Pricing Lies Continue As Bell Labs Dies

from: ISP Planet [1]

DSL Prime: Pricing Lies Continue As Bell Labs Dies

Whenever the phone companies ask the government for more money, less competition, or permission to merge, they promise more investment and innovation, but in fact they are cutting back as fast as they can.

by Dave Burstein of DSL Prime and Future of TV
[December 8, 2006]

"Competition is desperately needed in the video market."
—Kevin Martin, 6 December 2006

Martin just affirmed the most important argument for strong net neutrality rules. People should be able to watch the TV they want, not what Comcast or AT&T picks for them. The obvious way to ensure that is the AT&T/BellSouth merger, but he intends to let it through anyway. BellSouth stock went up $3 billion in the last week—AT&T hasn't offered one twentieth of that to make the deal.

Simple logic makes clear it's a bad deal for the American consumer

1. Concentration—typically two providers—is severely hurting the U.S. market
2. An $80 billion merger significantly reduces competition.

Ergo, the AT&T/BellSouth merger is not "a good thing."

Headlines like "AT&T customers to see array of price hikes Jan. 1" as well as academic studies like Majumdar, filed in the merger proceeding, make it clear consumers simply won't benefit (policy, as usual at end).

I'll try to send another issue in a day, while we're in Paris for LeWeb3. Please say hello to the round fellow with a beard and cameragirl Jennie Bourne.

"Verizon $15 DSL Now $19.99"
Think $35 as typical broadband price, remembered devalued dollar
Costs of offering broadband go down with Moore's Law, but in the U.S., high cable rates allowed the telcos to recently raise their DSL prices. AT&T has gone up as well, judging by their web site. AT&T now is at $39.95 and $49.95. If you can get them into the "new customer only rates" you do somewhat better.

The website implies you can't, but their PR people tell me it's possible to make a deal. Verizon, on 1 December, raised its ultra-low speed tier (768/256) from $14.95 to $19.95 + some unspecified nasty fees. Their 3 Mbps/768 Kbps is $29.95 + nasty fees; both rates require a 12 month contract, require bundling in a phone service, and have gotchas.

The best estimates are that the average U.S. customer pays about $35, while they advertise much less in their headlines. These speeds, of course are "up to" and sometimes deceptive. U.S. basic charges with a modest national calling plan typically range from $55 to $75. Verizon also raised their FIOS prices, looking to reduce demand to their capability to install. That's a smart move for quality.

Compare those rates to France, where twice the speed, 60 channels of TV, and free international calls have settled at about 30 euro, or $40. The French package was closer to $30 when introduced—half the American price without TV, and less than a third of the U.S. "triple play" price. With a similar drop in the dollar-pound rate, the 20 to 35 pound UK V+D offers are now not that much different than the U.S., although on many the speed is twice as high. Japan, where the yen hasn't moved as much, still is the best value among high wage countries, with voice + DSL at 5 to 20 Mbps available around $25 to $35, often including TV. Seven million Japanese have signed on for 50 to 100 megabit fiber at $35 to $45.

The dollar has dropped 14 percent against the euro this year alone, which needs to be considered when making international comparisons. The headline is picked it up from Karl Bode, whose direct style is refreshing.

As Lucent and Bell Labs Dies
Set the flags to half-mast
"They looked for dung but found gold, which is just opposite of the experience of most of us."
—Describing Wilson and Penzias' Bell Labs discovery of the Big Bang radiation.

Claude Shannon would ride his unicycle through the halls of Bell Labs, but when he stopped he invented communications theory. Applying that theory suggested megabit speeds over copper were possible, and DSL is the practical application. Crucial early work came directly and indirectly from the Bell Labs and Telcordia. Today, 160 million homes have DSL connections. Dozens of the engineers whose work has been reported by DSL Prime were deeply influenced by their time at the Labs.

Another great moment came when Wilson and Penzias couldn't get rid of some noise in their radio telescope, even after shoveling off the bat guano. No matter which way they pointed, that three degrees above absolute zero noise wouldn't go away. Eventually, they found an explanation; this was the cosmic background radiation from the big bang.

Alcatel deserves no blame for picking up the final pieces and hopefully preserving some of the fragments. I've been covering the decline of Bell Labs literally since my first solo interview as a reporter. Jeremy Bernstein came to the WBAI studios nearly twenty years ago and discussed his worries about the lab's future. He had just written Three Degrees Above Zero, which chronicled both the Wilson-Penzias experiment and glory days of the institution.

I wish I had the skill to write an obituary worthy of the Labs.

"The power of the printing press belongs solely to those who own the presses"
—A.J. Leibling