From: tad@ssc.wa.com (Tad Cook)
Subject: Re: Modem tax back
Organization: very little
Date: Wed, 12 Aug 1992 21:19:54 GMT

In article <1992Aug10.213156.102@xn.ll.mit.edu> olsen@xn.ll.mit.edu writes:
>
>>>>[Tad Cook] You want data communications networks to be free of the
>>>>injustice of paying for services they use.
>
>>>[me] What services, pray tell, do the data networks use without
>>>paying for them?  ... Unless someone can explain the magical reason
>>>why calls to a data network modem are more expensive ... I will
>>>still maintain that carrier access charges (i.e., the 'modem tax')
>>>are a ripoff designed to subsidize local telephone companies.
>
>>[Tad] Its because of a concept called universal service....residential
>>customers pay less than the cost of providing service, and businesses
>>pay more than their share of the costs.
>
>Note that Tad is now implicitly admitting that Comupserve *does* pay
>for the services it uses.  He is now complaining that Compuserve
>doesn't pay a high enough subsidy on top of that.

No, I am saying that Compuserve uses the myth of the "modem tax"
so that it pays NOTHING (other than for the point of presence)
while other carriers pay the tarriffed rate.
>
>>why should your employer pay anything more than what you pay at home?
>
>Because business lines, as a class, do far more peak-hour calling than
>do residence lines.  For direct-dialed service, peak-hour calling is
>the only usage which increases costs for the telephone company, so
>business lines cost more to provide.  IMHO, the idea that residential
>rates (except for certain 'lifeline' rates) are subsidized is largely a
>canard.


Wait a minute....my question was rhetorical...asked because YOU are
the guy that said that Compuserve shouldn't pay for connections
to the local network that cost the same as other network connections.
YOU are the guy who felt that there should be no difference in
rates.  Now you are saying that businesses should pay more
because a line terminates at a commercial location?

The "idea" that residential rates are subsidized by business rates
is not a "canard"  (a false or unfounded story).

>
>>So if the division of costs is set up so that businesses pay more,
>>why does Compuserve get a break?
>
>Compuserve pays business-line rates too.  You want it to pay an even
>higher rate than most businesses.

No, I want them to stop LYING about a mythical "modem tax" and
start paying the same rate for having local telcos transport
their traffic to and from their network points of presence
that every other carrier has to pay.

>
>>And why should AT&T and Sprint pay any access charges for connecting
>>to the local network?
>
>Why indeed?  They shouldn't, except for regular business rates, and for
>special services they need which regular businesses do not.


OK, well, I guess you have been lobbying the FCC and your PUC to
raise everybody else's phone rates so that Sprint and AT&T don't
pay for network connections too?  Remember the local telco has
a regulated rate of return.  You cut someone's rates, and everyone
else's goes up.

Note that paying for "special services they need which regular
businesses do not" is exactly what Compuserve DOESN'T want to
pay for when they circulate the modem tax rumor to avoid paying
for possible future ONA services.

>
>>So if Compuserve doesn't pay access charges ...  why should any
>>carrier pay access charges?  And if none of these charges are paid ...
>>how much more do you want to pay for your home phone line to make this
>>all happen?  How many residential users drop off the network?
>
>Here's the crux of Tad's argument: if long-distance networks (data and
>voice) don't pay a subsidy to the local telephone company, residential
>rates will rise enormously: so much that an unacceptably large number
>of residential users will drop telephone service.


Its not MY arguement....its the basis of universal service...its been
done this way for many years.  We got a big drop in cross subsidies
when AT&T was broken up, and local rates mushroomed.  Now (claiming
that it is a "modem tax"??) you want the carriers paying NOTHING
more than what a residence pays for a phone line for each of their
trunks in a point of presence.  If you really think this is in
the public interest, why not ask for an NPRM from the FCC?  Or
is it just easier to circulate network "chain letters" about
a mythical "modem tax"??

>
>The proper way to subsidize universal service (if necessary) is to have
>all telephone rates based on cost, unbundle the rates to allow
>competition in telephone switching, and to levy a tax on top of all
>these rates to subsidize residential service, *from any provider*, not
>necessarily from the current monopoly telephone company.  This allows
>both residential subsidies and telephone competition to co-exist.
>(IMHO, the telco couldn't raise residential rates much anyway in this
>scenario, and might have to reduce them, since otherwise the
>competition would undercut their prices and take away their market
>share.)


Oh, great!  Then the rural users pay thousands of dollars per
month for the "true cost" of providing service into low desity
areas, and the telcos just fight over providing the lowest cost
service to big customers in the city.  Some telephone service!

>


-- 
 Tad Cook     |  Phone:  206-527-4089  (home)     |   MCI Mail: 3288544   
 Seattle, WA  |  Packet: KT7H @ N7DUO.WA.USA.NA   |   3288544@mcimail.com 
              |  Internet: tad@ssc.wa.com        or...sumax!ole!ssc!tad