From: mju@mudos.ann-arbor.mi.us (Marc Unangst)
Subject: Re: Modem tax back
Date: Sat, 15 Aug 1992 02:20:28 GMT
Organization: The Programmer's Pit Stop, Ann Arbor MI

In article <1992Aug14.011442.4969@xn.ll.mit.edu> olsen@xn.ll.mit.edu writes:
>Compuserve and its subscribers pay standard local rates for standard local
>calls.  If you persist in calling this 'nothing', then I'm afraid it's
>pointless to argue with you.

I don't think you understand.  (I'm not sure that I do, either, but
I'll give it a shot; seeing as how this is Usenet, I'm sure I'll be
quickly shot down if I'm wrong.)  Interexchange carriers (IXCs), like
AT&T and MCI, do not pay the same rate that you or I do for their
connection to the network.  Because they supposedly make much more
substantial use of their network connection than you or I do, they pay
substantially higher rates.

The argument against SprintNet, Tymnet, et. al. is that they, like the
IXCs, have points of presence (POPs) in various locations with
connections to the public switched telephone network (PSTN).  In
addition, they have built their own private network connecting these
POPs, using leased lines, microwave links, and so forth.  Thus,
SprintNet and Tymnet have essentially established their own
long-distance network, and are therefore IXCs.  And, as such, they
should pay the IXC rate for their PSTN connection, not the rate
charged for an ordinary business-type phone line, which is what they
pay now.

This is where CompuServe comes into the picture.  If the FCC decides
that SprintNet and Tymnet and the rest of those folks are IXCs and
should pay IXC rates for their PSTN connections, this will mean that
they will have to pass the increased charges on to their customers.
Since CompuServe is one of their customers, CompuServe will end up
being charged more.  And since CompuServe isn't about to start losing
money, it too has to pass the increased charges on to its customers.
Which translates into much higher CompuServe charges for you and me.

SprintNet/Tymnet/etc.'s original argument against having to pay IXC
rates was that since they were just small startup companies, competing
against the industry giant (Bell), they would be unable to compete if
they had to pay the higher charges.  That argument may have been valid
back in 1980 when the Bell system was first broken up, but I don't
think it's valid 12 years later; SprintNet and Tymnet are big boys
now, and they can play by the rules the big boys use.

Note that this argument has *nothing* to do with residential, or even
most business, modem users.  As long as you're not trying to set up
your own wide-area network and bypass the conventional IXCs, the FCC
isn't going to bother you.

>In arriving at the above statement, what method did you use for
>apportioning the cost of call switching equipment between residential
>and business users?

There is no difference, technically speaking, between a business call
and a residential call.  This is obvious.  It makes no difference to
the switch whether you're making a business deal or talking about Aunt
Mabel's hemorrhoids.  The justification for making business rates
higher than residential rates was that, on average, business lines
used more peak switch time than residential lines.  (Remember that
the telephone was first envisioned as a business tool; nobody thought
that everyone would have one in their home.)  So, the telephone was
mostly for business, and the home customers got something of a free
ride, since most of their usage was during the non-peak hours.  Since
the telco's switch is designed to handle peak call volume, calls
during non-peak hours have an essentially zero incremental cost.

Unfortunately, the two classes of user (business and residential) are
not so black-and-white anymore.  There are some residential customers
(i.e., your average BBS sysop) who make most of their use of the phone
during peak hours.  And, there are businesses who make most of their
use of the phone during non-peak hours.  Instead of going to what's
right -- different charges for peak and non-peak calling -- the telcos
are trying to make up some new rules to decide who's making peak calls
and who's making non-peak calls.  (i.e., modem users get lumped in
with the "peak calls" people, and so forth.)  Unfortunately the
general public has almost zero knowledge of the way switch capacity is
designed, so they assume that it's perfectly all right to charge the
same amount for peak and non-peak service, as well as have "business"
customers subsidize "residential" customers.  In reality, if any
subsidization is going to take place, it's going to be the peak users
subsidizing the non-peak users, without any mention of business or
residential use.

>benefit from universal service.  Why should long-distance networks
>(data and voice) be the sugar-daddies for everyone else?

They're not sugar daddies.  The IXCs are making much more substantial
use of their PSTN connection, so they should pay for it.

-- 
Marc Unangst                | Real men don't make backups.  Real men never
mju@mudos.ann-arbor.mi.us   | accidentally delete files that they're going
                            | to need later.
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