goldstein@delni.enet.dec.com (Fred R. Goldstein dtn226-7388) (06/19/89)
Lars Poulsen <lars@salt.acc.com> writes, >In article <telecom-v09i0202m01@vector.dallas.tx.us> > ms6b+@andrew.cmu.edu (Marvin Sirbu) writes: >> The subscriber line charge (SLC) is an element of interstate phone rates. > >I consider that to be a fiction. It is something that *I* pay to my >local telephone company, and which cannot be waived, even if I disable >all toll calls from the line. The local telco does not have to >substiantiate the expense that is alledgedly covered by this charge, and >it is not tied to the actual access provided. Perhaps Lars considers our system of mixed state-federal sovereignty to be a fiction, but it is deeply enshrined in our Constitution and most Americans wouldn't have it any other way. The Supreme Court issued a ruling which led to the interstate subscriber line charge. I think it was "Smith Vs. Illinois" (not the only case by that name) ca. 1930, and it held that since local telephone lines were part of a network that carried interstate calls, local phone lines are subject to federal regulation under the interstate commerce clause of the Constitution. Congress gave the FCC that authority. Local phone line costs are proportionately divided between state and interstate (FCC) jurisdiction, based on the overall ratio of interstate usage (Subscriber Line Usage, SLU, is the formal term). SLU is computed for a jurisdiction (state). Now before the FCC changed the rules at around the same time as divestiture (but in a proceeding that predated divestiture -- this was coincidence), SLU was multipled by a fudge factor called Subscriber Plant Factor (SPF) and some more incantations were done to raise the interstate share to some multiple of its true usage. So in 1982, about 30% of local loop cost was interstate, though only about 10% of calls were interstate. Why do this? Because inTRAstate costs were covered by monthly bills, but inTER state costs were covered only by interstate usage (LD calls). Thus LD subsidized local, while the telcos had "plausible deniability" behind the SPF numbers. This whole process was called "separations". The FCC changed the rules and now has an increasing share of the fixed costs ("non-traffic sensitive", NTS) of the interstate share of local facilities (from SLU*SPF*total cost, still probably around 30%) covered by non-traffic-senstive billing (fixed monthly "access" charges). This allows the traffic-sensitive billing (per-minute charges) to be smaller and LD rates to be lower. If, however, your line were ruled totally intrastate, then the local bill would have to cover about 100% of the cost rather than 70%. The FCC has split the difference, but it's all entirely legal and basically necessary under the federal system. >I do not object to volume discounts. But Centrex is NOT a volume >discount. Centrex is a tariff that allows a subscriber with 400 >instruments to describe this as a virtual PBX with 12 outside lines. You >then pay only for 12 lines plus rental on the non-existent PBX. I >maintain that this is sheer obfuscation. Different states have different Centrex rates. Few if any however lose money for the telcos. If they make a profit, then what's the beef? Cost accounting for telcos is a black art, one which neither they nor the regulators are very good at, but since regular line costs are entirely fictional, Centrex is probably closer to true cost. fred