purple motes

Based on data filed by the Ad Hoc Telecommunications Users Committee, tariff rates in 2009 for DS1 and DS3 special-access circuit elements across U.S. states have a spread equal to about plus and minus a third of the average.  Rates differ across bandwidth (DS1 or DS3), regulatory type (price cap or pricing flexibility), purchasing term commitment (in months from 1 to 60), and geographic zone (typically three zones).  Differences across states within these rate structures reflect other factors that affect tariff rates.

Rate differences across states are not highly correlated with state characteristics.  Qwest, for example, has the same DS1 and DS3 rates across its 14-state service territory.  AT&T and Verizon, in contrast, have tariffs that differ across state groups in ways that relate to the service territories of historic telephone operating companies.

Consider the highest and lowest DS1, price-cap, month-to-month, zone 1 rates as measured by the composite 10-mile circuit rate.  The highest such rate is $1023 in Indiana and Wisconsin (AT&T).  The lowest such rate is $395 across the whole 14-state Qwest service territory, which includes Minnesota and Iowa.   Differences in regulation, competition, service cost, or unmeasured differences in tariff structures could explain this dispersion.  What specifically explains the actual difference isn't obvious.

Differences between price-cap and pricing-flexibility rates also show considerable ambiguity.  Telephone companies are granted petitions for pricing flexibility based on criteria that the FCC established to measure the development of competition.[*]  The rate data indicate that pricing flexibility rates are consistently higher than price-cap rates.   Higher prices typically aren't associated with greater competition.  However, for most service attribute types, pricing flexibility rates have less dispersion across states than do price-cap rates.  That is consistent with more competition in circumstances in which unpriced differences across states matter little.

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Data: DS1 and DS3 rate statistics based on Ad Hoc Rate Dataset (Excel version); Ad Hoc DS1 and DS3 Rate Dataset

Note:

[*] An FCC order, adopted on Aug. 5, 1999, set out a procedure ("pricing flexibility" petitions) for removing rate elements from existing price-cap regulation.  BellSouth provides an example of the regulatory procedure.  On Dec. 15, 2000, the FCC's Common Carrier Bureau granted a BellSouth petition for pricing flexibility.  The order granting that petition apparently isn't online, but an affirming review of that order, which includes a list of the metropolitican statistical areas (MSAs) to which it applies, is online.   Here's a better formated version of the MSA list.  On Nov. 22, 2002, the Bureau adopted an order granting another BellSouth petition for pricing flexibility.  On May 16,2008, the Bureau granted a third BellSouth petition for pricing flexibility.

Offer Comments

Publicly filed tariffs have been an important element of federal economic regulation in the U.S. since the formation of the Interstate Commerce Commission in 1887.   U.S. local exchange telephone companies currently file federal tariffs for their interstate access services.   These tariffs are publicly available through the U.S. Federal Communications Commission's Electronic Tariff Filing System (ETFS).

The number of rate elements in interstate access rate-detail filings is a measure of the size of interstate access tariffs.   Among the seven former regional Bell operating companies, the historic Nynex operating company has had the greatest rate-detail growth.   In 1993, Nynex's filing contained about 1,500 rate lines.  In 2009, the filing had grown to about 92,000 rate lines.  The Bell Atlantic and BellSouth operating companies also showed strong filing growth from 1992 to 2009.   Ameritech, Southwestern Bell, US West, and Pacific Bell, in contrast, did not expand their rate-detail filings after the mid-1990s.  Measured by rate elements actually used (rate elements with non-zero revenue), rate-detail filing sizes vary much less across operating companies.

Complete tariff filings are more comprehensive compilations of tariff rates.   Complete tariff filings include rates not included in the rate-detail filings.   For example, Ameritech has many pages of contract tariffs in its complete base tariff on ETFS.   Rate elements in these contract tariffs are not included in its rate detail filing.   The size of complete tariff filings could be measured in tariff pages.  On those pages, the number of dollar signs might provide a crude indicator of the number of rates.

Unlike normal commercial prices, tariffs are associated with regulatory obligations.   To the extent that tariffs expand, they increase regulatory obligations.  Tariffs expanding rapidly relative to regulatory resources can produce a regulatory crisis or regulatory insolvency.

Data: counts of elements in U.S. local-exchange telephone companies' interstate access rate detail filings (Excel version); full rate-detail compilations for seven former Regional Bell operating companies.

Offer Comments

Public utility tariffs are typically established through a formal administrative process that legally certifies rates (prices) and makes them public.  Hence, these prices differ significantly from commercial prices established without any specific public administrative process.   The difference between public utility tariffs and commercially established prices is under-appreciated.[1]  The web and technologies for semantic mark-up can make public utility tariffs a valuable, open-data product of the public administrative process.

Tariff regulation has tended to focus on rate-making principals.  In the U.S., the Interstate Commerce Act of 1887 addressed railroad "common carrier" rates.  The Act required that railroad rates be "reasonable and just" and prohibited giving "undue or unreasonable preference or advantage" to any railroad customer or type of railroad traffic.  Similar rules have been extended to a variety of services, including some in the water, energy, trucking, and communications sectors.  What exactly these rules mean is typically a matter of contentious administrative and political debates.  Those most willing to invest time, money, and effort into these debates have been businesses with significant financial interests in tariff decisions and politicians and interest groups who see opportunities for scoring news-marketable symbolic victories.

The Interstate Commerce Act, however, was also quite concerned with making tariffs public.   Section 6 of the Act required a plain statement of rates and conditions to be made available for public inspection.  Ten days' public notice was required for an increase in rates.  Reductions in rates could be made immediately, but they also were required to be publicly posted immediately.  The Act's requirements for making rates public were quite specific in terms of the communications technology of the time:

Such schedules shall be plainly printed in large type, of at least the size of ordinary pica, and copies for the use of the public shall be kept in every depot or station upon any such railroad, in such places and in such form that they can be conveniently inspected.

The Act also gave the newly formed Interstate Commerce Commission broad powers to adopt new communication technologies:

said Commission shall from time to time prescribe the measure of publicity which shall be given to such rates, fares, and charges, or to such part of them as it may deem it practicable for such common carriers to publish, and the places in which they shall be published

In response to the Act, some common carriers used what were called "midnight tariffs".   The basic idea was to tip-off a favored customer about an obscure reduction in a tariff just before the old tariff was re-enacted.  Thus no other customer but the informationally favored customer got the lowered tariff rate.  In response to such abuse, Congress amended the Interstate Commerce Act to require 30 days' notice for a tariff increase or decrease. [2]

Tariffs are now typically available on the web in forms that humans and data-gathering software applications cannot readily read.  British Telecom, for instance, has online Price Lists that presents a huge amount of relatively unstructured information.  Only a well-informed human could easily make sense of this information.   In the U.S., tariffs filed at the Federal Communications Commission (FCC) are available through the FCC's Electronic Tariff Filing System.   Tariffs in that system are pdf documents describing rates and terms.   Only a well-informed human could easily make sense of this information.   Tariffs are not generally available in ways that make tariff information most useful to the widest range of persons and applications, given up-to-date communications technologies.

Presenting tariff data with standard mark-up technologies and vocabularies would be a valuable contribution to open-data ecologies.  Smart-grid systems for more efficient energy consumption need structured, software-interpretable price data.  Efficient use of communications networks requires not just standardized, real-time propagation of technical routing tables but also standardized, real-time propagation of prices associated with different routes and services.   More generally, requiring that tariffs be public knowledge openly available to applications would discipline and leverage administrative and legal resources used in the public process of establishing tariffs.  Tariffs under such a process would look nothing like current tariffs.

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Notes:

[1] In British English, tariff is more or less synonymous with price.  The relevant distinction is between prices certified through a public administrative process and prices not certified through such a process.

[2] Amendment enacted on June 29, 1906.

Offer Comments

Southwestern Bell Telephone's rate detail files include Self-Healing Transport Network (STN) elements from 1994 to 2009.  A basic STN network consists of nodes and 44.736 Mbit Digital Transmission Links (DTLs) arranged in a ring configuration.  In the event of a link failure, communication service across the nodes is engineered to be restored in 50 millisecond.[1]   STN thus provides high-reliability, high-bandwidth connectivity for private networks.

STN service revenue grew strongly across the 1990s and continued to grow through at least 2003.   Southwestern Bell's STN service revenue was $4 million in 1993.  It grew more than tenfold to $51 million in 1999.  On March 14, 2001, the FCC authorized Southwestern Bell to remove some STN revenue from its FCC price cap filings.[2]  That authorization thus potentially affected the filing year 2001 (demand year 2000) data.   Similar subsequent FCC orders extended that authorization to a larger share of STN revenue.  Hence revenue data for demand years 2000 to 2008 is not comparable with earlier data.  An interesting fact, however, is that Southwestern Bell's reported STN revenue rose from $14 million in demand year 2001 to $26 million in demand year 2003.  That's evidence that demand for STN service continued to grow from 1999 through at least 2003.

STN prices have been constant for multi-year periods.  Multplexing purchased on a 5-year term plan was the rate element with the most total revenue ($38 million in revenue from 1993 to 2008 demand years).  This element was priced at $580 per month about July 1995 and remained at that rate through at least July, 1999.  By June 2000 , its rate was $500 per month, and it remained at that rate through July 2009.  The rate element with the second highest total revenue was a basic configuration with 24 DTLs on a 5-year term plan ($32 million in revenue from 1993 to 2008).   This element was priced at $24,000 per month about July 1996 and has remained at that rate through July 2009.  Transport mileage on a 5-year term plan, the sixth-highest element in total revenue, was priced at $108 per month in July 1995 and remained at that rate through July 2009.[3]

Analysis of Southwestern Bell's STN service element quantities purchased (demand) shows some strange patterns.   The number of non-recurring charges (NRCs), which the tariff specifies for service installation, are much smaller than the corresponding change in the associated element.  For example, the reported number of STN basic configurations increased by 1,430 from 1997 to 1998, but the reported number of basic configuration NRCs in 1998 was only 17.  Generally waiving NRCs, generally not reporting NRCs in tariff filings, or some other factor must explain this numeric inconsistency.

Demands also show some unexpected changes across years.  For example, reported demands for multiplexing (mux) were  5,802 and 7,108 for 2001 and 2003 respectively.  In contrast, reported demand for mux was 340 in 2002.  The ratio of mux elements to basic configurations was 0.3 in 2002, compared to 8.4 and 7.2 in 2001 and 2003.   The precipitous drop in demand for multiplexing in 2002 is difficult to understand.

Transport mileage demands also show some unusual patterns.  Reported demands for transport (in miles) were 15,029 and 13,857 for 1996 and 1998, respectively.  In contrast, reported demand for transport was 4,470 for 1997.   Transport mileage per basic configuration fell from 27.9 in 1996 to 6.7 in 1997.   Basic configurations are purchased on 3-year or 5-year term plans.   Perhaps a confluence of plan terminations and new, lesser-distanced basic configurations explains transport mileage dropping by more than two-thirds from 1996 to 1997 while the total number of basic configurations more than tripled.  But that seems improbable.

These tariff data were publicly filed and subject to comment by anyone, including customers of STN services, during a formal period of tariff reveiw.   But in the 1990s the Internet was much less developed than it is today.  It is much easier now for anyone to study these data and discuss what they find.  That potentially can lead to better review of tariff data and a better process for securing adequate communications services at reasonable rates.

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Data: Online spreadsheet of Southwestern Bell's STN demand, rates, and revenues, 1994 to 2009 (also available as an Excel file), with statistics discussed above.  The element names for STN elements (excluding DS3-STN interconnection elements) have now been standardized in the main Southwestern Bell rate detail dataset.

Notes:

[1] Service restoration is specified to occur in not more than 2.5 seconds.  STN service is described in Southwest Bell's FCC tariff, Section 19 (effective Aug. 24, 2002).

[2] That authorization was under the FCC's pricing flexibility policy.  Here's the specific Mar. 14, 2001 order, in the Matter of Petition of Southwestern Bell Telephone Company for Pricing Flexibility.  SBC received additional grants of pricing flexibility in 2002, 2003, 2004, 2005, and 2006.

[3] I have not collected data for rates after July, 2009.  Rates as of July 2009 may have continued at the same level to the present.

Offer Comments

A dataset of units sold, rates, and revenues from 1992 to 2009 for BellSouth's interstate communication services is now available.  BellSouth, now part of the new AT&T, developed as a regional Bell (Telephone) Operating Company (RBOC) serving customers in nine states in the U.S. Southeast.  This dataset has been compiled from price-cap tariff data publicly filed at the U.S. Federal Communications Commission (FCC).   It is intended to foster better understanding of communications industry developments, keener appreciation for the realities of economic regulation, and more informed public policy deliberation.

The dataset distinguishes some types of special access and trunking revenue by state.  From tariff filing years 2000 to 2003, the state distribution of revenue for these services shifts away from states that accounted for a larger share of BellSouth's revenue (Florida and Georgia) and toward states that accounted for smaller shares (Alabama and South Carolina).   This shift in the distribution of special access and trunking price-cap revenue is associated with FCC grants of BellSouth petitions to remove services from price cap regulation (pricing flexibility petitions).[*]

The number of BellSouth rates under price cap regulation increased greatly from 1992 to 2009.  The number of filed rates increased from 1,168 in filing year 1992 to 37,059 in 2007, and then fell to 21,223.  The share of non-zero-revenue rate elements declined from 55% in 1992 t0 12% in 2009.   The net effect was that the number of filed rates associated with non-zero revenue fell from filing year 2000 to filing year 2009.  The broad pattern is similar to that for Bell Atlantic price-cap rate counts.  Identifying significant rates is important for efficient use of regulatory effort.

Looking at rates by descending order of associated revenue provides one view of economically significant rates.  Comparing the top-100 BellSouth special access and trunking rate elements in filing years 1999 and 2009 indicates considerable service revenue inertia.   The leading rate element in 2009 was a DS1 local channel termination.  A DS1 local channel provides 1.5 Mbits/s symmetric service.   It generated about $43 million for BellSouth in  demand-year-2008 revenue. That's a lot of revenue for an old service which, by current standards, provides rather meager bandwidth.

Customer demands for rapid service installation apparently have increased.  In the 1999 filing, $3.2 million in revenue was associated with a rate element specifying a special access service order interval of less than 4 days.  In the 2009 filing, a special access (SPA) service date advancement generated $13 million in revenue.   Customers seeking rapid order fulfillment pay millions to get it.

In the 2009 filing, a "Data-Universal" rate element is associated with $35 million in revenue.  This rate element has been included in filings since 1999, but prior to the 2009 filing, negligible revenue was associated with it.  The nature of the "Data-Universal" element isn't clear.  However, innovation is vitally important to the future of telephone companies.  Generating $35 million in revenue in 2009 for the "Data-universal" rate element may be an indication of BellSouth innovating.

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Here's the BellSouth rate-detail dataset.

Spreadsheet data discussed above:

• comparison of rate detail data with TRP data (Excel version)
• distribution of state-specified special access and trunking revenue (Excel version)
• Top 100 special access and trunking rate elements in 1999 and 2009 (Excel version)

Note:

[*] An FCC order adopted on Aug. 5, 1999, set out a procedure ("pricing flexibility" petitions) for removing rate elements from existing price-cap regulation.   On Dec. 15, 2000, the FCC's Common Carrier Bureau granted a BellSouth petition for pricing flexibility.  The order granting that petition apparently isn't online, but an affirming review of that order, which includes a list of the metropolitican statistical areas (MSAs) to which it applies, is online.   Here's a better formated version of the MSA list.  On Nov. 22, 2002, the Bureau adopted an order granting another BellSouth petition for pricing flexibility.  On May 16,2008, the Bureau granted a third BellSouth petition for pricing flexibility.

Offer Comments