Table of Contents

Section 1

• Introduction
• Time
• Full - Minute
• Six - Second
• Review

Section 2

• Access Methods
• Objectives
• Key Terms
• Key Points
• Time of Day
• Distance
• Type of Banding
  • Traditional Banding
  • Virtual Banding
  • Postalized Banding
• Switched Access
• Feature Group D
• Review

Section 3

• Dedicated Access
• Why do customer use Switched Access?
• Why do customers use Dedicated Access?
• Why do customers use Virtual Access?
• Who can sell Long Distance Service?
  • Your Telco - Local Telephone Company
  • AT&T Communications – or AT&T
  • Other Common Carriers – OCC’s
  • Switched Based Resellers & "Leased-Facilities Carriers"
  • A Purchasing Co-Op
  • Carrier’s Carrier
  • Resellers of Carrier’s Dedicated Circuits
  • Multi-Location Plan Aggregators
  • Association Marketing for Major Carriers
  • Switchless Rebiller

Section 4

• Pricing
• Objective
• Key Terms
• Key Points
• Volume of Usage
• Standard Volume Discounts
• Tapered Rates
• Flat Rates
• Other Fees and Charges
• Review

Introduction

All local and long distance networks utilize unified numbering and traffic routing plans and common transmission standards. The Network Numbering Plan, or North American Numbering Plan, covers the United States, most of the Caribbean, parts of Mexico, and all of Canada.

The components of the North American Numbering Plan include the Area Code or Numbering Plan Area (NPA), the Central Office (C.O.) prefix or exchange (NXX), and the 4-digit identifier (XXXX). The entire phone number NPA-NXX-XXXX is referred to as an ANI (Automatic Numbering Identification).

Consider a phone call made from a company’s headquarters location to one of its sales offices.

The central office receives the call from headquarters, identifies it as one of their own exchanges, and routes the call to the sales office.

For billing purposes, there is a telephone number under which other telephone numbers are billed. This Billing Telephone Numbers is called a BTN. The other Working Telephone Numbers are called WTN’s

All BTN’s and WTN’s must be listed to complete a long distance order

Now consider a call made from the same headquarters location to one of the company’s sales offices located in a different exchange.

The Central Office receives the call and does not recognize the exchange as one of their own.

The call is sent to the central office responsible for the sales office’s exchange.

The call is then routed to the sales office.

In the summary, all local calls are routed by the exchange and then the 4-digit station number to the number to the terminating location.

The duration of a long distance call is often measured in two increments:

• A full-minute increment

• A six-second increment

The most familiar billing increment is a full minute. This familiarity is due largely to the fact that most residential services are priced in this manner.

What is meant by a "full minute"? The time is measured from the moment the receiving party picks up the phone to the termination of the call. Then, to determine the duration of the call for the billing purposes, the time is rounded up to the nearest full minute. For example, a customer places a call that lasts 10 minutes and 25 seconds. In this case, the customer would be billed for 11 minutes.

If any portion of a minute is used, the customer is billed for that entire minute.

A customer places a call for two minutes and three seconds. This customer is billed for three minutes of usage.

Obviously, this type of rounding causes full-minute billing increments to be the most expensive. Additionally, consider the fact that by placing a completed call the customer is charged for a full minute of usage, whether completely used or not. Also, the first minute of usage is sometimes priced higher than any additional minutes. A customer might pay $.28 for the first minute of usage and $.19 for each additional minute. Note that the call must be completed in order to be charged for the full minute. If the called party is not home and the phone is "answered" by an answering machine, then charges are assessed.

Since this type of rate is the most expensive, the products which utilize full minute increments are typically intended for very low volume users.

Many commercial products utilize a six-second billing increment. Like the full minute increment, the time is measured from the moment the receiving party picks up the phone until the termination of the call. Then, to determine the duration of the call for billing purposes, the time is rounded up to the nearest six second, or tenth of a minute (i.e., 6, 12, 18, 24, 30, 36, 42, 48, or 54).

For example, if the customer placing the call that lasted 10 minutes and 25 seconds were charged according to six-second increment, he would be billed for only 10 minutes and 30 seconds.

If any portion of a six-second increment is used, the customer is billed for that entire six seconds.

A customer places a call for 7 minutes and 43 seconds. This customer is billed for 7 minutes and 48 seconds of usage.

Six-second rounding allows for a more accurate tabulation of call duration.

For this reason, products having six-second billing increments save customers usage fees simply by the fact that the billing increment is less.

Again, note that the call must be completed in order to be charged for the first six seconds of usage. If the call party is not home and the phone simply rings or if the line is busy, no charges are accrued. If the phone is "answered" by an answering machine, then charges are assessed.

Consider a long distance call from the headquarters location to a customer location in another state. When headquarters makes a long distance call, the Central Office screens the digits that were dialed and recognizes the call as long distance.

The call must be sent from the Central Office to the Equal Access Tandem, which will screen the caller’s ani and route the call to the presubscribed long distance carrier. The purpose of the tandem is to catch a collecting house or gathering house for all long distance calls. Without it, all Central Offices would have to be physically connected to each long distance carrier’s network.

The call enters our network at what is called the Point of Presence, or POP. The POP will send the call to the nearest switch within our network, which will route the call to the switch an POP nearest the terminating end of the phone call.

Once the call goes through our network, it is routed to the customer at the terminating end.

It then goes through the tandem to the terminating Central Office, and then finally the phone will ring at the customer location.

Step 1- The call is sent from the customer premise, headquarters in this case, to the Central Office. This connection is called a local loop

Step 2- The Central Office recognizes the call as long distance, and sends the call to the Equal Access Tandem for the further routing, the connection between the Central Office and the tandem office is referred as a trunk connection, or Inter Machine Trunks (IMTs).

Step 3- The tandem office receives the long distance call and, by screening the digits, routes the call to the caller’s presubscribed long distance carrier. The connection between the tandem office and the long distance carrier is called Feature Group D. You will learn about Feature Group in the Access Methods section.

Step 4- The call arrives at the long distance carrier’s network at the POP, Point of Presence. The POP is the point where the local telephone company’s responsibility and network ends and the long distance carrier’s responsibility and network begins. The call will be routed through the long distance carrier’s network and will exit the network at the POP closest to the terminating end of the phone call.

Step 5- The components on the terminating end of the phone call are the same as on the originating end. The call exits the long distance carrier’s network and is routed to the tandem office, the Central Office, and then to the sales office on the terminating end.

Objectives In this section, you will learn:

• The differences between Feature groups A, B, C, and D.

Key Terms Key terms you will learn in this section:

Key Points As you study this section, you should keep in mind the following information:

Pricing telecommunications products involves the consideration of:

• Time

• Distance

• Volume of Usage

All telecommunications companies use these same considerations in pricing telecommunications products.

The time of day when a call originates affects the base rate of the call.

• Calls made 8:00 A.M. to 5:00 P.M. Monday-Friday are billed at Peak rates.

• Calls from 5:00 P.M to 8:00 A.M. Monday-Friday are billed at Off-Peak rates.

• Calls from 5:00 P.M Friday to 8:00 A.M. Monday are billed at the Off-Peak rates

The second factor contributing to the price of a long distance call is the distance that the call travels.

The process used to determine the distance of a call is called "banding."

This term originates from a time when "bands" or rings were arbitrarily set up for each state to determine distance. For example, a customer residing in Nebraska would place a call that terminated within Nebraska-this is called a Band O call. If this same customer called Kansas or Iowa, the call is said to be a Band 1 call. There is a maximum of six bands. Naturally, the further the call travels, the higher the band, and therefore the rate is charged is higher. Three common types of banding are:

• Traditional Banding

"Traditional Banding" predetermines the cost of a call simply by which line is use to place the call. The higher the band, the higher the rate.

With traditional banding, the customer determined a specific distance or band they would be calling. No call could be made on that line if the destination NPA was further away than the selected band. If the customer made a call to a shorter distance, they would be charged the per minute rate of the presubscribed band.

A fixed monthly charge was assessed-the longer distance or higher band was charged greater monthly fee.

These lines were dedicated, which meant someone had to come out and physically install the lines.

Example: If a customer purchased all band 5 lines and placed a call that was band 3, the customer would be charged the band 5 rates for that call.

Virtual Banding determines the distance of a call by the originating and terminating points of each individual call, irrespective of the line used.

No specific line is ordered or needed. Regardless of the terminating point of the call, the same line can be used for placing any long distance call cost-effectively.

The originating and terminating point of the call is used to determine the distance for pricing.

International calls utilize postalized banding, that is, the distance is determined form anywhere within the United States (except Hawaii) to anywhere within the terminating country, except for Canada and Mexico.

When you mail a letter to England, the same amount of postage is applied, regardless of whether the letter is to be delivered to London or New Haven, England.

An international call is priced in a similar fashion-no matter where you call within the country, the price is the same.

The many changes in the telecommunications industry have a resulted in an increased awareness of the route or path of a long distance call.

With each call, various choices are available to maximize the quality and decrease the cost of each "leg" of a call’s route. The first of these legs is the connection between the customer and our network.

In this Basic Telephony section, you have learned about the components of the first leg of a long distance call—the telephone set of customer premise equipment, the Central Office or LEC and the Equal Access Tandem.

This first section of the call’s route is called access, because it is the means by which a customer accesses a long distance carrier’s network.

Access to a long distance carrier’s network can be divided into two broad categories:

• Switched Access

With switched access, the customer’s call goes to the Local Exchange Carrier’s (LEC) Central Office. The Central Office "looks" at who is placing the call and switches the call to the appropriate long distance carrier; hence the name "switched access."

LEC’s typically funnel traffic form the Central Offices within a LATA (Local Access Transport Area) to an Access Tandem Office. The lines, or circuits, used to perform this routing are shared by all long distance carriers. This means that the lines used by a customer having switched access are shared with other customers, PrimeNet and non-PrimeNet customers. This sharing of lines is an important characteristic of switched access. Additionally, switched access lines allow both incoming and outgoing, long distance as well as local calls to utilize the same circuit.

While the switched access circuits which connect the LEC to PrimeNet physically look the same, they have distinctly different characteristics. The equipment at the Central Office has allowed switched access circuits to have different "feature capabilities." These capabilities are classified into "Feature Groups."

Feature Group D is also known as Equal Access. It allows all long distance carriers to offer the same quality of access and dialing convenience to customers. Customers using Feature Group D access dial only 1 plus Area Code and number to place their long distance calls. For this reason, Feature Group D access is said to carry "1 plus traffic." It is not necessary to dial an authorization code because the customer is recognized by the phone number associated with the phone they are using. This capability is known as "Automatic Number Identification" or ANI.

The local company "reads" the numbers that are dialed by the customer and switches the call, along with the originating phone number for billing, through the access tandem and on to the appropriate long distance carrier.

Feature Group D also allows customers to reach any long distance carrier, whether or not that carrier has been chosen as the "primary carrier" for their telephone number. Different 10XXX access numbers have been assigned to long distance carriers for this purpose. While selecting one long distance carrier for

The following is a review of how Feature Group D calls are routed:

Step 1 - Customer dials 1 + a long distance number.

Step 2 - The Central Office recognizes the call as long distance and routes the call to a tandem office via a trunk connection.

Step 3 - The tandem office screens the digits of the originating phone number and the number that was dialed and sends the call to the Point of Presence of the appropriate long distance carrier.

Step 4 - The call is processed through the long distance carrier’s network to the terminating end.

Step 5 - Calls terminating on Feature Group D are routed through the tandem office on the terminating end. From the tandem, calls are routed through the appropriate Central Office to the called party’s location.

Let’s review the key points covered so far:

Access to a long distance carrier’s network can be divided into two brad categories—switched and dedicated.

The switched access circuits which connect a carrier to the LEC Central Offices have different characteristics, or feature capabilities.

These feature capabilities are classified as Feature Group A, B, C, and D.

Feature Group A connections were pre-equal access connections to non-AT&T carriers. Feature Group A was a low quality access as the Central Office was unable to recognize the call as long distance call.

Feature Group B connections were also dial-up connections, but allow for a uniform local access number to be dialed to reach the long distance carrier’s network

Feature Group C connections are pre-equal access connections to AT&T’s network only, and are still used in non-equal access areas.

Feature Group D is also known as equal access. In addition to better quality access, customers are not required to dial authorization codes.

The other major category of access is known as dedicated access. An important characteristic of dedicated access is that the circuit is used only by an individual customer for connection to a long distance carrier’s network. The lines, or circuits, go to the Central Office, but are "hardwired" in a Wire Center directly through to the IXC (Inter-Exchange Carrier-i.e., a long distance carrier). This means that, unlike customers using switched access, customers using dedicated access do not share their circuits with the rest of the public.

With dedicated access, the Central Office does not switch calls through to the long distance carrier. No "number reading" or switching is required by the local phone company because the lines are dedicated for the customer and automatically go directly to that customer’s long distance carrier.

Individual WATS dedicated access lines (WALS) are provided by the local telephone company on an analog basis. Several customers’ WATS access lines may be combined together at the local company into a digital format. This is done by changing the individual analog signals into digital signals and putting all of them on a single circuit.

Large users may require digital bundling of individual circuits to take place at their premises. This gives the customer the equivalent of 24 individual circuits form their location directly to an IXC’s network. This is known as T-1 access, and the bundling process is called multiplexing.

Installation and monthly access costs and other equipment costs will be passed on to the dedicated T-1 customer. Lower per minute costs will justify these one-time and monthly expenses.

Generally, customers with approximately 0-500 hours of long distance usage (inbound and outbound) use switched access. Customers use switched access for the following reasons:

• There is no installation charge for switched access as customers use their regular business lines. This provides cost savings for customers.

• Customers will not experience any downtime. This means no interruptions of business lines. This provides cost savings for customers.

• With switched access, the same line can be used for inbound and outbound traffic. Customers do not need to have special lines installed to carry their outbound service or 800 service. This provides cost savings and convenience for customers.

• With switched access, the same line can be used for local and long distance calls. Once again, customers do not have to have special lines installed. This provides cost savings and convenience for customers.

• Customers can use switched access lines for voice, fax, and low speed data transmissions.

Customers with a higher volume of long distance traffic (inbound or outbound), approximately 500-600 hors per month or more) use dedicated access because:

• Witch dedicated access, customer lines are not shared by other users. This improves response time for voice, data, or fax transmissions.

• Customers use dedicated access, specifically T-1, for higher quality, all digital connection to our network. These digital connections greatly improve fax and data transmissions.

• Dedicated access is more cost effective for larger users as the rates for the products that utilize this type of access are significantly lower than the rates associated with products that utilize switched access.

• With T-1 access, customers have the ability to combine 24 circuits over one digital connection. This provides better quality connections and more efficient use.

T-1 access can be arranged for two-way calling. This means that calls to the T-1 location from other locations on the network receive a lower usage cost. Because there are two access methods (switched & dedicated), there are three possible pricing methods for a given call:

1. The first pricing method is switched access originating and switched access terminating;
2. The second pricing method is dedicated access originating and switched access terminating OR switched access originating and dedicated access terminating; and
3. The third pricing method is dedicated access originating and dedicated access terminating.

The use of dedicated access reduces the cost of a call by approximately 3¢ per minute. For example, if the cost per minute is 20¢ using the first pricing method, the cost would be 17¢ per minute using pricing method two and the cost would be 14¢ using pricing method three.

This can be a very economical arrangement for a customer who has multiple locations with frequent calling among the locations and one or more of the locations can justify T-1 access.

• A Bell Operating Company (BOC) for more than 80% of us, an independent Telco for the rest of us. All local phone companies, BOC’s and independent companies are called LEC’s (Local Exchange Carriers).

• Carriers long distance calls to nearby areas – called LATA’s, or Regional Calling Areas. These calling areas are usually within your state, but can cross state lines.

• Rates approved by State Regulator (intrastate).

• Telcos bill for intraLATA calls you make and may bill some calls for other long distance companies.

• Major provider of interLATA calling with 70% of interLATA market at this writing.

• Currently carries all "1 +" dialed interLATA calls if you do not have equal access.

• Can call anywhere in the world.

• Variety of new low-cost optional services, interstate and intrastate, and international.

• Companies building their own networks primarily for selling calls directly to you and me.

• MCI, Sprint, Wiltel, Cable and Wireless, and AllNet and others. Little difference between OCC’s and resellers with long-term leases on fiber and microwave circuits.

• Offer variety of services; call anywhere in U.S. and most foreign countries.

• Larger ones with much of their own microwave or fiber in specific parts of the country or long-term fiber and microwave leases.

• Sell in specific regions or cities. Can be equal in quality and often cheaper than OCC’s.

• Most do not use much AT&T or OCC WATS. Mergers and acquisitions are yielding stronger regional long distance companies.

• Organizing formed to negotiate contracts and purchase long distance (and sometimes phone equipment) for its members.

• Wide variety in various parts of the country. Some are user groups that have banded together randomly and make proposals to carriers in their city.

• Others are formed with membership fees, consult for members and negotiate lower costs. Example: American Business Network

• Some co-ops are for special types of organizations. Example: There’s a co-op for non users.

• Microwave and fiber companies set up to sell circuits to long distance companies.

• However, big companies with lots of calling to specific cities can buy private lines and high capacity circuits from many other carriers.

• Buy private lines in bulk from the carriers and repackage them to you at lower prices between certain city pairs.

• Allows smaller users to take advantage of service of new fiber and microwave companies even though they are not beg enough to purchase directly from carriers’ carriers.

• Good prices on private line between certain city pairs. Example: American Private Lines in the Northeast.

• AT&T, MCI and Sprint have multi-location calling plans on outbound and 800 service. Some businesses have signed on as sponsors of these and will enroll your sites for a cut of your savings.

• MCI, Sprint, and others give discounts to members of associations, if the association meets minimum requirements. Association members buying this way get about 10% off day calls, less on other periods. Not a big discount; only suitable for small businesses not able to use real business plan.

• Buy tariffed products from national carriers.

• Provides low cost, long distance service to small/medium size customers utilizing national carrier’s network.

• Bills and services customers.

• No switch.

Objectives In this section, you will learn:

• Pricing considerations.

Key Terms Key terms you will learn in this section:

• Traditional Banding
• Virtual Banding
• Postalized Banding
• Tapered Rates
• Standard Volume Discounts
• Flat Rates

Key Points As you study this section of course, you should keep in mind the following information:

The telecommunications industry maintains several different methods of "rewarding" large users.

• Standard Volume Discounts

Volume Discounts offer additional savings for those users whose usage exceeds a designated level within a billing period.

With standard volume discounts, the customer’s usage is calculated at the end of the month. If his total usage exceeds and established volume discount level, the customer receives a specified discount on all of his usage.

The invoice amount will therefore reflect this discount.

This type of discount, toward all of a customer’s usage, is called a retroactive discount.

There are often separate volume discounts for day, evening, and night calling.

Another method of offering price benefits to large users is through actual rate structures. Tapered rates are a form of incremental volume discount specifically designated to give lower rates as the customer’s usage increases. These rates are non-retroactive and are based on the hours of usage.

Rate tiers, or "buckets," are established with an amount of usage needed to fill each bucket. As the customer’s usage increases to fill an established bucket, the remaining usage overflows into the next bucket.

When a customer’s usage reaches the last bucket or rate tier, he is assessed the lowest rate per increment in the rate structure.

A customer’s day, evening, and night/weekend usage are each calculated on a separate set of rate tiers, or buckets.

Remember: These rates are NOT retroactive. The customer pays one rate for the first tier and lower rate for each succeeding tier.

An example may best illustrates this process. Suppose a customer has 150 hours of usage, all during the day.

According to the above illustration.

0-5 hours billed at 23¢ per minute

23¢ X 60 min X 5 hrs = $69.00

5-100 hours billed at 17¢ per minute

17¢ X 60 min X 95 hrs = $969.00

100-500 hours billed at 15¢ per minute

15¢ X 60 min X 50 hrs = $450.00

TOTAL billed amount is $1,488.00

If the customer was billed at the first taper,

the total billed amount would be: $2,070.00

Another rate structure used in the telecommunications industry is known as "flat rates."

Flat rates offer the same low rates regardless of the hours of usage. No usage tiers or buckets exist in a flat rate structure. Often, products which utilize a flat rate structure are accompanied by significant installation fees and monthly access charges.

With flat rates, the usage of the customer is such that the savings from low usage rates offered by a flat structure are greater than the setup fees and monthly access charges.

While time, distance, and volume of usage are used to price long distance calls themselves, often miscellaneous fees are assessed depending on the service being used by the customer.

Some examples of these charges are:

• Set-up fee or installation charges

• Monthly service charges, or minimum usage requirements

These charges can be assessed to customers by both long distance companies and local telephone companies.

These charges are set fees for the service and remain the same for all customers utilizing the same service. Often, long distance companies will conduct promotions to waive these fees for new customers.

Pricing telecommunications products involves the consideration of:

• Time
• Distance
• Volume of Usage

Full-minute billing increments means that the time is measured from the moment the receiving party picks up the phone to the termination of the call. Then, to determine the duration of the call for billing purposes, the time is rounded up to the nearest full minute.

Six-second billing increments means that the time is measured in six-second increments. Six-second billing averages 7% less expensive than one-minute.

The time of day when a call originates affects the base rate of the call.

Traditional Banding predetermines the cost of a call simply by which line is used to place the call.

Virtual Banding determines the distance of a call by the originating and terminating point of each individual call, irrespective of the line used.