From fgoldstein@bbn.comTue Jun 25 08:43:37 1996 Date: Mon, 24 Jun 1996 14:40:08 -0400 (EDT) From: "Fred R. Goldstein" To: Multiple recipients of list Subject: Arguments against BA-style Resi ISDN rates Since "NYNEX" (not yet technically owned by Bell Atlantic but largely staffed at management levels by BA-hired contractors, and under a purchase-and-sale agreement to BA) is rumored to be filing a new ISDN tariff for its entire region, I've put together a few "talking points" to be used against them. I do hope to see a MASSIVE intervention against them here in Mass., and since I probably can't fund it myself, I'll throw in what I can afford (e.g., talk is cheap). So here's a quick list of points that I'd like to flesh out into a full scale attack come intervention time. Others might find them handy to adapt to other states. Certainly the Delaware commission seemed to have similar feelings. Would that they all did! *note: The following are provided for informational and enterntainment purposes only, and reflect the view of the author. Standard disclaimers apply: Points to be made to regulators in an Intervention against potential NYNEX/BA rate hikes in MA, and adaptable elsewhere: ISDN IS STILL A MONOPOLY Competition may be permitted but only a miniscule percentage of potential Resi ISDN subscribers have a choice. Resale based on ILEC tariffs doesn't count. CATV data is not functionally equivalent, though it overlaps for a category of users. VALUE OF SERVICE IS AN INAPPROPRIATE PRICING MECHANISM Telco appears to be basing its pricing of ISDN on its perceived "Value" over and above POTS, rather than on its "cost". In a truly competitive market, price tends towards cost (per Adam Smith; witness the LD market) while in a monopoly, regulatory action is a substitute, especially when transition to competition is intended. "Value of service" pricing went out with bell bottoms and should not be restored in this instance. ISDN IS JUST AN INTERFACE TO THE PSTN As made clear in the 1992 NYNEX/MA case (D.P.U. 91-63-B), ISDN is simply a new digital interface onto the existing network. Per-line pricing should reflect the differential in costs. A voice call made on an ISDN line is indistinguishable, within the network, from a call made on an analog line. A data call is functionally similar; the same resources are used, even though the trunks used for data are supposedly all 64-clear and SS7-linked. That is the norm now anyway. SWITCHWAY TREATMENT IS NO LONGER APPROPRIATE In 1991 ISDN data was carried on Switchway, an older Switched 56 network built out of 1AESS adjuncts. The 1As are history; data is just another call that avoids AMI/ZCS/RBS trunks. NAILED USAGE IS NOT AN ISDN-SPECIFIC PROBLEM Telco may assert that ISDN users are prone to nail flat-rate lines, but that, if relevant, is not a reason to impose measured service. If this can be demonstrated to have a cost impact at all, then it can be taken care of with a threshold price set at a level which is *essentially* flat to all users who do not nail calls. A threshold should be at least 200 hours/monthly. Average users are +/- 40 hours, few between 200 and "nailed" levels. This distinction allows the typical rate-averaging of POTS flat rates to continue absent the distortion of averages caused by nailed users. In any case analog lines with modems are also prone to this. A higher "semi-permanent" rate for "nailed" calls may be appropriate. But even this should be based on cost, not imputed from measured rates. Since most usage is between two dedicated points, a rate could be offered for calls nailed to a single designated destination CO. Leased-line alternative. CALLPAK RATES ARE MEASURED SERVICE Multiple block-of-usage (Callpak) options are simply a prepaid measured service. Users must estimate future usage, enter service orders when it changes. Users perceive this as measured and will move to flat rate options, even POTS. MEASURED TARIFF IS DESIGNED TO ENCOURAGE GRATUITOUS CENTREX Telco is attempting to move inappropriate users to Centrex tariff, which provides unlimited intercom usage. Only low users will want measured ISDN, but low users are least likely to want to invest in ISDN's up-front cost. Much ISDN data is to a fixed destination, ISP or employer, who is encouraged to own Centrex. Most users are in different COs and Centrex SOPs require costly leased interoffice facilities (3 DS0 channels, BRITEs). This is a poor way to save the resources allegedly wasted by "excessive" usage; it's effectively three nailed lines! It appears that the bulk of telco's planned ISDN investment in on behalf of Centrex, not in order to make ISDN a viable alternative to analog POTS. Measured service is noxious to the bulk of residential subscribers, who form the highest volume of potential ISDN users; non-Centrex ISDN volumes will therefore be minimal. This improperly holds the bulk of the network in its technological past. MOVING FROM A FLAT TO MEASURED SERVICE RESULTS IN STRANDED INVESTMENT Today's NYNEX tariff allows flat-rate speech/audio bearers. These are widely used for 56 kbps data, in effect treating ISDN as a very clean line capable of supporting "modem" calls up to 56 kbps. Adding usage charges to these calls will cause many users to abandon the service. Since NYNEX has capitalized a large installation expense, this will cause losses that would not occur if the tariff were not made noxious. MEASURED USAGE DISCOURAGES EFFICIENT USE OF NTS RESOURCES The vast majority of ISDN local cost is non-traffic-sensitive. Switch ports, service ordering, loop engineering, loops, SLCs, MSRs, etc., are all NTS. Measured rates reduce use of these, saving only on the TS cost which is trivial. Overall economic efficiency goes way down. Inasmuch as measured ISDN drives some users to POTS lines, actual network trunk utilization increases because POTS takes longer to set up calls, longer to transfer equivalent data. [this one is very MA-specific] MEASURED ISDN RATES DO NOT COMPARE TO MULTIPLE POTS OPTIONS NYNEX offers Boston-area subscribers a choice of several flat rate plans. Measured ISDN service has only a single radius, generally very small. Therefore POTS is dramatically cheaper than measured ISDN for users whose preferred destination is not in that radius. The analog rate options should be reflected in ISDN tariff, from fully-measured up to LATA-wide unlimited. ___ Fred R. Goldstein fgoldstein@bbn.com BBN Corp. Cambridge MA USA +1 617 873 3850