From: jim bell <jimbell@pacifier.com>
Date: Wed, 21 Aug 1996 15:18:37 +0800
To: Brian D Williams <cypherpunks@toad.com
Subject: Re: phoneco vs x-phones
Message-ID: <199608210437.VAA16416@mail.pacifier.com>
MIME-Version: 1.0
Content-Type: text/plain


At 02:21 PM 8/20/96 -0700, Brian D Williams wrote:
>
>Disclaimer: The opinions expressed are my own, I do not speak for
>Ameritech or it's alliance partners.

>Jim Bell replies:
>
>>If that is the main difference in costs, then we should abandon
>>those regs. Another big cost is billing, which could be eliminated
>>if usage were unmetered.   In any case, I tend to agree:  Make
>>these changes, eliminate the LD/local subsidy, and  the LD
>>companies would have no problem (at least domestically) competing
>>against Internet phone.   (International may be a different story,
>>because foreign telcos tend to be owned by countries.)
>
>Yes compliance costs are a sore subject. Billing costs are actually
>very cheap,(the mainframes are on the floor above me) the
>difference between sending a metered bill or a flat rate bill is
>tiny. Really tiny (NDA). The local/long distance subsidy was
>eliminated at breakup, but long distance companies do have to pay
>to use local networks,

"the king is dead, long live the king!"???

The long distance companies are not "using local networks," your customers 
are...to connect to those long distance companies.  And any payments LD 
companies make to you are, indeed, a subsidy.   Tell me, how much is this 
_subsidy_, exactly?

BTW, in case you doubt this assessment, let's do a fair comparison, shall 
we?  Let's suppose, for the moment, that the amount of the subsidy is 3 
cents per minute.  (a figure I heard around here, recently.)  As an 
alternative, the phone company would presumably be entitled to be served by 
phone lines, at say $30 per month or so, through which their customers reach 
them.  $30 per month is $1 per day or 4 cents per hour or about 0.07 cents 
per minute.   3 cents doesn't equal 0.07 cents, now does it?!?

Tell me again how "the local/long distance subsidy was eliminated at 
breakup."  Tell me another one, daddy...


>but as competition heats up these rates are
>dropping and new players (competitors) join the table, Or they can
>build their own. ;) 

How has this remaining SUBSIDY dropped over time, assuming it has?  When is 
it scheduled to drop to zero?


>One of the fun turns of events might be that the threat of x-phones
>might lead the RBOC's to actually turn into an ISP's! We could pull
>this off at amazing speed. (if you can't beat them, join them!) We
>are after all one of the four major nodes of the Internet......

First, you need to figure out how to supply ISDN for a REASONABLE charge, 
like "no extra charge!" to customers.  It's been over 16 years after I first 
heard of ISDN.  At the time, it seemed like a wonderful idea...against the 
300 baud modems then in use.  Against modern 31K modems that you only have 
to pay for...ONCE...ISDN seems mighty lame.

Face it, ISDN used to be a good idea.  But it's just barely shown up the 
moment it's hit the end of its marketing window.  ISDN will have a marketing 
lifetime for maybe a couple of more years, and only then because you can't 
put more bits through a 3.4 khz passband.

Not to mention all the bullshit propaganda that claimed that with ISDN, you 
wouldn't have to buy any modems.  Well, maybe that's just because they 
didn't CALL them modems, but they charged way more for an essentially 
indistinguishable function.  Can you say, "Fraud"?  I knew you could!

Okay, go ahead, charge a little extra for ISDN.  How much more?  Well, let's 
see:  31K modems sell for $99.  ISDN is four times faster, so let's say it's 
worth four times more, or $400.  Amortized over 10 years, that's about $3.60 
per month.

Fair enough?




Jim Bell
jimbell@pacifier.com