Path: utzoo!attcan!utgpu!jarvis.csri.toronto.edu!mailrus!uwm.edu!rutgers!texbell!vector!telecom-gateway From: goldstein@delni.enet.dec.com Newsgroups: comp.dcom.telecom Subject: Re: Measured Service: What Does It Cost? Message-ID: Date: 16 Oct 89 19:19:27 GMT Sender: news@vector.Dallas.TX.US Organization: Digital Equipment Corporation, Littleton MA USA Lines: 54 Approved: telecom-request@vector.dallas.tx.us X-Submissions-To: telecom@eecs.nwu.edu X-Administrivia-To: telecom-request@vector.dallas.tx.us X-TELECOM-Digest: volume 9, issue 455, message 9 of 11 In article , comcon!roy@uunet.uu.net (Roy M. Silvernail) writes: > Do you have measured service? What are the actual rates? Do you have > to juggle zones? Do you have a free-call area? If you were there for > the beginning of measured service, what was the introduction like? > (was there a public outcry? Was the public even consulted?) Here in Mass., there are measured residence options but mostly it's flat-rate. Business is measured-only IF there are more than 160k local lines, otherwise you can get either. I.e., the boonies are flat, but Boston is measured. Measured local service, particularly for residence, is a truly awful idea. The usual justification is that it's "fair" that people who use more should pay more. But what is fair about monopoly rates that don't correspond to costs? Most local measured service plans don't have any relationship to costs whatsover. The classic study was done in Denver in the mid-1970s, where local calls can go up to 53 miles. The cost of the typical local call turned out to be under a mill a minute. Only the longest were around 2c/minute. It's no doubt part of the Colorado PUC's public record, but I don't have a reference. New York State is fairly rigorous about cost-based rates. New York City, with its extremely high percentage of tandem switching, is all measured. Costs vary with time of day, and there are multiple distance zones. Residence can be timed or untimed. Untimed is about 8c/call peak hour, timed about 7c plus a penny a minute after the first five. I don't have the details handy. But in any case, NYC is NOT typical of the rest of the country! I once worked at a firm whose major business was intervening in telco rate cases. Measured local service was a common telco ploy to raise rates. The cost of measurement typically exceeded the cost of the calls being measured! Thus it was actually padding the rate base, costing the ratepayers money, and not buying any actual benefit. If overpriced local calls cause people to talk less, then the actual cost/minute of the network will go up. That's terribly counterproductive and makes poor public policy. Typically 80% of telco local cost is fixed, 20% usage-sensitive. What usage sensitive pricing plan was like that? Usually it gets more than 50% of revenue from usage. Local calls, especially within a short distance (not the Atlanta/Denver multi-office extended local areas) are incredibly cheap, on a marginal usage cents per minute basis. If the telco could really justify the rate on the grounds of cost, it would be economically valid and "fair". But then it would be too cheap to bother with. Which means they really shouldn't bother, but they always come back again and again... fred