Telecomm Price Pressure was Announce The Vintage Computer Forum

But you are discounting the leaps in technology that have taken place in the last 20 years.

Every formerly capital-hyperintensive component of telephony has fallen drastically.

There has always been some pricepoint at which The Companies could have delivered unmetered national service as part of the basic line rent. But until very recently that price would have been unbearable to all but the wealthiest consumer.

Consider the following -- When I lived in Brookline, MA (1989), I had NET's "Baystate" service which gave me all of LATA 128 as my unmeasured area, and calls into LATA 126 were basically charged at the FG-D terminating minute rate - about 3 cents in those days.

This offering was available to any consumer who wanted it, albeit at a very high cost - roughly $100 1989 dollars. Keep in mind, at the same time, that New England Tel had some of the HIGHEST intraLATA toll rates in the nation: On the longest path, say from Athol or Orange (out near the LATA boundary) to Hull (on the cape) was 38 cents per minute. Even short toll calls could be expensive.

The relationship between price and cost of telephone service has always been difficult to explain -- the recurring costs are dominated by fixed (labor) costs, regardless of consumption - once you have a facility built, it costs you exactly the same amount to keep it operating if it sits idle or is fully saturated.

It gets confusing, because the SIZE of the facility is based on the projected peak loads -- such that as the retail price for service falls, the capital cost (and the recurring expenses) do rise.

Leap forward 15 years -- Now, the components that were ludicrously expensive are nearly free. (Compare the price of a terrestrial DS1 worth of bandwidth from say BOS to San Francisco ... 1975: $10,000 1989: $3,500 Today: 750).

At the same time the raw cost of moving bits has fallen, advances in coding technology have increased the capacity of that same facility: So, the carrier that could hold 24 VF circuits in 1975 could hold (with ADPCM) 48 in 1989, and today (with advanced Codecs as used in the VoIP universe) up to 100.

If we correct for inflation (Hawk - tell me if I'm screwing the pooch here -- I used the GDP deflator from EH.Net) , that trunk in 1975 is $27,800 2003 dollars .. 1989 inflates to $4,700 and 750 stays 750.

Cost per month per nationwide VF path therefore: 1975: about $1000; 1989 about $100, and today aobut $7.

The same changes of several orders of magnitude have occured in the OTHER capital intensive component: Switching. I don't have hard numbers, but consider that anyone with about $1500 to spare can build up a snazzy VoIP system using commodity hardware and free (as in beer) software.

You can take off the tinfoil hat -- I predict we will see, within the next ten years, that the majority of customers will enjoy unmetered nationwide service in the US, and within the lifteime of today's high school student the phenomenon move world-wide. If anything, I'm being too conservative -- I will not be the slightest bit surprised if it happens MUCH sooner.

Consider that: Today, unmetered calling is available regardless of national boundaries by using VoIP technology. There will be a few more major shakeouts in the industry as national monopolies a forced by their users to compete in an international marketplace of telecomm services. You cannot unring the bell - the days of the national PT&T as a golden goose are gone.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Computer software consists of only two components: ones and zeros, in roughly equal proportions. All that is required is to sort them into the correct order.