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Telpak May Be Dead, but Closer Look Shows a Better Deal Ahead.

Since the demise of Telpak in 1981, private line rates have continued to escalate. First, there was Hi-Lo. Then came multishedule private line. Most recently, there has been a new round of proposed increased associated with the divestiture of the Bell Operating Companies. Large volume users, who depend on private lines as the backbone of their networks, have had few alternatives but to pay the higher rates. They could only fondly reminisce about Telpak and the rates they remember.

It has been widely reported that the new tariffs proposed by AT&T will increase private the costs by an average of 10 to 15 percent. This is true for small volume users of private lines; however, it does not need to be the case for large volume users. Under the new tariffs, there are ways for large users to obtain what are essentially Telpak rated for their private lines.

Since early 1983, AT&T has been offering a bulk private line service called terrestrial digital circuit or TDC. It is a point-to-point 1.544 Mb/s digital circuit and is probably best known as a T1 circuit. AT&T is reportedly going to begin promoting it as Accunet T1.5 Service. By using this high capacity digital circuit and some of the new digital signal processing equipment just now coming on the market, toll quality private line service can be obtained at costs 35 to 80 percent below equivalent analog voice grade circuits.

Because TDC is a bulk service, small volume users of private lines will not be able to realize savings of such a magnitude. If a user has fewer than 20 voice circuits between two locations, a TDC may not prove to be cost-effective. If, however, data circuits are in use between the two locations, it often pays to examine the situation closely. In many cases, by combining the data traffic with voice traffic, the voice savings will pay for the TDC and associted equipment, while thedata network is obtained at no added cost.

To understand how the benefits of a terrestrial digital channel may be obtained for a given network, it is necessary to review the AT&T private line prices in effect at the end of 1983 and the new prices which have been proposed. These new revised prices were scheduled to go into effect on January 1, 1984, but in October 1983, the FCC deferred the effective date of the new tariffs until April 3, 1984. Line Charges Under Old Tariffs

Under the old tariffs, private line charges were in three categories; a fixed charge, a distance-sensitive charge, and local termination charge. There was only one distance-sensitive charge, and it was based on mileage between serving central offices. In addition, special service charges such as conditioning and special terminations were also tariffed.

With divestiture, most of the serving central offices will become the property of the local exchange companies. AT&T, as well as other competing carriers, will own the interexchange transmission facilities, and the local exchange companies will own the local distribution facilities. In the future, all private line circuits will be furnished by two or more carriers--an interexchange carrier and one or more local exchange companies. An adventuresome user can deal with all of these companies independently. The less adventuresome will no doubt prefer the total service concept wherein one carrier takes total responsibility for end-to-end circuit performance and billing. In jmost cases, these single carrier will be an interexchange carrier who will subcontract for service from the local exchange companies.

Another result of the AT&T divestiture has been the division of the entire US into 160-odd local access transport areas or LATAs. For example, Philadelphia, Delaware Valley, Atlantic Coast of New Jersey, North New Jersey and Metropolitan New York City are each LATAs. A LATA can be descrbed as the geographic region in which an interexchange carrier terminates its service. Interexchange carriers will provide service between LATAs (even if both are in the same state), and local exchange carriers will normally provide service only within LATAs. For further subdivision, LATAs are partitioned into rate centers.

In the new AT&T tariffs, a private line again has three components: an interoffice channel or IOC, a LATA distrbution channel or LDC, and a terminating channel or TC. An IOC is the circuit between the servicing offices of the interexchange carrier, that is the inter-LATA circuit. An LDC is a circuit which crosses rate center boundries within a LATA. A TC is the circuit which completes the connection to the customer premises. It is important to note that if the customer premises and the interexchange carrier's serving office are in the same rate center, an LDC is not required since no rate center boundaries are crossed. In the new tarrif, both the IOC and the LDC have distance sensitive pricing. Only the TC has a flat rate.

Another new concept introduced in the tariff is that of a service function. Every private line must have at least one primary service function or PSF. Secondary service functions or SSFs are optional. The PSF is described in the tariff as the design and maintenance activity required to provide a circuit, and the testing and coordination required to maintain circuit transmission parameters. SSFs are more concrete and include special service such as transfer arrangements, multiplexers and special line conditioning.

Last, but not least, the tariffs incorporate an item called the surcharge. This is, of course, the much discussed access charge and is always included as part of the terminating channel rate. Comparison of Monthly Rates

Table 1 is a comparison of the total monthly rate for four different private line services--the terrestrial digital circuit or TDC, the voice grade circuit or VGC, a 9.6 kb/s Dataphone Digital Service (DDS), and a 56 kb/s Dataphone Digital Service. Table 1 tabulates prices for these services as a function of IOC circuit length for year-end 1983 and for the new 1984 tariffs. As mentioned above, the only distance sensitive element in the 1983 tariff was the IOC price. In the new tariff both the IOC price and the LDC price are distance sensitive. The columns labeled "No LDC" in Table 1 assume the customer premises and the serving office of the interexchange carrier are in the same rate center and no LDC is required. The "With LDC" column assumes different rate centers with a LDC length of 20 mles. This is a fairly long LDC, so most users will probably find their actual price is somewhere in between those listed under 1984. Terminating Channel at End of Link

Each end of the link must have a terminating channel. It is interesting to note that the terrestrial digital circuit surcharge is a flat $600 irrespective of the number of voice, data or video channels which may be derived from it. Each private line requires only one private service function. In Table 1, the data PSF charge was used since it is a prerequisite for obtaining data conditioning. The secondary service function of C-5 conditioning is also used in Table 1 at both ends of the link, and will have no affect on use of the circuit for voice traffic. It was included simply to make later comparisons of channel characteristics more valid; voice grade circuits for voice-only use would be $125.50 lower than the 1984 prices shown on Table 1.

With one exception, the 1983 and 1984 prices in Table 1 are for identical private line services. The exception is the exclusion of the customer service unit in the 1984 DDS prices. In 1983, the DDS prices included a customer service unit or a CSU. Because of a Federal Court decision, CSUs can no longer be offered under tariff. A user should be able to lease a CSU for about $5 per month. So for direct comparability, $90 should be added to the 1984 DDS prices.

The date in Table 1 is shown graphically in Figure 1 and Figure 2. Figure 1 shows voice grade circuit prices and Figure 2 shows terrestrial digital circuit prices.

In both cases the upper 1984 lines include a 20 mile LATA distribution channel at each end of the circuit and the lower lines have no LDC. As may be seen, there is a substantal increase in voice grade circuit prices at distances less than 1,000 miles. Over 1,000 miles, VGC prices are essentially unchanged. This net increase, however, is the basis for the statements that analog private line prices will increase an average of 10 to 15 percent in 1984. Referring to Figure 2, it can be seen that TDC prices are increased slightly under 500 miles and are reduced by about the same amount over 1,000 miles. The net result is to mak TDCs very attractive for use with some of the new channelizing equipment now on the market. Attractiveness of TDC

The degree of attractiveness can be seen in Figure 3 which shows the monthly price for a single TDC and for 24, 48, 72 and 96 voice grade circuits. (VGC prices are those which include a pair of the 20-mile LDCs; however, excluding LDC costs will not materially affect the conclusions to be made below.) At distances less than 100 miles, a single TDC is priced about $3,000 to $8,000 per month less than 24 VGCs. If a pair of standard, D-type channel banks are connected to the TDC, 24 voice channels can be derived and some savings could result. Far more impressive savings can be made, however, if a greater number of channels could be derived from the terrestrial digital circuit.

There are now available on the market, channel banks which can derive 48, 72 and even 96 voice channels from a single TDC. Through use of such equipment, per channel prices equivalent to the old Telpak rates can be obtained. For example, a 2,000 mile TDC costs $57,710 per month. If 96 circuits can be derived from it, then the per channel price is approximately $600 per month. For those who can remember, that is a Telpak "D" price.

The above example is not completely correct since the cost of the channelizing equipment was omitted. Aydin Monitor Systems manufacturers a line of channelizing equipment which will perform the necessary functions. The 6248 VQL Channel Bank converts 48 analog voice channels to and from a terrestrial digital circuit. Similarly, the 6272 VQL/DSI Channel Bank handles 72 channels and the 6296 VQL/DSI Channel Bank handles 96 channels.

Returning to Figure 3, a few words of explanation are in order. The prices shown are for 1984, but the cost of the channelizing equipment necessary for using a TDC is not reflected. Not only does the channelizing equipment which can put 48, 72 or 96 voice channels on a TDC have different prices, there are also differences in its performance. A good measure of voice channel performance is its ability to carry data modem traffic. The VQL codec can consistently carry 9,600 b/s modem traffic without inducing any bit errors. The end to end channel quality is equivalent to a completely analog channel with C-5 conditioning. The continuous variable slope delta modulation (CVSDe, or delta-mode codecs currently on the market can carry only 2,400 b/s modem traffic and exhibit distinctly inferior subjective voice quality.

Thus, to make an "apples-to-apples" comparison, the line labeled "48 VGC" in Figure 3 assumes all 48 circuits have C-5 conditioning. The 6248 VQL Channel Bank with a TDC can carry 48 simultaneous channels of full duplex modem traffic at 9,600 b/s just the same as 48 C-5 conditioned voice grade circuits. Modem Traffic Is Limited

Because of the digital speech interpolation (DSI) process used in the 6272 and 6296 VQL/DSI Channel Banks, the ablity to carry modem traffic is limited, although the subjective voice quality of the channel is not affected. About 10 percent of the 6272 channels can carry modem traffic while the 6296 is not recommended for applications having any appreciable degree of modem traffic. Therefore, in Figure 3, the "72 VGC" line is priced for eight channels having C-5 data conditioning and the remaining 64 are priced as voice only. The "96 VGC" line assumes all channels are voice only.

To use a TDC, a channel bank or multiplexer is located at each end and all derived circuits originate and terminate at these two locations. For VGCs, this geographic bundling need not be the case. Further, the user need only pay for the exact number of VGCs required. With a TDC, the user pays for 1.544 Mb/s whether it is all used or not. This is the bulk aspect of TDC service. Of course, the VQL Channel Bank can be equipped with on the exact number of channel modules required and this will reduce costs somewhat. At 100 miles IOC length, the breakeven point between VGCs and a 6248 equipped TDC is 14 voice channels. At 2,000 miles, the break even point rises to 32 voice channels. Clamor Over Rising Costs

Presently, there is a great clamor throughout the country about the rising costs of telecommunications. Many of those doing the complaining have not taken the time to see if lower cost alternatives are available. They simply want things to be as they always have been, and that is not going to be the case with the continung technical evoluation in telecommunications. For the large user, analog voice circuits and encoding a voice channel at 64 kb/s are going to become a thing of the past. Already, a number of the largest corporations have committed to putting their private line networks on terrestrial digital circuits. In the year ahead, many, many more will. Yes, Telpak is dead, but if you look closely, an even better deal may be available.
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Author:Riley, I.
Publication:Communications News
Date:Jan 1, 1984
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