TELECOM Digest Sunday, 13 Nov 1983 Volume 3 : Issue 99
Date: 11 November 1983 20:45 EST
From: Leigh L. Klotz <KLOTZ @ MIT-MC>
I just joined the crowd in complaining about the control character
lossage (inability to redisplay lines after a control character is
typed), and the lack of a suitable function for the RUBOUT key. I
also complained that about having to pay $10/month if you want to get
rid of the menus.
The machine I was using this evening lost its net connection to
wherever, and I lost the message I was mailing, but not the header!
I'm reasonably satisfied with MCIMail, but I'd be interested in
hearing from people who develop uploading software for editing on
personal computers and mailing in a batch mode so you don't have to
interact with their editor.
[Sigh, I don't even have my welcome package yet. I registered over 3
weeks ago! --JSol]
Date: 12 November 1983 09:20 EST
From: "Marvin A. Sirbu, Jr." <SIRBU @ MIT-MC>
Subject: Access charges
Okay, let's go over this one more time. Access charges are NOT
charges for access to the long distance network; the name is a
misnomer. Everyone who has telephone service has a wire that runs
from his or her premises to the local central office. The cost to the
phone company of installing and maintaining this wire does not depend
on the number of calls you make over the wire -- in regulatory
parlance it's called Non Traffic Sensitive (NTS) plant.
This same wire is used for making both local and long distance calls.
Question: how should you recover from the customer the annual cost of
this wire (maintenance plus depreciation)?
Since its cost doesn't depend at all on how much you use it, it seems
reasonable to charge a fixed rate per month for NTS plant.
Alternatively, if the average cost per customer of NTS plant is $25,
and the average household makes 250 minutes of calls per month, you
could tack $.10 per minute on all calls (on top of actual usage
sensitive costs), and collect -- on average -- the right total amount.
With this system, you'd under collect from people who made few calls,
and you'd over collect from people who made a lot of calls. Now if I
were one of the people who made a lot of calls, and I saw I was paying
3 or 4 times my share for NTS plant, I'd look around for some kind of
substitute system where I wouldn't be paying to cover the NTS costs
for some other guy who doesn't make a lot of calls. I might get a
leased line which has a fixed cost no matter how many calls I make, or
I might build my own microwave system or put up a satellite dish.
If I do that, then the average number of minutes for all phones will
go down -- say from 250 minutes to 200 minutes (since I as a big user
was raising the average), and everybody else will end up having to pay
$.125 per minute to collect enough to cover the NTS plant.
Until recently, we've used a combination of both systems to recover
the costs. The FCC has arbitrarily divided the NTS cost into two
parts. One part--the so-called "local" part -- has been paid for by a
fixed charge per month. The other part -- the so-called "long
distance" part -- has been paid for by a per minute charge, but only
on long distance calls. These latter funds were actually collected by
the long distance company and handed over to the local company to
cover the NTS plant.
The FCC access charge decision took note of the fact that large users
were opting out of the system. So they decided that the so-called
"long distance" part would also be recovered by a flat charge per
month. The result was supposed to be fairer rates -- frequent callers
wouldn't end up paying 3 or 4 times their share of NTS costs -- and
fewer big companies would opt out by building their own networks. Of
course, once you collect for the NTS plant through a fixed monthly
cost, you can lower the long distance rate by the $.10 per minute you
What the House just did in the legislation it passed is insist that we
go back to the old system, at least in part. Large businesses will
pay a flat rate per month for their NTS plant. But then ALL users,
including large businesses, will pay a per minute charge on long
distance to cover the NTS plant for residences and small businesses.
You can see that the large business ends up paying twice, and the
residence or small business that makes few long distance calls gets a
As a result, long distance rates will not go down (they may go down a
little because the flat payments being made by large businesses
reduces the amount that has to be collected through long distance
rates) and large businesses will still have an incentive to opt out of
The House recognized that these large businesses will want to opt out,
so they put in the bill what amounts to a tax on anyone's private
telecommunication system, the revenues from which go into the fund for
paying NTS costs of telephone customers. In other words, if MIT has a
private microwave link to it's observatory out in Groton, we'll have
to pay a tax on it which goes to keep residential and small business
telephone bills down.
One of the problems the bill doesn't address is how you are going to
compute the tax. Will it be so many dollars per kilohertz of
bandwidth? per kilobit per second? per voice channel? what if I'm
using it to send data? If I use the channel for packets is the tax
based on a per packet basis? Or, if I have a 50 kbps CAPACITY packet
channel do I get taxed for 50 kbps, even if I send very few packets?
As soon as you start to think about it, you realize that the proposed
tax is going to be pretty unworkable.
There's a lot more detail to the story than I could go into here (for
example, the so-called long distance NTS cost part is further divided
into an interstate part and an intrastate part and the two parts may
be handled quite differently as the rules for the former are
determined by the FCC and the rules for the latter are determined by
the state PUCs).
Now it's true that one result of the FCC plan is that large businesses
will end up paying less, and residences that make few long distance
calls will end up paying more than under the current system. That's
because, up to now, residences haven't been paying the full cost of
the NTS plant they use; they've been subsidized by the long distance
callers. The FCC has simply decided that the subsidy a) shouldn't be
continued as a matter of fairness -- why should people in rural areas
who make lots of long distance calls subsidze everyone, including rich
suburbanites? and b)in the long run, with new technologies allowing
large businesses to opt out altogether, the current system can't be
In short, I think, in the long run, we'll all be better off if the
FCC's access charge decision is allowed to stand.
Research Program in Communications Policy
Date: 12 Nov 1983 1002-PST
From: Jon Solomon <JSol@USC-ECLC>
Subject: Access charges
The other side of Marvin Sirbu's argument is that residence customers,
faced with paying high prices for local service will be forced to do
without telephones if they can't meet the cost, or don't think it is
worth it. In short, it's big business vs. the little guy.
I don't think that a law taxing private communications facilities will
be unenforcable. The spirit of the law is to insure that the little
guy keeps his phone service. The FCC and the PUCs will adhere to the
spirit of the law when setting up rate structures and taxes for such
things. (taxes could be evaluated as each new license is applied for,
in the microwave model, private line services would be easily taxed).
The justification for this is that the phone network is designed to
work only one way, and if you opt for "other" services, you should
subsidize this primary service.
The following breakdown of services is my own opinion on what I think
should happen, can anyone give a more accurate picture?
First there is the cost of the two-wire connection between you and the
central office. Who pays for this is being decided in Congress.
Then there is the cost of the local CO switching. In my case, I'm
hooked up to a number 1 ESS machine. If I make a call to someone else
on the same switch, the call only uses the resources defined up to
here. Part of this (the part which gives you dial tone, tells incoming
calls your line is busy, rings your phone, accepts digits, decides
where your call is going, connects you with interoffice trunks or
lines on the same switch) is paid for by message units in a message
rate environment. The rest of it (the part which provides battery to
your phone, the parts which are unique to your line) would be paid for
by basic service. In an unmeasured environment, all of this is paid
for by basic service.
Then there is the interoffice trunk. I'm referring here to local
calls. We have two ESS machines in our central office, and there are
the equivalent of interoffice trunks between them. There are also
trunks from our central office to (theoretically) all other exchanges
to which we are local (in practice this may not always be true. In a
measured service environment, this is what is paid for with measured
rates. In a flat rate (unmeasured environment), this is paid for by
This is the basic local environment. Anything else described here is
toll. Toll calls are always paid for by measured units. some Toll
calls are inter-LATA (interstate for some), others are intra-LATA.
Inter-LATA calls are carried by AT&T, SBS, MCI, Sprint, etc.
Intra-LATA calls are carried by the local operating company.
What I'm pointing out here is that the first thing I described, the
two-wire loop between you and the central office is what is being
given the largest political thrust. The basic argument that I tend to
agree with is if I don't have a phone, not only can I not call you,
but you can't call me either. If I get a phone and don't use it, the
real reason I have the phone in the first place is so that I can be
REACHED. "It's your dime" is the adage which applies here.
End of TELECOM Digest