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Wednesday, February 02, 2005
Old Technology Telecom - Final Days
Andy Kessler writes,In this day and age, there shouldn't even be a "phone" business communications is 20 years into a digitalization process, and the Bells don't like it one bit. With broadband, people are canceling second lines that were used for dialup. Primary lines are shut off in favor of cell phones. No wonder SBC's sales have been dropping. Buying AT&T will merely slow SBC's swirling descent. With the stroke of a pen, prices might still collapse on plain old telephone service. Real competition actually works. The incumbents have used every trick to avoid the competition a digital world brings: legal delays, bullying, lobbyists, fat dividends to keep stock up, and promises not to raise rates before elections. Archaic regulations such as TELRIC is helping copper owners get more money based on past investments..But that's like figuring the price of getting to Europe using the hypothetical cost of digging a tunnel under the Atlantic, instead of computing airfare. A phone call is just 16K of data bandwidth. The math is easy. Based on current gigabit fiber line monthly fees, the value of phone service is 1.6 cents per month. That's it. Amazingly, SBC charges $18-$22 per month and complains that's below their costs! Voice over Internet Protocol works over broadband and allows unlimited local/long-distance dialing for $30 a month. But almost half of those fees go to Bells like SBC to interconnect to their antiquated phone network, so it's not real competition. For the same reason, cellphone plans (which SBC and Verizon control) cost us twice what they should. Even cable modem service would be half-price without TELRIC. Because of nonsensical accounting, it's one of those "prices are high because prices are high" things.
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