This discussion is Beehive CEO's - monthly column as found on the last page of Americas Network magazine. They have been printing his letters for nearly 20 years. This column will remain posted till he writes the next one.
The Last Word.. February 1998
The cost doctors
FCC alchemists concoct 'rate prescriptions.'
Any charges over the FCC Common Carrier Bureau's rate cap will be disallowed and rate income using true costs will be found unlawful..
In an interesting Federal communications commission order to see the light of day in 1998, the FCC Common Carrier Bureau used National Carrier Exchange Association (NECA) data to compare switching costs of 55 telcos serving from 800 to 1,000 subscribers from one or two exchanges.
From those reported costs, the bureau developed a ratio of total operating expense to plant in service (TPIS). The average ratio was 22%. The bureau thus intends to establish a "rate prescription" for local switching. The cap will be a TPIS of 25%. Any charges over this amount will be disallowed. Income from rates using true costs will be found unlawful, and any earnings for costs over the ratio will be required to be refunded with interest compounded daily.
The first telco to be so effected has 900 customers grouped around 15 exchanges. There is 600 route miles of toll just to get to and from those exchanges. Moreover, it appears the bureau is not going to allow the telco's leased switched expenses.
So unless you buy it -- it doesn't exist. Leased switching expenses are to be disallowed. My analysis found some companies with ratios as high as 100%. I was unable to tell if higher ratios reflect leased switching expenses. There is a fear in some quarters that these new rules come from economics types who think the industry is like peas in a pod and all independents are tidy little companies with identical costs. Is the FCC switching us to the same track as was last seen by Western Union? Sure and a good New Year to you all!
MISCELLANEOUS
Sales of debit cards are a fast-moving item in every 7-11 convenience store. So say the clerks I ask. And when those promotional cards reach their allotted 10 or 15 minute time limit -- there is no warning, just disconnect -- click. Unless you call and use your credit card to get the debit card "recharged."
If Delta Airlines has a mechanical or weather problem that disrupts a regular schedule, the counter agents are authorized to give free debit cards so you can phone home.
And you are not supposed to covert a business phone used for validation of credit cards to a public coin(less) line to enable billing 27 cents a call to the validation 800 number.
And why should Southern New England Telephone (SNET) make a killing on surcharges to telcos for validation of VISA cards, just because VISA won't deal with any other telco except SNET? Alan said it appeared there was an anti-trust issue there somewhere.
FLOWERS TO THE NEVADA PSC!
In the normal Levi's-and-plaid-shirt dress anywhere else -- over the Christmas vacation, they managed in the last two days to have non-stop (unopposed) hearing to ram through dozens of universal service fund eligibility approvals with other related items for that state's rural telcos.
Jim Bull phoned me many years ago. The Grass Valley guys in California had completed a video switch for NASA, but could not figure out how to move it. Seems it was big, and could not be disassembled. Humor had the guys saying to NASA to send out a big rocket and they could deliver it in 20 minutes or so, but it would be freight on board. I allowed how we move big things like that on a cushion of air. One or two guys can shove big. Heavy switches from loading docks to air ride trucks.
What got me thinking about Jim was the two 768 port video switches Bally's casino in New Jersey installed to switch some of the thousands of video cameras in their complex. The casino doesn't have tel or data twisted pair or coax for anything except plain old telephone service (POTS). The major runs of the 1,500 miles of fiber are in 36 fiber bundles. Every gaming table, security camera and wideband data device has fiber. Fiber runs through the place like conventional 25-pair station wire, only each bundle has 36 fibers. This is called planning for the future.
Could your telco handle installation or maintenance of diverse stuff like this? Do you want to?
How about schools, library and telemedicine transport and local termination. Do you know the difference between high resolution video and how to handle or switch it?
And, where do we get the trained tech's that know how to plan, install, and maintain this new telecommunications stuff?
Copyright 1998 by A. W. Brothers and Americas Network magazine. All rights reserved.
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