Ralph Nader and James Love letter to FCC Chair William E. Kennard regarding ISDN pricing

                         Ralph Nader
                         P.O. Box 19312
                         Washington, DC 20036
                         Ralph@essential.org

                         James Love
                         Consumer Project on Technology
                         P.O. Box 19367
                         Washington, DC 20036
                         202.387.8030; fax 202.234.5176
                         http://www.cptech.org
                         love@cptech.org

June 26, 1998


William E. Kennard
Chairman
Federal Communications Commission
1919 M Street N.W.
Washington DC 20554

Dear Chairman Kennard:

     We are writing to provide your office with evidence
that pricing of residential digital ISDN lines is irrational
from both economic and policy perspectives, and to ask that
the FCC hold a public proceeding to consider the following
issues.

1.   For what percent of the U.S. population is ISDN likely
to be the best alternative to POTS service over the next
seven years?

2.   What does it cost Incumbent Local Exchange Carriers
(ILECs) to convert residential POTS lines to ISDN lines?
What does it cost an ILEC to route ISDN traffic to an ISP,
either through a circuit or via a packet transport?  Is it
appropriate to estimate Internet usage costs using older
average cost pricing models based upon voice traffic that
has sharp peaks and low daily loads on switches?

3.   How much did consumers pay (already) to switch analog
switches to digital technologies, and why aren't the ILECs
providing reasonably priced digital modulation to consumers
for Internet connections?

4.   Are ILECs deliberately reducing support for analog line
quality to reduce the efficacy of so-called 56K modems, and
what connect speeds do consumers actually get over these
devices on typical POTS lines?

5.   In what ways would broad deployment of low cost
residential ISDN threaten ILEC profits from "features"
services such as call waiting, or the sale of second lines?

6.   What changes in regulatory models are needed to ensure
that consumers can benefit from mature and inexpensive
digital technologies?  Consider particularly those consumers
who live in areas that are not likely to benefit from cable
modems or high end xDSL technologies in the foreseeable
future.

     The attached is a survey of residential ISDN tariffs in
all 50 States plus Washington, DC, under 12 carriers.  As
you can plainly see, there are huge differences in the
tariffs, which are often extraordinarily high.  Moreover, as
indicated in several filings before FCC, ILECs have
indicated that the non-traffic sensitive costs of BRI ISDN
service are only about 12 percent higher than the NTS costs
for POTS line.  It is also not difficult to demonstrate that
ILECs have often made straightforward misrepresentations of
traffic sensitive costs for Internet usage.  For example,
see, the attached excepts from "ISDN Pricing, What
Went Wrong," (paper presented June 24, 1998, at the
Harvard Information Infrastructure Project Policy Roundtable
on Next-Generation Communications Technologies: Lessons from
ISDN, NIST, Gaithersburg, MD).

     We look forward to receiving your thoughts on this
issue.



Sincerely,



Ralph Nader              James Love