Date: Fri, 21 Aug 92 02:41 PDT
From: john@zygot.ati.com (John Higdon)
Newsgroups: comp.dcom.telecom
Subject: Re: Deterioration of POTS
Reply-To: John Higdon <john@zygot.ati.com>
Organization: Green Hills and Cows
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X-Telecom-Digest: Volume 12, Issue 650, Message 4 of 10

goldstein@carafe.enet.dec.com (Fred R. Goldstein) writes:

> As Marvin Sirbu pointed out, nobody sued AT&T for divestiture of the
> operating companies, but of Western Electric.  It was axiomatic that
> local service lost money and long distance made money; AT&T management
> may have concluded that they'd do best by keeping the latter.  Of
> course the cast-off Bells realized that they could make money with
> their monopolies too!  AT&T management wanted in to the computer biz,
> and lost their starchy white shirts!

Yes, the line we were all fed and that which some still believe is
that long distance subsidized local service. The actual truth is that
long distance and other business services subsidized the bloated,
inefficient, lethargic cow that was The Bell System. You will note
(putting emotion aside and letting reality prevail) that local service
rates have not even kept up with inflation and long distance rates
have fallen through the floor. Did we all get something for nothing?

No. What we did was cast the telcos into the sea of real economics.
Sink or swim. Gone are the "firemen" and "brakemen" of the
switchrooms.  Gone are endless levels of supervisors in the business
office. Gone are the casual over-ordering of supplies and the
"replace-it-whether-it-needs-it-or-not" mentality that was part and
parcel of Bell. The LECs had to survive without that "subsidy" and
they did -- marvellously. They have so much money that they cannot
decide whether to go into cable TV or Cellular or Voicemail or
information providing or ...

No, folks, the only thing that long distance used to subsidize was an
archaic, bloated dinasour whose time had come and gone. With that dead
and buried, our telecom dollars can now actually buy telephone
service.  It is this very concept that companies such as Bell Canada
do not want people to find out about. That subsidy line is being
pushed at this very moment in Canada in order to convince the
Canadians that Competition Is Bad.

What hooey! Does anyone in the US really still believe that old
baloney about cross subsidy of long distance/local service? The truth
of the matter is that the marketplace is the only truly effective
regulator of business and commerce. "Regulated Monopoly" is an
oxymoron. There is not enough regulatory horsepower in the universe to
ensure the lean and mean machine that results from nice, cut-throat
competition. Are the long distance companies more efficient than the
old AT&T? You bet. Are the LECs more streamlined and responsive? Of
course.

IMHO, it is always wise to examine any "natural monopoly" to see if
technological progress has changed the playing field. In the long run,
effective competition (COCOTs are not included since there are factors
that disable a true competitive situation) will always win hands down
over monopoly as a method for delivering value to the end user. I, for
one, will be most interested to see what happens when Pac*Bell is not
the only game in town. Hopefully, GTE will just simply go out of
business (after it loses its regulatory fight trying to avoid
competition).


        John Higdon         |   P. O. Box 7648   |   +1 408 264 4115
    john@zygot.ati.com      | San Jose, CA 95150 |       M o o !