roundtable: Update on ISDN # 2 (fwd)

roundtable: Update on ISDN # 2 (fwd)

Update on ISDN # 2 (fwd)

James Love (love@Essential.ORG)
Wed, 17 May 1995 12:48:34 -0400 (EDT) 

Date: Wed, 17 May 1995 12:48:34 -0400 (EDT)
From: James Love <love@Essential.ORG>
To: roundtable <roundtable@cni.org>
Subject: Update on ISDN # 2 (fwd)
Message-Id: <Pine.SUN.3.91.950517124740.3655D-100000@essential.essential.org>


---------- Forwarded message ----------
Date: Mon, 15 May 1995 19:30:25 -0400
From: James Love <love@essential.org>
To: Multiple recipients of list <isdn@essential.org>
Subject: Update on ISDN # 2 (fwd)


    [snip, snip, snip ]


                             Back Ground Notes on
                 ISDN (Integrated Services Digital Network)
                            and telephone rates
                                      
                     Ad Hoc Coalition for Low Cost ISDN
                                 May 15, 1995

1.   ISDN is a mature technology which allows a telephone company to
     configure a telephone line to transmit digital data at high
     speeds.  With standard analog telephone lines (sometimes referred
     to as POTS), the fastest modem connections to computer networks
     operate at 28.8 kilobytes per second.  Using ISDN technology, a
     telephone can connect to a network at 128k per second.  The higher
     speeds allow users to transmit data much faster, and to use
     telephone networks to transmit multimedia applications, including
     low grade video transmissions.  Interest in ISDN technology has
     expanded greatly in the past year, as the use of the Internet's
     World Wide Web (WWW) has become more popular.  The highspeed ISDN
     connections give users the "bandwidth" to download graphics and
     sound files much faster, making the WWW much more pleasant to use.

2.   ISDN lines require the use of special hardware in the customer's
     home, plus some changes in the way the lines are routed by the
     telephone company.  The cost of customer premises equipment vary
     according to configurations, typically costing more than $100 (and
     can run several hundred dollars for special uses of the
     technology.)

     The most important public policy debates concern the monthly cost
     of the ISDN lines.  Studies of the "marginal" or "incremental"
     cost of providing ISDN services vary greatly, depending upon who
     is paying for the study.  For example, in a 1993 study by the
     Tennessee Public Service Commission (TPSC), South Central Bell
     Telephone Company (SCB) estimated that the "incremental cost" of
     ISDN service (over and above the cost of POTS) is $36.33 (per
     month) for residential customers.  But the TPSC's own calculations
     were only $9.77 (per month).  In an earlier 1991 study, the
     Massachusetts Department of Public Utilities (MDPU) found that the
     "marginal cost" of ISDN service was $7.40 (per month) over the
     cost of POTS service.  In studies for the Consumer Federation of
     America (CFA), Mark Cooper has estimated the marginal cost of an
     ISDN service (over the cost of POTS) to be $2 to 4 per line (per
     month), and falling.

3.   Telephone companies and consumers have different ideas about how
     ISDN should be priced.  Telephone companies want to price the
     service on the basis of the "value" of the service, based upon its
     higher functionality.  Consumers would prefer to pay prices based
     upon the actual cost (including reasonable profit on investment)
     of the service.

     If local telephone exchange service becomes a competitive market,
     competition among providers may lead to lower prices based upon
     the costs of providing the service.  However, in most markets
     today local exchange telephone service is a monopoly, and even
     with legislation that removes legal barriers to entry, some
     markets may not have much or any competition for several years,
     because of economic barriers to entry.

4.   The Ad Hoc Coalition for Low Cost ISDN service supports transition
     rules, that will apply to markets until competition for local
     exchange services actually occurs.  Specifically, the Ad Hoc
     Coalition would require the incumbent telephone company to offer
     ISDN service priced no more than POTS, plus the incremental cost
     of ISDN.  This requirement would hold until "actual substantial"
     competition occurred in the market for local telephone service. 
     Thereafter prices would be set by the competitive market. 
     Language that would accomplish this is given below:


     (xx) A common carrier providing local exchange telephone service
          that is the dominant carrier and that provides ISDN service
          to residential subscribers and small businesses shall make
          such a service available to the public for the price of a
          voice grade line plus no more than the incremental cost of
          providing the ISDN service.  This requirement shall expire
          when the Commission determines that the common carrier faces
          actual substantial competition for local exchange services in
          the residential market.


5.   The Ad Hoc Coalition position is consistent with the so called
     "open platform" language included in last year's HR 3636 (103rd
     Congress), which would have required carriers to provide a digital
     service priced at cost.


----------------------------------------------------------------------
James Love, TAP; internet:  love@tap.org
P.O. Box 19367, Washington, DC 20036; v. 202/387-8030; f. 202/234-5176
12 Church Road, Ardmore, PA 19003; v. 610/658-0880; f. 610/649-4066

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