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From: rb@ccivax.UUCP (rex ballard)
Newsgroups: net.dcom,net.mail
Subject: Re: PC Pursuit (opinions)
Message-ID: <251@ccivax.UUCP>
Date: Fri, 13-Sep-85 23:20:22 EDT
Article-I.D.: ccivax.251
Posted: Fri Sep 13 23:20:22 1985
Date-Received: Sun, 15-Sep-85 23:45:02 EDT
References: <63@seismo.CSS.GOV> <761@vortex.UUCP>
Organization: CCI Telephony Systems Group,  Rochester NY
Lines: 48
Xref: watmath net.dcom:1296 net.mail:1166

> 
> Opinion section starts here:
> 
> If you analyze this service, it's pretty clear what's going on.
> GTE is attempting to maximize use of facilities already in place
> that tend to sit idle outside the business day.  Those facilities
> are not massive (24 dialers for all of Los Angeles, for example).
> It seems unclear how they can EXPAND beyond the current levels based
> on the $25 flat rate fee, since local telephone lines and dialers
> are going to be one of the most expensive recurring costs in the
> operation.
> If you make FIVE one-hour calls of this sort during evening hours
> during the month, you've already cost them more than the price
> of the service!  It takes a few more hours (or slightly more 
> expensive non-local calls) to reach that level at late night-rate, but
> you can still reach the "no-profit" point for them damn fast.

Not necessarily.

One of the major problems facing the telco's in general and the long distance
companies in particular is the problem of people using SPRINT to call a long
distance bulliten board.  The modems are converting 300 baud signals into
binary signals between the two computers.  The lines being used are analog
lines being digitized at the rate of about 50KB/sec.  In other words, a line
capable of handling over 100 calls is being tied up for up to an hour.

The solution is simple, have 'modem callers' call telenet to call that
long distance board, and have computers at each end of the digital line
converting back down two 300 baud.  Even at 10 cents an hour, they come
out ahead (your throughput problem may have been a result of load averaging).

The problem is, if telenet must bill the consumer for this service, the
cost of billing a 1 hour/week user is more than the cost of servicing the
line.  (Sending a bill with a 25 cent postage stamp to collect a 50 cent
bill).  A way has to be found to get the user to use the system enough to
make the product pay for collection costs and still appear to be a
'bargain' over calling point to point on SPRINT.

Local telepone companies are considering similar tactics to reduce the
traffic on the local exchanges.  Some are selling 56Kb lines to the
PBX busineses already (Illinois).  Others are selling 9600 KB lines to
the home (Pacific Tel).

The main point is that competition will be stiff because the market has
only started to appear.  Currently less than 1% of all current computer
owners use a modem for more than an hour a week, if costs can go down
and services can improve, you may eventually see the time when you can
use your telephone like a disk drive.


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