Telecom Collapse?

Brett Frankenberger rbf+nanog at panix.com
Thu Dec 4 13:09:06 CST 2008


On Thu, Dec 04, 2008 at 08:48:27AM -0600, Chris Adams wrote:
> Once upon a time, Paul Ferguson <fergdawgster at gmail.com> said:
> > I deliberated for a while on whether to send this, or not, but  I figure it
> > might be of interest to this community:
> > 
> > http://techliberation.com/2008/12/04/telecom-collapse/
> 
> One thing doesn't make sense in that article: it talks about POTS being
> subsidized by other services, and people cutting POTS lines.  Wouldn't
> that be _good_ for the companies and their other services?  The way the
> article describes things, fewer POTS lines = smaller subsidies taken
> from other services = better profits for other services and the company.

The marginal cost of POTS service isn't subsidized by other services;
at the margin, POTS is profitable.  The subsidy covers some of the
fixed costs (but not all of them, some of the fixed costs are covered
by POTS revenues).  So ... every time a POTS line is taken out, the
fixed costs that were being covered by the revenue from that line now
have to be covered from somewhere else (= More Subsidy).

     -- Brett




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