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CarriersCarriers carry traffic for a fee
Must have rights of way to lay wire
Given some monopoly protection
Regulated but being deregulated
Carriers in Most of the World• PTT
– Traditionally
– Originally Postal, Telephone, and Telegraph (authority)
– Now, Public Telephone and Telegraph (authority)
– Government-owned organization
– Traditionally had a complete monopoly on domestic (within-country) service
Carriers in Most of the World• Ministry of Telecommunications
– Another government organization
– Regulated the PTT
– The Distinction:
• PTTs provide service
• Ministries of Telecommunications regulate their PTTs
Carriers in Most of the World
• Competition is Increasing
– Deregulation: the removal of traditional PTT monopoly rights to increase competition
– Allows competition
Deregulation Globally
• Varies Considerably
– Few countries as deregulated as U.S.
– Prices generally higher than U.S.
– Customer premises usually deregulated most
– Data traffic is deregulated heavily
– Usually long-distance voice is fairly deregulated
– Local service usually is deregulated least
International Service• Provided by international common carriers
(ICCs)
• Bilateral Negotiation
– Each pair of countries negotiates which ICCs may provide service (bilateral negotiation)
– Each pair of countries negotiates settlement charges on calls
• This bilateral negotiation often brings uneven pricing when you call nearby countries
Carriers in the United States
• For international service, bilateral negotiation
• Never a government-regulated domestic monopoly like a PTT
• Although AT&T was very dominant once
Carriers in the United States• AT&T was broken up in 1983
– AT&T continued as long-distance company and as an equipment provider
• Later, AT&T voluntarily spun off its equipment operations to as Lucent
– Local telephone companies were grouped into seven regions, each managed by a Regional Bell Operating Company (RBOC)
• Also called “Baby Bells” because AT&T was known as the Bell System
Carriers in the United States• Local Service
– U.S. divided into around 200 regions called Local Access and Transport Areas (LATAs)
• Intra-LATA Service (Within a LATA)
– Incumbent Local Exchange Carrier (ILEC): the traditional monopoly local telephone company
– Competitive Local Exchange Carriers (CLECs): Local service competitors for the ILEC
Carriers in the United States
• Note
– LATAs are geographical regions
– ILECs and CLECs are carriers that provide service within a single LATA region
Carriers in the United States
• Inter-LATA Service (Between LATAs)
– Inter-exchange Carriers (IXCs)
• Note: “I” in IXC is not “International”
– AT&T, MCI-Worldcom, Sprint, etc.
Carriers in the United States• POP
– Point of Presence– Connects all customers of the ILEC, CLECs,
IXCs, ICCs– Gives all customers access to everyone else – Allows new carriers to reach the total installed
base, making competitive entry possible
POP
ILECICC
IXCCLEC
Regulation in the United States
• Nationally– Federal Communications Commission (FCC)
– Sets interstate regulations, standards, prices
– Can set intrastate policies that affect the nation-wide system
• Within States– Public Utilities Commissions (PUCs)
– Regulate most intrastate matters, including intrastate pricing
Deregulation in the United States
• Telecommunications Act of 1996
– Congressional Act
– Mandates intra-LATA competition
– Before, many PUCs had limited local competition
– New competitors for service, including access, that is, the local loop (dial tone service)
Deregulation in the United States
• Relaxing the Consent Decree
– AT&T is being allowed into intra-LATA service
– RBOCs are being allowed into inter-LATA service
– RBOCs being freed to compete in one another’s territories for intra-LATA service
Deregulation in the United States
• Telecommunications Act of 1996
– Allows new freedom in pricing
– But competition has been developing slowly
– So price freedom has largely brought higher prices
Deregulation Trends in the U.S.
• Customer Premises
– Most deregulated
– Once, you could not own modems or even telephones
– Deregulated in the 1970s
– Now fully deregulated: you can do what you like on your premises
Deregulation Trends in the U.S.
• Data networking services– Now wide open
• Inter-LATA service– Deregulated in 1970s and 1980s– Now, equal access: you get to choose your
long-distance carrier– Now wide-open
Deregulation Trends in the U.S.
• Intra-LATA Service
– Least deregulated
– Some prior deregulation
– Deregulation really began in earnest only with the Telecommunications Act of 1996
Deregulation Trends in U.S.
• Degree of Deregulation: Most to Least
– Customer premises (total)
– Data networks (high deregulation)
– Inter-LATA service (high deregulation)
– Intra-LATA service (low deregulation)
Carrier Services and Pricing
• Tariffs
– Filed by carriers, approved by authority
– Lets customer know exactly what service should be provided
– Lets customer know exactly what price they should pay
– Provides recourse in disputes
– Deregulation is generating many untariffed services for faster response to competition
Local Calling• Within local area• Flat rate pricing
– Fixed payment per month
– No charge per call
• Message unit pricing– Charged message units for each call in local area
– Depends on distance and duration
– Penalizes Internet access, other resource hogs
Toll Calls• Long-distance calls
– Inter-LATA or Intra-LATA long-distance calls• Even in intra-LATA service, there is a local-
versus long-distance distinction– Priced per minute– Price based on distance
• International calls– Prices depend primarily on country called– Prices depend less on distance than on country called
because rates are set through bilateral negotiation
Toll Calls
• Direct Distance Dialing– Most common method– Calling party pays
• Collect Calls– Called party pays if accepts calls– Pays more per minute than direct dial rate
Toll Calls• 800/888 Numbers
– Area codes are 800 or 888– Called party pays– Pays less per minute than direct dial rates– To support customers
• 900 Numbers– Caller pays– Pays more per minute than direct dial rate– Called company can charge for user service
Toll Calls
• WATS
– Wide Area Telephone Service
– Company can call OUT from site, to phones throughout the WATS service area
– Caller pays
– Pay less than direct dial rates
Toll CallsWho Pays Cost Relative
to DDD
DDD Caller Same
Collect Receiver More
800/888 Receiver Less
900 Caller More
WATS Caller Less
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