
  usage; it's effectively three nailed lines!
  
  It appears that the bulk of telco's planned ISDN investment in on behalf
  of Centrex, not in order to make ISDN a viable alternative to analog POTS.
  Measured service is noxious to the bulk of residential subscribers, who
  form the highest volume of potential ISDN users; non-Centrex ISDN volumes
  will therefore be minimal.  This improperly holds the bulk of the network 
  in its technological past.
  
  MOVING FROM A FLAT TO MEASURED SERVICE RESULTS IN STRANDED INVESTMENT
  Today's NYNEX tariff allows flat-rate speech/audio bearers.  These are
  widely used for 56 kbps data, in effect treating ISDN as a very clean
  line capable of supporting "modem" calls up to 56 kbps.  Adding usage
  charges to these calls will cause many users to abandon the service.
  Since NYNEX has capitalized a large installation expense, this will
  cause losses that would not occur if the tariff were not made noxious.
  
  MEASURED USAGE DISCOURAGES EFFICIENT USE OF NTS RESOURCES
  The vast majority of ISDN local cost is non-traffic-sensitive.  Switch
  ports, service ordering, loop engineering, loops, SLCs, MSRs, etc., are
  all NTS.  Measured rates reduce use of these, saving only on the TS
  cost which is trivial.  Overall economic efficiency goes way down.
  Inasmuch as measured ISDN drives some users to POTS lines, actual network
  trunk utilization increases because POTS takes longer to set up calls,
  longer to transfer equivalent data.
  
  [this one is very MA-specific]
  MEASURED ISDN RATES DO NOT COMPARE TO MULTIPLE POTS OPTIONS
  NYNEX offers Boston-area subscribers a choice of several flat rate plans.  
  Measured ISDN service has only a single radius, generally very small.  
  Therefore POTS is dramatically cheaper than measured ISDN for users whose
  preferred destination is not in that radius.  The analog rate options
  should be reflected in ISDN tariff, from fully-measured up to LATA-wide
  unlimited. 
  ___
  Fred R. Goldstein      fgoldstein@bbn.com  
  BBN Corp.              Cambridge MA  USA    +1 617 873 3850