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