hes@ccvr1.cc.ncsu.edu (Henry E. Schaffer) (01/15/91)
In article <72210@bu.edu.bu.edu> yarvin-norman@cs.yale.edu (Norman Yarvin) writes: X-Telecom-Digest: Volume 11, Issue 34, Message 1 of 8 >It seems to me that there are two ways of dealing with this. One is >to continue the endless proliferation of rules, special cases, and >additional considerations. The other is to charge by cost. ... Cost accounting is much easier (but less interesting :-) when most of the cost is *Variable*. But, it seems to me, that most of the cost for local service are Fixed costs, and so the cost to the phone company of having you for a customer for a month do not change much regardless of how many phone calls you make per month. Here are the cost categories I see: Being a customer - having an account, getting mailed a bill, processing payment, providing telephone book listing. Fixed. Local loop - from your place to CO and CO line-card. Fixed. (Ecept for rare cases of local loop multiplexing) CO switch - Fixed for non-blocking switches. Mostly Fixed and partly Variable for blocking switches (the basic switch cost is Fixed, and the Variable cost is for increaseing the hardware enough to be able to handle one extra simultaneous user.) I don't have figures for the above, but it seems the costs are mostly Fixed. Unlike Variable costs which can be attributed in a logical fashion, Fixed costs have to be assigned by policy decisions, and the recent policy decisions over "business" vs. "residence" boil down to judgements of who "deserves" to be treated better (i.e., who we like) and not of who it costs more to serve. I think that mixing up these decision criteria leads to confusion. henry schaffer n c state univ