From: jim bell <jimbell@pacifier.com>
Date: Tue, 20 Aug 1996 09:44:44 +0800
To: vipul@pobox.com
Subject: Re: Phoneco vs X-Phone
Message-ID: <199608192246.PAA08982@mail.pacifier.com>
MIME-Version: 1.0
Content-Type: text/plain


At 04:02 AM 8/20/96 +0000, Vipul Ved Prakash wrote:
>> 
>> Well, let's consider such costs.  Most of which (maintenance, management, 
>> rolling stock) are unrelated to amount of telephone usage.  So there is no 
>> reason that these costs should be unequally attributed to a person who 
makes 
>> local calls 1 hour per day, as opposed to another who only calls 15 minutes 
>> per day, for example.
>> 
>> As for the "laying new pipes" issue:  Years ago in the the US, when 
>> inter-central-office trunk connections were all implemented using large 
>> bundles of copper pairs, it would have been _correct_ to say that higher 
>> telephone usage resulted in larger costs, since more trunk lines were 
>> necessary.  Today, on the other hand, inter-office trunks (at least the new 
>> ones, and I presume that even many of the old ones have been switched over) 
>> are implemented in fiber optics.  Extra capacity is either automatically 
>> available (since the capacity of a given fiber is unlikely to be fully 
used) 
>> or can be fairly simply added by converting old fiber from about 450 
>> megabits per second to 2.4 gigabits, or even faster rates which have become 
>> more recently available.
>> 
> 
>Your view point doesn't really fit the facts, but since it is not the
>issue here, I'll let it go.

What do you mean, "doesn't really fit the facts"?!?  What part of it was 
incorrect?  Fiber-optic _is_ commonly used in inter-office trunks, right?  
It doesn't wear out, right?  Higher usage doesn't entail greater costs, 
right?  The capacity, while not strictly infinite, is high enough so 
expanded usage doesn't strain most links, right?  Finally, modern phone 
switches have sufficient connect capacity so that they can handle usage 
which would have been considered "unusual" by yesteryear's standards.  All 
of this points to an obvious conclusion:  Telephone companies do not, in 
general, have increased costs as a consequence of increased telephone usage.

Here's what I think is _really_ going on:  You have decided that you think 
the costs of the telephone system should be apportioned by usage EVEN IF 
higher usage is no more costly to provide.  That's why you don't want to  
disprove my claims.  You're afraid that you'll have to say, "Yes, you're 
right Jim, but I _still_ think billing should be porportional to use."


>Can't resist like someone has to pay those 80,000+ 
>employees at AT+T.

Some of whom are probably unnecessary.  Interestingly enough, the rumor is 
that half the costs for LD are in billing and customer service.  Most of 
these costs would disappear if LD was unmetered.  

>
>> >But you miss my point, if a phoneco is not getting a penny for its long 
>> distanceservices (which subsidise the flat rate local calls) then the 
choice 
>> would
>> >be to close down. Which would be a severe attack to the local internet 
usage.
>> 
>> That's an entirely unsupported claim.  Nobody claims that telephone usage 
>> (term used generically) is on the way out.  "Closing down" is only going to 
>> happen if local phonecos cease to be able to provide a service that people 
>> are willing to pay for.
>
>Exactly! Once "X-Phone" has its servers in US Cities, and its charging 10 
cents 
>a minute for long distance calls, I don't see if the phonecos would be able 
to provide any service that people are willing to pay for, I mean they won't
>be able to provide matching lucrative rates. 

I am confident that local phonecos can remain competitive even against 
"free" Internet telephone service.  What they need to do is simple:  
Entirely remove the LD/local subsidy, remove metering on LD (as well as 
local), bill yearly for far lower costs, etc.  Once this is done, LD will be 
"free", at least on a marginal basis, so no customer will have any 
motivation to move to "Internet telephone" service.


>You mean to say that, X-Phone will take advantage of the phoneco and mint 
>money for a minimal investment, whereas the phoneco who spent billions on the
>infrastructure will be just whistle down the road, and let the X-Phone 
>indulge in its own cyberdo.

In the US, the current telephone company infrastructure is ALREADY PAID FOR. 
 It was paid for by over-inflated rates during a monopolized era.   If 
anything, the locals have an "unfair advantage" over the rest of the 
companies:  Only they have a copper pair into every home.  


Jim Bell
jimbell@pacifier.com