RE>NIX on per minute charges for telco 1/9/98
Mike, Good arguments; I concede your points 1and 2, but overall, the conclusion does not effectively refute the crux of my position. That is, we don't need the government to regulate pricing on something that for most home users is a luxury, not a necessity. I don't care if the telco monopolizes the current delivery system; if market forces are allowed to operate, there are REAL limits on what they can do with pricing. The proposed pricing regulation is the WRONG way to go. The reality is that the telcos ARE IN COMPETION for discretionary dollars--in competition with EVERY other business out there that is after our discretionary income. This is because internet service is not a necessity for most people, it is a luxury. If the telcos gouge too much, the pricing shock will cause dollars to flow from their services to someone elses (eg. One may go to a movie, read a newspaper, book or magazine, buy clothing, or save the money one would have otherwise given to the telco as a result of one's internet surfing). So if the telcos screw up their pricing model, THEY WILL LOSE MONEY they otherwise could make if they make prices reasonable. That is what supply and demand is all about. I can agree that OVER THE SHORT RUN, pricing structures will be skewed due to the market reality of their monopoly. But over the longer term, I contend the market will better deal with the problem than price fixing will. Consumption patterns will change if pricing is too high. If the average person stops using the service, the very thing that makes the internet such a great medium ceases to exist. Do you think that will cause this type of service to disappear forever? Absolutely not. There is a short term market shock that drives innovation that creates the new latest, greatest "internet-like" service at a COMPETITIVE price. This would be a technology that bypasses the phne system entirely. If it is not a cable modem, it will be something else. Now the telcos no longer have a monopoly on the internet and they are in direct COMPETITION with the new way of delivering the service. This is the longer term reality. So I say that there is going to be competition for the telcos whether or not they monopolize the current delivery system for this service. Therefore, I don't agree with the argument you present in Item 4. I'd love to see the numbers that support your claim in item 3. I would agree that real "web heads" would be inclined to buy a dedicated line for the internet. But I know a lot of family and friends that use the service daily; I can't think of one that has purchased a dedicated line. They are all gainfully employed. Unless my acquaintances represent a statistical anomaly, studies should show that most households using the internet DO NOT buy a dedicated line to add the service. Also, I grew up in a large family and we burned up the phone lines in our teens. We did not add a line because of this and neither did most of our friends. We made do since it was cheaper that way. It is hard to fathom that the local telcos' costs have not increased substantially as a result of internet usage. It also makes sense to expect that these costs would not increase linearly with expanding service. At some point optimal economies of scale are acheived. Beyond that point, marginal costs probably outrun the marginal revenues for a given pricing system. You are saying that we should resist any rate hike. Why is it fair to expect the telco to eat the cost by fixing them to a pricing system that does not take these changes into account? What is your proposal to allow them to recover these marginal costs and make a reasonable profit on the capital that they are committing to this extra service? And why is it not fair that if one uses more of a resource, then one should pay more than another that uses less of it or none at all? This logic escapes me. Regards, [email protected] -------------------------------------- List-Post: [email protected] Date: 1/9/98 11:57 AM To: Tony Fredriksson From: MikonCons Your message of 1/9/98 seems well-intentioned, but misses reality. 1. Low cost "Lifeline" services ALREADY exist for the poor and elderly (mandated by law). These provisions are not expected to change in the next decade. 2. "Competitive" technologies for internet access such as cable modems STILL REQUIRE CONTINUOUS TELEPHONE ACCESS to transmit commands, requests, and uploads to (hopefully) a local telephone number. This alternate does NOT change the issue at this stage of cable modem development. 3. UNLESS the adult individual is unemployed, routine and extensive use of a phone line for internet access (at the expense of sacraficing all incoming calls) usually leads to the installation of a SECOND line. This leads to ADDED monthly charges by the telco provider that wasn't there before; hence, MORE $$$ for the telco provider. NOTE: Extensive phone use by kids almost invariably leads to a second (or third) line installation; hence, the telco provider WINS AGAIN!!! 4. Last, but certainly not the least error, the local telco supplier is the ONLY provider. That is, THERE IS NO COMPETITION to drive the market to a competitive level. The new telco laws simply allow other baby bells to have access via the local provider's installed infrastructure (i.e., telephone lines, routers, switchers, etc.) at "reasonable" prices. To allow an existing monopoly to "maximize profits" would crucify services to the general public. My recommendation: FIGHT TOOTH AND NAIL TO PREVENT ANY RATE HIKE!!!! Mike Conn Mikon Consulting Santa Clara, CA ------------------ RFC822 Header Follows ------------------ Received: by mac.net.com with ADMIN;9 Jan 1998 11:56:18 -0800 Received: from ns1.net.com by unet.net.com (SMI-8.6/SMI-SVR4) id LAA03976; Fri, 9 Jan 1998 11:50:04 -0800 Received: from imo17.mx.aol.com (imo17.mx.aol.com [198.81.19.174]) by ns1.net.com (8.8.6/8.6.9) with ESMTP id LAA19538 for <[email protected]>; Fri, 9 Jan 1998 11:54:26 -0800 (PST) From: MikonCons <[email protected]> Message-ID: <[email protected]> List-Post: [email protected] Date: Fri, 9 Jan 1998 14:48:51 EST To: [email protected] Cc: [email protected] Subject: NIX on per minute charges for telco Content-type: text/plain; charset=US-ASCII Content-transfer-encoding: 7bit Organization: AOL (http://www.aol.com) X-Mailer: Inet_Mail_Out (IMOv11)
