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From: John Higdon <>
Subject: Pac*Bell: The Old Bell System?
Date: 16 Sep 89 20:02:41 GMT
Organization: Green Hills and Cows

Over the past months, a number of disturbing manuvers have been
executed by Pacific Telesis. It would appear that in direct
contradiction to the spirit of Judge Greene's order, our RBOC is trying
to re-create the old Bell System.

In the past year, Pacific Telesis has attempted or received approval
from appropriate agencies to provide the following:

Voice Mail
Cable TV Service
InterLATA Long Distance Service
Telephone Equipment Vending

In short, it looks like a major attempt to become a one-stop
telecommunications shop once again.

Some items to consider:

Pac*Bell has finally obtained its long-sought ability to arbitrarily
disconnect 976 providers. In a recent federal court decision, Pac*Bell
was told that it could disconnect any provider that had "obscene"
material. The determination of "obscene" is, of course, left in the
hands of none other than Pac*Bell.

It doesn't take much imagination to see what a tremendous advantage
that would give Pac*Bell in the AudioTex field. It would be "obscene"
if some competitor was taking away busines from PB, ergo turn him off!

We're already seeing what control of the network can do for a
promotional effort. When I was in the equipment vending business, it
was quite common for PB to contact one of my customers and darkly imply
that if they got their equipment from "the phone company", that their
service would improve substantially.

A friend of mine, who is currently in the equipment business, has
documented proof that PB is perpetually causing trouble on a customer's
trunk. He reports trouble, they clear it, and the next day it's bad
again. When, on behalf of his customer, he asked someone at PB what all the
trouble was, he was told that "there seemed to be cronic trouble with
the CPE". That was followed with a well-timed call by a Pac*Bell rep
who raved about the virtues of Centrex to the customer's telephone
administrator. Of course there had been no trouble with the CPE; if
there had there would have been major charges levied by Pac*Bell.

This Thursday, there will be a discussion by industry players on the
matter of Pac*Bell's entry into the VideoTex field at the State
building in San Francisco. Yours truly will certainly be there watching
the PUC, Pac*Bell, and videotex providers battle it out.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Subject: Re: PacTelesis Power Grab
Date: 9 Dec 89 23:18:32 PST (Sat)
From: John Higdon <>

Kian-Tat Lim <> writes:

> 	Pacific Telesis ran a full-page ad in today's Los Angeles
> Times.  Here's the text (there is no copyright on the ad):
> [...]
> 	In 1984, an agreement between AT&T and the U.S. Justice
> Department split up the nationwide Bell system, forming Pacific
> Telesis and six other regional holding companies.  At that time, very
> narrow limits were imposed on the services that their phone company
> subsidiaries, like Pacific Bell, could offer.

And for good reason. This was the topic of a meeting at the State
building in San Francisco a couple of months ago between PacTelesis,
information providers, and a rep from the PUC. A lot was discussed,
but the long and the short of it is that since Pac*Bell controls the
network, they could and probably would use every trick in the book to
unfairly compete with independent providers. Once they gained a
monopoly (in a completely unregulated market), they would only
concentrate on lucrative aspects of the service. Since the PUC is not
really sympathetic to Pac*Bell on this issue, it appears that they
have taken to the streets.

To see how information services provided by Pac*Bell would evolve,
just look at the nation's cable TV industry. Cable companies scrambled
to get exclusive franchises in cities across the US, promising to
offer, not only TV stations from all over, but interactive services,
educational services, and cultural programming. What did we really
get? With minor exceptions, there is no interactive capability, they
dropped the "out of area" TV stations and substituted all manor of
over-priced pop-market pay channels.  There are shopping channels,
pay-per-view channels, and the rates have gone through the roof, even
though technology and economies of scale would contraindicate the
present high cost to the consumer.

> If the Bell companies could develop and provide these services,
> along with many others that people in other countries take for
> granted, they would become more widely available, and growth of this
> market would encourage more information providers to enter it.

This is blatant nonsense. If the market is so promising, why aren't
entreprenuers falling all over themselves to enter it now, as they are
perfectly able to do? Is the reasoning that just because a "Bell
company" enters a market that a stamp of approval has been issued?

> 1.	I sincerely doubt that Pacific Telesis expects to make much
> money off of education-only information services.  I would expect them
> to quickly take a back seat to more lucrative commercial services.

Absolutely correct. See my comments above about cable TV to see how
there motives line up with reality.

> 3.	Lifting restrictions may be a bit more general than the ad
> implies.  I plan to call to get the further information.

There is only one thing to remember: PacTelesis' dream is to become an
"unregulated monopoly".

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395     | San Jose, CA 95150 |       M o o !

Subject: The Big PUC Give-Away
Reply-To: John Higdon <>
Organization: Green Hills and Cows
Date: 9 Jan 90 16:27:54 PST (Tue)
From: John Higdon <>

My mailbox has been filling up with messages from people who think
that I am being overly mean to Pac*Bell concerning their recent
"modern regulatory changes" that they whisked past the CPUC.

One writer said that my comment about Pac*Bell being allowed unlimited
profits was incorrect; that they indeed had to share with the rate
payers. Well, yes and no. Granted, the wording on the ruling would
indicate that, but who will determine how much of a profit has been
made? Why, Pac*Bell, of course.

There are so many tricks to hide a profit from one subsidiary by
pumping up another that space forbids going into that here, not to
mention the inappropriateness of the group. But let us just say
whenever you have an intentional monopoly, it MUST be regulated or the
public will suffer. Allowing a "rate of return" against the CPI as the
sole standard for regulating a monopoly is most ineffective protection
for the consumer.

This is particularly true when you have a holding company that has as
much diversification as Pacific Telesis. They are now into every form
of electronic communications, including equipment supply. Which brings
up an interesting scam. What would stop a Pacific Telesis supply arm
from buying, for instance, Northern Telecom DMS100s at a steal of a
price (quantity, someone sleeping with someone, whatever) then turning
around and selling those switches to Pac*Bell at full list? And then
when it comes time to compute rate-of-return for Pac*Bell they show
exhorbitant costs for their CO equipment, reflecting a lower apparent
rate-of-return. But Pacific Telesis made the profit at its other
subsidiary, *totally at the expense of Pac*Bell's ratepayers*. Back to
my question: What would stop them? Nothing. They do it all the time.
Now that the PUC isn't watching them anymore, it will be even easier
to get away with it.

Pac*Bell's PR is most effective. I was reminded by some that they
agreed to give up touch-tone charges in this package. Actually, that
was the new PUC chairman's idea. It was an obsession with him to
remove those charges, and Pac*Bell had to agree to it before the PUC
would proceed with the give-away. In my case, it is meaningless.
Touch-tone is included with Commstar II, and if anyone thinks that
Pac*Bell will lower the cost of Commstar II to reflect that then I
have some large artifacts near New York I would like to sell to you.

I hate to be such a curmugeon on this topic, but where in the hell was
the public (and, for that matter, the consumer advocacy organizations
like TURN) when all this was before the PUC? The media spoke of the
whole matter in glowing terms, printing verbatim what the Pac*Bell
spokespeople spewed forth on the subject. The California telephone
ratepayer was taken to the cleaners. Let's hope the good people of
Texas are not taken for a ride by SWB the way we where here in CA.

Remember, Pacific Telesis isn't in business to serve the public; it's
in business to make money--any way it can.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Subject: Telco Advertising
Organization: Green Hills and Cows
Date: 31 Jan 90 00:06:39 PST (Wed)
From: John Higdon <>

Pac*Bell is currently involved in a saturation compaign to promote its
Centrex. There are very expensive-looking television spots, radio
spots, double-page newspaper ads, not to mention the direct mailings.
This represents an unbeliveable amount of money. And for what purpose?
To convince the public that they should forsake the interconnect
industry and allow their kindly phone company to "provide it all".

This is all very disturbing. In the old days, the utility was allowed
to do "informational" or "institutional" advertising to get people to
wait for the dial tone, or to dial correctly (hee-hee), or to not
leave their phone off the hook. In many cases it was required that
this advertising be paid for by stockholders rather than ratepayers.

Now we have the mighty force of a giant public utility that is
guaranteed a rate of return from customers that can't go anywhere else
using its muscle to compete against an industry that itself requires
the services of that utility. So now the ratepayers foot the campaign
to compete against the equipment vendors.

As if that wasn't enough, a frightening mechanism exists to pull shady
and unscrupulous tricks to nudge customers over to Centrex. Since the
company that is pushing Centrex is the same entity that supplies
dialtone to all those vendor-provided phone systems out there, it
might be just a little bit to someone's advantage to provide less than
adequate service to those CPE customers. "Oh, they wouldn't do that",
you say.

They not only would; they do. I have several documented cases where
Pac*Bell has had problem after problem with trunks to customers and
causes are never really pinned down. What does happen, however, is
that Pac*Bell personnel call the customer to "assure" him that the
problem must be in his equipment, while acknowledging to the vendor
that there is some CO problem that they "will look into". And then
SURPRISE! Guess who shows up at the door? You got it--the Centrex
salesperson.  I have personally been called out to customers locations
and have been able to vindicate the CPE. Meanwhile the trunk problems
continue, the customer is told that "the phone company" isn't at
fault, and the vendor is led down the garden path.

A friend of mine in the interconnect business found out about
Pac*Bell's "revisionism". One of his customers had trunks that
wouldn't pull dialtone on an intermittant basis.  After many days of
on-site time and effort, it was determined that the problem was eleven
originating registers out of spec for loop current. When these
registers were repaired or replaced, the problems went away. Months
later, when the customer was being beat upon by a Centrex salesperson,
the 611 service records were trotted out. Somehow, magically, the bad
CO ORs had turned into "trouble in the CPE". The customer, being
somewhat knowledgeable, threw the Centrex person out. But how many
people would be well enough informed to see through those tactics?

I am steadfastly against using equipment (central office switch gear)
simultaneously for regulated monopoly purposes and a competitive
business, such as Centrex. There is no way the public's interests can
be protected properly either by regulatory bodies or by the public

For the record, numerous letters have gone to the CPUC concerning this
matter and I have yet to receive any intelligent response. That's
probably asking too much.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Subject: The Answer
Organization: Green Hills and Cows
Date: 8 May 90 11:42:54 PDT (Tue)
From: John Higdon <>

For those of you who have been sitting on chair's edge waiting for the
outcome to the great Bay Area Cellular One vs GTE Mobilnet payphone
situation, here it is. As you recall, when using utility payphones you
can call any Bay Area Cellular One prefix from any Bay Area payphone
and the call is $0.20, untimed. Making the same call to a GTE Mobilnet
prefix will cost whatever toll is applicable, timed in the usual
manner. (Calls to mobiles served by either provider are always zone 1
[local] from non-coin phones.)

I am informed that this is correct. The "contracts" with the different
providers call for the disparate handling of coin-paid calls. And now
for the editorial comment. My first reaction was that GTE Mobilnet was
being "cheap" in not subscribing to the (probably) more expensive
contract. But if you think about it, Bay Area Cellular (Cellular One)
gets its Pac*Bell access for free no matter what they pay or what
contract they subscribe to. Since Cellular One is owned by the same
holding company as Pac*Bell, the money simply goes from one pocket to
another. While GTE Mobilnet has to pay its connection fees from money
collected solely from its subscribers, Cellular One just shuffles
Pacific Telesis money around.

Just another form of cross-subsidization, folks. And you thought that
those industries that the RBOCs were now trying to enter were full of
paranoid people who just didn't want any competition. I think it can
be adequately demonstrated that the Bells have the ability to unfairly
dominate any market they might enter, be it information providing,
cable TV, cellular service, telephone equipment vending, you-name-it.
If it relies on the switched network, or is even loosely associated
with it, the RBOC can and will perform whatever manipulations are
necessary to "win".

We have cut the behemoth Ma Bell into seven Baby Bells that are well
on their way to each becoming as big and powerful as Mother. We
(through our regulatory agencies) seem to be willing to let the
children get away with far more that we ever allowed the old Bell
System to even think about.

I'm looking for the day when Pacific Telesis will handle all of my
electronic needs, whether I like it or not.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Sat, 16 Feb 91 00:31 PST
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Re: Nynex Gateway Bites the Dust (Adam M Gaffin) writes:

>      Greene is currently re-evaluating his ban.
>      [...]
>      At least two other regional phone companies have abandoned
> similar services after heavy losses over the past 18 months.

I hope Judge Greene thinks long and hard about lifting his
proscription on information providing. Why did these regionals have
heavy losses when offering information services? I suspect it is
because they used the time-honored monopoly tradition of doing THEIR
way with no regard to that nasty gremlin -- competition.

It does not take a crystal ball to predict what would happen if telcos
were allowed to freely participate in on-line information providing.
The first order of business would be to get rid of all those
interlopers who have the gall to provide FREE on-line services: the
BBS operators. We have already seen some of the tactics such as
regrading service to "business" on the one hand to trumping up charges
and having operators arrested Craig Neidorf-style on the other. Then
to kill off the succesful commercial services, such as Compuserve, the
various PUCs would be pressured into allowing surcharges and other
bogosity to price them out of the market place.  Hell, a telco could
get the PUC to authorize escalating local charges for all subscribers,
but make calls to the telco info line "free" using a special prefix.

What I am trying to say here is that telcos should never, but NEVER, be
allowed to compete in an industry that depends on telephone service. To
do so would put all of the competing players on the endangered species
list. I am rooting for the Judge to hold his original ground on this one.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Fri, 22 Feb 91 21:28 PST
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Re: Telephone Surcharges for Deaf, Poor Anger IBT Customers

Will Martin <> writes:

> Can anyone explain why there is such a brouhaha, what with
> class-action suits and vast publicity, over this lousy *15-cent*
> surcharge, when the $3.50-a-line "FCC-mandated-access-charge", which
> would better be termed a "Fancier-cars-and-better-country-club-
> memberships-for-telco-executives-charge", gets imposed with
> practically *no* public outcry? 

Well, how about the "higher rates for everyone that can't go anywhere
else than the local phone company so that those big businesses who
COULD bypass won't because the rates are kept low"?

What, you say? In a recent bill insert Pac*Bell announced that rates
for residence and small business would have to go up. (Actually, the
"rate surcharge" will be diddled with.) Why? So that rates could be
REDUCED for big customers. The reasoning is that big customers have
the ability to go elsewhere for telephone service (known as "bypass").
So to keep that from happening, Pac*Bell will offer deals they cannot
refuse. But to keep revenues flat, Pac*Bell will have to charge the
rest of us more. Of course we cannot go elsewhere for OUR telephone
service so we are just stuck. This is supposed to be a GOOD THING (tm)
since "it keeps overall rates lower for everyone". You heard right.
Only Pac*Bell could say with a straight face, "Your rates are going up
so that your telephone costs can remain low."

I know it gives me a warm feeling inside to know that I am helping to
subsidize the telephone service of customers such as the City of San
Francisco and Kaiser Permanente.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Sat, 16 Mar 91 00:54 PST
From: John Higdon <>
Organization: Green Hills and Cows
Subject: LEC Anti-Competitive Practices

In light of recent discussions concerning the relaxation of
restrictions preventing LECs from entering the enhanced services
marketplace, it might be of interest to know that hearings on this
very topic are going on right now in California. Behind closed doors,
testimony is being given concerning competitive abuses by Pac*Bell.

Some examples of this abuse:

Pac*Bell offers voicemail and more recently "The Message Center". This
is in direct competition to voicemail bureaus. But Pac*Bell has an
advantage. Besides being able to subsidize its voicemail business with
regulated revenues and offering a very low (artificial) price that VM
bureaus cannot touch, it can integrate the service with the CO switch.
If a customer has messages waiting, telco can provide stutter dial
tone to the customer so that he knows to check the voicemail.

Through its Pacific Telesis subsidiaries, Pac*Bell is wooing customers
to Centrex by offering extended area paging and other services that
cross LATA (and even state) boundaries without having to bother the
customer with nasty old IEC arrangements. Sort of the return to "one
stop shopping" as it were.

The temptation here is to say, "If the customer gets a good product at
a reasonable price, what harm is there?" The problem is that if
Pac*Bell and telcos in general are allowed to stomp out the
competition by unfairly taking advantage of their position as utility
network providers, ultimately there will be a return to the old days
of no choice and take it or leave it pricing.

Pac*Bell would like to see things both ways, in its favor of course.
On the one hand, it wants no competition in the handling of standard
local service. On the other, it wants to compete with it customers in
the marketing of enhanced services such as Centrex, voicemail,
audiotex, and in the future, terminal equipment. This just cannot be
allowed to happen, unless we are prepared for a return to the old days
of Ma Bell, only this time with many mini-tyrants rather than one
national behemoth.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Fri, 3 May 91 18:35 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Hollings and the RBOCs

If this is not reaching for justification, I do not know what is:

[quoted from today's AT&T's Newsbriefs]

BELL DEBATE -- ... In 1990, Congress [passed] the Americans with
Disabilities Act.  The law provides that telephone companies ensure
that people ... who use TDD devices have the same access to the
telephone network that others do [but] it ignored the needs of people
who do not use TDDs.  That's why legislation sponsored by Sen. Ernest
Hollings (D-S.C.) to allow the seven [RBOC]s ... to enter research and
manufacturing, is so important. ... Lifting the [MFJ] restrictions
would give the Bells ... incentives to invest in their networks and
would spur development of new products such as "prescriptive hearing
service," that would tune an individual's telephone line to
accommodate hearing loss. ... [Frank Bowe, college professor],
Viewpoints NY, p. 119, New York Newsday, 5/2.

[end quote]

Does anyone imagine that CPE vendors and manufacturers cannot come up
with equalization for a phone line and provide devices for the hard of
hearing? What a lame reason for supporting Hollings LEC giveaway.

Ernest Hollings' bill allows the RBOCs to manufacture telephone
equipment in direct competition to the current marketplace suppliers.
All of the concerns about cross subsidization aside, the time has come
for the RBOCs to face the reality that if it is competition they want,
it is competition they will get. There is no stretch of fairness that
dictates that LECs can compete in the equipment business while others
are barred from competing in the dial tone business.

The RBOCs have had a soft, cushy, cash cow long enough. But rather
than use the obscene profits from this guaranteed money-making
business to reduce costs to the public, RBOCs such as Pac*Bell want to
parlay this wealth into vast empires. Using creative accounting
techniques, it is little trouble to siphon off money from the
regulated side of the operation to fund vulturistic practices on the
non-regulated side (and convince brain dead PUCs that regulated rates
need to be increased in the process). NYNEX not so long ago showed us
how easy this is to do.

After carefully considering the various arguments pro and con from
many on this forum, as well as others, I have become convinced that
competition will in the short term and possibly in the long term
result in the massive screwing of the average and even not-so-average
telephone user. The beneficiaries of LEC competition will be those who
can bypass anyway. Those who cannot bypass (you and me) would be stuck
with subsidizing a futile attempt by the regulated LECs to hang on to
the major customers.

My alternative suggestion is to restructure the MFJ so as to forbid
any entity that owns a regulated LEC (or group of LECs) from engaging
in any other related business. It is hard to shed crocodile tears for
Pacific Telesis, who prints full page ads crying about how it is
prohibited from offering all sorts of space age services, when it is
operating a regulated monopoly that is quaranteed to make a specific
rate of return. No gambles, no risks, just recession-proof, easy

If this isn't enough for the current operators of local telephone
networks, then maybe they should sell to yet to be created
corporations that would be happy to run such a focused enterprise. If
Pacific Telesis wants so badly to compete in the equipment and
information services markets, then perhaps it could sell Pacific Bell
to a group of investors whose purpose would be to run the best
regulated monopoly it could.

What is wrong with that, you say? The whole point of Pacific Telesis
becoming involved in the equipment and other markets would be to use
its advantage in owning the local network. Take away that advantage
and you would find that this burning desire to manufacture and provide
other services would suddenly dissipate.

No amount of accounting safeguards can prevent deleterious cross
subsidization. And Mr. Hollings' bill contains not even a pretense of
provisions to protect the consumer. If this bill becomes law we will
be on the road to a return to those thrilling days of yesteryear. But
instead of Ma Bell, we will have all of the Mothers Bell. What they
may lack in regulatory clout will be made up for with financial might.

It may be time to break up the breakup.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Tue, 7 May 91 10:43 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Re: Hollings and the RBOCs

Marvin Sirbu <> writes:

> In several recent messages John Higdon has asserted that Pacific Bell
> is "guaranteed" a cushy rate of return.

> However, the cap is AUTOMATICALLY cut each year in real terms by 4.5%
> (Federal) or 6.5%(State).  Thus, unless Pacific Bell is continually
> lowering its costs by at least that much, it will find itself making
> less than the initial 11-13%.

And guess who wrote this procedure in general and in detail. And then
fought tooth and nail, making promises that still have not been kept
to convince public opinion and the regulatory bodies to embrace it.
Currently, the profits are obscene under the price cap regulation.
Bells all over the country have blown vast portions of labor forces
out the door.  Labor costs have dropped DRAMATICALLY and equipment
costs and maintenance have dropped as well and yet -- and YET -- the
average LEC customer is paying MORE for his service than five years
ago. It does not take a master mathematician to uncover the fact that
RBOCs are cleaning up.

> In 1988 Nynex agreed to a price cap plan where it promised to cut
> rates in real terms at the same rate as inflation -- about 4.5% per
> year (What it actually agreed to was to freeze prices in nominal
> dollars which amounts to the same thing.)

Compared to the headroom of the intitial agreement and the real
difference between cost and revenue this is chump change.

> By the end of three years
> its rate of return had dropped to about 8%, or less than you could get
> by buying a truly no-risk Treasury Bond.  Nynex was unable to meet the
> productivity target it had agreed to with the NY PSC and saw its
> profits drop substantially.

As determined by whom? When was the last time you ever heard of a full
audit of an LEC by either legislative or regulatory entities? How
short your memory is (or how gullible you are)! Nynex, if you will
recall, got zinged for its "creative accounting" (which was so blatant
that it did not require a full audit) in which it sold equipment to
itself via its unregulated division at list-plus prices. This had the
effect of showing a substantial expense on the part of the regulated
side, reducing profits considerably. Where did all this ratepayer
money go?  To the unregulated division, of course.

And this was just something one RBOC got caught at. This is most
likely the tip of the iceberg in regards to telco scams. It might even
have been done so that Nynex would be caught and would take the heat
(and light) away from some more nefarious schemes.

BTW, if Nynex told the PUC-equivalent that it could no longer survive
under the current regulations, do you suppose it would be told "too

> I'm sure that there is plenty of slack at Pacific Bell so that it can
> achieve 6.5% reduction in real terms for a few years.  It will be
> interesting to see for how long they can keep it up.

If the Hollings bill passes, it should survive indefinitely and then
some. The telephone company will just take care of us as it used to.
In whatever manner it chooses.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Wed, 5 Jun 91 10:39 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Hollings and Pac*Bell

Pac*Bell has given those of us who care to look a glimpse of the
future under the Hollings bill that permits the RBOCs to enter the
world of equipment manufacturing. It is call "The Message Center", and
while it is not exactly "hardware", it is a good example of how
Pac*Bell intends to compete in the marketplace.

The "Message Center" is a voicemail service that directly competes
with voicemail service bureaus. It will answer your phone after a
preset number of rings, allow you to retrieve your messages from
anywhere, and will put "stutter" dial tone on your phone if there are
messages waiting.

What is wrong with this? First, it is priced well below most service
bureaus. Using the vast capital resources available courtesy of its
ratepayers, Pac*Bell can offer this service at a preditory price that
is designed to murder the competition. When the field has been thinned
out sufficiently, then the price can be whatever it wants.

With a service bureau, it is necessary to forward calls to the special
number it provides for your mail box. This results in at least local
charges for the forwarded calls. Pac*Bell, being "the phone company"
does not worry about this and will tout this as an advantage for its
own system (no local charges).

And no service bureau can provide "stutter" dial tone on your
telephone if you have messages holding. Another EXCLUSIVE Pac*Bell
advantage -- exploiting the fact that it controls the network.

This is how Pac*Bell would play in the equipment market. "Buy our
system. It has special features that no other system can provide." And
it would have those features because if you bought the Pac*Bell
system, special signals or what-have-you could be sent from the CO to
enable the exclusive selling points--signals that would be denied
ordinary vendors. In other words, Pac*Bell would use its capital from
the regulated services to subsidize preditory pricing, while using its
position as controller of the network to provide "exclusive" services.

If you doubt this, just look at "The Message Center" and ask yourself
these questions:

1. Why does "The Message Center" offer features I can't get anywhere

2. Why does it cost less than any other comparable service?

3. What will it cost when the competition is driven out of the market?

What would you think of ConEd or PG&E selling appliances, claiming
that this would advance the state of the art, benefit the handicapped,
improve the quality of life, etc., etc.?

Let us hope the Hollings bill dies a well-deserved death in the House.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

[Moderator's Note: But actually, in Chicago the Commonwealth Edison
Company does offer 'light bulb service'. For every paid electric bill
you turn in, you can have four bulbs (various wattages) for every ten
dollars or so on the bill.  No one complains about it, and I am not
about to complain about Ameritech/Illinois Bell's voicemail service
here. I think it beats out any of the others at half the price.  PAT]

Date: Fri, 7 Jun 91 22:29 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Re: RBOCs Own Cellular

Ken Jongsma <> writes:


> Of the top 10 cellular carriers, only No. 1 McCaw Cellular
> Communications is not now owned by a conventional "wireline" phone
> company. Indeed, phone companies are mainly battling one another:
> Ameritech and Southwestern Bell will go head to head in St. Louis and
> Chicago.

And in San Francisco, even McCaw's Cellular One is held in partnership
with Pacific Telesis (Pac*Bell). This means that you have, in essence,
GTE battling Pac*Bell.

> I find the second paragrah very disturbing. Some may claim that there
> is no way that the local service ratepayer subsidizes this business,
> but at the very least, it distracts the RBOCs from doing what they
> ought to be. That is, delivering improved local wireline service.

And judging from the way Pac*Bell's wireline service is deteriorating,
there is probably some truth to this. Oh, you would like some

The business office has now gone to 'automated attendent'. Most COs
are completely unmanned after hours. The program services department
has gone completely to hell. The right hand has no idea what the left
hand is doing anymore. Frankly, I have never seen worse service from
Pac*Bell, and it appears to be going down hill rapidly.

Rather than offering The Message Center, Centrex, Cable TV, Cellular
Service, Long Distance, and a host of other non-regulated products, I
would like to have an LEC that can provide what I cannot go anywhere
else to get: telephone and leased line service that works.

Weeks ago I ordered a pair of 15Khz program circuits for a radio
station in preparation for a repeater project. Last week's due date
was missed because the circuit was engineered BACKWARDS. That is
right: it was designed to carry audio from the repeater site back to
the studio. Very useful indeed. A new due date was scheduled for
Wednesday (last).  Instead, the day before (Tuesday) I got a surprise
call: could I let them into the repeater site for an end to end test
and turn-up? No, but we rescheduled for today (Friday). After standing
around ALL DAY with the installer, it turns out that no one had
bothered to check some interoffice equalizations and the line was not
ready for turn-up after all. They will try again on Monday.

I have never seen such incompetence in a quarter-century of
professional dealings with telephone companies. I have seen GTE
perform substantially better than that which has come from the most
recent transactions with Pac*Bell. What is happening?

Insiders tell me that the most intense handwringing at Pacific Telesis
centers around the inevitable loss of the intraLATA monopoly. This has
been the cash engine since divestiture. In preparation for this, there
has been considerable "fat trimming" in addition to the expected
search for new revenue sources. Apparently, some of the meat has been
removed with the fat, since the number of competent people available
to customers has noticeably dropped. As mentioned before, since
Pac*Bell is afraid to increase business rates much for fear of bypass,
affordable residence service may become a thing of the past. Look for
a substantial rise in the not-so-distant future. Unlike big business,
you and I have nowhere else to go.

I have said it before and I will say it again: prevent companies
providing regulated LEC service from branching out. Let these holding
companies sell their monopolies to investors who would like to provide
telephone service for a nice guaranteed rate of return. And break up
the RBOCs.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

From: John Higdon <zygot!>
Date: Sat, 8 Jun 1991 23:29:53 PDT
Organization: Green Hills and Cows
Subject: Re: Hollings and Pac*Bell

On Jun 9 at  1:28, Bob Frankston writes:

> Pac*Bell is able to provide some compelling features because it owns
> the network.  The issue is not simply one of pricing but rather the
> fact that it can create the protocols it needs to provide the
> services.  In fact, many of the protocols are intranetwork protocols
> that are generally available to telcos.

Information and service bureau providers will tell you that they can
beg, plead, demand, suggest, and cajole until they are blue in the
corporate face, but Pac*Bell could not care less about a given
protocol or service enhancement until IT needs it. Then it will
sluggishly make it available to outside parties at a cost that usually
seems out of line. For example, service bureaus can offer stutter dial
tone just like The Message Center -- IF they are willing to install and
pay for a dedicated data line TO EACH SWITCH in which they wish to
provide the feature.

>  A common theme of my messages is that these protocols must be exportable.  
>  Unfortunately, protocols generally means CCITT and a design cycle the 
>  guarantees irrelevance.

But when they are exportable, they are almost always skewed to the
regulated telco's advantage.

> In the spirit of naive optimism I'd like to see a law that allows
> telcos to offer these services but with the condition that they
> services be done with an arms length sub and that any protocols used
> would be made generally available to third parties.

Given that the resources for completely auditing an RBOC do not exist,
I would submit that there is no such thing as "arms' length". "No
connection", "not affiliated with", "no common ownership", now THAT is
arms' length.

> Making these protocols available external raises many network
> integrity and  performance issues, but these issues must be faced
> otherwise the Judge Greene error is for naught.

It is the cornerstone of the whole divestiture exercise. If there is
to be an expectation of fair competition, everything must ultimately
become available externally.

I thought I would share with all of you a little analogy.

Let's say I owned a bus company (that competed with other bus
companies) and I also owned a bridge that carried a major highway. I
have decided that my bus company is going to "win". To do that, I put
luxurious busses on my routes, increase my runs per hour (to make it
convenient to riders), and lower my rates to the point that anyone
would be stupid to ride the competition. What a boon to consumers.
Excellent bus service at cheap rates. Only an ogre could attack that,

But these things cost money. My busses don't pay their way as it is
and now with my increased service the cash flow is really lacking.
What do I do? I increase the tolls on my bridge to an astronomical
figure. The people who cross the bridge have no choice; they must
cross my bridge to get to where they are going. They must pay my toll.
Now I have the money to run my superior bus company. I put the
competition out of business. Now, not only must people cross my bridge
(and pay anything I demand), but they must ride ONLY my busses and pay
whatever I now decide to charge. The competition? They sold their
busses to me (at distressed prices) before they went bankrupt. We
won't be hearing from them any time soon.

Far fetched? Have you ever heard of the Golden Gate Transit Authority?

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Sun, 9 Jun 91 02:34 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Re: Hollings and Pac*Bell

Charlie Mingo <> writes:

[The usual uninformed, simplistic response citing the short term
effects of monopolistic behavior.]

Since my points, which I thought to be more than clear, were not
understood by all, I will support them one by one.

> Although I take no position on the
> Hollings bill itself, it sounds perverse to me to attack a company for
> offering quality service at a low price.

Regardless of how it manages to do that? If it does so by taking from
regulated ratepayers and then undercutting legitimate competition
through its control of the network AND subsidization from capital
derived from other captive customers, you do not feel that worthy of
attack? Especially when those regulated ratepayers are taking it in
the shorts with rate hikes and rapidly deteriorating service. Too bad
those "inefficient" competitors do not have a nice regulated ratebase
cash cow that they can squeeze more capital from when desired.

> "Predatory pricing," for example, is defined as selling
> a product *below the cost of production* for the purpose of eventually
> monopolizing a market. Mr. Higdon provides no evidence...

Sorry. Here is the evidence. For $4.50, Pac*Bell provides The Message
Center. Nothing else is necessary. CF/No Answer, CF/Busy, and standard
CF are included for voicemail purposes. Last time I checked, the going
rate for the forwarding services alone exceeded $4.50. Either Pac*Bell
is overcharging its forwarding customers, or it is giving away the
store to its VM customers. Which is it?

> This is a natural advantage which large, established
> companies have over smaller ones; pricing one's goods to reflect one's
> lower cost structure is neither anticompetative nor "unfair."

It is also an advantage enjoyed by companies that control the MEANS of
service delivery, have sources of income that are decreed in statute
(FCC and PUC R&R), and have colusion with other entities. And I
disagree: this is BOTH anticompetitive AND unfair.

>     Mr. Higdon also writes that "[w]hen the field has been thinned out
> sufficiently, then the price can be whatever [Pac*Bell] wants." It
> should be clear that Pac*Bell cannot raise the price of voicemail in
> the future above what independent providers currently charge, without
> allowing the competition to reestablish itself.

I do not understand this at all. Why not? What magic force will
prevent Pac*Bell from marching right up to the PUC to claim that it
must charge more for the service? It will not be hard to make a
convincing case, since it probably should have been charging more all
along. Only at this point it can have ALL the business.

>     Likewise, his argument that Pac*Bell should be prevented from
> offering voicemail, because it alone is in a technical position to
> provide special services (such as "stutter" dialtone and free call
> forwarding), is similarly flawed. Consumers would not be better off by
> making these desirable features unavailable merely to protect
> inefficient competition. (Of course, if it is possible to extend these
> feature to competitors' services, Pac*Bell should be required to.)
> The key concept here should be service to consumers, and not
> "fairness" to competitors.

In your imaginary, fairytale world, maybe. I am sorry to be so harsh,
but you are obviously light years away from the day to day grunge of
this business. Other VM companies can, indeed, offer any techincal
service Pac*Bell provides IF they are willing to, themselves, buy the
means from (guess who) Pac*Bell. This is the multi-layered whammy.
Pac*Bell offers stutter dial tone. That is easy; the system lives in
the CO anyhow. Mr. Service Bureau can do it by paying Pac*Bell for a
dedicated data circuit to each and every switch that Mr. B wishes to
serve. So now Pac*Bell has a bigger piece of Mr. B's income, it
enriches itself, keeps Mr. B's prices higher, etc., etc. For Pac*Bell,
it is a win/win/win situation.

Pac*Bell only provides things like stutter dial tone activation when
it deems such a feature useful for its own marketing purposes. VM
bureaus have been requesting it for years. Now it is available because
Pac*Bell, itself, wants it. But Pac*Bell gets it free (or rather
buried under unauditable paperwork), while it SELLS it to others.

Another example: From Pac*Bell payphones a call to any Bay Area
Cellular One (owned by McCaw and PacTel) number cost twenty cents,
untimed regardless of distance from the phone to where the number is
based.  Calls to GTE Mobilnet numbers from those same payphones go
full toll. Why? The cellular companies buy a connection package to
link to the landline carrier (Pac*Bell). The "no toll" payphone
package costs MUCH more than the standard one. But since there is
common ownership between the cellular company and the landline
carrier, it makes no difference what the higher charge is; it all
circulates in the same pocket anyhow.

But cross subsidy is not permitted, you say. Maybe not, but until
someone produces a full, verified audit of Pacific Telesis and its
subsidiaries then I am going to assume that which appears to be

If you want to fall for the Pac*Bell line of "we can do it better and
we can do it cheaper", then go for it. But please do not expect all of
us to bury our heads in the sand with you.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Tue, 23 Jul 91 01:52 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Marketing, Telco-Style

In a recent post, I indicated that Pac*Bell had been involved in
documented cases of slightly underhanded Centrex sales tactics. A
number of readers have expressed a desire to hear some of the dirt and
have requested a case history. OK.

Through a series of maneuvers, a local, government-funded social
agency acquired an ITT System 3100 PBX. Through various associations,
I was involved in its care and feeding. The problems began when the
operation moved.

In the new location, people began complaining that they could not get
an outside line when dialing '9'. This seemed straightforward enough.
Simply check all the outgoing trunks for defective ones. All checked
out OK. But then there were more complaints. Trunks checked again.
All tested fine. We started swapping trunk cards in the 3100. No luck.

Then we started exercising the system. Oddly enough, the problem
seemed to rotate around throughout the trunks, with no one trunk
causing the problem. To condense things a bit, we determined that
sometimes a ground start trunk would come up with insufficient loop
current and would not properly signal the 3100 that it had been
'started'.  Consequently, the audio path was not established and the
caller heard no dial tone.

The CO was a #5 crossbar, which means that for every dial tone
request, an originating register would be selected on a random basis.
We concluded that some of the ORs were somehow defective. Pac*Bell
repair was incredulous. The lineman (and CO people) assumed that if a
repair person could take a butt set and bring up dial tone 100% of the
time on a trunk, there could be nothing wrong. The concept of loop
current and "specifications" did not impress the plant people.

In the meantime, the agency directors were getting a little steamed.
The problem had been going on for some time and no progress toward a
solution seemed to be in the works. Pac*Bell insisted that if you
could seize dial tone with a butt set, that was that. After a great
deal of name calling and threats, a crossbar "expert" was brought in
by Pac*Bell. His first act was to order a "routine" of all of the
office originating registers. No less than fourteen were found to be
out of specification, out of a total of 140. The problem showed up
about one out of ten attempts. Pretty close.

When these ORs were blocked from service, the problem which had been
going on for months went away. The customer was delighted. But then,
enter the Centrex goons.

The Centrex people made an appointment with the agency directors. In
hand they carried the entire history of the trouble reports on the
questionable central office equipment. But history had been re-written.  
The reports clearly showed that the trouble on each call was in the
CPE. The sales turkeys claimed that this amount of trouble was to be
expected in a privately owned PBX, but that Centrex was totally
reliable, blah, blah, blah.

Fortunately, the directors of this agency, unlike most government
stooges, had some grasp of the situation. An associate was called in
to join the converstation and history, in effect, was re-revised to
reflect reality. The goons went on their merry way and the 3100 is
still in service.

What a great day it will be when Pac*Bell starts marketing its own
equipment using these slimy tactics. I have written to my congressman;
have you written to yours? Do you know who s/he is?

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Sun, 28 Jul 91 01:07 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Re: Baby Bells Can Now Offer Audiotext

TELECOM Moderator <> writes:

> The big (and good!) telecom news this past week was that the Baby
> Bells are now free to begin offering audiotext services; i.e. 900 and
> 976 style programs. A spokesperson for Illinois Bell said the company
> will begin offerings of this sort as soon as technical changes have
> been made which will permit them to do so and when some last minute
> marketing studies have been completed which they hope will indicate
> the best direction to take in this new endeavor.

That this is good news is in the ear of the hearer. As it now stands,
independent providers have offered audiotext services, subject to
restriction upon restriction, mainly imposed by the very telcos that
are now rejoicing in the decision that allows them to compete in this

Pac*Bell for one capriciously disconnects or reclassifies 976 and 900
providers who "violate" various non-specific company standards.
Frequently PB will back down when pressed for details and
specifications (because there are usually none), but now with
competition at stake, the company will be much more aggressive at
disconnecting its competitiors. And given Pac*Bell's track record in
such matters, I wonder how many of the current audiotext providers are
now going to suffer financially detrimental outages of "unknown"
origin that will drive them out of business. I ask you, would you
really want your competitor to also be your supplier?

> Here's hoping that between their efforts in Appeals
> Court and the federal legislature they succeed in repairing much of
> what at one time was the world's greatest phone network. 

It still is. Why is it inferior? COCOTs do not count, as they have
nothing to do with the network. Since divestiture I have noticed
improvements in telephone service that have come to pass at a rate
that far surpasses progress realized in "The Bell System".

Long distance is faster, better, and cheaper than at any time that Ma
Bell was in charge. Yes, you can get screwed at hotels and other
places, but again this has nothing to do with divestiture -- it has to
do with poor regulatory control, and even more importantly, consumer
ignorance. In fact, virtually every item you can name as a liability
of divestiture is probably related more to public attitude and
disinterest than to anything else. At least now if you are getting
screwed you can go somewhere else. Before divestiture you took what
you got. Now the only place you CANNOT go somewhere else is with the
product provided by the RBOCs: local exchange service.

But even local service has improved. Pac*Bell, for one, is MUCH more
responsive in its repair department, is MUCH more responsive it its
marketing department, and provides overall MUCH more satisfactory
service than it did as Pacific Telephone.

> We'll never see the Bell System again ... but maybe some of the damage
> of the past few years can be undone if the good news this week is any
> indicator of things to come.

Thank heaven we will never see the Bell System again. I remember that
even admitting in public that you knew what 'originating register',
MF, 'frames', or even 'cable pairs' meant was risking trouble. While
today, I routinely discuss CO equipment with Pac*Bell personel, in the
Bell System days, NO one was to know anything about that sort of
thing. And why should they? Mother just took care of us, providing all
that was needed for telephone service. Is this what you want to see us
return to?

Pac*Bell and the RBOCs are just drueling at the possibility of being
able to control it all once again. And how many times must it be said:
when you control the network, you have a completely unfair advantage
over all the other players? And when they are gone, what is to stop
you from playing the game anyway you like (such as in the old days)?

And PLEASE (said in a Roger Rabbit style) do not fall for that tired
old line of how great and wonderful these services will be if the RBOC
wizards are allowed to shower their super-advanced technology on the
people. Where was all this power and technology when it was the Bell
System? While independent companies were trying (under the Carterphone
decision) to sell the public electronic PBXes, Pacific Telephone was
still offering cord boards (and very mechanical PBXes). If it were not
for divesture, this message upon completion, could very likely be sent
out at the breathtaking speed of 300 bps.

Remember, the only technical advantages that the RBOCs enjoy over
ordinary mortals arise out of the fact that they own the network. They
buy their technology from the same suppliers as the rest of us
(Western Electric is no longer a factor), and I think that the
Moderator or anyone else would be hard pressed to cite a single
significant technical advancement in the last ten years to come from
an RBOC, rather then from the industry at large.

If RBOCs want to run local monopolies, they should not be allowed to
branch out in all of these other directions. They should not provide
long distance, terminal equipment, information services (as
originators), voice mail and answering services, or any other content
or content processing aspects of communications--except on one
condition. That condition is that the local monopolies be opened up to
all competitiors. If, as a hypothetical information provider, I am
forced to compete with my exchange service provider and carrier, I
believe I should have the option to go elsewhere for that service if
it becomes necessary.

As long as the RBOCs can keep everyone off their LEC turf, they should
not be allow to run roughshod over everyone else's.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Mon, 29 Jul 91 00:41 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Re: Baby Bells Can Now Offer Audiotext

On Jul 28 at 23:47, TELECOM Moderator writes:

> Anyway, BBS' are no real competition; the telco
> services will be so much more involved, with many more offerings than
> a BBS operator could ever provide without a huge budget.  PAT]

Pat, read what you just wrote. Where is all this money to finance
these fabulous services going to come from? The regulated ratepayers,
who by and large will have no interest in them? Or will it only come
from those who use the services per se? If so, and they cost so much
to provide, who could afford to use them? Money does not fall as manna
from heaven (at least for businesses that do not have a captive
regulated base to dip into.)

Of course private BBSes are competition. Why do you think there have
been these cases already trying to force them out of existence by SWBT
and the like? For the nickels and dimes that would be realized by
getting the slightly higher business rates? Private BBSes will be a
number one target for destruction when the Bells really gear up for
on-line services.

And not all 900/976 providers are scam artists. Some happen to provide
very satisfied customers with quality service. So when the LECs start
gunning for the competition, no one will be safe.

But someone please answer the question: where do these bottomless
resouces that we keep hearing about in connection with LECs come from?
Outer space? God? A printing press in Grandma's basement? You do not
get something for nothing. If the telcos are going to provide
expensive, elaborate, and "involved" services that ordinary mortals
could not dream of offering to the public, where DOES the money come
from? Before I hear anymore about how wonderful this all is, I want,
nay I demand, an answer to that question.

I suggest you check out Material Enterprises (a subsidiary of NYNEX)
before you answer.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Sat, 10 Aug 91 02:42 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Re: What RBOC Information Services?

Lars Poulsen <> writes:

> With high-volume circuits being
> available on IDSN, and with multi-user systems finding their way into
> homes, I bet you will find many hobbyists offering friends the use of
> spare cycles on their unix boxes, either for free or for very modest
> fees. If the RBOCs start selling computer service, they will look at
> this as competition and will find ways to strangle it.

This is a concern of mine on two fronts. (OK, you people who were
wondering just exactly what I do with sixteen lines -- here it is!) I
use my home computer in a sideline development of computer-based
devices (not related to my primary occupation). Since the system is
well-connected to the outside world, a number of my friends use it as
a source of news and mail. There is, of course, no charge to anyone
with an account on the machine.

The other machine (the test jig for the development) is a "party-line"
style system that is similar to various 900 services. Again, people
may call this system at no charge.

Now how do you suppose people at Pac*Bell would feel about all of this
if and when the company starts offering these very services? The first
attack would probably be on the pricing structure of the phone lines
feeding both computers. Others, who would try similar activities,
might find that there are new policies about the installation of
multiple lines in residences. Or that facilities in the neighborhood
are "inadequate" for the purpose of installing additional lines.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Mon, 12 Aug 91 20:40 PDT
From: John Higdon <>
Reply-To: John Higdon <>
Organization: Green Hills and Cows
Subject: Pac*Bell is Eager to Begin

"Pacific Bell wants to be more than a telephone company," proclaims an
article in today's {San Jose Mercury}. (It is debatable whether it is
even a phone company, but that is a horse to be whipped elsewhere.)
Pac*Bell would like to be in the information business by the end of
next year.

The services? Here are the five main categories:

* Enhanced Voice Mail

* Enhanced Fax

* Transaction Processing

* Radio Location

* Electronic Yellow Pages

First, it should be pointed out that Pac*Bell is currently doing an
intensive marketing study to find out what would sell and how much can
be gouged for it. "... the company is surveying Message Center
customers to see what type of information they'd like to receive and
how much they'd be willing to pay." Somehow it seems a little
disconcerting when a monopoly prices services according to what the
market will bear.

Some of this article should make anyone's hair stand on end. For
instance, Pac*Bell would like to get into the automated ordering
business and sell the service to smaller businesses that cannot afford
systems themselves. "The Pac Bell computer would keep a record of each
customer's buying preferences. A customer who notifies the system of
an impending wedding, for example, might get mail or phone messages
offering special deals from caterers, photographers and tuxedo rental
shops." Just what we all need, no?

Pac*Bell built the "International Teletrac" system, which is similar
to the "lojack" stolen car retrieval system. "Pac Bell built
Teletrac's radio network but can't directly operate the Teletrac
service. If the restrictions on information services are lifted, Pac
Bell intends to exercise an option to buy International Teletrac."
Gee, that is all really wonderful, but the crossbar serving my
regulated monopoly-provided telephone still cannot even do Call
Waiting. How about thinking about us regulated ratepayers before
leaping off into that Brave New World, Pac*Bell?

"Numerous attempts in the last decade to sell information services to
a mass audience have failed. Knight-Ridder Inc., publisher of the {San
Jose Mercury News}, lost $50 million in the early '80s with a home
information service called Viewtron; Times-Mirror Co., publisher of
the {Los Angeles Times}, also mounted an expensive, unsuccessful
effort." It is comforting to know that if Pac*Bell loses millions in
its information services, the stockholders will be protected. The
money will just come from all of us ratepayers.

If anyone enjoys the prospect of having one huge company having direct
control over many aspects of people's daily lives, he should be
feeling really good right about now. It looks like Pac*Bell will be
taking good care of us in very short order. And with money we thought
was supposed to be used to provide us with basic phone service, at

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Organization: Green Hills and Cows
From: John Higdon <zygot!>
Date: Wed, 4 Sep 1991 14:42:06 PDT
Subject: Comments From a Provider

The following is an e-mail that fell into my hands some time ago. I
have been trying all this time to get publication clearance from the
author and have finally succeeded. While it is not exactly timely, it
is the only response to the Hollings and Pac*Bell thread from a real
live service bureau owner. If there is a way to fit it into
publication, please feel free to do so.

The following is from Marc O'krent <>

On Jun 9 at 1:14, (Charlie
Mingo) writes:

> It must be remembered that antitrust law generally (and the Bell
> divestiture in particular) was designed to benefit *consumers* not
> competitors.  "Predatory pricing," for example, is defined as selling
> a product *below the cost of production* for the purpose of eventually
> monopolizing a market. Mr. Higdon provides no evidence that Pac*Bell
> has priced its voicemail service below the cost of providing it; on

I'll help John out here with a small insight.  I was going to stay out
of this, but after reading your reply, I couldn't resist. Your reply
reminds me of a class on anti-trust, but ignores the reality of the
market place and Pac*Bell's positioning.

As I service bureau provider, I can shed some light here.
Specifically on the issue above, many of us feel that Pac*Bell *IS*
providing the service below cost, and offer the following as evidence:

Pac*Bell locates their Voice Mail equipment at one location in each
LATA (they used to have a machine in each office, but that was not
cost effective, even for them-what with reductions of CO manpower,
etc.).  They then run FX Voice circuits from each CO where they want
to offer service back to their "Voice Mail Point-Of-Presence", if you
will.  The same is true with their SMDI links which provide the MWI
(AKA "stutter dial tone" and various typs of call forwarding
connections): they remote these from the CO's where they want to offer
service back to their Voice Mail POP.

Now let's take LATA 5 for example.  The CEI rules require Pac*Bell to
pay the same rates for services as everyone else, me for example.  FX
DID trunks from non-continguous CO's cost $580.00 each to install +
mileage (at something like $1.60/quarter mile).  The monthly service
charges are also mileage based and can reach into the hundreds of
dollars per month *each* depending on distance. Let's say that
Pac*Bell's Voice Mail POP is in the Gardena Tandem (doesn't really
matter where it is since no point is equidistant from all points in
the LATA, especially LATA's 1 & 5).

If Pac*Bell is truly paying what they are required by law, it is
impossible, given the number of trunks and SMDI connections required
in the LATA, to assert that the cost of providing Voice Mail service
for subscribers in Agoura ( a point in the LATA very far form the VM
POP) is the same as the cost of providing the service from Torrance (a
point in the LATA very near the VM POP).

We've done the math here and we could never provide the same service
at the same cost if we had to pay for FX connections even small
distances away.  But this is exactly what Pac*Bell is doing: everybody
pays the same rate.  Yet, we know that Pac*Bell's cost of providing
the service is not equal with respect to all subscribers.

This is a perfect example of what John was saying.  Because Pac*Bell
has the revenue base of the local subscribers, they can afford to lose
money on much of their Voice Mail subscribers just to gobble up market
share and wipe out smaller providers like us.  Because of their
revenue base, they can withstand the hugh losses incurred by their
deployment of Voice Mail while they hope that they get enough
subscribers in each area to cover their costs.  And if they don't,
well who suffers but the rate payers?

This is preditory because Pac*Bell is selling the service *below their
cost* in many areas.  This is the standard IBM product introduction
philosophy used to eliminate or discourage competition: take a new
product with which you have 0% share and price it as if you had 50%
share even though you don't have the economies of scale yet to be
pricing at that level.  If you can withstand the losses eventuall you
*will* have 50% share and everything will be in line again.

Further, Pac*Bell engages in the illegal act of using rate payer
dollars to subsidize their Voice Mail operations with giving private
providers the same benefit.  For their Voice Mail product, you can
call 611 for help.  People working at repair work for the *regulated
subsidiary* of Pac*Bell.  Their salaries and benefits are paid by the
rate payers.  Yet the Voice Mail product is an unregulated product.
In addition, the people who maintain the Voice Mail system are part of
the *regulated* company.

By not having to bear the true burden of these repair and maintainence
people as a direct cost of running their Voice Mail company, Pac*Bell
unfairly takes advantage of their monopoly position.

If Pac*Bell's Voice Mail company is to be allowed to benefit from rate
payer dollars, who have NO SAY in how their dollars are used, then ALL

Failing that, Pacific should be required to have a *separate* repair
bureau (not 611) and *separate* maintainence people.  (This is similar
to the AmVox case challenging the use of the 811 number for marketing
Voice Mail.  I note that Pacific has opted to use an 800 number now
instead of offering all their copetitors an 811 number).

> the contrary, he himself shows that Pac*Bell's size and credit rating
> give it easier access to capital, which lowers its cost of providing
> the service. This is a natural advantage which large, established
> companies have over smaller ones; pricing one's goods to reflect one's
> lower cost structure is neither anticompetative nor "unfair."

This, of course, is absurd.  They have no "natural advantage" other
than the misuse of rate payer dollars to subsidise their costs of
providing uniform Voice Mail service throughout the LATA as mentioned
above.  If they are following CEI (which is a whole other matter that
ought to be looked into), they have no "lower costs."

You confuse this with other industries where the true competitive
model thrives: this market has an entrant that is by definition a
monopoly and can exert monopoly economic power.  Independent providers
have been acting like a true competitive market for years, but when
you though a monopoly into the pool, fair competition ends.

> Mr. Higdon also writes that "[w]hen the field has been thinned out
> sufficiently, then the price can be whatever [Pac*Bell] wants." It
> should be clear that Pac*Bell cannot raise the price of voicemail in
> the future above what independent providers currently charge, without
> allowing the competition to reestablish itself.  Given this
> limitation, any such "predatory pricing" strategy would be decidedly
> unprofitable.

If there are no independent providers with significant enough market
share left, then their strategy works perfectly.  Similiarly, if there
are few providers left then their would be a hugh barrier to entry: no
investor nor any bank would want to invest in "reestablishing" an
independent provider because of Pacific's behavior. 

> Likewise, his argument that Pac*Bell should be prevented from
> offering voicemail, because it alone is in a technical position to
> provide special services (such as "stutter" dialtone and free call
> forwarding), is similarly flawed. Consumers would not be better off by
> making these desirable features unavailable merely to protect
> inefficient competition. (Of course, if it is possible to extend these
> feature to competitors' services, Pac*Bell should be required to.)
> The key concept here should be service to consumers, and not
> "fairness" to competitors.

Actually, I almost agree with you here.  Consumers should have these
services available to them.  Pac*Bell should not be allowed to provide
them below cost, however.  Pac*Bell would be acting totally
differently if they had to charge what it really costs them to run
SMDI links all over the LATA.  My guess is they would do what SW Bell
did: provide one line that allows "inter-machine" SMDI signaling.
That service truly benefits the consumer because it allows the
consumer to have *MORE than ONE* choice for providers who can give
them stutter dial tone, for example.

Right now, in CA, there is only ONE provider who can (and is ) provide
stutter dial tone to all subscribers: GUESS WHO?  And it's not because
their "cost" to provide it is lower than mine.  It's because they
don't have to provide their service based on their cost.

Date: Thu, 19 Sep 91 17:49 PDT
From: John Higdon <>
Organization: Green Hills and Cows
Subject: Pac*Bell's Restructuring

The last I heard about Pac*Bell wishing to restructure rates was
several years ago before it cut the sweetheart deal with the PUC.  Now
that Pac*Bell has received everything it wanted and we ratepayers got
touch tone and Zone 2 charges applied to everyone rather than just
those who used them, it is indeed probably time for Pac*Bell to start
whining to the PUC again. Already, the company is before the PUC
complaining about "de facto intraLATA competition".

This is the (increasingly common) practice of using IEC dedicated
lines, those that come directly from the carrier's switch, to make
intraLATA calls at a substantial savings over Pac*Bell's inflated
rates. Since these calls do not pass through Pac*Bell's switching
equipment, there is no technical way for it to stop this practice. Of
course this money-saving tactic is reserved for larger customers since
the cost of dedicated lines, typically provided over T1, is not cost
effective for smaller users. In essence, this is a form of bypass,
something that Pac*Bell itself has predicted would eventually happen.

To minimize this, Pac*Bell has always maintained that it was necessary
to extract more revenue from the residence customers so that it could
keep business services (among those, daytime intraLATA calls) priced
competitively. Depending upon how you look at it, this means
subsidizing business service on the backs of the residential
ratepayers, or subsidizing residential service less from the other

In any event, this was the last plan that Pac*Bell presented for this

1. Keep measured residence service approximately the same, but maybe
cut the monthly allowance slightly.

2. Create a new residential class of service that allows 130 untimed
local calls per month. Each call over the limit would cost on the
order of $.11 each (untimed). The monthly charge would be comparable
to the current unmeasured rate.

3. Double the monthly charge on unmeasured residence service.

The strategy is that most people would, after considering their real
usage, opt for plan two. After all, you would have to make 200 local
calls per month to make plan three cost effective. That is nearly
seven calls a day, day in and day out.

After a year or two, Pac*Bell would go back to the PUC and indicate
that plan three was no longer necessary because of insignificant
demand.  And that, my friends, would be the end of "free" local calls.
As you can see, this plan could not even remotely be considered
"revenue-neutral" but you can be assured that Pac*Bell will sell it to
the PUC clowns as a device to "more equitably" distribute the costs of
providing telephone service to those who use it the most.

It will be interesting to see if Pac*Bell really does trot this old
nag out and give it a run.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Tue, 24 Sep 91 23:24 PDT
From: (John Higdon)
Organization: Green Hills and Cows
Subject: Pac*Bell Tips Its Hand

To remain "lean and mean" in the business marketplace and to attempt
to stem the tide of intraLATA bypass, Pac*Bell has announced that it
wants to lower by thirty percent the intraLATA rates in California. To
maintain its revenue, it will rape the captive residential customer
base by RAISING the residential flat-rate by fifty percent.

There are some ramifications here that may not meet the eye. None of
Pac*Bell's competitors have this captive cash cow to rob whenever it
suits their fancy to be "lean and mean". For example, if MCI wanted to
suddenly reduce its charges, it would have several choices. It could
cut back its expenses, hope for more volume, or suffer reduced profits
or major losses. Pac*Bell has no such difficulties. The company knows
that residential customers have no where else to go for telephone
service. Whatever it can slip past the PUC, the customer will have to
pay or do without. As we have all seen, the PUC is putty in Pac*Bell's
tender hands.

Another noteworthy item here is that the only significant rate
increase is the residential FLAT-RATE. Pac*Bell has always hoped to be
able to phase out unmeasured service. All telcos would like every
relay click and every CPU cycle to result in more revenue. This is why
FX, leased line and other inherently unmeasured telco services have
been priced in the stratosphere as of late. Providers of
telecommunications would prefer all traffic to travel over the
switched (and measured) network.

By cranking up the cost of unmeasured residential service, Pac*Bell is
making it more and more attractive for customers to opt for measured
service. Once Pac*Bell can convince the PUC that unmeasured service is
no longer in demand, PB will be allowed to discontinue it. Then, when
it wants a rate increase, it just inflates the cost PER CALL and at
the same time tells us (and the PUC) that everyone is in control of
his own phone costs by simply watching use and cutting back on calls.

Pac*Bell has had this scenario waiting in the wings for years.
Insiders talk quite frankly about it. But the logic of sticking it to
residential users to remain competitive in the business world escapes
me. What PB spokespeople seem to be saying is, "We have to raise
residential rates in order to keep them low."

Say what?

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Subject: The Rate Shuffle Hearings
Date: 31 Oct 91 22:19:59 PST (Thu)
From: (John Higdon)

After hearing what an exciting thing the Caller-ID hearings were, I
decided to attend the "IntraLATA Competition" roadshow hearings when
they came to a town near me. At the moment that happens to be

A little mention of the locale is in order. Victorville is a small
(45K) town that is essentially the gateway from the Los Angeles sewer
to the High Desert. It is part of a growing desert community of about
220K and the majority of the telephone service comes from Contel.
Since Contel's rates are tied to the rates Pac*Bell charges, the PUC
came to town to get customer comments.

The meeting was in the city council chambers and had representatives
from Pac*Bell, Contel, GTE, TURN, and the PUC consumer advocates
office present. In addition, there were about ten townfolk at the
gathering.  It would appear that simple (?) rate increases do not have
the draw that an explosive issue such as Caller-ID carries.

In any event, the predictable comments came from the predictable
people. The judge gave opening remarks, Mr. Disher from Pac*Bell had a
few words with charts and graphs showing his case, the person from
Contel said that his company was still pondering its part in the whole
thing, and the PUC consumer advocate explained what his function was
in the whole proceding.

TURN predictably was more concerned with little old ladies than with
anyone else, claiming that this increase would be a hardship on people
with fixed incomes, etc., etc. But since all of these people had been
heard from many times before, the bulk of the time was turned over to
the audience.

I spoke first. Remembering the last major PUC action with Pac*Bell
(the great regulatory giveaway, as David Gast so aptly expressed it)
and how we, the public, got absolutely nothing, I went on to express
my suspicions that this was even worse. Refuting Mr. Disher, I
mentioned that it was too late to stop bypass; it is already a big
reality among big business. Pac*Bell is sharply raising its prices
ONLY in those areas where the customers involved cannot go anywhere
else and will use that money to undercut and devastate the competition.

And what happens if competition is so effective that Pac*Bell needs
even more money from the regulated rate base? Will they be back in a
couple of years wanting still more? And this in an industry where the
actual costs of providing service are plummeting. And considering what
advances have been made in the past ten years in the arena of
telecommunications, what have we, the monopoly customers got to show
for it? What services can we get now that we could not get ten years
ago? (Remember this is California and Pac*Bell territory so you ISDN
people just sit on your hands!)

Anyway, I went on and on. It was sort of theraputic in its own way.
But it suddenly dawned on me. Here was the public's chance to sound
off, and we heard from one crackpot (me), two little old ladies ("too
much money"), and one other gentleman ("too much money"). And this for
an increase that, if passed, will really gouge the small businessman.
The doubling of the local minute charge is not something to be taken

I overheard Mr. Disher (Pac*Bell) discussing the wonders and joys of
measured service with one of the elderly ladies. Believe you me, that
is Pac*Bell's next major agenda: total measured service. In my
comments, I suggested that if competition was so successful in
bringing down the price of everything else, why not extend it to local
service as well? This did not make a big hit with Mr. Disher, who
after the meeting tried to tell me that the cable companies are
responsible for keeping Pac*Bell from wiring neighborhoods with fiber.
"We would love to deliver your sixteen residential lines with T1, but
the PUC won't let us."

And with that bedtime story, it is time to hit the hay. But the judge
did mention that no decision could be expected on this whole big ugly
mess before fall, 1992 and no implementation would be scheduled before
the first of 1993.

John Higdon <> (hiding out in the desert)

Subject: Bypassing the Local Telco is a Good Idea
Date: 4 Nov 91 10:47:21 PST (Mon)
From: (John Higdon)

Pac*Bell has in its bag of reasons for the rate shifting proposal now
on the table the premise that it must be competitive to prevent big
business from "leaving the system" and thereby increasing the costs
the rest of us have to pay. After performing a survey of my own, it
would appear that the horse is long out of the barn.

Pac*Bell has the highest, most confiscatory rates for intraLATA toll
calls in the nation. One can pay up to $0.49/min to call from one end
of a LATA to another (one can call overseas for that kind of money!).
Consequently, most major companies are now leasing lines directly from
MCI, Sprint, AT&T and others and "accidently" routing their intraLATA
traffic (at $0.10/min) over these lines, completely depriving Pac*Bell
of its pound of flesh.

Even if Pac*Bell succeeds in shifting the burden of its expenses to
the residential and small business customers and brings down the
ridiculous price of intraLATA calls, it will not get back those major
customers.  Why? Those customers now have nice, modern digital
entrance facilities for their direct WATS lines. Why on earth would
they want to go back to the crummy old copper analog circuits that
Pac*Bell insists on for dial tone delivery?

I am going to do everything I can to derail Pacific Bell on this one.
I recommend to every client that spends more than $500/month on
intraLATA call that direct WATS lines be considered from a major
carrier. Many clients are already saving many thousands of dollars per
month EACH on this. In addition, as some e-mail correspondents have
pointed out, the media needs to get involved. People need to
understand that California deserves a utility that is committed to
providing local telephone service rather than grabbing up revenue to
finance foreign and domestic cable, paging, and cellular companies.
Does anyone have any idea how many of our utility dollars went down
the drain on the abortive "PacTel Computer Center Stores"?

It is time that we expect Pac*Bell to start delivering something for
the exhorbitant rates that it charges and wishes to charge in the
future. Not one network feature is available to the residence customer
that was not available ten years ago, and yet the rates have not only
gone steadily upward (remember, Pac*Bell pockets the "FCC-mandated"
access fee), but we pay for many things that were traditionally
provided at no extra charge (inside wiring, DA, number changes for
cause, etc.).

The real reason for this "rate shift" is simply that Pac*Bell is
eyeing all of these new ventures that it will need to capitalize.
Information Providing, cable service, and equipment sales are just
three examples.  Pac*Bell (as does any RBOC) plays to win. It finances
its game on the ratepayer's back. This has got to stop.

John Higdon <> (hiding out in the desert)

Subject: Re: LEC Competition is a Bad Idea
Date: 5 Nov 91 12:06:07 PST (Tue)
From: (John Higdon)

David W. Barts <> writes:

> I will admit I am not an expert on the early days of telecom history,
> but I keep hearing stories of how our towns and cities were served by
> different, competing telephone companies in the past and of the chaos
> that resulted from such policy.

That was then. This is now. To discount the bulk of your article,
there are numerous ways of providing for multiple local carriers in
any community. Common fiber trunkage, short-haul microwave, CATV,
etc., can be used quite effectively and maintain interconnectivity. In
short, there are no valid technical reasons to oppose competition.
These same arguments used to be used to explain why competition in the
IEC field was impossible.

> Of course, there's always the cable TV network.  Even this, however,
> could not be turned into a telephone wire plant overnight.

So if something cannot be done overnight, we should just give it up,

> Then, of course, there's the problem of ensuring that the networks be
> well-interconnected.  Do _you_ want to pay long-distance changes to
> call your neighbor across the street, just because they use TCI Cable
> phone service and you use US West?

I would suggest that you look at Pac*Bell's current rate restructuring
proposal that is now before the PUC. If this is approved, this is
exactly what will happen -- Pac*Bell would like to price local calls
as if they were long distance. So what do we do about that? We cannot
go to the competition; there isn't any.

> Do small businessmen, already
> operating at a meager profit margin, want to be forced to pay for
> _two_ phone lines, not for any additional service, but just to
> maintain the customer contact they already have?  Do you want your
> call to 911 be answered by a fast busy because your telco pulled the
> plug on the telco serving 911 because of a billing dispute?  Or will
> the 911 call be answered with "Do-da-deeeee, The number you have
> dialed, 9 1 1, is incorrect.  The correct number is 9 9 9.  Please
> hang up and try your call again."

These are very silly and unrealistic scenarios. You can make up all
the horror fantasies you want and for your efforts the current LECs
will be most appreciative. But the truth of the matter is that saying
that local exchange service is a natural monopoly is like saying that
interexchange service is a natural monopoly and I think that MCI and
Sprint could take issue with that. What has happened since the
"impossible" took place? Much better quality, more advanced services,
much cheaper rates, and many other benefits too numerous to mention

LEC competition IS inevitable. With companies such as Pac*Bell now
wanting to rape the small subscriber, the time is coming closer,
faster. At $1.20 per hour for a call ACROSS THE STREET, Pac*Bell is
making "universal service" a bad joke. You claim that competition will
drive the cost up rather than down. I think Pac*Bell is single-handedly 
proving you wrong.

> With several big telcos, and oodles of tiny ones, there will be
> even more firms to police, so even more regulators will be hired.  The
> end result: more bureaucracy, higher taxes, and telephone service
> won't improve much (and it may even get worse).

Allow me to introduce you to the most effective regulator of them all:
The Marketplace. With competition, providers will have to woo
subscribers on the basis of price and service. What a novel concept!
I cannot fathom the idea that ANYONE would consider the current system
of a utility flim-flamming some brain-dead bureaucrats with things
such as "revenue shifting" and "cost of providing service" to be
superior to market reality.

You absolutely cannot have a company that is simultaneously involved
in competition AND monopoly in the same field at the same time.
Pac*Bell is working both sides of the street: running a monopoly at
the individual subscriber level and then competing in the short-haul
long distance arena. How can ANYONE claim that this is a viable or
beneficial (to anyone other than Pac*Bell) situation? Full monopoly or
full competition is the answer. We have been through monopoly and
apparently did not like it. What is the remaining choice?

> Local dialtone competition just doesn't make sense to me.

It will.

John Higdon <> (hiding out in the desert)

Subject: Monopolies
Date: 5 Nov 91 12:25:01 PST (Tue)
From: (John Higdon)

I think that it is time that we recall just what a monopoly is and how
it is supposed to work. A utility has income and outgo just like any
business. Traditionally, since a monopoly has no competition, it falls
under the supervision of a regulatory body. Its revenues are set to
provide a "reasonable" rate of return over expenses.

In the past, this was not complex. Since telcos only provided
"regulated" services, it was a simple matter for the regulatory agency
to figure what the total rates should be with the only discussion
coming in the area of rate distribution. Frequently the distribution
was skewed somewhat to allow for the concept of "universal service".
People who wanted "extras" paid a little more than the cost of
providing them so that people who only needed the basics could pay a
little less.

The current scene bears no relation to the traditional monopoly
concept. Pac*Bell is involved in more competitive services now than it
is in regulated monopoly services. As more and more of its formerly
regulated products move over into the competitive arena, the
complexity of its regulated rate structure increases. Pac*Bell insists
that the regulated customers do not subsidize the unregulated
services, but the current proposal belies that on the surface.
Pac*Bell comes right out and says that it has to raise local exchange
rates so that it can COMPETE in the intraLATA toll market. What is
this if not subsidization? We take its word for what costs what to
provide and so does the PUC. The PUC has NEVER done an audit on

This is a truly dangerous situation. Either we must put it all back
the way it was (not very realistic) or we must go all the way and
provide for full competition in the telecommunication industry. It is
as simple as that. The Pac*Bell "working both sides of the street"
dynasty must come to an end.

John Higdon <> (hiding out in the desert)

Subject: Impartiality and Due Process?
Date: 6 Nov 91 11:06:36 PST (Wed)
From: (John Higdon)

A number of correspondents have taken me to task for speaking as
though Pac*Bell had already been granted its "screw the little guy"
rate increase. While it is true that the grant is possibly more than a
year away, it is inevitable. To understand why, it is necessary to
quickly review the tariff-making procedures in California.

The informal public hearings have just concluded. Members of the
public have said their piece. Now the formal hearings will begin
before the same administrative law judge. This is where the utilities
drag out their essentially unsupported dog-and-pony figures explaining
why they will all instantly go bankrupt if their wishes are not
granted. After all of this testimony is in, complete with "expert"
witnesses (who are paid cronies of the utilities), the judge along
with the PUC staff will prepare a report and recommendation to the
full commission.

The commission will study the report and will have to option to: 1)
approve the recommendations intact; 2) make modifications and then
approve it; or 3) throw it out entirely and decree something
completely different (as Monty Python would say). What will actually
happen is that the commissioners will have lunch (and maybe dinner)
with some key Pac*Bell people and they will grind out what the people
of California will be stuck with. It will be almost exactly what
Pac*Bell originally proposed with some cosmetic changes to pacify
TURN, who will then be able to go back to its constituency (little old
ladies) and crow about how much it saved the people of the state. My
personal prediction is that even more of the burden of the increase
will be shifted to small business, a group that TURN seems to feel has
infinitely deep pockets.

You may ask: why do they bother with all of these hearings if the
commission is not bound by any of it? Good question. But to give you
an idea of the "impartiality" of the administrative law judge, allow
me to relate a comment made by him at the Victorville hearing. In my
comments, I challenged the assertion made by the Pac*Bell rep that the
company wanted a "level playing field". As in many other parts of the
country, the proposed intraLATA competition does not provide for
presubscription. In other words, to place a call over any carrier
other than Pac*Bell will require the dialing of the usual '10XXX'
code. I remarked that this does not by any stretch of the imagination
provide for equal treatment of carriers when Pac*Bell will be the only

After my remarks, the judge felt moved to "correct and clarify" my
statement. He pointed out that there were telephones that people could
buy that would prepend the five-digit company code automatically, and
then proceded to hold one up to the audience! I see. This same public
that I am constantly reminded by many in this forum that cannot even
avoid accidentally dialing 900 numbers is going to purchase and
program autodialer phones? This is a level playing field?

I hope this gives some of you out-of-staters a glimpse of what a sham
and charade the regulatory process is in California. Hopefully,
someday, telecommunications will be a completely market-driven
industry rather than idiot-driven.

John Higdon <> (hiding out in the desert)

Subject: Re: CA Rate Increases and GTE Notifications
Date: 7 Nov 91 01:23:12 PST (Thu)
From: (John Higdon) (David Singer) writes:

> Oh yes...there will be a new discount plan offering 9 cent/minute long
> distance calling anywhere in the LATA for a mere $200/month fee.  Aunt
> Minnie should jump at that one! 

You can practically get that now. Simply order direct WATS (delivered
on T1) from almost any major carrier and you will get a rate around
$0.09/min. The monthly will be slightly more than $200/month, but then
you can have up to twenty-four outbound circuits for your calls as a
bonus.  Then call to your heart's content anywhere in the country
(including within the LATA) for about $0.09/minute, day and night.

California regulations may prohibit carriers from claiming that they
can carry intraLATA calls, but I can tell you that they can and do for
many enlightened companies. GTE may be able to stop MCI, Sprint, et al
from telling you how to save big time on your intraLATA calling, but
they cannot stop me from giving you that information. And I will be
more than happy to tell you all about it.

John Higdon <> (hiding out in the desert)

Date: Sat, 9 Nov 91 13:24 PST
From: (John Higdon)
Reply-To: John Higdon <>
Organization: Green Hills and Cows
Subject: The Information Wars

Tom Lantos, a VERY consumer-oriented (overly so, in my opinion)
congressman from the Bay Area has come down four-square against the
entry into the information business by the RBOCs. He succinctly stated
his reasoning in an article written for the {San Francisco Chronicle}
that appeared in today's paper and which I faxed to the EFF earlier

Pacific Telesis' response has been a radio commercial which I just
heard aired over a San Francisco classical radio station. Later today
I will transcribe the spot, but for now let me tell you that it is
typical of the underhanded tactics PacTel uses to ruthlessly get its
own way. It attacks Lantos by name, accusing him of "siding with the
newspaper interests" in "blocking your right to the free access of
information". It goes on to claim that senior citizens and students
will be particularly hurt by not allowing PacTel to enter into the
information business.

So here you have a government legislator actually looking out for his
constituency for a change and he gets attacked by an expensive (this
was a highly-produced spot) ad campaign. The advertisement concludes
by saying that it was paid for by Pacific Telesis and not paid for by
telephone customers. Oh, really? And where DOES Pacific Telesis get
its money? Off of spaghetti trees? I will believe that line when I can
examine a complete, certified audit of Pacific Telesis (in other
words, never).

This matter is even more serious than Pac*Bell's confiscatory ratepayer
money-grab. Pacific Telesis' entry into the information providing
business will give new meaning to the term "Orwellian". Some
organizations, such as the EFF, seem to feel that letting the RBOCs get
a foot in the door is essential to the emergence of the necessary
technology to get a "universal", national data network launched. This
is dangerous naivete, in that, as demonstrated by history, the telcos
only offer that technology that serves their own immediate marketing
benefits. For instance, Pacific Bell only offers a form of ISDN that is
useful in the marketing of Centrex, its own counter-product to the
vendor-provided PBX. Since the gains of offering general purpose ISDN
are not immediately apparent, it is not available.

Indeed, I asked a Pac*Bell spokesman about Pac*Bell's timetable in
offering a residential ISDN and he responded with a sneer and told me
that there was really no demand and that "there were no plans or
timetables yet." If Pacific Telesis is allowed into the information
business AND ISDN fits into those plans, then, yes, you will see an
offering. But you can rest assured that the offering will only benefit
Pac*Bell's marketing strategy and will not conform to the idyllic
visions expressed in a recent newsletter from the EFF.

Our pulp media is having difficulty staying awake through all of this.
To most, this is a non-issue that deserves, if anything, space on page
sixty-seven. However, PacTel has taken the gloves off with its
political radio spots. Yes, you read that correctly, these are
political spots and I am going to investigate the matter of "equal
time". If PacTel wants to come out of the closet with its media attack
on Tom Lantos, I will be very happy to join the fray. I may not have
the financial resources commanded by Pacific Telesis (courtesy of
millions of Pac*Bell ratepayers), but I have some history and some
facts on my side.

Shall we see what the people think?

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Sat, 9 Nov 91 14:55 PST
From: (John Higdon)
Organization: Green Hills and Cows
Subject: Pacific Telesis' Radio Ad Attacks Congressman

Here is a transcript of Pacific Telesis' radio message to the people.
As an exercise, see if you can find anything misleading about it:
(Hints follow quote)

Sound Effects: Crowded courtroom and gavel striking. "Order, order"

Announcer: On October 7th, 1991, The United States Court of Appeals
issued an historic opinion. It granted Americans the right to receive
a sweeping array of information services through the universal public
telephone network.

Sound Effects: "We Object -- We Object"

Announcer: And yet some congressmen have joined America's largest
newspapers and cable conglomerates in pushing special interest
legislation that would take these rights away from the American
public.  Why is a pro-consumer congressman like Tom Lantos protecting
the newspaper industry from full and fair competition, and at the
expense of all consumers, including senior citizens, and students? If
you agree that your rights to information should be protected, tell
Tom Lantos.  Tell him America's future is too important to leave on

This advertisement is brought to you by the people of Pacific Telesis
and is not paid for by telephone customers.

[End of Spot]

For those of you who just tuned in, notice the first paragraph. The
court did not grant any right to the American people. "The People"
have always had this right. What it granted was the legality of RBOC
conglomerates to barge their way into this already booming industry.

I am unaware that keeping the medium out of the message business is
taking "rights away from the American public". Pro-consumer Tom Lantos
is not protecting anyone other than the consumer by opposing Pacific
Telesis' entry into the information game. And of course, if you have
no case, just bring up old people and students (whatever they may have
to do with the issue). I don't think that keeping the RBOCs from
monopolizing the information industry is exactly putting "America's
future on hold".

As for that final affront, again, let me see the audited figures. An
awful lot of money mingles in that pocket.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Fri, 29 Nov 91 22:17 PST
From: (John Higdon)
Reply-To: John Higdon <>
Organization: Green Hills and Cows
Subject: Re: 950 No-Surcharge-Card Info Wanted

Douglas Scott Reuben <DREUBEN@EAGLE.WESLEYAN.EDU> writes:

> Yet after calling numerous LD companies (Allnet, RCI, Cable&Wireless,
> Metromedia/ITT, Comm*Systems [who I'd rather not use anyhow due to
> their rip-off AOS]), I have found no service *without* a Calling
> Card/Travel Card surcharge. (Other than AT&T on ROA at night, or RCI
> within the Rochester LATA)

Don't cut off your nose to spite your face. I am using ComSystems and
find it quite economical and the service first rate. I get a rate of
$0.14/minute, no surcharge, no first-minute rate, six-second billing

Let me re-emphasize that you cannot simply call the front line people
and ask for rate quotes. You need to dig. You need to seek out
knowledgeable users and find out what the REAL rates are. You need to
check on various business plans. In California, no carrier can quote
you intraLATA rates so sitting in your easy chair and phoning around
will not get you the information you seek.

To find out what the T1 rates are, you need to go deep into the major
accounts division. Expect to expend more than a little effort to find
the right people. This part of what I do for a living: finding
inexpensive alternatives for telephone users. If it were just a matter
of picking up the phone a making a couple of calls, I would not be
delivering much.

> Some, such as C&W will offer you a $.33 per minute flat rate,
> providing you are one of their 1+ customers. Yet this is a bit more
> than the LEC charges me right now.

C&W also offers 950 access without surcharge and with attractive
rates.  You need to do a little more research.

> I believe that there have been a few inquiries about this in the past,
> so could someone who did the "research" previously let me know what is
> available?

All anyone can do here is point you to the carriers that we have found
to offer appropriate services. It is up to you to dig out the rates
applicable to your requirements and to negotiate for service. There is
a possibility that the rates in California are different than in NY
and if so, I cannot help you. I have no clients there.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Sat, 02 May 92 13:34 PDT
From: (John Higdon)
Organization: Green Hills and Cows
Subject: What Telcos REALLY Want

A recent story on the front page of the {San Francisco Chronicle} is a
great indicator of the future of telephony as seen from the eyes of an
LEC. "Pac*Bell to Unveil 'Dial-a-Movie' Plan" describes a system that
would allow movies to be distributed to theaters and others digitally
via fiber optic lines. It would take three minutes to transmit the
highly-compressed data that represents a two-hour movie.

"The technology would allow theaters to instantly yank flops and order
hits. Assuming licensing deals could be worked out, they also could
offer a wide range of other types of entertainment like pay-per-view
sporting events, operas and rock shows."

There you have it, folks. Message to the EFF: Pac*Bell has not the
slightest interest in offering ISDN to the masses. ISDN would only
fulfill the public's basic communications requirements. It would not
fill Pac*Bell's cash registers the way something as exciting as
Dial-a-Movie would. So what is Pac*Bell doing to move ISDN along?
Probably nothing.

But I can tell you what the company is doing to push this great
Dial-a-Movie idea. Pac*Bell plans to show this on May 6 at TEXPO,
being held at the Anaheim Convention Center. "Bugsy" was to be the
featured movie, but it contained too many dark scenes which did not
show up well on the HDTV system to be used for the demo.

So, "yesterday, Pacific Bell employees [on your regulated telephone
nickel] were busy watching other movies and still had not decided on a
bright enough substitute, a spokesman for the company said." While
Pac*Bell has ABSOLUTELY NO PLANS at this time to offer basic rate ISDN
to ANYONE, business or residence, it is moving full steam ahead on
highly experimental technology that has the potential for the really
big bucks. And it is using your captive regulated funds to do so.

And here is even more irony: ISDN is technically doable today with
equipment that is in place. Most film people predict that the video
technology involved with Dial-a-Movie will never be able to replace an
actual film presentation. Director Edith Kramer says, "You won't have
the particular aesthetics of film anymore. That would be a loss for
film makers and for those of us who love film."

Pacific Bell's point man counters with the statement that he is
concerned only with getting the images through the telephone system
from Point A to Point B. "He leaves the rest to somebody else."

I do not know about others, but I am completely enraged that Pacific
Bell is using MY regulated dollars to go after very 'iffy' but
potentially lucrative ventures, while neglecting to provide basic
telephone service to the public at large. I cannot get ISDN, CLASS,
and a host of other things because Pacific Bell chooses not to provide
them. And I cannot go elsewhere to get them.

It is time to remove the LEC monopoly.

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Sun, 31 May 92 02:17 PDT
From: (John Higdon)
Organization: Green Hills and Cows
Subject: Re: GTE to Refund Overcharges in California

John R. Levine <> writes:

> I note that half of the excess over 13% is refunded, and half goes to
> shareholders, which means that GTE has an incentive to overcharge as
> much as possible since half of the take pumps up their dividends.  To
> my stodgy East-coast eye, this is a peculiar approach to regulation.

Hell, my Wild West Coast eye considers it peculiar! But you have to
realize that since the Great PUC Giveaway of 1989 (soon to be made
into a Broadway musical by a Busby Berkeley decendant), cost of
providing service has nothing to do with the price a telco charges.
This is one reason I have been sitting back and watching with great
enjoyment the endless debates on flat vs measured calling, charges for
TT, etc. None of it has anything to do with the way rates are set in

How are they set? It is very simple: rates in effect at the time of
regulation were "capped". Each year, an adjustment is made for
inflation and the cap is raised. In the meantime, telcos may cut costs
until the cows come home without having to lower rates. However,
"incentive regulation" requires that anything made over 13% must be
divied up 50/50 with the shareholders and the customers.

Pacific Telesis is smart enough to juggle the books to the point that
it "never" exceeds that 13% cap on rate of return. Hence, it never has
to split any excess with customers. Back in 1989 when I was screaming
at the top of my lungs against this screwy regulatory capitulation, my
prediction was that PB would NEVER exceed a 13% rate of return. So
far, I have been right. Incredible, considering the massive labor
force reductions, centralization, and other cost cutting measures that
the company has indulged in.

GTE, on the other hand, has been bitten by its own incompetence. I'm
sure the word "oops" might have been heard to have come out of the
bookkeeping office. GTE needs to learn how the game is played. Buy
switches at inflated prices from a marketing subsidiary. Lose a
fortune in the paging or voicemail business. You know, things like

        John Higdon         |   P. O. Box 7648   |   +1 408 723 1395      | San Jose, CA 95150 |       M o o !

Date: Thu, 23 Jul 92 12:09 PDT
From: (John Higdon)
Organization: Green Hills and Cows
Subject: Ratepayer Funding

Yesterday, the California Public Utilities Commission ordered Pacific
Bell to refund approximately 57.6 million dollars and reduce its rates
by 19 million to ratepayers. The Division of Ratepayer Advocates
determined that Pac*Bell has been using regulated revenues to support
competitive services since January of 1990.

A service is considered competitive if it can be supplied by other
vendors. The CPUC says that Pac*Bell services such as Voicemail, PC
Connection, California Call Management, and Smart Desktop were all
subsidized by regulated ratepayers when they should have been financed
by shareholders.

Need I say more? Yes. Those who naively believe that regulation of
cross-subsidization is a trivial matter should consider this: yes, the
PUC caught Pac*Bell with hands in the cookie jar. But how many VM
providers, IPs, and other independent businesses did Pac*Bell drive
out of business before this discovery? (I know of several ...)

Please, can we finally see that RBOCs have NO BUSINESS getting into
competitive business. And particularly, they have no business getting
into competitive business that depends upon use of the LEC network.
There is not enough PUC horsepower in the world to supervise this
madness. The RBOCs are masters of this game and will ALWAYS win. All
of this push to allow them into information and other competitive
services is terribly wrong thinking. RBOCs do NOT have the public's
best interests at heart; they hold their stockholders' interests
paramount.  And that is the way it should be. So let us at least not
just bend over.

        John Higdon         |   P. O. Box 7648   |   +1 408 264 4115      | San Jose, CA 95150 |       M o o !

Date: Fri, 21 Aug 92 02:41 PDT
From: (John Higdon)
Organization: Green Hills and Cows
Subject: Re: Deterioration of POTS (Fred R. Goldstein) writes:

> As Marvin Sirbu pointed out, nobody sued AT&T for divestiture of the
> operating companies, but of Western Electric.  It was axiomatic that
> local service lost money and long distance made money; AT&T management
> may have concluded that they'd do best by keeping the latter.  Of
> course the cast-off Bells realized that they could make money with
> their monopolies too!  AT&T management wanted in to the computer biz,
> and lost their starchy white shirts!

Yes, the line we were all fed and that which some still believe is
that long distance subsidized local service. The actual truth is that
long distance and other business services subsidized the bloated,
inefficient, lethargic cow that was The Bell System. You will note
(putting emotion aside and letting reality prevail) that local service
rates have not even kept up with inflation and long distance rates
have fallen through the floor. Did we all get something for nothing?

No. What we did was cast the telcos into the sea of real economics.
Sink or swim. Gone are the "firemen" and "brakemen" of the
switchrooms.  Gone are endless levels of supervisors in the business
office. Gone are the casual over-ordering of supplies and the
"replace-it-whether-it-needs-it-or-not" mentality that was part and
parcel of Bell. The LECs had to survive without that "subsidy" and
they did -- marvellously. They have so much money that they cannot
decide whether to go into cable TV or Cellular or Voicemail or
information providing or ...

No, folks, the only thing that long distance used to subsidize was an
archaic, bloated dinasour whose time had come and gone. With that dead
and buried, our telecom dollars can now actually buy telephone
service.  It is this very concept that companies such as Bell Canada
do not want people to find out about. That subsidy line is being
pushed at this very moment in Canada in order to convince the
Canadians that Competition Is Bad.

What hooey! Does anyone in the US really still believe that old
baloney about cross subsidy of long distance/local service? The truth
of the matter is that the marketplace is the only truly effective
regulator of business and commerce. "Regulated Monopoly" is an
oxymoron. There is not enough regulatory horsepower in the universe to
ensure the lean and mean machine that results from nice, cut-throat
competition. Are the long distance companies more efficient than the
old AT&T? You bet. Are the LECs more streamlined and responsive? Of

IMHO, it is always wise to examine any "natural monopoly" to see if
technological progress has changed the playing field. In the long run,
effective competition (COCOTs are not included since there are factors
that disable a true competitive situation) will always win hands down
over monopoly as a method for delivering value to the end user. I, for
one, will be most interested to see what happens when Pac*Bell is not
the only game in town. Hopefully, GTE will just simply go out of
business (after it loses its regulatory fight trying to avoid

        John Higdon         |   P. O. Box 7648   |   +1 408 264 4115      | San Jose, CA 95150 |       M o o !

Date: Sat, 19 Sep 92 09:54 PDT
From: (John Higdon)
Organization: Green Hills and Cows
Subject: Re: Comments on NON-TELCO Dial Tone

Paul Robinson <FZC@CU.NIH.GOV> writes:

> My only real concern was raising the financing to do this.

I can think of another concern you had better have. How are you going
to provide service reliability? What happens when one of your cable
pairs fail? What happens when your switch goes down? What happens when
your interconnection to the LEC goes haywire?

One of the biggest complaints against all of the alternate local dial
tone providers is the attitude toward service reliability. This is
something that the traditional LECs (except, of course, GTE) take very
seriously. There is redundancy in the CO switching equipment; there is
excess cable capacity to handle spot outages; and there is a
twenty-four hour maintenance crew.

Cable companies, cellular providers, and others seem to take a very
laid back stance when it comes to the importance of providing
uninterrupted service. Cable outages can be caused by electric utility
failure and cellular service is constantly punctuated with "cell site
repairs" and switch maintenance.

Until all of the local service pretenders get a clue concerning the
importance of having that telephone work twenty-four hours a day, day
after day, non-stop, no-kidding, this whole idea of "local
competition" will end up being so much hot air.

> Current minimum rates for business phone lines are $18 per line per
> month.  This is the only place an alternative carrier can compete on,
> since I could conceivably offer the same service as the phone company,
> for $9 a month, charge the same rates per local call, and make a
> profit.

Other than the fact that you have made not one speck of provision for
G&A, labor, promotion, or rent, I guess you will be making a fortune.
Do you intend to do this all yourself AND be on call twenty-four hours
a day?  Also, since you will only be competing with business service
(as I suspect all other players would desire to do), you will simply
drive residential rates from the LEC through the roof, at least

Make no mistake. I am a fan of LEC competition. But the transition
period of weenie, half-baked, cream-skimming schemes such as your
proposal will be hard on us all.

        John Higdon         |   P. O. Box 7648   |   +1 408 264 4115      | San Jose, CA 95150 |       M o o !

Date: Tue, 29 Sep 92 04:18 PDT
From: (John Higdon)
Organization: Green Hills and Cows
Subject: Cable Companies and Dial Tone

Here is a good case in point to illustrate why I do not feel that
cable companies will be much of a threat to traditional LECs, at least
for awhile.

This morning as I was pleasantly listening to my DMX (cable radio) and
finishing up some software features for a client, the music died with
a bang. All thirty channels of the box were dead. All seventy-plus TV
channels were dead as well. The time: 3:30 AM. So I called TCI Cable
repair. I was informed that there was "maintenance" being performed in
my area and that the cable would be out for several hours.

Again, a word to all of you pretenders to the throne for local dial
tone service: this does not wash for telephone users. The cable lady
tried to placate me by saying that it was assumed that very few people
would be watching TV at this time of night. But when was the last time
your telephone went dead for several hours for "maintenance", even in
the middle of the night? Not even GTE does this!

Cable service may be expendable, but telephone service is not. If
cable companies think for one minute that any telephone service they
provide can even approach the unreliability of their entertainment
product, then the traditional LECs have nothing whatsoever to fear.
People live and work around the clock. No utility (and cable companies
are not utilities--yet) can presume to interrupt service, even during
the wee hours, to perform maintenance.

Side note: Our so-called electric utility in northern California,
Pacific Gas & Electric, does indeed turn electricity off IN THE MIDDLE
OF THE DAY to do maintenance. My electric service on Mt. Loma Prieta
has been turned off for hours in the middle of the day dozens of times
for routine maintenance. So here you have a monopoly, supposedly
regulated by the PUC, that provides worse than third world service.
My home telephone system and computers are all on a UPS, otherwise I
would be disconnected frequently. To call PG&E the GTE of electric
utilities would be an insult to GTE.

My point is this: either there are no minimum service standards for
electric utilities or (as I suspect) regulatory bodies are limited in
the influence they can exert to force a utility to provide acceptable
service. If cable companies or anyone else enter the dial tone
business, you had better be very careful. Nothing and no one can
guarantee minimum service levels.

The "Cable Bill" passed, but I hope no one really expects much to

John Higdon  |   P. O. Box 7648   |   +1 408 264 4115     |       FAX: | San Jose, CA 95150 | 10288 0 700 FOR-A-MOO | +1 408 264 4407

Date: Sat, 12 Dec 92 03:11 PST
From: (John Higdon)
Organization: Green Hills and Cows
Subject: Pacific Telesis Breaks UP

Moments ago, the board of directors voted to split the regulated
Pac*Bell from the other divisions of Pacific Telesis, in effect making
two separate companies. Reason: to relieve the unregulated side of the
restriction that apply to the utility.

My question: What will they do without all of that "free"
ratepayer-base money?

The split is subject to regulatory approval.

John Higdon  |   P. O. Box 7648   |   +1 408 264 4115     |       FAX: | San Jose, CA 95150 | 10288 0 700 FOR-A-MOO | +1 408 264 4407

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