TELECOM Digest OnLine - Sorted: Re: Foreign Listings for Residences

Re: Foreign Listings for Residences
3 May 2007 07:37:57 -0700

On May 2, 7:43 pm, Fred Atkinson <> wrote:

> Was life really simpler then, PAT? Or did you pay inflated costs
> because there was no compeditor to get your service(s) from?

As a result of divesture, the cost of telephone service INCREASED for
many people. For large business customers, savings on the phone bill
were offset by the need to hire their own telecom administrators and
staff. The quality of service decreased because of "finger pointing"
between vendors when something broke. Then of course we've had some
notoriously bad service providers, like that little company that
defrauded so many people. Do you think those people who lost
thousands of dollars from that bankruptcy were happy about divesture?
By the way, many businesses lost money from smaller merely incompetent
equipment and service providers. A free market works both ways.

> The only time when there was real evolution of our telephone network
> was when competition entered the industry.

So what you're saying is that the telephone system remained frozen
from 1876 to 1983? That's ludicrous.

Your statement conveniently ignores the explosion in electronics that
occured at the same time as divesture. Cheap electronics
(microprocessors, IC chips) allowed cheap telephone service, just as
it allowed cheap computers and computerized washing machines and TV
sets. (What kind of TV set would $300 buy you in 1983 compared to
today, and that's not even adjusting for inflation.)

> My thanks to Bill McGowan (who, by the way, used to hold the
> elevator door for me at MCI 19th Street when my arms were heavily
> loaded with equipment I was taking to the terminal).

MCI was into cream skimming. The Bell System was tightly regulated.
It was public policy -- pushed by the government -- that service costs
were averaged across a wide body of users. Thus a 100 mile toll call
cost the same anywhere in the U.S. regardless of the actual costs of
supporting that call. In some places of high volume such calls were
cheap to handle and very profitable, in places of low volume or
difficult terrain such calls were extremely expensive. MCI sought
only the profitable routes, not the expensive stuff. Further, MCI did
not provide any support for users that the Bell System provided.

If at the time the Bell System was allowed to actual costs for toll
services, MCI would have had a very short life.

An analogy would be: You open a restaurant next door to a long
established restaurant. Your customers use the old restaurant's
bathrooms and parking lot, you are saved the capital expense and
headache of building your own. You get to charge lower prices.

In practical terms: If you dialed 0 under the Bell System, an operator
promptly answered and gave you whatever rates you needed. You had
24/7 repair service and a competent business office. MCI offered none
of those things (I tried them, there was no support, not even to get

> They told you you couldn't connect an answering machine to your
> service. They told you you couldn't connect any other equipment to
> your service (unless you were paying them to provide it) until along
> came the famous Carterfone decision and the courts changed things for
> them.

Carterfone was about ECONOMICS, not technology. People wanted to save
money. Again, it was cream skimming:

As mentioned, here too public policy was that business customers would
pay more to offset other segments. People who wanted a plain vanilla
single line single phone paid an extremely low rate compared to today
and there were a great many of those customers. It was a goal of both
the phone company and government to encourage universal service, so
they provided that basic entry at low cost.

Buying independently produced equipment -- which often wasn't as good as
Western Electric gear -- was a lot cheaper since the vendor didn't have
the overhead costs of the Bell System.

Note that the Bell System was required by the government to share its
patents (1956 consent decree). That meant competitors got the
benefits of Bell System research and expertise without the costs.

As to directory listings, I agree with others that it should be your
carrier's responsibility to set them up.

[TELECOM Digest Editor's Note: Speaking as you did of Bill McGowan, he
was another real winner! He and MCI came <<thisclose>> to getting MCI
circuits (which of course, like everything else in those days had to
be leased from AT&T) cut off when a couple of MCI checks *bounced* for
lack of money. Yes, MCI had some tough times financially in the early
days. AT&T bill collectors had been giving MCI the riot act; 'quit
stalling; pay your bills or get sued; and we will cut you.' Period,
end of discussion.

McGowan authorized the financial people to *kite* (abuse the check
float period) a totally worthless check to the AT&T collectors to
stall them 'for a couple more days'. Very fortunatly, money got in
their account to make the checks good -- barely. No stranger to acts
of fraud, the earliest days of (M)icrowave (C)ommunications
(I)ncorporated had begun with a fraudulent petition to the Illinois
Commerce Commission anyway. The radio repair shop in Joliet, IL (from
whence MCI was born) had filed a petition with ICC asking for
permission to operate a private, leased line circuit from Chicago to
St. Louis, MO for a 'few private customers', and after much grousing
by Illinois Bell over this invasion in their territory the Commission
finally approved it. Chicago <=> St. Louis via MCI was the first ILEC
anywhere. It took MCI only a day or two to redefine the term 'few
private customers'. Yes, from Alex Bell and Elisha Gray and Ted Vail
and forward through the ages to Bill McGowan and more: charlatans one
and all! PAT]

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