[10925] in Commercialization & Privatization of the Internet
Re: The FCC strikes the Internet (fwd)
daemon@ATHENA.MIT.EDU (Karl Denninger)
Mon Mar 14 19:10:13 1994
From: karl@mcs.com (Karl Denninger)
To: barney@databus.com (Barney Wolff)
Date: Mon, 14 Mar 1994 11:13:04 -0600 (CST)
Cc: karl@mcs.com, com-priv@psi.com
In-Reply-To: <9403140827.AA28030@uu6.psi.com> from "Barney Wolff" at Mar 14, 94 03:27:55 am
>
> >From: karl@mcs.com (Karl Denninger)
> >Date: Sun, 13 Mar 1994 20:30:00 -0600 (CST)
> >
> >I advocate that the
> >government NOT force the imposition of settlements on the
> >telecommunications companies. As it stands right now those settlements are
> >a matter of law.
>
> Karl, are you saying that the LECs charge IXCs ruinous rates not because
> they want to, but because they're required to?
Check out the MFJ which freed MCI and others to enter the LD business.
You'll find those settlements in there, regulated as a matter of law.
> So what if that rate
> becomes deregulated, if the LEC is still the monopoly provider of the
> local loop? Merely unbundling the local loop doesn't help, if the LEC
> is free to charge whatever it wants for it. The only alternative I see is
> to break that monopoly, and you then have nasty issues of interconnect.
Correct. You need to, at the same time:
1) Require the LECs to provide equal access to the copper pairs coming
to a home or business at the marginal cost of maintenance and
installation <from that point forward>. Does this devalue their
capital base? NO. You're giving them cost recovery on that base,
and nothing more. That's ok.
2) Require equal access to the billing and processing information
already on file at cost.
3) Require interconnection on a no-settlement basis for the marginal
cost of providing that interconnection, and <standardize> the
protocol by which that takes place.
4) Allow any or all of the competitors in a market to do whatever they
want with future technologies, except that (3) must be maintained
(ie: you still have to follow the signalling and billing rules)
You've now levelled the playing field for access to the poles that have the
wires on them.
4) Drop the IXC<>LEC interconnect rate (as a function of #3) to zero.
You've now levelled the playing field between LECs and IXCs!
5) De-regulate, entirely, the cost of local and long-distance service.
No more tariffs. People can charge whatever they want, with only
the "invisible hand" of competition to guide them. It will --
downward -- dramatically.
There will be a few backwaters where costs will be higher. That's a fact.
But you know what? You'll find direct satellite links going up there,
and/or microwave transmission systems. They will compete with the wired
alternatives. Since they <can> compete to provide dialtone, on a level
field, you'll find these also showing up in urban areas.
> >Doing this would be a TRUE good to society. You'd accomplish a number of
> >things:
> >
> >1) Make flat-rate national phone service possible.
> >2) Make flat-rate CELLULAR phone service possible.
>
> Possible, but at what cost? I get charged 45-55 cents a minute, of which
> at most 10 is going to the LEC and probably less. What's your guess at
> a target price for flat-rate cellular? (That's assuming flat-rate really
> means unlimited-use. There are plenty of plans offering X minutes per
> month included in the monthly rate, but the rate definitely varies with X.)
I would bet in the area of $100 monthly. That $0.10 sounds cheap, until
you consider that it likely costs as much to meter it as it does to provide
it!
Even so, with no overhead consideration at all, consider that you're talking
about roughly 20% of your cellular bill <disappearing> overnight.
The reason cell rates are so high is that there is no meaningful
competition there EITHER. That also has to be changed, by the same
process.
> I don't see how, when the cost of providing a service varies directly
> with the volume of usage, flat rates can be anything but very high. Do
> you have a feel for how many hours per month your average user is
> logged on, for the $20? (If that's not confidential.)
Yeah, that is confidential :-) The averages have stayed almost completely
constant since MCSNet started operation. They vary by tenths of an hour
monthly, but that's about it. The curve is really odd, but the averages
track. That's something that people don't understand about this stuff --
they see the guy logged in all the time, and think that's the norm. It
isn't. There are ways to get around that problem -- one of them is idle
timeouts -- and you just take your lumps on the few that use it that way.
The rest all average out.
Now, if it ends up that the averages move upward in a sustained fashion
then you have to increase your rates or put caps on things. So far it has
not been necessary.
--
--
Karl Denninger (karl@MCS.COM) | MCSNet - Full Internet Connectivity (shell,
Modem: [+1 312 248-0900] | PPP, SLIP and more) in Chicago and 'burbs.
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