[2810] in Commercialization & Privatization of the Internet
Re: ISDN questions anyone?
daemon@ATHENA.MIT.EDU (Karl Denninger)
Fri Jun 5 23:00:42 1992
From: karl@ddsw1.mcs.com (Karl Denninger)
To: drw@BOURBAKI.MIT.EDU
Date: Fri, 5 Jun 92 20:31:51 CDT
Cc: com-priv@psi.com, eff-talk@eff.org
In-Reply-To: <9206052135.AA11902@taylor>; from "drw@BOURBAKI.MIT.EDU" at Jun 5, 92 5:35 pm
> From: karl@ddsw1.mcs.com (Karl Denninger)
>
> I find it outrageous that an analog line connection over dial-up to
> a site locally here would cost me $2160 (!) to maintain a month
> before discounts (which would be something like 30%) while a leased
> line at 56kbs (4 times my best line rate on analog service) to that
> same point DOES cost me $250.00 a month.
>
> Where do the phone companies get their ideas from? My gods, what
> nonsense!
>
> Such is the price of monopoly protection.
>
> Perhaps there are technical reasons why a dial-up line is more
> expensive? Or perhaps there are so few people who maintain a line
> dialed-up for most of a month who aren't dialing to one location all
> the time that the regulatory agencies haven't put in a special rate
> for it? I wouldn't call it ridiculous until I'd seen all the
> information...
>
> Dale Worley Dept. of Math., MIT drw@math.mit.edu
No the real reason is that we have a monopoly in the telephone business.
Examine some of the facts:
It used to be that analog service was flat-rate, or could be bought that
way. That used to be true before the "pay as you go" plans, which have done
nothing more than steal from the consumer of those services -- a captive
audience with no choice to go to a competitor.
As an example, in the Chicago area I used to be able to buy three varieties
of analog service:
1) Measured zero service, which was about $12.00 a month plus usage
charges of about a nickel a minute.
2) "Call pack unlimited", which gave one unlimited calling within a
reasonable local area for about $50.00 a line.
3) "Extended call pack unlimited" which gave one unlimited calling
within a larger local area for about $70.00 a line.
These were decent deals. The first was an excellent deal for the person who
almost never dialed outbound, but needed a phone for emergencies or to
receive calls. Note that this is pretty good actually; $70 x 4 (about what
I can get out of a digital circuit) is about $280, or close to what a 56kb
digital line costs. Thus we had reasonable parity.
Then IBT in concert with our "Consumer protection agency", the CUB, came up
with a "radical" idea. They said "all those poor people are subsidizing the
people who use the phone all the time". So they changed the plans -- now
there is only one:
1) A line cost of roughly $15.00 a line, plus usage charges of a nickel
a minute.
Notice the problem here? Who gets a rate >decrease<?
This PASSED the regulatory agencies and is now law in Chicagoland!
Many people I know, myself included, saw our line charges go from about $100
a month (two lines, one of which had extended call pack unlimited) to $400
or more! This is PURE GREED on the part of the phone companies.
Also, they >charge< for touch-tone service, although it requires less
equipment (due to a shorter dial time) in the CO to support touch tone than
dial service in modern COs. Why? Because they can!
The phone company's WORST CASE is a dedicated circuit. You use the copper
wires all the time, bandwidth in the DACS banks all the time, and switching
circuits all the time. The DACS systems which carry voice and data calls
both use a 64kb channel for a single circuit, voice OR data (this is how
they do speech these days; 64kb data rates yield a 3Khz analog bandwidth,
which is what you have available). The channel cards for analog or digital
use cost roughly the same amount of money in either case.
So why can I buy a dedicated, full-time leased 56Kb circuit for $250 a month
between nearly any two points in the Chicagoland area, yet can't even use the
analog phone for three continuous days (or 10% of the time!) for that same
money? Also note that IBT, a little under a year ago, actually LOWERED the
price for those leased circuits! Obviously there isn't a costing problem
with them; they're making money, or why file for a rate DECREASE?
The reason is obvious -- greed. "The people" have no alternatives. However,
business customers who need leased circuits DO have alternatives in Chicago;
Metro Fiber, for example, will happily sell you a 56kb or T-1 circuit for
less than IBT will. But you can't get a POTS line from them, nor can you
connect to a "dialable" network (which IBT has a monopoly on). It is obvious
that MFS is making money on their pricing, or they wouldn't be able to survive.
ISDN is worse; twice as bad in fact. A 64kb channel is available in the
area I used to live. I checked it out -- they wanted over 10 cents per
minute of connect time! This, with the usage of the SAME BANDWIDTH as that
analog circuit in the central office equipment!
Now if I need to use ISDN for a day and a half a month (total usage) I am
better off buying a >full-time< leased circuit.
The numbers are similar all over the country. I've bought over 150 leased
circuits all over the country in the last 6 months -- there isn't much
variation in the local access portion. Mile-by-mile, it's also an enormous
rip-off, and service from the local telcos STINK. All due to monopoly.
Another example; a typical 56kb line from Chicago to Atlanta (these aren't
actual prices as I'm at home right now, but they're darn close):
Chicago LEC (Local exchange) portion: $250
This is a ~15 mile run to the MCI POP in the suburbs
MCI IXC from Downer's Grove to Atlanta's MCI POP $600
This is a >800< mile 56kb run
Atlanta LEC (local exchange) portion: $230
This is a 4 mile run to the final customer location
Note that the two LEC portions nearly equal the entire IXC cost!
MCI is willing to run the signal on a mile-by-mile basis for $0.75 a mile,
while IBT charges me $16.66 a mile to do the same thing!
Sure, I admit that a large part of that is the termination on either end
(which is 2 pair; nothing special here). But it's still rediculous; this
is off by more than an order of magnitude!
The reason is that MCI has competition, and if they charge any more I will
buy the line from AT&T, Sprint or WilTel.
The LEC pricing is an outrage and pure thievery.
The only solution to this is deregulation of local access, and a law which
provides for equal access to right-of-way and wire plant installed on the
backs of monopoly customers. The fees paid for access to those rights-of-way
should be administered by a third agency which is limited to spending the
money gained ONLY on more "common plant" for the use of all interested
parties.
If you think its bad now, wait until the phone companies get into the
information business. They'll be able to raise rates for access to the
phone system for competitors, effectively forcing them out of business.
It >will< happen unless consumers of these services vigorously begin to
work against the monopolistic local telcos.
--
Karl Denninger (karl@ddsw1.MCS.COM, <well-connected>!ddsw1!karl)
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