"James Borynec" <james@cs.ualberta.ca> (04/24/91)
After looking at some of the developing transmission technologies (notably fiber optics) I have reached some conclusions that I would like to share with the net. I would also appreciate any feedback. 1) The costs of long distance transmission of information is going WAY DOWN. This is because of the incredible bandwith of fiber. You can easily fit one million phone calls onto one 32 strand fiber cable. I suspect that the number of phone calls in New York City at any one time would fit on this cable! 2) The real costs of transmission is really in the multiplexing technology. Getting information on and off these fiber highways is the cost bottleneck. Fortunately, we can build bigger, faster, and CHEAPER multiplexers with the new silicon (and other) technologies. Thus these costs are going down quickly too! Because these costs are going down so very much they will quickly be dwarfed (or indeed may already be dwarfed) by other costs such as local access, accounting of calls, etc. Therefore, for all practical purposes a LOCAL phone calls costs as much as a LONG DISTANCE phone call. Clearly the pricing structures do not reflect these costs (Yet!). My question is - What is AT&T, MCI, Sprint, etc going to do when they can no longer reasonably charge more than a local call? Won't this change the industry substantially? Will North America move to a wide area extended flat rate billing zone? How about this - you pay Sprint $10/month to call anywhere in the USA to talk for as long as you want. Jim Borynec jboryne%agt@cs.ualberta.ca james@cs.ualberta.ca 500 Capitor Sqr, 10065 Jasper Ave, Edmonton Alberta, T5J 3B1
John Higdon <john@zygot.ati.com> (04/25/91)
"James Borynec" <james@cs.ualberta.ca> writes: > Because these costs are going down so very much they will quickly be > dwarfed (or indeed may already be dwarfed) by other costs such as > local access, accounting of calls, etc. > Clearly the pricing structures do not reflect these costs (Yet!). My > question is - What is AT&T, MCI, Sprint, etc going to do when they can > no longer reasonably charge more than a local call? Won't this change > the industry substantially? Will North America move to a wide area > extended flat rate billing zone? Do not count on it. As a pivot for discussion, I offer the following: AT&T NEWS BRIEFS SPEC -- ... [Analyst] Denise Jevne thinks that [AT&T] is poised to pocket big bucks when - thanks to regulatory changes - competition heats up in the business of connecting long-distance calls. ... Access charges - currently the exclusive domain of the RBOCs - are the most expensive part of [such] calls. They also happen to be AT&T's biggest cost. As other companies enter the field and these charges fall, AT&T's profits should rise - if the company can avoid passing all the savings to consumers. Access costs now equal about 40 percent of AT&T's revenues. If they fall to 37 percent ... AT&T's profits would leap by as much as 40 cents per share. ... [Column, Herb Greenberg], San Francisco Chronicle, C1. [End Quoted Text] While it is just personal speculation, the probability of a precipitous drop in long distance rates is very small. Long distance rates are purely marketplace-controlled and have very little to do with the cost of providing the service. Can you imagine that (given that the rates for equivalent calls among the various carriers are very close -- within 20 percent) that it costs each carrier practically the same amount to handle the traffic? In case you have not already figured it out, the general method of pricing long distance is to take AT&T's rate and then discount it by some amount. The amount is a compromise between what might attact customers and optimum revenue. Too high and it will not attract customers away from AT&T; too low and not enough money comes in the door. And remember, AT&T's rate is still subject to regulation by the FCC. Lowered costs of operation is what the IECs have long counted on to eventually make the really big bucks. This is what they are working for; it is the pot of gold at the end of the rainbow. No one, from the investors to the executive board is going to endure the slings and arrows of startup and construction expenses only to "give it all back" when the promised-land technology comes to pass. It is interesting to learn of the new technologies and their promise, but the benefits cost-wise are for the service providers, not for the customers. John Higdon | P. O. Box 7648 | +1 408 723 1395 john@zygot.ati.com | San Jose, CA 95150 | M o o !
Mark Fulk <fulk@cs.rochester.edu> (04/26/91)
In article <telecom11.303.13@eecs.nwu.edu> james@cs.ualberta.ca (James Borynec) writes: > 1) The costs of long distance transmission of information is going WAY > DOWN. This is because of the incredible bandwith of fiber. You can > easily fit one million phone calls onto one 32 strand fiber cable. I don't think you've absorbed the real effect of this yet. I just talked to an optics professor here, who does research into linear optical amplifiers for fiber repeaters. It is now feasible to transmit more than 100 terabits/sec on a fiber; linear optical amplifiers allow up to about 6 Tb/sec even on transoceanic cables. AT&T and NTT just signed a contract to use these fibers (probably at a lower rate at first) in a trans-Pacific cable, and the next trans-Atlantic cables will also use this technology. These cables are slated for service in about 1995. Now a phone call takes about 32 kb/s; let's say 50 kb/s to make the math easier (note: this is not using any kind of fancy compression). 20 phone calls take 1 Mb/s (actually, T1 line at 1 Mb/s handles 32 calls, I think); so 1 Tb/s is 20,000,000 calls. So a trans-oceanic cable consisting of two fibers (one each way) could handle about 120,000,000 calls. In other words, nearly half the people in the US could be talking to people in Asia using those two fibers. > 2) The real costs of transmission is really in the multiplexing > technology. Getting information on and off these fiber highways is > the cost bottleneck. Fortunately, we can build bigger, faster, and > CHEAPER multiplexers with the new silicon (and other) technologies. > Thus these costs are going down quickly too! Actually, you want to do your multiplexing optically too. This is getting easier all the time. How do you think they TESTED those fibers at the high throughputs? The hardest problem arises in connection with packet-switched networks: the last record I heard for packet switches is a degree-32 node handling 150 Mb/s on each connection; it was from BellCore and is called the ``switching fabric.'' The importance of this kind of switching technology might well be mooted by increasing bandwidth: if fibers reach 2000 Tb/s, very much in reach in view of the above, than 200-fiber cables would permit a billion global broadcast HDTV channels. > Because these costs are going down so very much they will quickly be > dwarfed (or indeed may already be dwarfed) by other costs such as > local access, accounting of calls, etc. Therefore, for all practical > purposes a LOCAL phone calls costs as much as a LONG DISTANCE phone > call. Th1e costs will be: subscriber equipment, network interfaces, and right-of- way for cables on land. > Clearly the pricing structures do not reflect these costs (Yet!). My > question is - What is AT&T, MCI, Sprint, etc going to do when they can > no longer reasonably charge more than a local call? Won't this change > the industry substantially? Will North America move to a wide area > extended flat rate billing zone? > How about this - you pay Sprint $10/month to call anywhere in the USA > to talk for as long as you want. Unfortunately, the pricing structure reflects the costs of the currently installed equipment, and will continue to do so even after that equipment is obsolete. I suspect that, short of a revolution, the best we will see will be a gradual decrease, and the promise of the new transmission technologies won't be realized until 2010 or so.
Jeff Hayward <jah@margo.ots.utexas.edu> (04/27/91)
In article <telecom11.303.13@eecs.nwu.edu> james@cs.ualberta.ca (James Borynec) writes: > After looking at some of the developing transmission technologies > (notably fiber optics) I have reached some conclusions that I would > like to share with the net. I would also appreciate any feedback. > Clearly the pricing structures do not reflect these costs (Yet!). My > question is - What is AT&T, MCI, Sprint, etc going to do when they can > no longer reasonably charge more than a local call? Won't this change > the industry substantially? Will North America move to a wide area > extended flat rate billing zone? > How about this - you pay Sprint $10/month to call anywhere in the USA > to talk for as long as you want. I've been told that AT&T could still make money at a rate of 1/10 of a cent per minute, no matter where in the North America you go. Here in Texas, long distance charges are completely dominated by the local BOC access fees, 7.5 cents/minute per end. It seems clear to me that our society can best exploit the opportunities that today's telecommunication technology brings by doing distance- insensitive pricing. I'm not so sure about time-sensitivity, but I think that the experience of the IP internet shows that usage insensitivity yields some useful results also. It is certainly the case that the BOCs (and to a lesser extent the IXCs) make an enormous profit on a very inexpensive service. Jeff Hayward The University of Texas System +1 512 471 2444 Office of Telecommunication Services jeff@nic.the.net
Jack.Winslade@uunet.uu.net> (04/27/91)
In recent articles: > Because these costs are going down so very much they will quickly be > dwarfed (or indeed may already be dwarfed) by other costs such as > local access, accounting of calls, etc. Therefore, for all practical > purposes a LOCAL phone calls costs as much as a LONG DISTANCE phone > call. > Clearly the pricing structures do not reflect these costs (Yet!). My > question is - What is AT&T, MCI, Sprint, etc going to do when they can > no longer reasonably charge more than a local call? Won't this change > the industry substantially? Will North America move to a wide area > extended flat rate billing zone? > How about this - you pay Sprint $10/month to call anywhere in the USA > to talk for as long as you want. I don't think we're gonna see this in God's lifetime <grin>. The Phone Companies will do whatever it takes to maximize their profits. That means maximum $$$ transferred from the pockets of consumers (that's you and me, gang) to the pockets of the corporations. If they *COULD* make more by offering flat-rate service, they would, but I think in practicality it would result in some people abusing it (as in the 1800-0700 PCP connections of a few years ago) and keeping lines open continuously. Selling it by the slice instead of all-you-can-scarf is obviously more profitible for all telecom corporations. Local telcos have been trying to push for the end of flat and/or untimed local service in favor of measured service. They **CLAIM** this 'saves money for many customers' but in truth it simply serves to extract more $$$ from customers' pockets. I **CAN**, however, visualize that in the near future the least expensive portion of a phone call will be the long distance transport from one area to another. I can imagine LD calls costing just slightly over local calls of the same duration, but the most expensive part of any call, local, LD, or international, may very well be the local telco's charge for the local loop portion of the call, whether it is to another local subscriber or the terminal point for an interexchange carrier. However (comma) if I am wrong, I would not gripe. ;-) Good Day! JSW [1:285/666@fidonet] DRBBS Technical BBS, Omaha (1:285/666) ..uunet!ivgate!drbbs
John Higdon <john@zygot.ati.com> (04/28/91)
Jack Winslade <ivgate!Jack.Winslade@uunet.uu.net> writes: > I can imagine LD calls costing just > slightly over local calls of the same duration, but the most expensive > part of any call, local, LD, or international, may very well be the > local telco's charge for the local loop portion of the call, whether > it is to another local subscriber or the terminal point for an > interexchange carrier. The rate structure for calls outside of the innermost band (Zone 1 -- Local) is such that it is already distance unrelated in California. LATA calls are outrageously expensive. During the day, it is cheaper to call NYC on AT&T from San Jose than it is to call San Rafael, sixty miles to the north. Calls within California but outside the LATA are better, but not as good as interstate. A call to my 800 number from say, San Francisco, is $8.60/hr, but a call from San Diego (nearly 600 miles away) is $5.63/hr. This is an example of the stranglehold that LECs still have on the toll market. Pac*Bell still charges a fortune for calls that it carries. I know of someone who ran up over $200 on calls to a girl friend on the other side of town in one month who was just out of the local radius. What he did not realize that he would have been better off if she had lived out of state! In fact, most knowledgeable types who cannot find a good UUCP connection within the local calling radius look for one in another state rather than settle for one in the Bay Area with the ultra ripoff rates. John Higdon | P. O. Box 7648 | +1 408 723 1395 john@zygot.ati.com | San Jose, CA 95150 | M o o !
Dave Levenson <dave@westmark.westmark.com> (04/28/91)
In article <telecom11.303.13@eecs.nwu.edu> james@cs.ualberta.ca (James Borynec) writes: > Because these costs are going down so very much they will quickly be > dwarfed (or indeed may already be dwarfed) by other costs such as > local access, accounting of calls, etc. Therefore, for all practical > purposes a LOCAL phone calls costs as much as a LONG DISTANCE phone > call. > Clearly the pricing structures do not reflect these costs (Yet!). My > question is - What is AT&T, MCI, Sprint, etc going to do when they can > no longer reasonably charge more than a local call? Won't this change > the industry substantially? Will North America move to a wide area > extended flat rate billing zone? An interesting point! In most industries, the price of goods or services reflect their cost, and also their value to the customer. If the customer perceives that there is increased value in 'long distance' calling, then the customer is willing to pay increased rates. Remember Satellite Business Systems (one of the early alternate long distance carriers)? They were a joint venture of IBM and Aetna, I think. Their rate structure was very simple. While I forget the exact numbers, I think it was 11 cents per minute for calls up to 100 miles, and 21 cents per minute for all other calls. They routed virtually all of their long-haul traffic by satellite. With that technology, it's roughly 45,000 miles between any two Earth stations, regardless of the overland distance between them! The cost is the same, and their pricing reflected that. (They also remained unprofitable throughout their short existence, and were eventually aquired by MCI.) It takes more than one carrier to alter the customer's expectations, but when distance-insensitive pricing becomes common, the big guys will have it, too. If none of the 'big guys' have it, however, it won't become common. Dave Levenson Internet: dave@westmark.com Westmark, Inc. UUCP: {uunet | rutgers | att}!westmark!dave Warren, NJ, USA AT&T Mail: !westmark!dave Voice: 908 647 0900 Fax: 908 647 6857
"Daniel R. Guilderson" <ryan@cs.umb.edu> (04/28/91)
Given that the recent posts about fiber optic transmission rates in the range of terabits per second are accurate, I envision a phone network in which people maintain a continuous live connection to a packet switched network. When that happens, it will make sense to charge a flat rate for most service and in addition a resource usage fee. People who don't make a lot of long distance transfers or transfer huge amounts of data will only be charged the flat rate. I like to try to imagine what it would be like if the internet adopted an RFC which specified a voice interface protocol. All you would need is an ADC and the right software and we could have voice transmissions over the internet. I bet that would really scare the hell out of the telephone companies. I think the lack of bandwidth is the only thing that's keeping it from happening. Daniel Guilderson ryan@cs.umb.edu UMass Boston, Harbor Campus, Dorchester, MA USA
"James Borynec; AGT Researcher" <james@cs.ualberta.ca> (04/29/91)
ivgate!Jack.Winslade@uunet.uu.net (Jack Winslade) writes: > If they *COULD* make more by offering flat-rate service, they would, > but I think in practicality it would result in some people abusing it > (as in the 1800-0700 PCP connections of a few years ago) and keeping > lines open continuously. Selling it by the slice instead of > all-you-can-scarf is obviously more profitible for all telecom > corporations. Note that we will soon have fiber bandwith coming out of our ears. Everyone talking to everyone else across the country will only use up 80 48 strand cables. If you need more capacity along a stretch you just replace the repeaters with newer technology - no need to plow in another cable. This technology changes the WHOLE economics of long distance voice traffic. > Local telcos have been trying to push for the end of flat and/or > untimed local service in favor of measured service. They **CLAIM** > this 'saves money for many customers' but in truth it simply serves to > extract more $$$ from customers' pockets. The problem is that people LIKE flat service. The only way that I can see for people to go to local measured service is if they get long distance service at the same rate. How about this: You pay five cents a minute to call anywhere in the USA (including local calls). jim borynec james@cs.ualberta.ca
Nuclear Warrior <dpletche@jarthur.claremont.edu> (04/29/91)
I have been harboring an amusing idea for some time. Wouldn't it be great if one of those rare individuals who wasn't motivated solely by personal and corporate greed was to create a full-service telephone company, hopefully providing long distance (and in some areas, where the LEC was especially lame, local service) at the lowest possible prices? It would charge just enough to hire all the necessary people, provide ample capacity and keep all of the equipment state-of-the-art. Perhaps a public stock offering could be made, and the big benefit would be that $1000 up front would get you five years of unlimited free long distance on your line or something. The amazing thing is that this could actually be done, and it would probably have fascinating effects, effectively bringing the whole country into your local calling area. Any comments? David Pletcher dpletche@jarthur.claremont.edu
John Higdon <john@zygot.ati.com> (04/30/91)
Nuclear Warrior <dpletche@jarthur.claremont.edu> writes: > Wouldn't it be great if one ... was to create a full-service telephone > company, hopefully providing long distance ... and ... local service > ... at the lowest possible prices? It would charge just enough to > hire all the necessary people, provide ample capacity and keep all > of the equipment state-of-the-art. And maybe charge just enough more to guarantee the investors a twelve percent rate of return. Maybe I missed something, but is that not what our LECs as a regulated monopoly are already supposed to be doing? If you have trouble recognizing any of that in your local telephone utility, perhaps it is because the regulated division is just a tiny speck on the spreadsheets of a megaconglomerate holding company who is manipulating the books, the legislators, the regulators, and its customers to maximize the "unregulated" profits of the parent corporation. I give you Pacific Telesis as an example, not because it is particularly slimy (it is), but because it is typical. Here you see a very powerful corporation, who among many other things, happens to own a telephone utility. This monopoly is guaranteed by statute to earn a given percentage on invested capital. It cannot lose. The government will not allow it. But does this satisfy PacTel? Of course not. It wants to have the last of the regulations removed that prevent Pac*Bell from competing with its own customers. It wants it both ways: a guaranteed rate-of-return AND the ability to compete on a playing field tilted in its favor. ("No one but Pac*Bell should be able to provide intraLATA toll service, but Pac*Bell should be able to manufacture and sell terminal equipment.") That is one holding company's idea of fair. I can think of a lot of people who would be quite happy running an exemplary utility -- providing the best service at the lowest possible cost. But looking at the stepsisters Bell, it is not really very likely that they will get the chance. John Higdon | P. O. Box 7648 | +1 408 723 1395 john@zygot.ati.com | San Jose, CA 95150 | M o o !
nanook@eskimo.celestial.com (Robert Dinse) (04/30/91)
In article <telecom11.306.1@eecs.nwu.edu>, fulk@cs.rochester.edu (Mark Fulk) writes: > Now a phone call takes about 32 kb/s; let's say 50 kb/s to make the There are multiplexing schemes that only require 32kb/s for a voice channel but they destroy high speed data and fax so are rarely used in this country. The normal T1-cxr uses 64kb/s (8 bits times 8 Khz sample). > 20 phone calls take 1 Mb/s (actually, T1 line at 1 Mb/s handles 32 The standard T1 rate is 1.544 Mbits/sec and carries 24 not 32 channels.
"Barton F. Bruce" <Barton.Bruce@camb.com> (04/30/91)
In article <telecom11.313.5@eecs.nwu.edu>, dpletche@jarthur.claremont. edu (Nuclear Warrior) writes: > I have been harboring an amusing idea for some time. Wouldn't it be > great if one of those rare individuals who wasn't motivated solely by > personal and corporate greed was to create a full-service telephone > company, hopefully providing long distance (and in some areas, where > the LEC was especially lame, local service) at the lowest possible You have the right idea. Think of the HORRIBLE impact on the European contries of their individual greedy PTTs. They make the RBOCs look like saints. Realise how fundamental it is to the growth and prosperity of our planet to have communications so darn cheap that ANYONE can easily afford ANY amount of bandwidth they can use. The not millions but BILLIONS of dollars they are about to use to sink the South East Expressway underground in Boston is totally needless. They are perpetuating the ugly downtown mess that originally was 'necessary' only because it was not possible or economical to communicate effectively with other businesses unless you were physically DOWNTOWN. If one tenth of that money were to be invested PERMANENTLY and used to subsidise statewide communication with it being CHEAPER to call anywhere OTHER THAN downtown Boston, and make the WHOLE state a local call to residences, the crying need for this insane artery project would dissappear. Anyone note that even Pop Sci this month mentioned an AT&T software package for Definity PBXes called "HOME AGENT"? You log in or out of your telemarketing response terminal located AT YOUR HOME. When logged in, customer calls will be dynamically routed to you. No gas mileage, no expensive office space rent to support your individual work, and, if in Boston, a little less need to squander billions sinking the smogging expressway. The video teleconferencing codecs that work at 112/128kb will be two or three thousand dollars in a year or so, further allowing businesses to move to their favorite countryside hilltop. Cheap dial T1 could hasten teleconferencing's growth - less compression needed, cheaper codecs. The telco's charter should be 'how much can be done for how little dollars', rather than, sadly, the reverse.
"Ralph W. Hyre" <rhyre@cinoss1.att.com> (05/01/91)
In article <telecom11.306.2@eecs.nwu.edu> John Higdon <john@zygot.ati. com> writes: X-Telecom-Digest: Volume 11, Issue 306, Message 2 of 6 > "James Borynec" <james@cs.ualberta.ca> writes: >> Will North America move to a wide area extended flat rate billing zone? > [No] ... executive board is going to ... "give it all back" > when the promised-land technology comes to pass. > ... the benefits cost-wise are for the service providers, not for the > customers. Well why can't consumers band together, form a non-profit organization, and build their own phone network to provide service at cost? Amateur radio operators do this already. Subscriber equipment costs more than telephones, but you get free bandwidth. One could use microsatellites and radio links to provide enough capacity to get a network up to a critical mass of subscribers cheaply, then you could run fiber as your network grows to dwarf all others :-) Even with the expense of acquiring rights-of-way could be mitigated by asking for 'donations' from member/subscribers. - Ralph W. Hyre, Jr. Internet: rhyre@attmail.com Amateur Radio: N3FGW UUCP: attmail!cinpmx!rhyre Snail Mail: 45150-0085 [ZIP code] or: att!cinoss1!rhyre Phone: +1 513 629 7288
paul@unhtel.unh.edu (Paul S. Sawyer) (05/01/91)
In article <telecom11.319.5@eecs.nwu.edu> John Higdon <john@zygot.ati. com> writes: > I give you Pacific Telesis ... Since this sounded like a horrible, contageous disease to me, I wondered if it was a real word. My desk dictionary says: telesis: progress that is intellgently planned and directed : the attainment of desired ends by the application of intellegent human effort to the means. Does "truth in advertising" apply here, John? The next, possibly related entry, is: telesthesia: an impression supposedly received at a distance without the normal operation of the organs of sense. :-) Paul S. Sawyer {uunet,attmail}!unhtel!paul paul@unhtel.unh.edu UNH CIS - - Telecommunications and Network Services VOX: +1 603 862 3262 Durham, New Hampshire 03824-3523 FAX: +1 603 862 2030
ryan@cs.umb.edu (Daniel R. Guilderson) (05/01/91)
> Well why can't consumers band together, form a non-profit organization, > and build their own phone network to provide service at cost? Amateur > radio operators do this already. Subscriber equipment costs more than > telephones, but you get free bandwidth. Forming a non-profit phone network is pure fantasy. I fantasize about it all the time. The more I fantasize the more I realize it's just that. There's absolutely no precedent for it. I can think of a lot of successful non-profit organizations but nothing on the scale of AT&T, MCI or Sprint. I have another idea. Let's deregulate the telecommunications industry and merge it with the rest of the communications industry. We'll throw the phone companies, the cable companies, the LAN/WAN companies and anyone else who wants a peice of the action into a battle royal. The competition will be so vicious that prices will have to fall. Eventually there would be a shakeout and we would be left with a few very lean and mean competitive communications companies. Any new technologies would then be offered quickly as a competitive advantage. Of course the RBOCS and the long distance carriers would fight this idea tooth and nail. Daniel Guilderson ryan@cs.umb.edu UMass Boston, Harbor Campus, Dorchester, MA USA
Andy Sherman <andys@ulysses.att.com> (05/02/91)
In article <telecom11.307.10@eecs.nwu.edu>, jah@margo.ots.utexas.edu (Jeff Hayward) writes: |> I've been told that AT&T could still make money at a rate of 1/10 of a |> cent per minute, no matter where in the North America you go. I doubt *anybody* could make money at $0.001 per minute. I'd like to see this number justified. |> It is certainly the case that the BOCs (and to a lesser extent the |> IXCs) make an enormous profit on a very inexpensive service. Since when is the cost of installing and running the transmission media the only cost of the call? You got switching, you got operators, you got billing, you got marketeers (No, that's not a dirty word. Somebody has to figure out what services you want to buy). Also, you've got shareholders (in our case, a lot of "widows and orphans") who expect a reasonable return on their investment and you've got a need to fund R&D. Where, praytell, would all this "cheap" transmission have come from if AT&T had just marked up past transmission costs a few percent? If you amortize the past costs of inventing and developing digital transmission and digital switching and try to fund future trends, you're not going to sell services for $0.001 per minute. Do remember that the Internet was developed with Defense Department money. The service can be cheap because it was subsidized. Andy Sherman/AT&T Bell Laboratories/Murray Hill, NJ AUDIBLE: (908) 582-5928 READABLE: andys@ulysses.att.com or att!ulysses!andys What? Me speak for AT&T? You must be joking!
"Fred R. Goldstein" <goldstein@delni.enet.dec.com> (05/02/91)
In article <telecom11.319.4@eecs.nwu.edu>, Barton.Bruce@camb.com (Barton F. Bruce) writes... > The not millions but BILLIONS of dollars they are about to use to > sink the South East Expressway underground in Boston is totally > needless. They are perpetuating the ugly downtown mess that > originally was 'necessary' only because it was not possible or > economical to communicate effectively with other businesses unless > you were physically DOWNTOWN. Sigh. Once again, the "futurists" come out with an idea that works only so far as you don't follow up on the Law of Unintended Consequences. Don't get me wrong: I make a living in telecom, and think that keeping it expensive is a Bad Thing too. But Downtowns serve a purpose. Let's go way, way out beyond the pale of reality and assume that talking on a phone, picturephone, high-bandwidth-virtual-reality-phone, etc., could be as effective as face-to-face communication. (Yeah, right.) Just for argument, let's assume that fantasy and go to the next step, where businesses can be located on any convenient hilltop. In such an environment, concentrations of the workforce (downtown) go away. But people still have to work somewhere. Clearly our homes don't cut it: While a significant fraction of the population _can_ work at home _some_ of the time, our homes aren't big/quiet enough to support much of our modern office gear, and the human interaction of being in an office with co-workers is rather useful -- to me at least! So we end up with less-concentrated offices. (And with offices in the suburbs, housing can be farther from the city, causing creeping suburbanization. Soon there are no farms left for a hundred miles. Been to NJ lately?) We end up with Los Angeles. We end up with sprawling suburbia, where you can't have public transit since there's no concentration of workspaces to run the transit lines to! I work in the exurbs and commute _out_ from town (the easy way!), but it's a car or else! The Expressway in Boston carries a fraction of total commuter traffic; trains carry a huge load of those who work downtown. Much Expressway traffic in Boston is passing _through_; there's an ocean next door, so you just can't go east a bit. And if you have a sprawling, decentralized environment, what do you think that does for telecom costs? Most of the subsidies that we pay in non-residential telecom go to pay for the longer local loops needed in non-urban areas. Downtowns make money for telcos. Downtowns allow competitors like Teleport to have a chance. Who could afford to run fiber to all the newly-paved hilltops? Telco, as a monopoly, maybe. But it's not efficient. > The telco's charter should be 'how much can be done for how little > dollars', rather than, sadly, the reverse. It's true that telcos' historical "rate of return" regulation has encouraged over-investment, but there's no free lunch. Somebody has to foot the bill, and "futuristic" Californication of America won't solve it. Fred R. Goldstein Digital Equipment Corp., Littleton MA goldstein@delni.enet.dec.com voice: +1 508 952 3274 Do you think anyone else on the planet would share my opinions, let alone a multi-billion dollar corporation?
herrickd@uunet.uu.net> (05/03/91)
In article <telecom11.313.5@eecs.nwu.edu>, dpletche@jarthur.claremont. edu (Nuclear Warrior) writes: > I have been harboring an amusing idea for some time. Wouldn't it be > great if one of those rare individuals who wasn't motivated solely by > personal and corporate greed What are you waiting for? Surely you are such a person. > was to create a full-service telephone company, hopefully > providing long distance (and in some areas, where the LEC was > especially lame, local service) at the lowest possible prices? We have a new industry starting, calling themselves Alternative Carriers, offering local service in competition with the established local exchange carriers. > It would charge just enough to hire all the necessary people, > provide ample capacity and keep all of the equipment state-of-the-art. Is this opportunity real? Has your phone company hired a lot of unnecessary people? Do they have the money to swap out 1985's state of the art equipment for 1991's state of the art equipment? > Perhaps a public stock offering could be made, and the big benefit > would be that $1000 up front would get you five years of unlimited > free long distance on your line or something. I remember another offer that isn't made any more - $1000 up front gets you one week a year in the new tower hotel at Heritage USA for the rest of your life. There are four of those in my family that someone else bought and gave us. We did camp there once. Nice place. > The amazing thing is that this could actually be done, and it would > probably have fascinating effects, effectively bringing the whole > country into your local calling area. Any comments? There is a Robert Heinlein novel that sheds some light on the economics of big enterprises entitled "The Man Who Sold the Moon". There was another post a few back in this thread that repeated some common misconceptions about the relationship between cost and price. The price is determined by what people are willing to pay. In long distance service, AT&T provides a benchmark. Someone else who wants to persuade you to buy their service and not AT&T's has to do one of the following: 1. Convince you their service is better than AT&T's and worth a higher price than AT&T charges. 2. Convince you that they will give you comparable phone service to what you have been getting from AT&T for a comparable price and they will be nicer to you than AT&T is. 3. Convince you that you will be happy with their lower quality phone service because it costs so much less. Those considerations determine selling price. Cost does not enter in to the calculations. The provider of the service learns from the market what he can sell it for, the price. He has to find a way to make his costs low enough that he makes a profit at that price. Or go out of business when he runs out of money. The question I put after the first quoted passage above is serious. If you have a better idea, offer it to the marketplace. dan herrick herrickd@iccgcc.decnet.ab.com
ndallen@contact.uucp (Nigel Allen) (05/05/91)
ryan@cs.umb.edu (Daniel R. Guilderson) writes in Vol. 11, Issue 326, msg. 4: > Forming a non-profit phone network is pure fantasy. > ... There's absolutely no precedent for it. Recall that in the early years of the 20th century, the Bell companies were more interested in serving the cities than the sparsely populated rural areas. So new rural telephone companies sprang up. Some were owned by the local doctor or general merchant. Others were established as cooperatives or membership corporations. (There are some conceptual differences between cooperatives and non-profit groups, but in practice they're pretty similar.) Isn't UUNET set up as a non-profit organization? And aren't a lot of the regional NSFnet networks similarly set up? Now, I recognize that the rural telephone examples were monopolies, albeit marginally profitable ones, and what we are discussing is a competitive non-profit phone network, I don't think one could readily be set up (apart from something like shared tenant services in a co-operative apartment building or office complex), but there is plenty of historical precedent for people getting together to meet their own telecommunications needs when the established carriers weren't interested in serving their needs. Nigel Allen ndallen@contact.uucp
johnl@iecc.cambridge.ma.us (John R. Levine) (05/06/91)
In article <telecom11.326.4@eecs.nwu.edu> you write: > I have another idea. Let's deregulate the telecommunications industry > and merge it with the rest of the communications industry. ... > Of course the RBOCS and the long distance carriers would fight this > idea tooth and nail. Perhaps. A plausible outcome of this scenario is that everyone except the deepest pockets would end up bankrupt, and we'd be left with AT&T and the RBOCs more monopolistic than now. Or maybe General Motors or IBM. Regards, John Levine, johnl@iecc.cambridge.ma.us, {spdcc|ima|world}!iecc!johnl
Peter da Silva <peter@taronga.hackercorp.com> (05/06/91)
goldstein@delni.enet.dec.com (Fred R. Goldstein) writes: > So we end up with less-concentrated offices. (And with offices in the > suburbs, housing can be farther from the city, causing creeping > suburbanization. Soon there are no farms left for a hundred miles. > Been to NJ lately?) That's a good point ... for places that have a reason for existing other than a concentration of workers. For places like Scenic Houston, whose only advantage is low property values (thanks to it being built in a swamp on the edge of some really nice country I'd much rather live in), this would be a nice change. A bigger problem is that this can only work for service jobs. The number of jobs that *create* wealth that can also be telecommuted is relatively small (I'm in one ... actually the service part of my job is the only part I *can't* telecommute!). The most important jobs (manufacturing) can't telecommute at all without major expense. peter@taronga.hackercorp.com
roeber@cithe1.cithep.caltech.edu (05/06/91)
In article <telecom11.313.5@eecs.nwu.edu>, dpletche@jarthur.claremont. edu (Nuclear Warrior) writes: > I have been harboring an amusing idea for some time. Wouldn't it be > great if one of those rare individuals who wasn't motivated solely by > personal and corporate greed was to create a full-service telephone > company, hopefully providing long distance (and in some areas, where > the LEC was especially lame, local service) at the lowest possible > prices? You do not need a rich philanthropist for this. All you need is a free market, with any entry barriers low enough to be surmounted by startup capital. Public utility monopolies were created in response to high entry barriers (e.g., all that copper), with the theory that one regulated company was better than no companies, or one surviving unregulated one.[1] Now, if technology has improved to the point that the barriers are not so formidable as to preclude easy entry to the market, theoretically we need merely point this out to the populace and the government, and the market will be deregulated. Then, the motivations of "personal and corporate greed" will be the very agents that bring us this great service. Unfortunately, this is where economics is replaced by politics. And until the market is deregulated, even a rich philanthropist can't bring you a competing service. [1] Caveat: This applies to the American system. Here, in France and Switzerland, the PTT is just another government-run "service," and you could no more compete with it than you could form your own police force. But then again, Adam Smith wasn't French. Frederick G. M. Roeber | CERN -- European Center for Nuclear Research e-mail: roeber@caltech.edu or roeber@cern.ch | work: +41 22 767 31 80 r-mail: CERN/PPE, 1211 Geneva 23, Switzerland | home: +33 50 42 19 44