Stewart Fist, writing his Crossroads column in The Australian in the mid-1990s claimed Telstra could charge a flat 25 cents for all calls, local and long distance, in that country and the teleco would still return an enormous profit. If Australia could do that back then, why can’t US telecos do it now?
(I’m trying to find the online cite for that column.)
Parts of the reason is that in Australia all the local loop, and most of the long distance as well, is all owned by the one company. Which means no costs for figuring out who gets what. The competitive companies required by US legislation (the breakup of Ma Bell) make this sort of thing harder to do.
In a more recent column, Mr Fist broke down where the money in a 25 cent phone call went. As I recall, it went something like
2-3 cents for the running costs
7-8 cents for advertising
7-8 cents for the cost of billing you
the rest profit.
Most of the running costs was to do with the local loop - going from one end of the country to the other added less than 0.5 cents to that cost.
DancingFool
I might add that in recent years phone companies have had to add service employees to run and maintain the new fiber lines and to keep costumers happy.
The infrustructure has continually been upgraded to deal with the increase in bandwidth that fiber brings to the table. Fiber, new equipment, service guys, switching through other companies equipment, all adds up and will continue to cost money for the companies until all the fiber is layed and all the equipment is upgraded - never.
Then we have urban plight to deal with which means that many people are moving out to the country-side where the phone companies have to constantly run new lines out to and through subdivisions. Customers who want DSL usually complain about line speed through old lines so those lines have to be re-run with new cable. Older lines in the cities are constantly being replaced.
Gee, sounds like a lot of work to me.
You’re close, Otto.
The LATAs were determined by the FCC in the early 1980s when AT&T was broken up into the Long Distance Company and the Baby Bells. To prevent domination by one particular company, the FCC decided the Baby Bells cannot cross the LATA line. In order to call Wilmington, NC (LATA 428) from Surf City, NC (LATA 949) you need a LD Carrier, even though they are only five miles apart.
You get charged Long Distance rates because, in order to call Long Distance you still reserve a direct line connection. In other words, If you’re calling LA from Miami, you are actually asking Bell South to connect your dedicated line to AT&T (or whoever your LD carrier is). AT&T then sets up a path from their connection to Bell South in Miami to their connection to PacBell in LA, and PacBell sets up the last connection to the person you’re calling. While you’re gabbing with your surfer dude buddy in LA, that connection cannot be used for any other purpose, hence the per minute charge.
Forty years ago, you would have Sally-May manually make all these connections, which could take a long time. Nowadays, we get computers to do all this for us. Ain’t technology grand?
In the future, if the FCC will ever approve it, voice traffic will use packet switching, so several dozen people will be able to use that Miami/LA connection, and (ideally) LD rates will plummet.
The proceeding is grossly simplified, but I don’t care.