Return-Path: Received: by massis.lcs.mit.edu (8.7.4/NSCS-1.0S) id LAA08851; Mon, 6 May 1996 11:55:16 -0400 (EDT) Date: Mon, 6 May 1996 11:55:16 -0400 (EDT) From: ptownson@massis.lcs.mit.edu (Patrick A. Townson) Message-Id: <199605061555.LAA08851@massis.lcs.mit.edu> To: ptownson@massis.lcs.mit.edu Subject: TELECOM Digest V16 #217 TELECOM Digest Mon, 6 May 96 11:55:00 EDT Volume 16 : Issue 217 Inside This Issue: Editor: Patrick A. Townson International Traffic Accounting Process (Jeremy Parsons) ATIS, Canadian Telecom Standards: Webpages (Mark J. Cuccia) Nortel Datapath ISDN NT4X25 SPID? (excess@onramp.net) Frame Relay or Point to Point (Lou Person) Re: New-Fangled Phones on a Two-Party Line (Ed Ellers) Re: New-Fangled Phones on a Two-Party Line (Mark J. Cuccia) TELECOM Digest is an electronic journal devoted mostly but not exclusively to telecommunications topics. It is circulated anywhere there is email, in addition to various telecom forums on a variety of public service systems and networks including Compuserve and America On Line. It is also gatewayed to Usenet where it appears as the moderated newsgroup 'comp.dcom.telecom'. Subscriptions are available to qualified organizations and individual readers. Write and tell us how you qualify: * ptownson@massis.lcs.mit.edu * The Digest is edited, published and compilation-copyrighted by Patrick Townson of Skokie, Illinois USA. You can reach us by postal mail, fax or phone at: Post Office Box 4621 Skokie, IL USA 60076 Phone: 500-677-1616 Fax: 847-329-0572 ** Article submission address: ptownson@massis.lcs.mit.edu Our archives are located at mirror.lcs.mit.edu and are available by using anonymous ftp. The archives can also be accessed using our email information service. 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A suggested donation of twenty dollars per year per reader is considered appropriate. See our address above. All opinions expressed herein are deemed to be those of the author. Any organizations listed are for identification purposes only and messages should not be considered any official expression by the organization. ---------------------------------------------------------------------- From: Jeremy Parsons Subject: International Traffic Accounting Process Date: Mon, 6 May 1996 03:17:32 -0400 From the preceding stuff on international 'sex lines' and so on, I thought it might be helpful to give a more precise description of the accounting rate regime for international settlements, and why things are getting into such a mess. I have glossed a little over some of the details, but I hope this may give some people a better understanding of how it all works and what some of the pressures are on smaller and developing countries. Establishing a 'traffic relation' between country A and country B is essentially a matter for bilateral negotiations. This involves agreeing to establish dedicated circuits to carry the traffic, and the remuneration in the form of an accounting rate. An accounting rate consists of three elements, all of some significance: the currency (commonly SDRs [a basket currency], US$ or Gold Francs), the rate and the division (how the rate is divided between the administrations). This is meant to be cost-based, but often costs have fallen much faster than rates. Let's take a couple of examples. Eg 1 Admin A and admin B agree an accounting rate of SDR1.20 divided equally. The SDR1.20 is meant to represent total cost, so it is expected that the price in either direction will be higher. The division means that notionally when A sends to B it accounts for SDR0.60 to meet its own costs, and for SDR0.60 to be paid to B; B to A is symmetrical. As for actual payments, these are made net, so typically one only of A and B is outpaying to the other, at a rate of SDR0.60 times 'imbalance minutes'. For the purpose of these calculations, typically the arrangement will be that the call will be treated as originating in the billing country, so for instance home direct calls made by a customer of A from B's territory will be settled as if they had been made from A to B; different rates, surcharges etc may be applied for different services (eg collect calls). >From an accounting point of view, this is either looked at as a gross allocation (notional outpayments allocated along with any other costs to call prices, notional inpayments less costs looked at as a freestanding contribution), or a net allocation (the relation is taken as a whole, with all the revenue and cost streams lumped together). Eg 2 Admin A and admin B agree an accounting rate of SDR1.20 divided 3:2. For a call from A to B, A allocates SDR0.72 to its own costs and SDR0.48 as an outpayment to B. For a call from B to A, B allocates SDR0.48 to its own costs and SDR0.72 as an outpayment to A. This is meant to cater to the cost differential (eg B is a larger developed country, A is a smaller less developed country experiencing lesser economies of scale). This is a good mechanism in principle, but rather unsurprisingly it has tended not to be effected very often, and the developed world has not exactly co-operated in using it. We'll come back to this. As you would expect, it is not exactly going to make sense for every single administration in the world to have direct circuits to every other - some of these relations are going to be a few hundred minutes per month and less. So the accounting rate mechanism supports the introduction of one or more transit admins into the relation. Suppose A and B agree to relations via an admin C which provides a transit facility, with a published rate of SDR0.3. This figure is not added to, but taken out of the total figure agreed between A and B (eg above SDR1.20): note that the agreement is still between A and B, and traffic transiting C is still declared as originating at A or B. 1. Appearance of 'sex lines' and the like Typically the 'inpayment' is profitable (this should be the case, otherwise there is no benefit to a carrier investing in high quality facilities) - and if it is profitable enough, then an admin may choose to pass some of this profit on to a third party. One example would be if two international admins compete in the same country. VPN services are often used to take international traffic out of the general pool (and typically they will have different accounting rates), so a carrier may well reward its customer for incoming traffic either by a direct discount or, more commonly, by low outbound 'on-net' rates to promote use of the facility. Another example is 'audiotext', where the call is to a service, and the service provider receives income from the incoming calls it generates, in very much the same way as, say, a 900 number in the USA. The customer receives the benefit of the service (which presumably exceeds the price of the call), the admin sending the call charges as normal and makes the normal return, the admin receiving receives a return less the 'payback'. None of this is especially sinister or unusual, although clearly bilateral agreements and codes of practice are often desirable to ensure the services are not offered where they violate international comity or in a manner which rewards fraud (again, just like domestic Premium Rate services). 2. Proportional Return and its many effects Where there are competitive international operators, sometimes bilateral agreements specify that traffic will be returned to correspondents in the same proportion as it is received. The FCC normally 'requires' this in all US relations, although it is debatable whether it has the authority in theory to do so. The major effects of Proportional Return are (a) to ensure that a dominant operator cannot close off the market to licensed competitors, and (b) to encourage violent price competition by smaller carriers. Suppose there are two carriers A1 and A2 in country A, working with a single carrier B. The accounting rate is $1.00 divided equally. A1 sends 90,000 minutes to B, and A2 10,000; while B sends 60,000 divided proportionally. Suppose all the carriers are pricing calls at $0.75. That gives us the following picture (I'm simplifying by ignoring other costs, own or domestic outpayments, but remember that true telecom costs are predominantly fixed, so attempts to apportion them per-minute rely on volume stability):- B Bills its customers 60,000 minutes = $45,000, Sends to A1 54,000 minutes = ($27,000) Sends to A2 6,000 minutes = ($3,000) Receives from A1 90,000 minutes = $45,000 Receives from A2 10,000 minutes = $5,000 Net income is $65,000 A1 Bills its customers 90,000 minutes = $67,500 Sends to B 90,000 minutes = ($45,000) Receives from B 54,000 minutes = $27,000 Net income is $49,500 A2 Bills its customers 10,000 minutes = $7,500 Sends to B 10,000 minutes = ($5,000) Receives from B 6,000 minutes = $3,000 Net income is $5,500 Suppose A2 captures another 10,000 of the outgoing minutes, pricing them at $0.30, giving the following outcome:- B Bills its customers 60,000 minutes = $45,000, Sends to A1 48,000 minutes = ($24,000) Sends to A2 12,000 minutes = ($6,000) Receives from A1 80,000 minutes = $40,000 Receives from A2 20,000 minutes = $10,000 Net income is $65,000 Change is $0 A1 Bills its customers 80,000 minutes = $60,000 Sends to B 80,000 minutes = ($40,000) Receives from B 48,000 minutes = $24,000 Net income is $44,000 Change is ($5,500) A2 Bills its customers 10,000 minutes at $0.75 = $7,500 plus 10,000 minutes at $0.30 = $3,000 Sends to B 20,000 minutes = ($10,000) Receives from B 12,000 minutes = $6,000 Net income is $6,500 Change is $1,000 and customers in A save $4,500. Note (a) that the business remains very profitable for all concerned, (b) A2's profit on the marginal business is still good, but (c) the $0.30 price if offered to all customers in A would eliminate all profit. Now, suppose instead that A2 captures 10,000 of the _incoming_ minutes, acting as or through a callback operator, pricing them at $0.50, giving the following outcome:- B Bills its customers 50,000 minutes = $37,500, Sends to A1 40,909 minutes = ($20,455) Sends to A2 9,091 minutes = ($4,545) Receives from A1 90,000 minutes = $45,000 Receives from A2 20,000 minutes = $10,000 Net income is $67,500 Change is $2,500 A1 Bills its customers 90,000 minutes = $67,500 Sends to B 90,000 minutes = ($45,000) Receives from B 40,909 minutes = $20,455 Net income is $42,955 Change is ($6,545) A2 Bills its customers 10,000 minutes at $0.75 = $7,500 plus 10,000 minutes at $0.50 = $5,000 Sends to B 20,000 minutes = ($10,000) Receives from B 9,091 minutes = $4,545 Net income is $7,045 Change is $1,545 and customers in B save $2,500. Note (a) that the business remains very profitable for all concerned, (b) A2's profit on the marginal business is still good, (c) B has gained by the deal (because profit from incoming calls is greater than profit on outgoing calls - the reverse would be true otherwise), and (d) the regulator in A, _looking only at settlements_, sees an increased imbalance of minutes (was 40,000 minutes or 10:6, is 60,000 minutes 11:5) and therefore increased net settlement (was $20,000, now $30,000). All of this may help you to understand... 3. The double-bind by the developed world on smaller and developing nations Typically the developed world can experience lowest average costs, but uses negotiating power to insist on uniform divisions of rapidly declining accounting rates. The combination is clearly unfair, but often justified by 'until accounting rates are cost-reflective we'll use a 50:50 division' which sounds reasonable but doesn't work out that way. Smaller and developing countries will almost inevitably experience higher costs, as the costs of operating international facilities are spread among a smaller group of customers, and the admin cannot achieve such good prices for facilities, switches etc - the domestic network may well be more expensive for similar reasons. In the case of the developing world particularly, this is exacerbated by the necessity to heavily subsidise the domestic network out of international income in order to achieve good penetration levels (imagine the affordable price if GDP per capita is, say, $4,000). Now see the vicious circle. If the country relies on international call prices to generate the necessary subsidy, market structure arbitrage such as callback service will tend to restrict this to the level where profit is about equal on incoming and outgoing service - in other words, inpayments are the backstop for this subsidy. On the other hand, price elasticities are typically very low. Over time, the apparent traffic imbalances will tend to grow, and with them pressure for accounting rate reductions. Sooner or later, the carrier is forced either to 'rebalance' prices to more closely reflect costs, which brings telephone service out of reach of many, or investment must be reduced so that service quality must be allowed to degrade and while service remains affordable the waiting lists will grow and grow. Prospective competitors line up at the door to serve the high international calling customers - easy to do profitably because they are the providers of the subsidy. 4. Some more interesting examples In what has gone above, the assumption is that traffic from A to B is declared as such, even if it is routed through C. Here are some more examples of how the developed world has its cake and eats it too. a) Transit discounts Transit service is competitive. The developed world has the best economies of scale. Discounts are offered on the published rates to the originating country. This has the effect of adjusting the division so the sender keeps more of the rate. Eg A/B rate of $1.00, equal division, transit through C published at $0.40. A is a larger/more developed country than B, and (a) sends more traffic to B than returns, and (b) through total business with C gets an 'invisible' discount of $0.25 on outgoing and $0.10 on incoming calls, while B does little business and gets no 'discount'. Without transit, A would be sending B $0.50 per minute; with transit it sends only $0.30 to B, plus $0.15 to C - it has gained $0.05 per minute at a cost to B of $0.20 per minute. B, on the other hand, instead of outpaying $0.50 to A now outpays $0.70, of which C receives $0.40. The principle of cost-basis has been flipped on its head - A has achieved a higher 'division' than B, although its costs are lower. A can under-price B very easily, and B is in a greater fix. If traffic volumes get high enough, it will eventually become economic for B to establish direct circuits - but how far will A co-operate? And if A is a competitive environment then B will have to establish direct links with several carriers, not just one transit administration. b) Re-origination Simple one, this. A sends to B via C (a large developed country) other than by the usual bilateral arrangements. The accounting rate from A to C is higher than C to B. A saves the difference, less C's charges for hosting the service. B loses the difference. C gains from its fees, plus uses the increased imbalance to pressure B for accounting rate reductions, increasing the difference in rates and giving A an increased incentive to send even more traffic that way (the B/C route may end up balanced, or even with C outpaying to B). This can involve carriers, or it can be invisible to them albeit using their facilities. 5. The consumer... In much of what goes above, consumers can potentially benefit, especially if they are wealthy, or in a developed country. Economically, this may even be 'efficient' in some sense - but what about economic development and the critical role of telephony? However, just consider the example that while US accounting rates have declined significantly in the last few years, US international call prices continue to rise year-on-year. 6. Fixes... There are a lot of things which could be done to move this along, most of which require multilateral co-operation and therefore many years (one obvious point - when all this was put into place why weren't transit fees set as additional to the base rate, which would promote efficient routing and avoid one of the most tasteless issues above). The often-forecast 'meltdown' really means poorer countries are pressured into operating a small number of direct links to large countries, at lower and lower rates. But within the existing mechanism, the division already accommodated could play a major part. If all the specious objections were swept away, divisions could very easily be set in a way which used some straightforward measures as 'cost' indicators (GDP per capita would be appropriate, possible combined with total country lineage as a measure for possible economies). For instance, suppose a scale something like this were used to set the difference between the outpayments in each direction:- GDP per capita bands: $0-$4,000; $4,001-$8,000; $8,001-$15,000; $15,001+ SDR0.00 GDP/cap in the same band SDR0.06 One band apart SDR0.12 Two bands apart SDR0.20 Three bands apart so if A was at $5,000 and B at $20,000, and the accounting rate SDR1.00, A would outpay SDR0.44 and receive SDR0.56 per minute. This would create a buffer against many of the pernicious effects described. Suppose costs at A equate to SDR0.15 and an additional contribution of SDR0.15 was required for domestic subsidy. B, on the other hand, has costs of SDR0.05 and makes a contribution of SDR0.02 to universal service. The profitability of incoming calls has been roughly equalised between the two, so while price arbitrage is still possible, it is only now a threat to high profits, not to basic service provision. Of course, part of the point of this would be specifically to allow accounting rates to fall much more quickly towards cost, with a large drop possible at the initial adoption of the divisions policy. And that really would allow consumers to benefit, but no longer at the cost of universal service. So where does the developed world stand on this? Well, the US FCC, for one, effectively excludes this approach in its 'policing' of accounting rate agreements. In the name of preventing the US carriers (note AT&T, MCI and Sprint are all in the top 20 world carriers) from being 'whipsawed' by the poorer nations of the world. Naivete, nationalism or malice? Either way, sometimes I wonder how they sleep at nights. Jeremy Parsons ------------------------------ Date: Mon, 6 May 1996 10:06:17 CDT From: Mark J Cuccia Subject: ATIS, Canadian Telecom Standards: Webpages ATIS (Alliance for Telecommunications Industry Solutions), the "umbrella" organization in Washington DC for the various North American telecom industry forums (many of them associated with Bellcore as far as secretarial and administrative functions) now has a webpage: http://www.atis.org This URL/domain name has been reserved for them, but had simply an "under construction" type notice for a few months. But as of Saturday 26 April, it is now up and running! There still are a few parts which are "under construction", but you can see lists of the various forums under ATIS/Bellcore, their mission statements, and for some forums, pointers to their own websites. Some of the "under construction" regards documents or "minutes" of the forums or their meetings. Eventually, I would hope that one can view and/or download the actual final documents or meeting notes of the INC (Industry Numbering Committee), ICCF (Industry Carriers' Compatability Forum), NOF (Network Operations Forum), etc. OBF (Ordering and Billing Forum) has many of its issues and documents available already at the ATIS website. Also, many of the Canadian telecom standards forums, such as the "Telecommunications Standards Advisory Council of Canada" and the "Canadian Interconnection Liason Committee" (these forums are very much similar to Bellcore and ATIS) have their issues and documents now available through the Canadian Government's "Industry-Canada" website: http://www.tsacc.ic.gc.ca/index.html MARK J. CUCCIA PHONE/WRITE/WIRE: HOME: (USA) Tel: CHestnut 1-2497 WORK: mcuccia@mailhost.tcs.tulane.edu |4710 Wright Road| (+1-504-241-2497) Tel:UNiversity 5-5954(+1-504-865-5954)|New Orleans 28 |fwds on no-answr to Fax:UNiversity 5-5917(+1-504-865-5917)|Louisiana(70128)|cellular/voicemail ------------------------------ From: excess@onramp.net (R.A.Y.) Subject: Nortel Datapath ISDN NT4X25 SPID? Date: Sun, 05 May 1996 16:30:20 GMT Organization: On-Ramp; Individual Internet Connections; Dallas/Ft Worth Reply-To: regyoung@main.globallink.net I purchased the TA (I think it's a TA?). The line is installed, but I can't find where to enter my SPIDS. Please help! Thanks, Reg ------------------------------ From: Lou Person Subject: Frame Relay or Point to Point Date: Sun, 5 May 1996 13:20:03 -0400 Organization: Intellitech Corporation We have the fortunate opportunity to extend our network. Does anyone have and suggestions regarding Frame Relay vs. Point to Point? We are thinking about renting a frame relay circuit, but we don't know if we should go Frame Relay or Point to Point. Thanks, Lou http://www.mcny.com ------------------------------ From: Ed Ellers Subject: Re: New-Fangled Phones on a Two-Party Line Date: Mon, 6 May 96 10:03:06 -0500 Organization: Delphi (info@delphi.com email, 800-695-4005 voice) Pat O'Neil writes: > [TELECOM Digest Editor's Note: You can't insure those things, which is > why under FCC regulations it is *completely forbidden* to put any sort > of attachment or phone on a multi-party line other than the nice black > POTS phone telco gives you when you sign up for that asinine service. That's not always the case -- in some areas phone companies are installing special devices at the drop that make conventional devices appear as though they were specially wired for that party on the line, meaning that calls placed would appear to come from that party and ringing would only be passed through for that party. (I still remember finding out in 1984, right after divestiture, just how difficult it was to get a phone fixed on a party line in a Bell area. When my grandmother had trouble with her 500 set -- leased from AT&T -- only AT&T could fix it of course, and they sent her a replacement phone by mail with a meter stamp for postage to send the old one back. However, that phone was wired for a normal line, so before she could use it the Bell company had to send its technician out to rewire the ringer on the AT&T phone, and install the modular jack for the new phone. She didn't have to pay extra for any of this, but it did take a few days during which she didn't have a phone to use.) ------------------------------ Date: Mon, 06 May 1996 10:31:51 -0700 From: Mark J. Cuccia Subject: Re: New-Fangled Phones on a Two-Party Line Pat: While some telcos have completely eliminated multi-party service (existing customers/lines were probably by regulatory tarriff continued to be charged the cheaper multi-party as long as they didn't move service, etc), some telcos have stopped offering it to new or moving customers. The last time I checked with the service reps of South Central Bell (BellSouth), I was told that *existing* multi-party customers continued to have the service "grandfathered", of course charged at the cheaper rate. Usually if you want to upgrade to single-party service, you are charged a "one-time installation" fee, similar to changing between flat-rate, EAS or measured-rate offerings, adding CLASS or custom calling features, etc. which "could" be a discouragement to upgrading. ("Why should I have to *pay* telco a fee, even a one-time fee, if I will be paying them a higher monthly rate anyhow?" could be a rationale.) Many rural or isolated areas probably still have a lack of enough copper loop between the central office and the customers, therefore you have to be on a "waiting list" to get single-party service. As for CPE, about ten years ago (post-divestiture), I asked a SCBell service rep about party line service and CPE. I was told that for new partyline customers or new CPE declared on a partyline, a repairman would have to make a visit to the location and "check" the phone for the proper side of the party line (tip or ring). Most Western Electric phones were traditionally factory wired for the "ring" half of a party line from what I've seen. Bell would charge an extra "fee" for the repairman visit to check the phone and possibly re-wire it. The "fee" would also apply if the phone were a new style phone which couldn't be easily opened up and re-wired (if it needed to be re-wired). If the phone *had* to be re-wired and couldn't be easily opened up and/or re-wired, you were *forbidden* to attatch the phone to the line! Recently when I checked with a BellSouth service rep, I was told that in many locations these days, the differentiation between tip or ring, with respect to ground, can be handled at the box on the exterior wall of the house, at the green pole in the backyard, or on the box on the pole! Therefore just about *any* kind of phone could be attatched to a party line, without the need for a repairman to even "visit" the CPE itself! A reminder here -- don't attatch answering machines or modems to party-lines. If the other party on the line needs to make an emergency call while the modem (or fax) machine is in use, or answering machine is actually handling a call, a machine cannot understand that the party line is needed for an emergency so as to release the connection. Failure to relinquish use of a party line in a (truthfully) declared emergency violates state and possibly federal laws! Falsifying an emergency in order to gain access to a party line is ALSO a violation! MARK J. CUCCIA PHONE/WRITE/WIRE: HOME: (USA) Tel: CHestnut 1-2497 WORK: mcuccia@mailhost.tcs.tulane.edu |4710 Wright Road| (+1-504-241-2497) Tel:UNiversity 5-5954(+1-504-865-5954)|New Orleans 28 |fwds on no-answr to Fax:UNiversity 5-5917(+1-504-865-5917)|Louisiana(70128)|cellular/voicemail ------------------------------ End of TELECOM Digest V16 #217 ******************************