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From: goldstein@carafe.enet.dec.com (Fred R. Goldstein)
Newsgroups: comp.dcom.telecom
Subject: Re: Best and Worst (was: Labor Day, 1990)
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Date: 10 Sep 90 15:33:05 GMT
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X-Telecom-Digest: Volume 10, Issue 636, Message 11 of 11


>[Moderator's Note: I liked our monopoly here in the United States
>also, and it appears, based on consumer organization polls that people
>here are finally beginning to wise up to the problems with
>divestiture. I have no problem with competition: let people use
>whatever service they want; but why was AT&T smashed to pieces in the
>process?  PAT]

Disregarding our eternal disagreement about my personal hero, Harold
Greene, competition is not a simple binary state {competition |
monopoly}.

Before Carterfone, AT&T's utter monopoly meant that you could only buy
their modems, $25/month for a 300-baud "Dataphone" clunker.  You could
only buy their PBXs, mechanical clunkers.  Technology was
intentionally slowed down to meet long depreciation schedules.
(Anybody remember what it cost to have an answering machine?  You
don't want to know.)

Competitive provision of terminal gear has been absolutely vital to
the development of telecom, computer and especially datacomm
technology.  While there's a lot of junk on the market, I'm beginning
to see a reaction; "real" metal-base ITT (Alcatel Cortelco) phones are
back in one large local store (You-Do-It), for instance, and the
one-piece junkers are less common.

Competitive provision of long distance hasn't changed the technology
as much, but it did force AT&T to go digital faster than they would
have.  And it led to MUCH lower rates for the private lines that
datacomm depends upon, the introduction of T1 and T3 services, etc.
In the old days rates were totally divorced from economic cost.
That's economically inefficient.  Look at Soviet supermarkets for an
extreme case of mis-pricing.

Naturally, the FCC went too far.  They allowed COCOTs, for example, to
rip us off, along with hotels.  That isn't true competition; it's
usually taking advantage of a local monopoly.

The divestiture rules were also not designed to help consumers.  The
theory is "market allocation" -- reserve much of the market for AT&T
Comms & those under their umbrella, by taking it away from the Bells.
That little scheme was cooked up by AT&T's top brass as a way around
an antitrust case based on WeCo equipment. We were screwed, but not by
the presence of competition; rather, we were screwed by the
prohibition of "competition" for some services by the Bells. (Greene
weakened the original deal; it could have been a lot worse.)

Still, it's a heck of a lot cheaper for everything _but_ POTS down
here, compared to Canada. There are ways to maintain subsidies
(needed) in a competitive market. I hope they don't throw out the baby
with the bathwater, but monopolization isn't the solution.


Fred R. Goldstein   goldstein@carafe.enet.dec.com 
                 or goldstein@delni.enet.dec.com
                    voice:  +1 508 486 7388 
opinions are mine alone; sharing requires permission