cr> Universal Access comments (1004 lines)


(Introduction from moderator: on first glance--at least, I admit, on
my first glance--this looked like a radical but marginally interesting
recommendation for changing the way phone calls are charged.  Craig
Johnson pointed out to me that it represents an attempt to liberate
the complicated current system whereby one part of the phone system
pays for another.  If adopted, maybe it could lead to more competition
between different technologies, and more opportunitites for Americans
to get advanced information technologies.--Andy)

TAP-INFO - An Internet newsletter available from •••@••.•••
INFORMATION POLICY NOTE - Universal Service Proceeding April 12, 1996

   The following are comments CPT filed with the FCC today on its
universal service docket.  The proceeding touches on dozens of topics,
and CPT only provided comments on a few.  We begin by asking the FCC
to eliminate the per-minute "Carrier Common Line" (CCL) charges which
are now imposed on every long distance interstate call made over the
regulated switched network.  We tell the FCC that per-minute usage
based charges for network use have led to inefficient use of the
public telephone network. This discussion is fairly detailed, and
controversial.  The Consumer Federation of America and Consumers Union
have indicated that they may file comments in opposition to our
position during the reply period (which ends May 3, 1996).  For a view
contrary to ours, contact Mark Cooper 301/384-2204 for CFA, or Gene
Kimmelman (202-462-6262) for Consumers Union.

   We also discuss the need for the Commission to push the local
companies to convert the current analog-digital-analog voice network
to a fully end-to-end digital network, using ISDN or other digital
technologies.  In this context, we discuss problems with high prices
for ISDN.

  jamie (•••@••.•••, 202/387-8030)

                       Before the
                  Washington, D.C.  20554
COMMENTS ON FEDERAL                )
UNIVERSAL SERVICE                  )
JOINT BOARD                        )  FCC  96-93
To: Chief, Common Carrier Bureau   )



1.      The Consumer Project on Technology is a non-profit
organization which was started by Ralph Nader to promote the
consumer interest in matters concerning the development of new
technologies, including information technologies.  For additional
information about CPT see our Web page at http:/
 These comments address three issues.  The need to eliminate the
Carrier Common Line (CCL) per- minute fee on long distance calls, and
to move away from usage based contributions to finance the fixed costs
of the network.  Second, we discussion alternatives to usage  based
charges.  Finally, we emphasize the importance of using the telephone
network for digital connections to a wide area network, and the
discuss the problem of excessive prices for residential ISDN service.


2.      In paragraphs 112, 113, 114 and 115, the Commission has
invited comments on the per-minute Carrier Common Line (CCL)
charge, which supports the cost of the "local loop" telephone
network.  Under the CCL,  a per-minute usage fee for making a
long distance telephone call is "paid" by  the long distance
carriers (LDC) to the local exchange carrier (LEC),.  These
payments from the LDC to the LEC reduce the monthly fixed fee for
telephone service, but only at the expense of higher long distance

3.      Assuming that overall, the change will be revenue neutral,
in that the additional total revenue collected by the LECs from
new fees will be equal to the revenue lost from the elimination
of the CCL, there will be a redistribution of the cost of
maintaining the local loop.   If the revenue from the CCL is
replaced by a higher Subscriber Line Charge (SLCs), which is a
fixed monthly fee, then persons who make very few long distance
calls will pay more, and persons who call more will pay less.
This is inevitable for any revenue neutral movement away from a
usage based fee, because consumers do not have identical calling
patterns.  There are, of course, other alternatives that could be
considered as substitutes for the CCL, each of which would represent a
different redistribution of the cost of maintaining the local loop.
However, whatever the approach, we believe that the elimination of the
per-minute CCL charge is a necessary action, in order to move toward a
more efficient system of pricing access to the network, and that
consumers will benefit greatly from the elimination of the CCL.

4.      As of August 1, 1995, the average per minute CCL charges
were about 1.72 cents per conversation minute, and equaled
roughly 30 percent of 5.7 cents per minute for "premium" service that
the LECs charged the LDCs [Statistics of Communications Common
Carriers, Table 5.11].  Some persons estimate that the elimination of
the CCL will lead to a $2.50 increase in the fixed monthly SLC fee.
Some consumer groups have expressed opposition to the elimination of
the CCL per-minute fees, if it is replaced with an increase in the
fixed monthly fee, because persons who make few long distance calls
would be worse off, including some low income consumers who might be
deterred from having telephone service.  While we share concerns about
access to the network by the poor, we do not believe that it is
necessary to maintain a system of charging by the minute for access to
the network.  The Commission has many alternative methods to reduce
the costs of network access for poor persons which do not involve
charging per-minute fees for network usage.  (These will be discussed

5.      We believe the elimination of the per-minute CCL fee is a
very important first step toward a more general restructuring of the
regulatory regime, which will encourage more intensive and efficient
use of the network. We believe it is appropriate to reconsider any
mechanisms which base contributions to support fixed local loop costs
on per-minute or per call charges.  We believe it is necessary to
provide alternative pricing schemes which make it possible to consider
different methods of pricing long distance services, or other new uses
of the local loop, such as the types of services that can be delivered
over ISDN and other digital connections to the home.

6.      The local loop telephone network is characterized by large
fixed costs.  The elements of the network which are sensitive to the
amount of network use are increasingly inexpensive to build out, as
the costs of interoffice trunkage has become cheaper, and digital
switches are deployed.  Moreover, "costs" imposed by usage of the
local loop network are largely sensitive to when usage occurs, with
congestion occurring during the peak hours between 8 a.m. and 5 p.m.

7.      The long distance telephone market is also a high fixed cost
technology.  Moreover, the LDCs appear to have considerable
excess capacity.  According to recent reports, when Sprint
enjoyed only about 10 percent of the long distance market, it had
enough capacity to carry all long distance traffic by itself.  The
total industry wide capacity for long distance service far exceeds
demand.  [see the discussion from Viscusi, Vernon and Harrington,
Economics of Regulation and Antitrust, MIT, 1995, page 495].   Long
distance services provided through the public switched network are
overpriced and underutilized , particularly during off-peak hours.

8.      User charges based upon hefty per-minute fees cause
consumers to economize on their use of the network.  This is
inefficient when the user charges exceed the costs which are
imposed on the network.  We believe the CCL and other per minute
charges for access to the local loop do greatly exceed the marginal
costs of usage.  Moreover, the LECs are actively lobbying state
regulatory commissions to support a variety of other usage based
tariffs, based upon per call or per-minute fees.  For example, Bell
Atlantic, Nynex, PacBell, US West, Ameritech (Indiana) and GTE are
among companies seeking fees of 2 to 6 cents per minute or more for
local calls made on an ISDN line.  These fees are an attempt by the
LECs to appropriate a portion of the value that consumers perceive
from higher speed access to the Internet.  As a consequence of the
high residential ISDN tariffs, there has been very little progress
toward the conversion of the local loop to an end-to-end digital

9.      The Internet provides an interesting contrast to the pricing
model for the local loop and the regulated distance telephony
network.  Firms and non-profit organizations which provide
Internet service acquire carrier services through a variety of
channels, including both tariffed and untariffed
telecommunications services, often leased from the large LECs and
LDCs.  The providers costs of obtaining carrier services and the
retail prices for Internet connectivity are highly varied.  The most
common arrangement for a provider is to buy dedicated (or shared)
leased lines, which provide a certain amount of bandwidth.  Prices for
these lines typically depend upon capacity, rather than usage.  At the
retail level, consumers have a wide variety of options, including
services which are priced by hour of usage, prices for blocks of
usage, or flat rate plans.  The per-hour charges typically range from
$3 to $1 per hour for usage, depending upon the provider or the number
of hours of service.   The flat rate plans are very popular.  Indeed,
AT&T and MCI both recently announced Internet access for $19.95 per
month, for unlimited usage.

10.     People who use the Internet are often astonished at how
cheap Internet access is, when compared to the regulated long
distance telephone market.   It is possible to use the Internet
for a wide variety of applications, including the delivery of
voice, video and new types of multimedia presentations, as well
as the less bandwidth intensive services such as electronic mail or
Web browsing.

11.     One area where the Internet suffers is congestion, which
slows the network down and degrades the performance of some
applications.   Internet congestion occurs in time periods which are
apparently less predictable than for the regulated telephone network.
 There are various proposals about how to address the congestion
problems.  One suggestion is to create a mechanism to charge prices
for priority routing when congestion exists, while allowing
non-priority or non-congested traffic to remain unmetered.  This has
not proved to be a simple mechanism to design or administer on the
Internet.  There is also work on methods of defining certain levels of
service that would support applications that require higher
performance levels, which is of interest to those who hope that the
Internet can evolve into a platform to deliver video and other
multimedia products to and from homes.  What is impressive about these
various Internet initiatives is the diversity and ingenuity of
approaches.  There has been little enthusiasm for the idea that a
simple per-minute, per-connection, per-message or per-byte charge
should be imposed on users, for a variety of reasons.  These charges
would result in too little traffic in periods with no network
congestion, and the administrative task of measuring usage and
collecting (and redistributing) fees is assumed to be costly and

12.     The current controversies over ISDN pricing present many of
the same issues.  Several LECs are seeking to impose very high
fees for ISDN deployment.  As noted earlier, Bell Atlantic,
Nynex, PacBell, US West, Ameritech (Indiana) and GTE are trying
to impose hefty per-minute charges for making a local call over
an ISDN line.  Several of these LECs claim that they are simply
trying to recover the costs of more intensive use of the network,
which requires greater inter-office trunkage and switching capacity.
None of the independent cost studies support the high fees the LECs
are seeking to charge, even for nailed up connections.  This is an
extremely important issue, because it goes to the issue of whether or
not the copper wire local loop will be used to provide digital
connections to wide area networks.

13.     Several persons from the computer and software industry have
offered suggestions about how the LECs could reconfigure network
software to accommodate more intensive use of the copper wire local
loop infrastructure.  Intel has told state regulators that the LECs
could design an ISDN connection so that consumers could open a "D"
channel connection, and have the software dynamically open up "B"
channels for data transfers on a as needed basis.  Since the D channel
is already an open connection, this would allow households to maintain
permanent connections, but not tie up interoffice bandwidth.  We very
much support movements in this direction.  Another approach,
recommended by David Lesher, is that the LECs offer "connectivity," at
the central office, which would be a digital data service, which would
be routed to various Internet Service Providers in the most efficient
way.  These innovative approaches to addressing potential congestion
problems contrast with the lack of creativity by incumbent telephony
giants, who seem exclusively interested in using the issue of
potential congestion as an excuse to tax value-added information

14.     The per-call charges that several states are imposing for
the local loop create their own problems.  With ISDN or other
digital technologies, one might consider a situation where the
"telephone calling" is controlled by the computer, and the
computer frequently connects and unconnects to various
information sources to obtain or send information.  With very
high per-call charges, this becomes too expensive.  At the
extreme end, users simply nail-up connections, to avoid high per call
charges.  Some Bell Atlantic business consumers who face a 9.5 cents
per-call charge, nail up connections for hours for this reason.  If
the copper wire is to be used for digital services, both the call and
the per-minute charges present many distortions and problems.

15.     If the Commission is to assert jurisdiction over the
Internet, as has been requested by some telephone companies, then it
will be presented with enormous problems in determining how to measure
usage.  If one connects to a Web page out of the local calling area,
what is the measure for the usage?  The minutes looking at the page?
The minutes (seconds) transferring the data?  What happens when the
network is slow, due to congestion?  Will this lead to excessive costs
in trying to mirror sites in order to avoid the usage charges?  Will
this create a barrier to information for persons in rural areas?

16.     If the Commission imposes per-minute, per-connection, or
per-byte usage charges on the Internet, these charges would
likely eliminate much of the free publishing which now takes
place on the Internet.  The existence of vast free sources of
information on the Internet is an extremely important issue for
universal service.  It is one thing to provide a device which can
connect to a network, and another thing to be able to use the network.
Poor and the middle income consumers both benefit from have access to
information services.  Universal service goals are served by policies
which facilitate access to the publishing products and other services
which have flourished on the Internet, often for free.  Usage based
charges would substantially reduce the scope and availability of
information resources which are now available for free on the

17.     The existence of the Internet as a platform for non-
commercial publishing and communications is important, even for
those persons who do not directly use the Internet, since many
persons are served indirectly by the Internet.  For example,
Essential Information uses the Internet to provide a number of
low income grass roots community groups with access to banking
statistics and other data which is used to investigate problems
of discriminatory lending practices.  While few individual
members of the group may have daily access to the Internet, their
neighborhood association uses the Internet for research purposes, and
to communicate with other neighborhood groups and national experts.
Low income students often benefit when their teachers use the Internet
to gather information for courses.  There are countless such examples.
 These are very important activities that would suffer if the
Commission imposed the CCL per-minute charges on Internet
communications, or imposed other mandatory usage based contributions
to the local loop.