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Collocation with rate parity an important goal.

Collocation (requiring local exchange carriers to provide interconnection to their networks to competitive access providers and users) has greater potential benefit to business users than any other issue in telecomm regulations.

Parity with residential rates, as collocation charges are established, should be the next goal of business users.

Collocation is one of these concepts that is so obviously advantageous to users and so long overdue in implementation that it is difficult to understand why it has taken so long to become established. It has overwhelming advantages in achieving route diversity and central office redundancy, and will lower prices as competition emerges and encourage innovation after years of resistance to user demands by many local exchange carriers.

But, finally, the collocation ball is rolling. The Federal Communications Commission, in its Notice of Proposed Rulemaking in June, requested comments on expanded interconnection with local telephone company facilities in interstate services.

At the state level, collocation already has been approved for special access services in several states and is being considered by state public service commissions in many other states. The next step should be to obtain approval for collocation of portions of switched access services.

A cadre of consultants and attorneys will argue endlessly over the connection charges and, predictably, they will try to agree on a cost-based rate. Everyone has a different definition of cost, however, and disputes over this elusive concept will mask a more obvious disparity--business rates vs. residential rates.

The rates for business lcoal service and residential local service were grossly disparate before divestirue on Jan. 1, 1984, and are not much improved in 1991, seven years later.

The critical issue is the assignment of local exchange carrier costs. What percentages should be assigned to business and what percentages to residential?

State public service commission historically have approved loading business rates to pay for residential services. It's a political, populist ploy that plays well in most local government.

As collocation connection charges are established, a de facto assignment based on precedents in local service rates will be grossly unfair to business users. It also will restrict the efforts of competitive access providers to establish and increase collocation services.

For example, the tier I, basic, residence, one-party service rate from the local exchange carrier in the Minneapolis-St. Paul area is $14.16. The comparable business rate is $42.48 or 200% higher. The only data with which this writer is familiar that supports any disparity is a claim business lines, on the average, carry 60% more traffic than comparable residential lines.

IF accurate, 60% is far from 200%.

This rate disparity, to a lesser or greater extent, applies in most metropolitan areas.

One of the more forthright statements of this policy may be the quotation from a Bell Operating Co. representative in an article in the June 1991 issue of "Dallas Technology" Magazine reporting on attempts by competitive access providers to obtain regulatory approval for their services.

The article, by Karen Kullgren Juh, on page 14, quotes a Bell Operating Co. representative's argument, "... the BOC's (Bell Operating Co.) big business customers subsidize its residential rates; therefore ... if Bell lost these big customers ... residential rates could skyrocket. When one area (of the local service structure) gets out of balance, the whole system gets out of balance."

The significant phrase in that statement is, "big business customers subsidize its residential rates." Why? Because its been going on for years? That's a review of history, not a justification!

I would hasten to add that if I was in charge of telephone company rate design, I would probably push the same rate theory. It is incumbent on business users, however, to see the theory derailed.

The advantage of collocation eventually will accrue to residential users as well as business users. If business users once again allow disproportionate rates to be charges to them in a collocation connection charge rate setting, and subsequently passed through to them by the competitive access provider, they are accepting costs they should not accept. They also are not doing the job for which their company pays them.

Collocation is the first step in breaking the local exchange bottleneck. Business users should support it, encourage it, fight for it and, in the process, demand parity with residential services as collocation connection charges are established.

Augie Blegen is a telecommunications consultant and executive director of the Association of Data Communications Users, Inc., P.O. Box 20163, Bloomington, MN 55420, 612-881-6803.
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Title Annotation:lobbying goals of business telecommunication users; Datacomm User
Author:Blegen, August
Publication:Communications News
Article Type:Column
Date:Oct 1, 1991
Previous Article:Association profile: the story behind today's CMA.
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