[12800] in Commercialization & Privatization of the Internet
Re: In the matter of flat-rate long distance phone service
daemon@ATHENA.MIT.EDU (Dory Ethan Leifer)
Sun May 29 12:53:39 1994
To: "Tansin A. Darcos & Company" <0005066432@mcimail.com>
Cc: Everyone Lurking on COM PRIV <com-priv@psi.com>
In-Reply-To: Your message of Fri, 27 May 1994 23:26:00 -0500.
<11940528042611/0005066432NA2EM@mcimail.com>
Date: Sat, 28 May 1994 22:56:26 -0400
From: Dory Ethan Leifer <leifer@terminator.rs.itd.umich.edu>
> Now if, what ends up happening is that with competition local phone bills
> fall by 1/2 and long distance competition allows them to offer lots of
> people unlimited long distance for $10 a month, with the result being that
> yes, phone service costs twice as much to make all calls free, but phone
> service now is 1/2 of the original rate, then that makes sense, e.g the
> phone bill drops from $20 a month to $10 but long distance drops from
> 10-30c a minute to $0 but with a $10 a month charge, then that makes sense.
>
An interesting concept. Some related comments:
* Long distance is actually getting MORE expensive for many people. With
all the competition from the big three carriers, many people hardly
noticed that prices for casual users are going up. If you make more
than about $25/month in interlata toll, you start to see discounts
and the effects of competition. For those of you that run up
hundreds of dollars in international toll, competition is pressing
prices way down. An hour social chat to Europe is now about the same price
as lunch in an upscale fast food resturant and without the calories.
* Usage insensitive untimed local calling has already been eliminated
in many areas and will be under plenty of pressure in locations that
have it. Some possible reasons:
- Local modem usage is exceeding the engineered switch and trunk
capacity with long holding times. It's hard to convince regulators
and the AARP that grandma who has never logged on to a computer
in her life should pay for us that are happy to tie up switches
all day and night with modems. (Of course grandma does not want to pay
usage charges either... that's why the AARP lobbiests will get
all kinds of exemptions for their members!)
- Universal affordable access to telephone services does not mean
that people should be able to afford to make calls.. just that
they should to have a phone to receive calls or dial 911. One
way to achieve this is to offer service with a very small
monthly (ie $8) and serious usage charges.
- The cost to provide unmeasured local service may end up being
cross-subsidized by business or intralata toll. As these sources
become targets for competition, the surpluses created by them
will vanish.
- It is technically possible to charge for each minute of calling
to the house next door. Could it be that the difficulty doing
this in the past was the original justification of flat rate
local calling??
* Don't expect local service to get cheaper for residential customers
in the long run. With all the subsidization going on, it may be
unreasonable to expect that competition can offset the increases
that need to happen to promote the competition in the first place.
CAPs may, in an attempt to gain market share, cut subscribers all
kinds of deals but, eventually they do need to show a profit.
> I am basing it on my own bills. I have three phone lines in my house, and
> with no long distance usage, I pay $58 a month or almost $20 a line. And
> that allows me a total of 195 local calls a month (at 65 each line) without
> additional charges.
I have 2 POTS and 1 ISDN line at home with heavy toll charges. I am
allowed 450 local calls/month with no addl charges. I don't pay usage
for ISDN data calls because they are part of my employer's centrex
group but, otherwise I'd have to pay $1/hr. Personally, I'd go for
flat rate local and toll even if it costs $150/month.
Dory
