BEFORE THE PUBLIC SERVICE COMMISSION OF THE DISTRICT OF COLUMBIA IN THE MATTER OF THE APPLICATION ) OF BELL ATLANTIC - WASHINGTON, D.C., ) INC. FOR THE AUTHORITY TO AMEND THE ) TT95-17 GENERAL REGULATIONS TARIFF NO. 203, ) SECTION 14, JURISDICTIONAL RATES ) REPLY TO BELL ATLANTIC - WASHINGTON, D.C., INC. S REPLY COMMENTS TWELVE REASONS WHY BELL ATLANTIC S COMMENTS ON ISDN SERVICE ARE SIMPLY WRONG The undersigned consumers respectfully submit this Reply to comments filed by Bell Atlantic - Washington, D.C., Inc. ( BA ) on December 8 and December 20, 1995, which were filed by BA in response to the comments of the Commission Staff and the Office of the People s Counsel. 1. BA has incorrectly described the charges of its ISDN tariff, by failing to acknowledge the fact that ISDN data services are most effective when both B channels are used (doubling all of BA s estimated costs of ISDN usage). For using both B channels, BA seeks to charge consumers $2.40 per hour from 7am to 7pm, and $1.20 per hour from 7pm to 7am. The only way that consumers can reduce these charges is by using only half the capacity in the ISDN connection. This is like playing basketball with one hand behind your back, swimming with an anchor tied to your body, or running a race hopping on one foot. You can do it, but why would you want to? 2. BA seeks an open-ended usage charge of $2.40 per hour in the 7am to 7pm period and $1.20 per hour in the 7pm to 7am period. This is clearly excessive by any standard. A person who uses an ISDN connection for 100 hours per month would be paying from $270 to $150 per month for local telephone service -- roughly 10 to 18 times the current cost of the highest tariffed local residential telephone service for the DC metropolitan area! 3. BA seeks to expand the definition of peak time from 5 pm to 7 pm. There is no justification for this 20 percent increase in peak time charges. 4. BA s tariff filing is confusing, but it appears as though the $19.50 monthly fixed charge is a surcharge on top of the cost of a residential measured usage telephone service. 5. BA has failed to show how metered usage for off-peak residential ISDN usage will cause network congestion. The fact that BA will not offer unmetered off-peak usage is evidence that BA wants to tax value added information services that use residential ISDN connections. 6. BA s description of ISDN users as computer-philes with more than adequate resources to pay as they go is an offensive and inaccurate attempt to obscure the important public policy reasons to promote deployment of this important service. It is true, of course, that by making the residential ISDN service expensive, only the wealthy will subscribe. But if residential ISDN service is ever priced correctly, at less than $25 per month for a 2B+D connection, a much more diverse group of consumers will begin to use the service, including many working class families that are buying computers to work at home, or for the benefit of their school age children. One should also consider the broader purpose of promoting ISDN usage, and the likelihood that new residential ISDN applications will develop once the service is more broadly deployed. 7. BA s filing seems to require a consumer who obtains ISDN service to pay a per minute metered charge for voice telephone calls. The Commission presently requires BA to offer a flat rate for telephone service. The current measured usage telephone tariff is based on a fixed charge per call - 6.5 cents. The new BA ISDN tariff seeks to charge more than 6.5 cents for every daytime telephone call over 3.5 minutes. If this will apply to voice calls it is clearly an excessive increase. Consumers should not be required to purchase an additional telephone line to get a reasonable priced telephone tariff. The Commission can fix this by clearly indicating that voice calls over an ISDN line will not be metered per minute of usage. 8. BA s failure to offer a flat rate service will prevent the Commission from learning about the potential benefits of broader ISDN deployment or ISDN usage patterns under a flat rate tariff. 9. BA s attempt to use excessive ISDN tariffs by other Local Exchange Carriers (LEC) should not mislead the Commission. There are active battles over ISDN tariffs in more than a dozen states today, including disputes in California, Washington, Utah, New Mexico, Virginia, Delaware, and Maryland, to mention a few. The battle is over the attempts by the LECs to price ISDN as some exotic service for the wealthy, or to price it closer to LEC costs, so we can see the development of an Open Platform for new digital services. 10. ISDN should be the immediate path for fast connections to the Internet. This will not happen if states allow BA and other LECs to price the service excessively. 11. BA s assertions about the costs of usage should be rejected. Most of the cost of an ISDN connection is the fixed cost of providing the copper wire infrastructure to the home. The only important additional cost argument that BA has raised is the potential for increased interoffice truckage if ISDN customers become intensive users. But the interoffice truckage is typically the much more economical fiber point-to-point connections between offices. Of course, even this is irrelevant in the off-peak hours. 12. The most important telecommunications policy issue today concerns the differences in philosophy between flat rate and measurage usage for network services. When costs are mostly (albeit not entirely) fixed, it is not economically efficient to connect most of the revenue from usage based charges. The usage charges discourage use of the network, and will cripple many important new ISDN services that will be based upon more intensive used of the network. CONCLUSION In choosing between the two options presented, the Commission should adopt the staff recommendation to require BA to provide residential ISDN service for a flat rate of $32 per month. However, in our opinion, the $32 per month is itself too high. Indeed, we believe that BA s costs for this service are less than $20 per month. In his new book, The Road Ahead, Microsoft founder Bill Gates recommends that residential ISDN tariffs be set at less than $20 per month: ISDN was invented more than a decade ago, but without PC-application demand almost no one needed it. . . The [ISDN] line costs vary by location but are generally about $50 per month in the United States. I expect this will drop to less than $20, not much more than a regular phone connection. We are among companies working to convince phone companies all over the world to lower these charges in order to encourage PC owners to connect, using ISDN. [page 101]. For now, the best option is to adopt either the staff recommendation or an even more affordable alternative. Since there is virtually no residential ISDN usage in DC at this time, the Commission can revisit the issue of the tariff once more is known about usage levels, deployment, and costs. December 29, 1995 Sincerely, James Love Director Consumer Project on Technology P.O. Box 19367, Washington, DC Todd Paglia 2117 O Street, NW Washington, DC 20037 Charles Bennington 1512 Corcoran St, NW, Apt 24 Washington, DC 20010 Beverely A. Orr 1672 B Euclid Street, NW Washington, DC 20009 Janice Shields 1526 17th St. #114 Washington, DC 20036 Deneen Gabrielli 2104 18th Street, NW #2 Washington, DC 20009