Gaming the Bell Systemby Colin Berkshire in Telecom
Long distance rates used to be based upon three things: The time of day you were calling, the distance you were calling, and whether you were dialing yourself or needed an operator.
I remember working for my local Bell Operating Company when we realized we could game the distance based pricing model. It was fun to think of the ways and then to see if we could implement them. We likely brought millions of dollars into the company this way.
The biggest change was the realization that the world is round and not flat. Distances had all been based upon flat maps which necessarily distorted “as the crow flies” distances. This is why when you fly from the US to Asia the airplane will fly up over a pole or through Alaska instead of around the equator.
Since long distance fell into distance tiers, the only time it really mattered was when the caller and called parties were near the edge of the next tier. So we identified the heavy calling central offices and where they called to. Then, initially using a tape measure and a globe we confirmed that we could move certain calls into a higher tier by calculating distances on the surface of a sphere rather than on a distorted flat map.
Eventually, this problem was handed over to brainiacs at Bell Labs who came up with the precise formulas. The effect was significant when implemented.
The next gaming of the system was that every Central Office had a V&H coordinate from which distances were calculated. But there was no precise rule as to exactly where within the Central Office the V&H was to be established. We moved the V&H coordinates to the Northwest corner of the property the Central Office was on. Since we were a telco located in the Northwest this would have the effect of moving the Central Offices up to 250 feet further from New York, Chicago, and Los Angeles (and other major cities.)
While most calls weren’t affected by moving the V&H coordinates a few hundred feet, it was surprising that it did make a measurable distance, given the vast number of central offices the Bell System had and the enormous volume of calls. While only a fraction of one percent of calls that were affected, it could add a few pennies to those calls. And the pennies truly added up to millions of dollars over the course of a decade.
I don’t think the regulators ever even knew we made the change. We just issued corrected V&H coordinates which we remarked were “more consistently” established. (Consistently meaning the northern-most and western-most edge of the property.)
It was fun gaming the system in a business as vast as the Bell System.