12. Chaos Communication Congress '95

Corporate Networks
or Telekom and the Seven Dwarfs

It is unknown to many Telekom-users that the competition has already started in the field of online-voice-communication. Private providers are mostly concerned with corporate clients. The Telekom cannot afford to loose them and thries to lure them with cheaper rates - making life more expensive for individual clients.

The Telekom gets 60%of its revenue by dealing with 5% of its clients. This situation is very favourable for corporate clients which know how to play the game. Presently, the telecommunication rates in Germany are quite high compared to those in other countries - ignoring the rates for ISDN. In 1995, the Telekom offered a rebate on all international calls - without the reach of the German monopoly.

In 1996, private Discountproviders offer a 10-20% lower rate on national and an a 20-35% lower rate on international calls compared to the Telekom. Due to the pressure of competition, permanent lines are available at a highly reduced price with the Telekom.

In addition, the Telekom offers flexible prices for freqently calling corporate clients, up to flat rates not depending on how many calls a client makes; a price-policy consequently hardly previewable. Another bonus for corporate clients: the Telekom will start to openly display the sales tax, which results in a rebate of about 13%. Corporations with stong international traffic can consequently expect a 40% price reduction (compared to Telekom prices of 1995) when changing to private providers in 1996. (This calculation includes the costs for necessary investments.) But the new Telekom-rates have not passed legislature yet. After complaints by the members of the Social Democratic Party within the regulation committee, the German Minister of Postal Services has asked the Telekom to lower the rates for otherwise hightly beaten online-clients.

Possibilities to cut the costs on local calls:

                        Purpose                 Advantages/Disadvantages

Permanent               connecting client       high lat rates,
connections (1)         with local departments, budgetable (2),
                        exchanging language     hardly makes sense
                        or data

Private Networks        connecting phone-nets   high investment and high
                                                flat rates,
                                                high comfort,
                                                budgetable,
                                                hardly makes sense

Corporate Network       comparable to private   permission required
                        network plus dialout    (BAPT (3))
                                                LCR(4)-software is
                                                expensive and needs
                                                much care

Call-back               cheaper international   bad connections,
                        calls, call-back        payment via credit card,
                        mostly via USA          monthly flat rate, e.g.
                                                US$25,
                                                additional call
                                                necessary,
                                                no good for fax or modem

Call-back               same as call-back,      same as call-back,
with dialer (5)         may be used for         no additional call,
                        fax and modem           connecting-process very slow

Discount-provider       same as call-back,      same as call-back
with 0130-number        must not wait for
                        return-call

The situation for private clients

The situation for online-clients is highly unfavourable. Many of the cheaper providers such as call-back, which is routing calls indirectly or does not fully support ISDN-standarts (e.g. 64kbps clear channel, display of the calling party), may not be used for data-transfer.

The prices for local online-access will therefore rise drastically. The shorter time-units will not lower prices on most longer calls. Only short calls, such as e-mail-transfer or nameserver-requests via ISDN might become cheaper. Permanent connections such as constant internet-access or connections to other corporations will definitely improve. Calling via IP on own lines (quick replies through cut down on the number of hops) will become increasingly economical. For a short time, cheaper rates for online-access might exist. It is still debatable, in which way main providers such an T-Online/BTX, AOL, Compuserve and IBM or even the local providers might profit.

The Telekom's economical situation

However, one still cannot fight off the impression that the Telekom is building up resources for the upcoming start into the open market system - while not trying to upset the corporate clients. "Defensless victims" in this race are the individual clients.

According to a new European law, the telephone monopoly ("dissemination of language for others") must be lifted by 1998. The regulating commission is caught in conflict: the Telecom should survive on the open market as a privatly owned corporation, while meanwhile respecting social concerns.

Resumee: Competition on the telecommunications-market is getting fiercer and corporate clients are favoured far more than individual clients.

Footnotes:

1. Also: Monopol-transmission. The technical differences will not be explained further.
2. Costs are generally fixed and may be calculated in advance. A decisive factor for major corporations and governmental clients.
3. BAPT: German Ministry of Postal Services and Telecommunications.
4. LCR: Least Cost Routing
5. Dialer, "black box": Device between endfeature (typically faxmachine) and phoneline, re-routing international calls and therefore automatically routing the call-back.
6. OnNet-Traffic: Traffic within the network, e.g. to other coporations.
7. Source: Communications Week International / Yankee Group.
8. Source: Verband der Postbenutzer.