Talking over the network
GPRS (Internet access) from my cell phone costs extra. SMS too. Yet both put vastly less traffic on the network than voice does. Why then are they much more expensive than voice, when on the face of things they ought to be cheaper?
Packet data does have its own issues. Voice is loss-tolerant but time-sensitive stream data, which is a fancy way of saying that for voice near enough is good enough provided it's quick. Packet data on the other hand requires lots of handshaking, because you have to make sure all of it is received uncorrupted. So per-byte it is more expensive to carry. But there's much less of it. Voice is bandwidth greedy. Therefore, different charging schemes are required.
A reasonable approach to charging would be to measure the traffic volume (how many bytes sent) and work out how many seconds of voice this represents at 9.6kBit - the speed of the old digital voice network. Data traffic might then be charged as voice. It actually is more expensive than voice due to the overheads of the TCP (transmission control protocol) checking that all the data arrived and if necessary retransmitting some of it, so it would be fair to apply a cost weighting. Say, double. This allows for retransmitting everything once - which isn't going to happen, but this leaves elbow room for other problems.
But no, they use some wacko per-request scheme that reflects neither the provider cost structure nor the load placed on the network.
Load on the network is relevant because charging schemes are often designed to discourage certain usage patterns that cause network problems. Reasonable, but the scheme in use seems designed to punish any use of GPRS. Why would the carrier want to chase off business at large?
Hmm... perhaps network capacity is dismal and this is deliberately concealed by a punitive pricing structure designed to inhibit non-essential use of it. That actually would make sense. High-speed packet data is a great marketing feature, but widespread use would bring the network to its metaphorical knees, and people who can't be bothered understanding the issues and who think "they" should do better (nearly everyone) would start badmouthing it.
This isn't speculation. I saw exactly this happen to countless ISPs between 1995 and 2000. They'd start up with a handful of customers, and performance would be wonderful. Word of mouth being what it is, this would promptly bring in hordes of customers. Lots of customers means lots of load. Performance would drop through the floor. They'd make a mint, but word of mouth being what it is, the reputation of their service would soon be in the toilet. This would abate the load and performance would come back up, but too late. With no way to recover their customer base but discounting, they would quickly go broke or get bought by Telstra, often both and generally in that order.
Tel-cos have the same problem. Updating entire networks is expensive and takes time. You have to buy lots of new equipment, and to do that you must first extort the money from your customer base. If you don't slow down network up-take, by the time you have enough network capacity on-line to support widespread use, your network will have a bad reputation and people will stay away in droves.
This will force you to sell at or near cost to get people to use it again... and you can't jack the price back up. Customers are so fickle, after all you've done for them you'd think they'd drop their pants for you but no, off they run to whoever is cheapest. Anyone would think they just wanted the service as cheap as possible.
So what you do is exactly what we're seeing: you charge the new service at a premium, which not only limits network up-take but (hooray!) makes such traffic as you can support extremely profitable. Unfortunately this state of affairs is so desirable to bean-counters that they see it as their fiscal responsibility to preserve the status quo. If you let the bean-counters run things you get ISDN for twenty years.
The convergence of IT and telecommunications has changed this situation. The pêle-mêle rise of bandwidth combined with the equally hectic collapse of equipment prices makes it cheaper to replace everything than repair it. This means that every now and then a tel-co finds itself with cheaper bandwidth. To increase market share they drop their prices. To compete, other tel-cos are forced to either set up a cartel or upgrade their equipment. Cartels are illegal, if not unheard of. Since you can't afford to replace the whole network you just do the capital cities... sound familiar?
Before anyone thinks I'm justifying the carriers' behaviour, I'd like to point out that what generally happens is the latest wonder-boy CEO does something insupportable so they gather up the proceeds of the last two years and bribe him to go away before it gets too embarrassing. There is then nothing in the coffers for the required network upgrade. This is blamed on corporate inefficiency. They "fix" the situation by sacking all the skilled employees, outsourcing everything they can think of and then charging for services that used to be free (ie funded by general revenues). In the short term this substantially improves corporate cash-flow, so the new CEO gets a big bonus. These characters generally know nothing about the industry with which they're interfering, so they honestly think they've earned the bonus. Which makes you wonder about their understanding of basic economics: if I sell my car it will do wonderful things for my short term cash-flow, but taxis and buses aren't free.
The other thing that usually happens when tel-co cash-flow is looking rosy, is that the government of the day issues shares. Um, excuse me, I thought we already owned Telstra on account of having paid for it in our taxes? Considering that telecommunications is specifically listed as an essential service is it not therefore the exclusive domain of a public service or at the very least a QANGO (quasi autonomous non-government organisation)? Doesn't that make it illegal and immoral to sell it into private hands?
I do not object to QANGO and other public sector organisations running at a loss and having to be propped up through taxes. They are not there to be cheap, they exist to guarantee reliability and availability. Doing so is the basis of their special privileges - like run a cable trench anywhere they please and everyone else can damn well dig elsewhere. But if they aren't going to fulfil this brief then the DoC should bugger off and let me run my own cables and transmit microwaves anywhere it doesn't cook people or jam other transmissions.
If it were up to me I'd nationalise all the tel-cos and consolidate them, and imprison all the people involved with the privatisation of Telstra. Treason would be the charge. Or theft, or possibly both. Not to mention reckless endangerment of 20 million lives - it's an emergency service, remember?
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