Hold the Phone!

It looks like Verizon and Embarq want you to pay a lot more for your local telephone service. These firms want to get there by completely deregulating local telephone service in New Jersey.

Baloney! There is no solid business case for deregulating basic local service in this state. Verizon is getting a sound return on investment for that service. Take a look at your local telephone bill. The charge for flat rate unlimited service is $8.95 monthly – that’s the fee which Verizon wants to raise on you. Sounds cheap, doesn’t it?

Let’s take a closer look. The next line item on that very same bill is $6.29 for something called “Federal Subscriber Line Charge.” That levy represents a now-obsolete charge which should have been eliminated years ago. It is a monthly gift to Verizon which no longer has any economic validity for being imposed upon customers.

In 1984, when the Bell System was broken up, the local telephone companies convinced a federal court which administered the breakup that it would be losing money. This would happen, the Baby Bells lobbied, because the subsidy formerly being provided to the local Bell companies by the Bell System’s Long Distance Division would go away. Before the breakup, the Bell System guaranteed universal telephone service and low rates for retail consumers. The cost for this guarantee was borne on the backs of long distance customers and businesses in the form of higher telephone rates on those services.

The federal court which, under the strong hand of Judge Greene, administered the consent decree, decided to impose a “Subscriber Line Charge” on your telephone bill. A similar and equal charge was also imposed on AT&T, which built it into its rates and transferred the money to each of the local Baby Bells. Those two charges were to compensate the Baby Bells for any losses they would incur as a result of the breakup.

Only one problem with this: the “Federal Subscriber Line Charge” no longer has any reason for its existence because now, Verizon owns the whole kit and caboodle. It has a seamless network from beginning to end, and therefore, there is no logical business reason for this now-undeserved subsidy to continue. Verizon owns not only the local network, but also the long distance network, having purchased and integrated MCI into its operations.

The local telephone network is paid for. It is now a legacy cost which demands only maintenance, not huge investment. New Jersey is what is known in the business as a “dense” telephone state: This means that the cost of delivering local telephone service is one of the cheapest if not, indeed, the very cheapest in all of the U.S., because households are not widely spread out as, for example, they are in large, sparsely populated states such as Montana and Wyoming.

Verizon’s strategy of raising local rates is clear to anyone who understands the telecommunications business. By raising basic local rates through deregulation, Verizon hopes to push residential customers onto its new fiber-optic network and its widely advertized three-tier, one-bill package of local/long distance phone, internet, and TV service. Increasing basic rates is also intended to subsidize the rollout of these new services.

A state and consumer coalition claims that deregulation would raise local rates from $9 to $30 monthly. There is no reason to doubt that statement. I hope that those who sit on New Jersey’s Board of Public Utilities understand this stuff and have the best welfare of New Jersey consumers in mind. What the BPU should be concentrating on is putting pressure on the Feds to eliminate the no longer justified “Federal Subscriber Line Charge,” not deregulating local phone service.

Note: For an excellent Gannett State Bureau news report on this matter, see www.mycentraljersey.com under “state” athttp://www.mycentraljersey.com/apps/pbcs.dll/article?AID=/B3/20080502/NEWS0301/805020498/1067/STATE, or on page 3 of Friday’s May 2, 2008, print edition.

Will Newspapers Make the Cut?

In its early days, when television took hold and began to expand across the country, many people thought that the days of radio broadcasting were numbered. Confounding many experts, though, broadcast radio did not disappear, but gradually changed its programming and prospered.

Who would have predicted that decades after the rollout of TV, today’s old-fashioned, analog airwaves would still be filled with over-the-air broadcast stations pumping out talk radio, sports and music? Would anyone have dreamed that Sirius and XM would be delivering specialized radio programming via satellite and getting customers to pay for it? Or that existing radio stations are now upgrading their broadcasting systems to carry superior quality HD (high definition) digital channels for free?

New Jersey already has 9 such radio stations broadcasting 12 HD radio channels, with more coming. From Central Jersey, we can already pick up HD radio from neighboring states as well.

Today, the print newspaper industry faces a challenge similar to that of early TV, as it grew to become a major competitor to radio. This time, it’s the Internet and cell phone technology which have both reared up to spar with print media. However, just as radio did not die out with the growth of TV, print newspapers will not go away. As they are already doing, newspapers will adapt and use the Internet as a complimentary delivery medium to their print operations.

No one now knows just how far the transformation of the newspaper industry will go, because the answer is bound up in two factors: 1) The inability to forecast with any great accuracy the unpredictable, long-term behavior of the buying public and, 2) The lack of information about how new technological innovations and marketing techniques will affect consumer behavior 5 to 20 years out.

Not all newspapers will make it, but those who are nimbly adaptable should thrive in an information and entertainment market in which their delivery systems will be a combination of newsprint, Internet and other, yet-to-be-discovered formats.

Note: 1. For specific information about the location and call signs of broadcast HD radio stations, see http://www.hdradio.com/find_an_hd_digital_radio_station.php 2. Traditional AM/FM radio receivers cannot pick up the new HD radio channels; a new receiver is required.

“The Doctor,” An Wang -- (See Teaser Question from the last Blog)

Dr. An Wang is generally credited with developing and manufacturing the most popular line of programmable desktop scientific calculators. It was in the mid 1960’s and was followed with a competitive rush into this marketplace by companies such as Hewlett-Packard and Texas Instruments, firms which now dominate the field.

However, Dr. Wang, a subsequently naturalized American citizen who emigrated to the U.S. from Shanghai, China, was an imminently successful inventor, entrepreneur and businessman. He played a major role in the progress of computers when, in 1949, together with his colleague, Way-Dong Woo of Harvard University’s Computation Laboratory, he developed the ferrite core memory.

This was a crucial technological event, because it sped the development of computers. It enabled Jay Forrester of MIT, another famous individual in the early days of computing, to modify Wang’s design and to use it in his work with Whirlwind, the first real-time computer used by the U.S. Air Force in flight simulation.

Although the company founded by Dr. Wang, is now non-existent and largely forgotten in the business world, at its peak Wang Laboratories was a highly profitable, multi-billion dollar revenue producer which employed as many as 30,000 people worldwide.

Dr. Wang was an agile business strategist. Following the advent of solid state components and integrated circuits, he guided the evolution of his product lines away from scientific calculators, to word processors and mini-computers. Under his guidance, Wang Laboratories went on to become the worldwide leader in the word processing marketplace of the 1970’s.

For All You Bridgewater Technophobes -- II

To recap, yesterday’s blog posed two questions: 1. “Which company invented, manufactured and sold the first four-function pocket calculator?” and, 2. “Which company developed and manufactured an extremely popular financial calculator in 1981, which is still widely in use today?”

Under the ‘comments’ section of yesterday’s blog, ‘Stable’ took a shot at the second question and hit the bulls eye – Hewlett-Packard produced the HP-12C, its longest and best-selling calculator. Although it has been improved with modern components, it still looks just as it did when it was introduced in 1981. Congratulations, ‘Stable!’

No one responded to the first question, so…... Bowmar is the company which sold the first four-function, pocket-size electronic calculator in 1971 at an initial price of $240. It was manufactured largely from components purchased from Texas Instruments which, at the time, was not yet a calculator manufacturer. Bowmar went on to become the biggest U.S. seller of pocket calculators. However, emerging competition forced it to file for bankruptcy in 1975. When the company that I then worked for purchased one for me –Bowmar model 901B – the price had dropped to $125.

Here’s another teaser: Which person is generally credited for first developing and manufacturing the most popular line of programmable calculators? The company subsequently became the market leader in the manufacture and sales of distributed word processors. (This is before the PC!)

Hint: This person was born in Shanghai, emigrated to the U.S., worked at Harvard’s Computation Laboratory, and is associated with the invention of the ferrite core memory. This entrepreneur and businessperson was widely admired and respected by his employees and was affectionately known within the company as, “The Doctor.”

Any takers?

Note: Answer in the next blog.

For All You Bridgewater Technophobes

As I was rummaging about in the basement, helping to bring up the Christmas tree and Christmas ornaments, my mind wandered to that one item that I’ve been looking for down there for years and which I just can’t seem to find – too much accumulation that needs to be cleaned out: We’re working on that.

I thought I’d turn my quest for the misplaced item into a quiz for you folks who are technology aficionados. This is no recent thing, though, so it will test your skills. If you are a baby-boomer, no fair using search engines! If you are a GenXer, I’ll forgive you if you use Google or the others.

1. OK, here it is: Which company invented, manufactured and sold the first four-function pocket calculator? Hint: The calculator used eight red LED lights for its display, and the firm was located in Acton, Massachusetts.

2. Next question: Which company developed and manufactured an extremely popular financial calculator in 1981, which is still widely in use today? It’s a small handheld unit that I used myself at Digital Equipment Corporation and at other companies in my career.

More hints: The first company lasted only a few years. The second one is still in business.

Note: Answers forthcoming with the next blog.