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Re: Just 2 simple copper wires I find it quite unbelievable but after nearly 30 minutes of searching and reading, I couldn't find what revenue and expenses are considered when local rates are set. I do recall that many years ago (early 90s), SBC tried to eliminate Yellow Pages revenue from revenues used to set rates and the Missouri PUC didn't allow it then. I think a lot has changed after the 1996 reforms which allowed wholesale access and schemes to reimburse ILECs when CLECS (VOIP/cellular) terminate calls on their networks.
I did fine an interesting March 2012 paper that seems to support my assertion that revenue and expenses derived from different LOBs are not included in setting rates. Consider this excerpt:
The movement of assets also impacts the accounting of access lines. Verizon and those quoting the phone companies claim a dramatic decrease of phone lines in recent years. When these numbers are examined, it becomes clear that the companies are only using a subset of their total lines, known as switched access lines. This accounting leaves out whole categories of other active lines, such as special access (e.g. alarm circuits), or business services, such as Centrex, or data and broadband services, such as DSL or FiOS, thus making it appear that there are massive declines in phone lines. In fact, the FCCs most recent data showed that switched access represented only 34% of total lines, with special access and other lines representing the majority of lines and they have been increasing, not decreasing.The paper's chief concern is recent Verizon reported losses that allowed it to make a huge profits without the commensurate tax burden.
The secret is that when a service is deregulated or joined in a bundle with another service, it gets redefined as no longer a switched access line and is moved into another subsidiary/affiliate and the revenues goes into another bucket, NOT the public-based-utility networks. We also add that other industry analysts estimate that over 40% of all switched access line losses were due to removing a line when DSL, which travels over the same copper wire as the phone call, made the second or more lines superfluous.
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Re: Just 2 simple copper wires I greatly appreciate your posting that link! Like you, I have only read through a portion of it but there are things in there I have been saying in this forum for a while only to be told they are illegal ergo impossible.
I agree that it tends to suggest that POTS line profits are not as low as stated and that they may not be in the red as I have claimed. Unfortunately, as you have noted, there are no documents which show it either way and I would tend to think if Verizon could produce documents to show POTS in the red, they would.
I will say that:
-The number of POTS subscribers IS down as more and more people switch to cable, FIOS, or wireless only.
-The copper plant is in such a state of disrepair that it requires constant attention.
-The number of technicians have been reduced to about 50-60% of what they were 10 years ago through attrition & layoffs (by my admittedly limited observation) which, when you consider it with the previous point, means LOTS of overtime to keep everything working.
-POTS has always been (well for the last 50 years at least) subsidized by the 'business end' of the company which generated the vast majority of the profits until wireless recently took that position. Yes, the business end is also regulated and included in 'wireline'.
-They have recently made changes to accounting in Enterprise (large business circuits, IOW $$$$$) to further separate it from POTS. These changes are unfolding right now within the company and will cause another 'drastic decline' in POTS profits. In fact, I should probably contact the author of that paper to tell him exactly what is happening... it looks like he would be very interested. (For instance, maintenance costs of existing business circuits are now kicked back to a department still included with POTS)
Realistically, I don't think residential POTS can stand on its own as a product, the profit margins are too low (I still say in the red). Even when business POTS is included, I think it would need to be priced well over $100/line for Verizon to be 'happy' with it. I do not think, though, that they should be allowed to abandon POTS since so many (mostly elderly and small/medium businesses) still rely on it. I believe without a semblance of doubt that Verizon is deliberately killing off POTS at the behest of Wall St. because it is subsidized (such an ugly word to them unless they are getting the subsidy) by more profitable aspects of the business.
Thank you again for the link and for the thought provoking discussion.
If Romeny hates the 47% so much, why is he always raising the percentage??