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Telcos to mind ISDN pricing gap

ISDN pricing ranges from $29 to $250 per month nationwide, a gap that many say has to close lest consumers urn elsewhere for quick Net access.

SAN DIEGO--High-speed access to the Net is definitely in demand. But the turf war over which technology will deliver fast connections comes down to dollars and cents for consumers.

The various basic-rate pricing schemes for ISDN was the hot topic today at the ISDN World conference here.

Integrated Service Digital Network pricing from telephone companies ranges widely from $29 to $250 per month nationwide, a gap industry supporters say has to close or consumers will turn elsewhere for quick Net access. Telcos across the country are applying to state regulators and public utility authorities to implement new pricing structures for ISDN, which users two digital phone lines to offer Net access at speeds up to 128 kbps.

One of the most closely watched rate hike battles came to a close this March in California, where Pacific Bell won the right to raise prices by 20 to 30 percent per month for residential and business customers. As of May, Pac Bell charges $29.95 per month for home usage and $33.55 for businesses. Between 7 a.m. and 7 p.m. on weekdays, all users pay 3 cents to connect calls, and then 1 cent per each additional minute.

BellSouth has also altered its rates in five states. Starting in December, BellSouth reduced its ISDN rates by about $10 a month for residents and businesses in South Carolina, Georgia, Florida, Kentucky, and Mississippi. Now, residents pay about $55 a month, while businesses pay about $77.

GTE discussed the new ISDN rates it's seeking in California during a panel on ISDN tariffs today. GTE offers service in areas surrounding Los Angeles, and in northern cities such as Morgan Hill and Los Gatos.

Switching from metered service to various flat-rate structures, GTE has already gained approval of similar tariffs in Florida and Texas. "Our customers told us they wanted a flat rate," said Christine Christian, senior product manger for GTE. "With this change, we can also keep customers longer."

If approved, the new pricing will be as follows:

  • Residents who sign up month-to-month service will pay $35 per month, plus 5 cents per minute to connect to the Net at 128 kbps. The one-year service contract costs a flat rate of $80. Otherwise, users can pay a flat rate of $60 per month for three years, with no installation charges that otherwise vary from $100 to $200.

  • Business customers are offered the same month-to-month plan. The one-year service plan costs $90 per month for 400 hours of usage. Under a three-year contract, service costs $70 per month for 400 hours.

    GE won't reveal its ISDN customer base, but Christian said the numbers have gone up since the flat rate went into effect in other states. GTE expects approval of its rates in California by this summer.

    The differences in these often complicated pricing models may be a deterrent for consumers, according to industry watchers. "The wide range of rates doesn't seem legitimate. ISDN should be considered a basic-rate service like the telephone so it can be available to everyone," said Richard Raybold, chair of the issues working group for the North American ISDN Users' Forum, a group created under the government's National Institute for Standards in Technology.

    Some say ISDN rates should be forced down to those in place before last year's telecommunications deregulation. Moreover, they contend that if the Clinton administration and Federal Communications Commission want to make Net access universal for all Americans, ISDN lines should be cheaper. "Despite deregulation, we really don't have competition in the local phone markets, which effects ISDN pricing," Raybold added.

    Others aren't convinced by the cost studies used to raise prices, such as Pac Bell's. "We felt they were inflating their costs," said Barry Fraser, a staff attorney for the Utility Consumers' Action Network. "The new prices for GTE seem to be high too, but GTE does have a smaller customer base. I would like to examine GTE's cost study and determine why they need to charge those rates."

    Pac Bell fought UCAN and a coalition started by Intel and Compaq when it applied to raise ISDN prices more than a year and half ago.

    The Baby Bell argued that it needed more money to cover increased customer service and installation costs. Its opponents said a rate hike would stifle the growth of both ISDN and the Internet.