[inforoots] Network infrastructure [2 of 2]

[John C Green Jr]

1 of 2 is Google.  2 of 2 is telephones.

This one is somewhat off topic as we're a computer list, not
a telephone list.

Back in 1976, after the 1968 Carterphone case but before the
breakup of AT&T, I spent 5 months at Bell Canada's main
data center in Toronto.  I learned something that few knew
at the time but which makes sense once it's explained.

The cost of telephone service (cost, NOT price) includes two
main components:

* FIXED COST of having the network infrastructure in place
   so that you can pick up a handset, get dial tone, dial a
   number, and have a conversation
* INCREMENTAL COST of actually making such a call

Basic service back then was around $10 per month plus about
$0.06 per minute, non peak, for actually making a call.

Ever wonder what the actual COST, not price, of making a long
distance call was back then.  An incremental call that did not
break the camel's back and require expanding the network
infrastructure?

It was under $0.03, regardless of distance, and regardless of
duration.  And 90% of that was capturing the originating
number, the destination number, the start time and stop time,
and putting them on a piece of paper at the end of the month.
The cost of the call was under $0.003 if accounting wasn't
necessary.

Given that I wondered when price would be cost based, with
perhaps $30-$50 per month access charge and unmetered usage
charge.

It took nearly 40 years of competition before some cell phone
calling plans started having price track cost; there are also a
few land line calling plans where price tracks cost.

Regards,
John Green