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Modem Tax - Urban Legend Come True?
Phluck writes "It seems that the modem tax myth might come true, the FCC is trying to decide whether ISPs should pay a fee for using the telephone network. Naturally this tax would probably be passed on to customers.
Check out the whole story here on ZDNet. " Scary - I can remember when these chain mails went around.
66-75% of the Phone Company's cost of providing local service is the provision and maintenance of the wires between the subscriber and the central office. This is not usage sensitive.
The sizing of the usage sensitive components of the telephone network is based on providing an acceptable level of service during the peak calling hour of the day, which is usually during business hours. Off-peak usage of these components essentially costs nothing since the capacity is going to be there whether or not it is used.
Think of it as a highway/motorway, that is made of some miracle material that can't be damaged by traffic. The highway is designed to be large enough to carry rush-hour traffic at a reasonable speed. You can drive your car around the highway for 16 hours a day without costing the highway owners any money, as long as you stay off the road during rush-hour.
The telephone companies had made a ton of money from the installation of second phone lines for Internet access, far in excess of what little money has been spent on reengineering central offices with congestion problems.
Guess how many phone company executives in the USA have an engineering degree? One. That should tell you something about the business.
The cost of providing service has been declining for years due to advancements in technology and layoffs of skilled labor. The phone companies have invested their monopoly profits in cellular systems, cable systems and foreign ventures, just about everything except their core business. Service quality levels have been declining and the phone companies show little or no interest in providing new services or upgrading their infrastructure.
The Bells should be broken up and forced to compete in the real world.
Seriously, the problem is the FCC method. If it's a per minute rate, that's insane - we're not making long distance calls in the "true" sense.
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But, a flat rate charge? Well, since it's for access for rural areas, kids in school, and seniors on low incomes - Yes. Why should we be exempt?
Face it, we're turning into a three-tier society.
Tier 1: Internet Elite - the rich and technologically enabled, with SDSL, T1/T3, and equivalent - we don't care about these charges.
Tier 2: Internet Enabled - the urban upper and middle class and the suburban upper class, with low-grade DSL or Cable Modems, or at least 56K. They know they get a pretty good deal and that it can't continue much longer.
Tier 3: Internet Handicapped - the urban poor and the suburban/rural middle and lower classes. They have to go to the library to get decent modem access, or pay large chunks of their disposable incomes to do so. They continue in their downward spiral in this uberelite society.
So, yes, put farmers and homeless kids on the Net. Although I think we should require old folks get a NetNanny filter on their ISP access, so they can't send spam to the rest of us or access any voters sites - make them truck down to the library for that, to keep them out of our hair
Will in Seattle
The prices on POT lines are based on the way they work without ISPs: occasional short uses, not long-term continual connections. You are on a time-share system, and you are insisting on your right to use it 100% of the time.
The phone system is not built to support half of the population being continually connected across town. With the rate internet use is growing, this could easily happen in a few years.
If you are connecting 24/7/365, you should be paying for a line from you to the other end of the connection, because that is what you are using (aside from all the unnecessary switching hardware in between that you are also taking up). If that means paying ten times a normal second-line fee, so be it (after all, 24/7 is considerably more than ten times the normal usage). It's either the people creating the drain on the system who pay for it, or everybody else. Constant internet connections using telephone lines are a horrible abuse of a system meant for other things.
Direct connections may be more expensive right now, but only for the end user. When you consider all resources consumed, you realize that direct connections can be much cheaper, because they are designed for this purpose. When prices fairly reflect the resources used, the system will change to use the minimum resources. Everyone will start using cable or DSL, or some other dedicated service, the price will drop to or under that of a dedicated POT line, connections will be much faster and more reliable, and the situation will be better for everyone.
Up with the modem tax!
My God -- you'd think the last place you'd find this kind of "journalism" would be Slashdot. The "modem tax" is as much a myth as it always has been, and I'm honestly disappointed that this site has seen fit to breathe any new life whatsoever into it.
All the article says is that the long distance companies are lobbying for the current exemption to access fees that is given to ISPs to be lifted. They've been doing this for years, and every time the FCC sees through their twists of logic and denies it. The FCC has also stated, very clearly, that they have *no* intention of lifting the exemption. That doesn't stop the telcos from complaining about it, but the proposal isn't any nearer to happening than it was the first time I saw a "modem tax" chain letter.
The FCC *knows* modem calls are *not* long-distance calls. The telcos might have a leg to stand on if all of the switching equipment (i.e., routers) on the 'net were theirs, but it's not. It doesn't make sense to allow them to charge for the use of equipment that doesn't belong to them. Fortunately, the FCC realizes that, and will probably deny them again and again until they give up asking.
Relax... as usual, the "modem tax" ain't gonna happen.
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Consult, v. t. To seek another's approval of a course already decided on.
ISDN could have been the RBOC's solution to this years ago. The setup/connect time for ISDN is only a second or two so there is no need to stay connected unless you are continuously sending or receiving data. Keep in mind that an ISDN channel uses the same amount of bandwidth as a regular phone line (although it's common to bond two channels together.)
Instead of fostering this technology, the RBOC's have kept the prices prohibitive. In most areas of the US the user is charged per minute per channel or an exhorbitant flat rate (more expensive than a T1 when I lived in NJ.) To make matters worse you have to pay for a full minute even if that e-mail only took 5 seconds to transfer. The average home user would tie up the network a lot less if their connection only came up long enough to load a web page then closed down again--almost definately less than a voice call rather than more!
So the RBOC's force people to tie up their network and then complain that they need more money because of it. Do you think that they didn't realize this would happen?
Think about the services RBOCs supply to home users... The bare minimum are affordable because RBOCs are local monopolies that don't benefit at all by giving more than the bare minimum--they basically charge as much as they are allowed for extra services. Over the last couple years more competition has entered the picture, and only now are we seeing reasonably priced data services showing up from the RBOCs.
So, why wouldn't they make prices more reasonable for ISDN if it will lessen the load on their network? Because they don't have to! Why give it away if they can charge 2-4 cents a minute for local calls? Why give away call waiting if they can charge $2.50 a month for it? (You don't think that it costs them any extra to provide you with call waiting do you?)
Greed.
All I can say is thank * for my cablemodem. As far as I'm concerned the RBOC's can go fsck themselves.
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