Abomination of Desolation [put in a place where it shouldn't be].

Jose G. Perez jgperez at SPAMfreepcmail.com
Sun Dec 5 19:36:59 MST 1999

>>The recent expansion in the supply of
phones in Brazil was mostly in cellular phones, which do not require
heavy previous investment in physical structure (and when such
investments were made, they were mostly financed by the state-owned
National Bank for Economic and Social Development). Therefore, you have
people with pauper-level incomes using a relatively expensive telephonic
tool - that normally would be reserved for urgent calls or for people
with specific needs - for everyday needs, which means that the
lowest-income users are paying the highest prices available for having
access to the telephonic service. <<

I think you will if you look at regulatory and economic literature
concerning telephone (and cable) service, you'll see that a huge portion of
the cost (to the phone company) is in the so-called "last mile," the twisted
pair of copper wires (or in the case of cable, coax) to each and every
individual subscriber from the nearest central office and (in developed
country phone systems) sufficient excess capacity to a) instantaneously
respond to an increase in demand and b) instantaneously replace any damaged
pairs. This is why "party lines," where several different households shared
the same physical analog phone circuit, were common in the states decades

Regulatory schemes were typically cost plus, i.e., the more fixed capital
the phone company had tied up in the network, the bigger the return. Thus in
the U.S. (even today in most states) and in much of the developed world the
phone companies have been encouraged to deploy the most costly possible
technology. The capacity to efficiently multiplex a high number of phone
calls over a single physical wire has been around, I believe, at least since
the 1960s. There simply was no economic incentive to deploy it, nor is there
much now, at least in the "last mile." In the wholesale business, which has
undergone deregulation and therefore a certain economic rationalization, the
cost of the physical media that carries the (digitized and multiplexes)
calls (normally not copper, but optic fiber) is considered so insignificant
compared to putting it into the ground that companies building communication
backbones in the U.S. AS A RULE always install several times more the
capacity they currently need, and the huge majority of the fiber optic
communication circuits that criss cross the country are so-called black
fiber, i.e., circuits not (yet) being used.

A carefully thought-out and implemented digital cellular network is, in fact
CHEAPER than the hard-wired network to set up and much cheaper to maintain.
In Israel, where (I'm not sure why) the billing model is that the caller
ALWAYS pays, the per-minute cost of a call to a cell phone or a hard-wired
line are pretty much the same, and cell phones have become ubiquitous. They
even have special cell phones for kids, which can only dial out a few
numbers (home, the parent's offices, emergency services) but can be called
from any number.

The use of a conventional pair of copper wires to carry a few minutes worth
of signals constrained to a 3khz bandwidth or so is, from a technical and
economic point of view, monstrous overkill and waste. A network well
designed from the ground up using such technology can easily deliver, say,
10Mb/sec downstream and 1Mb/sec upstream, whereas the best you can do with a
circuit actually constrained to voice bandwidths is 33 kbit, i.e., 1/30th
the upstream data rate and 1/300th the downstream. Moreover, this delivery
capacity is available 24X7, not just the 10, 15 or 30 minutes the typical
pair is used in voice communications. So assuming an actual voice use of 1/2
hour/day (which is very high, much higher than the U.S. experience) you'd
have to say that that 1/30th or 1/300th of the potential bit rate is being
used barely 1/50th of the time. So in reality the actual utilization of the
phone line is less than one-ten-thousandths of its potential capacity.
Copper-to-the-home-for-voice is 99.99% wasted.

Obviously, from the point of view of bandwidth, this is an enormously robust
system, yet it is configured in such a way as to completely waste the
built-in redundancy.  You could multiplex, say, the conversations of 90
subscribers onto three of these lines (in reality, more, as not everyone
uses the phone at the same time). You would set up on one antenna,  and
basically have everyone within a block or two dial in wireless into this ONE
installation. But with each copper pair assigned to each individual phone
line, there's no way I can take advantage of the HUGE amount of unused
bandwidth hard-wired in the neighborhood to maintain my service.

New subdivisions  in the U.S., already use a variant of this model. The
copper pair from each home leads not to a central office, but to a TelCo
junction box down the street, there the signal is converted to digital and
sent on by fiber to a central office. The "last mile" has been replaced by
the last 100 yards.

I'm sure Telefonica, which is an extremely rapacious telephone monopoly, has
structured their charges and so on in Brazil so as to maximize its profits.
Part of what is going on is the transfer of capital costs, which Telephone
companies used to bear in the form of laying in copper lines, to subscribers
in the form of phones which they must buy. However, if they were laying in
copper, Telefónica would also be doing it in such a way as to be raping the
population just as much as they are now. So abstracting from that, the
decision to promote an all or mostly-cellular network is rational, and don't
be too surprised if in a few years you have the emergence of "cellular"
phones which really aren't mobile at all, but can only be used in the one,
two or three block area they're configured for. The "really cheap" phone
service will be this, the equivalent of a cordless phone, except that the
"base station" (receiving unit) for dozens of these phones have been
gathered together in ONE place so as not to have to run and maintain copper
wires to each and within each individual home.


-----Original Message-----
From: Carlos Eduardo Rebello <crebello at antares.com.br>
To: marxism at lists.panix.com <marxism at lists.panix.com>
Cc: lnp3 at panix.com <lnp3 at panix.com>
Date: Sunday, December 05, 1999 11:07 AM
Subject: Re: Abomination of Desolation [put in a place where it shouldn't

>Louis Proyect wrote:
>> Carrying the Flag For Free Trade;  Brazil Still Embraces Globalization
>> SAO PAULO, Brazil, Dec. 1
>> Acquiring a telephone was a distant dream for Rene Vieira da Conceicao
>> Muniz, a maid in a small town in southeast Brazil. The government's
>> inefficient telecommunications monopoly made telephone lines a luxury of
>> the upper classes, far from the reach of Ms. Muniz, a mother of three
>> monthly salary is the equivalent of $57.
>> But the privatization last year of Brazil's phone system, part of a much
>> wider opening of the nation's economy to foreign investment, trade and
>> competition from abroad, has changed the situation. Two months ago,
>> Telefonica, the Spanish telecommunications company that bought the local
>> telephone operation in Ms. Muniz's region, began an installment plan for
>> low-income clients to buy cellular phones over several months.
>This, for me, fixes the question. The recent expansion in the supply of
>phones in Brazil was mostly in celular phones, which do not require
>heavy previous investment in physical structure (and when such
>investments were made, they were mostly financed by the state-owned
>National Bank for Economic and Social Development). Therefore, you have
>people with pauper-level incomes using a relatively expensive telephonic
>tool - that normally would be reserved for urgent calls or for people
>with specific needs - for everyday needs, which means that the
>lowest-income users are paying the highest prices avaliable for having
>access to the telephonic service. Also, mostly cellular phones sold to
>these new customers are "pre-paid", i.e, there is no bill to be paid,
>only a card which a fixed number of telephonic pulses sold at the
>highest fee in the market (As opposed to, say, my personal case and of
>other customers who have chosen not to have "pre-paid" cell phones; I
>pay a fixed monthly rent for having access to the cell telephone
>service, irrespective of actual use of the said phone, plus a variable
>fee for actual use, but the pricing of the pulses is such that, the more
>I use the phone, the lesser I pay for the single pulse). In fact, what
>is being sold is an expensive service at extortionate prices, and
>notoriously unreliable to boot (The American co. ATL, which competes
>with the Spanish Telefónica in Rio de Janeiro in the cellular phone
>market - the fixed phone service being offered by a Brazilian group- had
>its acronym translated as *Alguém Tentando Ligar* - "someone trying to
>make the phone work"
>Carlos Rebello

More information about the Marxism mailing list