Path: utzoo!telecom-request Date: 28 Apr 91 12:35:08 GMT From: Dave Levenson Newsgroups: comp.dcom.telecom Subject: Re: Decreasing Costs of Transmission Message-ID: Organization: Westmark, Inc., Warren, NJ, USA Sender: Telecom@eecs.nwu.edu Approved: Telecom@eecs.nwu.edu X-Submissions-To: telecom@eecs.nwu.edu X-Administrivia-To: telecom-request@eecs.nwu.edu X-Telecom-Digest: Volume 11, Issue 313, Message 3 of 8 Lines: 45 In article 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