Path: utzoo!telecom-request
Date: 3 May 91 10:14:00 EDT
From: HERRICK, DANIEL <abvax!iccgcc.decnet.ab.com!herrickd@uunet.uu.net>
Newsgroups: comp.dcom.telecom
Subject: Re: Decreasing Costs of Transmission
Message-ID: <telecom11.331.3@eecs.nwu.edu>
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In article <telecom11.313.5@eecs.nwu.edu>, dpletche@jarthur.claremont.
edu (Nuclear Warrior) writes:

> I have been harboring an amusing idea for some time.  Wouldn't it be
> great if one of those rare individuals who wasn't motivated solely by
> personal and corporate greed 

What are you waiting for?  Surely you are such a person.

> was to create a full-service telephone company, hopefully
> providing long distance (and in some areas, where the LEC was
> especially lame, local service) at the lowest possible prices?

We have a new industry starting, calling themselves Alternative
Carriers, offering local service in competition with the established
local exchange carriers.

> It would charge just enough to hire all the necessary people,
> provide ample capacity and keep all of the equipment state-of-the-art.

Is this opportunity real?  Has your phone company hired a lot of
unnecessary people?  Do they have the money to swap out 1985's state
of the art equipment for 1991's state of the art equipment?

> Perhaps a public stock offering could be made, and the big benefit
> would be that $1000 up front would get you five years of unlimited
> free long distance on your line or something.  

I remember another offer that isn't made any more - $1000 up front
gets you one week a year in the new tower hotel at Heritage USA for
the rest of your life.  There are four of those in my family that
someone else bought and gave us.  We did camp there once.  Nice place.

> The amazing thing is that this could actually be done, and it would
> probably have fascinating effects, effectively bringing the whole
> country into your local calling area.  Any comments?

There is a Robert Heinlein novel that sheds some light on the
economics of big enterprises entitled "The Man Who Sold the Moon".

There was another post a few back in this thread that repeated some
common misconceptions about the relationship between cost and price.

The price is determined by what people are willing to pay.  In long
distance service, AT&T provides a benchmark.  Someone else who wants
to persuade you to buy their service and not AT&T's has to do one of
the following:

      1.  Convince you their service is better than AT&T's and worth
          a higher price than AT&T charges.

      2.  Convince you that they will give you comparable phone service
          to what you have been getting from AT&T for a comparable price
          and they will be nicer to you than AT&T is.

      3.  Convince you that you will be happy with their lower quality
          phone service because it costs so much less.

Those considerations determine selling price.  Cost does not enter in
to the calculations.  The provider of the service learns from the
market what he can sell it for, the price.  He has to find a way to
make his costs low enough that he makes a profit at that price.  Or go
out of business when he runs out of money.

The question I put after the first quoted passage above is serious.
If you have a better idea, offer it to the marketplace.


dan herrick   herrickd@iccgcc.decnet.ab.com