From: szabo@netcom.com (Nick Szabo)
Date: Sat, 9 Oct 93 23:20:58 PDT
To: cypherpunks@toad.com
Subject: PHONE PRIVACY: real-time billing with digital postage
In-Reply-To: <wghifsK00VonEJikwR@andrew.cmu.edu>
Message-ID: <9310100621.AA08523@netcom5.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain



We take for granted that long distance companies must record who 
called whom, and when, in order to tally the bill.  The 900 redialer 
doesn't obviate this; it simply adds an expensive level of
indirection.  Could not the need for such records be eliminated by 
real-time payment of digital postage?  Debit cards for phone calls
already exist along these lines, but they are restricted to
public phones; I envision home use to eliminate the need for
monthly bills and the accompanying recordkeeping.

Scenario: long distance company receives a call from one of its
customer phones.  It doesn't know which phone, only that the phone's
local service area provider is requesting a connection.  It notes 
the area code/country to and from to determine the rate, and receives
the proper digital postage payment from the calling phone.  It 
notes the destination phone number only in order to pass it on and 
complete the circuit.  The long distance provider doesn't know 
the caller's phone number and doesn't keep a permanent record of the 
other information.

The incoming d-stamp serial numbers are checked to make sure they have 
not already been used, added to the used list, and a corresponding amount 
of time is added to the call.  A simple LED on the customer's phone 
displays the duration and amount of billing as the call progresses.  
When the phone runs out of d-stamps it could be refreshed from magnetic 
strips on cards bought at the local drugstore.

In addition to new-found privacy, real-time billing would be more 
customer-friendly, providing the real-time feedback on 
charges that is expected for most other transactions (eg retail 
purchase of a good).  No more phone bill surprises!
(But please, let's not replace bills with rude robot operators: 
"deposit fifty cents, please").

Alas, there might be regulations requiring some kind of traffic recording
to be dealt with in some jurisdictions.  But then again maybe not,
since such recording has been taken for granted.

During the Ma Bell breakup here in the U.S. there sprung up a bunch 
of Mom & Pop long distance companies.  Some of these, providing 
specialized services, still exist.  Assuming no deadly flaws in this 
real-time postage scheme, if none of the major long-distance companies 
are willing to implement it, a small startup might rent bulk long-distance 
time from the majors and concentrate on the anonymous real-time billing
system.

Nick Szabo					szabo@netcom.com