NBS

PUBLICATIONS

U.S.Depi AlllOb T7filbE

of Comm

National Bureau

of Standards

Computer Science

and Technology

NBS Special Publication 500-119

Future Information

Technology-1 984

Telecommunications
rwi

M he National Bureau of Standards' was established by an act of Congress on March 3, 1901. The

gK Bureau's overall goal is to strengthen and advance the nation's science and technology and facilitate their effective application for public benefit. To this end, the Bureau conducts research and provides: (1) a

basis for the nation's physical measurement system, (2) scientific and technological services for industry and

government, (3) a technical basis for equity in trade, and (4) technical services to promote public safety.

The Bureau's technical work is performed by the National Measurement Laboratory, the National

Engineering Laboratory, the Institute for Computer Sciences and Technology, and the Center for Materials

Science.

The National Measurement Laboratory

Provides the national system of physical and chemical measurement;

coordinates the system with measurement systems of other nations and

furnishes essential services leading to accurate and uniform physical and

chemical measurement throughout the Nation's scientific community, in- dustry, and commerce; provides advisory and research services to other Government agencies; conducts physical and chemical research; develops,

produces, and distributes Standard Reference Materials; and provides

calibration services. The Laboratory consists of the following centers:

• Basic Standards^

• Radiation Research

• Chemical Physics

• Analytical Chemistry

The National Engineering Laboratory

Provides technology and technical services to the public and private sectors to address national needs and to solve national problems; conducts research in engineering and applied science in support of these efforts; builds and maintains competence in the necessary disciplines required to carry out this research and technical service; develops engineering data and measurement

capabilities; provides engineering measurement traceability services; develops

test methods and proposes engineering standards and code changes; develops

and proposes new engineering practices; and develops and improves

mechanisms to transfer results of its research to the ultimate user. The

Laboratory consists of the following centers:

Applied Mathematics

Electronics and Electrical Engineering'^

Manufacturing Engineering

Building Technology

Fire Research

Chemical Engineering^

The Institute for Computer Sciences and Technology

Conducts research and provides scientific and technical services to aid Federal agencies in the selection, acquisition, application, and use of computer technology to improve effectiveness and economy in Government

operations in accordance with Public Law 89-306 (40 U.S.C. 759), relevant Executive Orders, and other directives; carries out this mission by managing

the Federal Information Processing Standards Program, developing Federal ADP standards guidelines, and managing Federal participation in ADP

voluntary standardization activities; provides scientific and technological advisory services and assistance to Federal agencies; and provides the technical foundation for computer-related policies of the Federal Government. The Institute consists of the following centers:

Programming Science and

Technology

Computer Systems

Engineering

The Center for Materials Science

Conducts research and provides measurements, data, standards, reference

materials, quantitative understanding and other technical information fundamental to the processing, structure, properties and performance of materials; addresses the scientific basis for new advanced materials technologies; plans

research around cross-country scientific themes such as nondestructive

evaluation and phase diagram development; oversees Bureau-wide technical programs in nuclear reactor radiation research and nondestructive evaluation; and broadly disseminates generic technical information resulting from

its programs. The Center consists of the following Divisions:

Inorganic Materials Fracture and Deformation^

Polymers

Metallurgy Reactor Radiation

'Headquarters and Laboratories at Gaithersburg, MD, unless otherwise noted; mailing address Gaithersburg, MD 20899. ^Some divisions within the center are located at Boulder, CO 80303. ^Located at Boulder, CO, with some elements at Gaithersburg, MD.
Computer Science

and Technology

NBS Special Publication 500-119

NBS

RESEARCH

INFORMATION CENTER

Future Information Technology-1 984

Telecommunications

Peg Kay and Patricia Powell, Editors

Institute for Computer Sciences and Technology

National Bureau of Standards

Gaithersburg, MD 20899

This report was developed by the Institute for Computer Sciences

and Technology, National Bureau of Standards, with contributions

by Preston, Thorgrimson, Ellis, and Holman, and the Rural

Electrification Administration.

Sections were prepared for the Institute for Computer Sciences and

Technology, the Internal Revenue Service, and the Office of the

Secretary of Defense by:

Arthur D. Little, Inc. 17 Acorn Park

Cannbridge, MA 02140

Aurora Associates, Inc. 1140 Connecticut Ave., N.W.

Suite 1200

Washington, DC 20036

TITAN Systems, Inc. 6833 Beverly Drive

McLean, VA 22101

International Data Corp.

1500 Planning Research Drive

Suite 240

McLean, VA 22102

U.S. DEPARTMENT OF COMMERCE

Malcolm Baldrige, Secretary

National Bureau of Standards

Ernest Ambler, Director

Issued December 1984
Reports on Computer Science and Technology

The National Bureau of Standards has a special responsibility within the Federal

Government for computer science and technology activities. The programs of the

NBS Institute for Computer Sciences and Technology are designed to provide ADP

standards, guidelines, and technical advisory services to improve the effectiveness

of computer utilization in the Federal sector, and to perform appropriate research

and development efforts as foundation for such activities and programs. This

publication series will report these NBS efforts tothe Federal computer community as

well as to interested specialists in the academic and private sectors. Those wishing

to receive notices of publications in this series should complete and return the form

at the end of this publication.

NOTE; Certain commercial products are identified in this report in order to cite rele- vant examples. In no case does such identification imply recommendation or endorsement by the Institute for Computer Sciences and Technology or the National Bureau

of Standards.

Library of Congress Catalog Card Number: 84-601149

National Bureau of Standards Special Publication 500-119

Natl. Bur. Stand. (U.S.), Spec. Publ. 500-119, 337 pages (Dec. 1984)

CODEN: XNBSAV

us GOVERNMENT PRINTING OFFICE WASHINGTON J984

For sale by the Superintendent of Documents, U S. Governnnenl Printing Ollice, Washington. DC 20402
TABLt OF CONTbNTS

List of Figures and Charts x List of Tables xii

Abstract and Acknowledgements xiii

Foreword xiv

PART I: FUTURE TELECOMMUNICATION TECHNOLOGY i

PREFACE 3

ACRONYMS 6

1. NETWORK ARCHITECTURE 7

1.1 OPEN SYSTEMS INTERCONNECTION (OSI) 7

1.1.1 Introduction and Background 7

1.1.1.1 Data Communications 7

1.1.1.2 History of Standardization 7

1.1.2 Present Approaches - The OSI Reference Model 9

1.2 THE ELEMENTS OF THE ARCHITECTURE - PROTOCOLS

AND LAYERS 10

1.2.1 Protocols 11

1.2.2 The Seven-Layer Model 12

1.2.2.1 Physical Layer 12

1.2.2.2 Data Link Layer 12

1.2.2.3 Network Layer » 12

1.2.2.4 Transport Layer 14

1.2.2.5 Session Layer 14

1.2.2.6 Presentation Layer 14

1.2.2.7 Application Layer 14

1.2.2.8 Conclusions 15

1.2.3 Technological Evolution 16

1.2.4 Computer Network Architectures 17

1.2.5 Cost Performance Trends 18

1.2.6 Significant Current Developments 20

2. NETWORK MODELING AND MONITORING 21

2.1 NETWORK MODELING 21

2.1.1 Background and Present Approaches 21

2.1.2 Technological Evolution 22

2.2 NETWORK TECHNICAL MONITORING 23

2.2.1 Background and Present Approaches 23

2.2.2 Te.chnolog ical Evolution 24

3. UNDERLYING TECHNOLOGIES 24

3.1 SYSTEM TECHNOLOGY 24

3.1.1 Local Area Networks 24

3.1.1.1 Background and Present Approaches 24

3.1.1.2 Technological Evolution 27

3.1.1.3 Conclusions 29

ii i
3.1.2 Digital Microwave Radio 35

3.1.2.1 Background and Present Approaches 35

3.1.2.2 Technological Evolution 41

3.1.2.3 Conclusions 43

3.1.3 Satellite Communications 43

3.1.3.1 Background and Present Approaches 43

3.1.3.2 Technological Evolution 45

3.1.4 Cellular Radio 50

3.1.4.1 Background and Present Approaches 50

3.1.4.2 Technological Evolution 50

3.1.4.3 Conclusions 51

3.1.5 Circuit Switching 52

3.1.5.1 Background and Present Approaches 52

3.1.5.2 Technological Evolution 52

3.1.5.3 Conclusions 64

3.1.6 PABXs 65

3.1.6.1 Background and Present Approaches 65

3.1.6.2 Technological Evolution 67

3.1.6.3 Conclusions 67

3.1.7 Packet Switching 68

3.1.7.1 Background and Present Approaches 68

3.1.7.2 Technological Evolution 70

3.1.8 ISDN 70

3.1.8.1 Background and Present Approaches 70

3.1.8.2 Technological Evolution 74

3.2 DEVICES AND MEDIA 74

3.2.1 Microwave Semiconductors 74

3.2.1.1 Background and Present Approaches 74

3.2.1.2 Technological Evolution 79

3.2.1.3 Conclusions 82

3.2.2 Optical Fiber Transmission 82

3.2.2.1 Background and Present Approaches 82

3.2.2.2 Technological Evolution 84

3.2.2.3 Conclusions i 86

3.2.3 Optical Logic 86

3.2.3.1 Background and Present Approaches 86

3.2.3.2 Technological Evolution 87

3.2.3.3 Conclusions 87

3.2.4 Coaxial Cable 89

3.2.4.1 Present Situation 89

3.2.4.2 Technological Evolution 89

iv
4. INPUT/OUTPUT 89

4.1 VOICE SYNTHESIS/RESPONSE 89

4.1.1 Voice Synthesis 89

4.1.1.1 Background and Present Approaches 89

4.1.1.2 Technological Evolution 92

4.1.2 Voice Recognition 93

4.1.2.1 Background and Present Approaches 93

4.1.2.2 Technological Evolution 94

4.2 CHARACTER RECOGNITION 95

4.2.1 Background 95

4.2.2 Document Readers/Sorters 95

4.2.3 Page Readers 96

4.2.4 Hand-held Readers 96

4.2.5 Scanners 96

4.2.6 Recognition Units 96

4.2.7 New Systems 97

4.3 FACSIMILE 97

4.3.1 Background and Present Approaches 97

4.3.1.1 Compression Codes 100

4.3.1.2 Array Scanners 101

4.3.1.3 Optical Character Recognition Scanners 102

4.3.1.4 Array Printers 103

4.3.1.5 Laser Printing Systems 104

4.3.2 Technological Evolution 104

4.4 TERMINALS 105

4.4.1 Background and Present Approaches 105

4.4.2 Technological Evolution 109

4.5 TELECONFERENCING 109

4.5.1 Background and Present Approaches 109

4.5.2 Technological Evolution 111

4.5.3 Conclusions 113

APPENDIX: STAFF COMMENTS 115

PART II: THE AT&T DIVESTITURE: THREE PERSPECTIVES 123

PREFACE 125

1. DIVESTITURE: OVERVIEW 12 5

1.1 CARRIER OFFERINGS AND THE IMPACT OF AT&T

DIVESTITURE 125

1.1.1 Other Common Carriers (OCCs), Value Added

Networks (VANs) and Domestic Satellite

Carriers (DOMSATs) 126

V
1.1.2 AT&T 127

1.1.2.1 Background and Present Approaches 127

1.1.2.2 Technological Evolution 128

1.1.2.3 Impact of Expected Development 132

1.1.2.4 Cost/Performance Trends 133

1.1.2.5 Conclusions 135

1.1.3 Resellers 136

1.1.3.1 Background and Present Approaches 136

1.1.3.2 Technological Evolution 137

1.1.3.3 Conclusions 137

1.1.4 Bypass 137

1.1.4.1 Background and Present Approaches 137

1.1.4.2 Technological Evolution 138

1.1.4.3 Conclusions 139

2. IMPLICATIONS OF THE AT&T DIVESTITURE FOR COMMUNICATIONS

OFFICERS 140

2.1 INTRODUCTION 140

2.2 THE EFFECTS OF DIVESTITURE AND COMPETITION 141

2.3 COMPETITIVE OPERATIONS BY AT&T AND THE BOCs 144

2.4 POLICY IMPLICATIONS AND PRACTICAL ADVICE FOR

COMMUNICATIONS OFFICERS 145

2.5 CONCLUSIONS 147

3. A RURAL PERSPECTIVE OF THE RESTRUCTURED TELECOMMUNICATIONS INDUSTRY 149

3.1 INTRODUCTION 149

3.2 FOUR BASIC ISSUES 150

3.3 THE PROPER INTERSTATE ALLOCATION 156

3.4 THE APPROPRIATE HIGH COST MECHANISM 157

3.5 DEAVERAGING OF TOLL RATES 159

PART III: SECURITY IN A DISTRIBUTED ENVIRONMENT 161

PREFACE 163

1. SECURITY: OVERVIEW AND FORECAST 16 4

1.1 SECURE TRANSMISSION AND STORAGE 164

1.1.1 Backgr-ound and Present Approaches 164

1.1.2 Technological Evolution 165

1.1.3 Conclusions 166

vi
1.2 ACCESS CONTROL USING BIOMETRICS 167

1.2.1 Backgound and Present Approaches 167

1.2.2 Technological Evolution 168

1.2.3 Conclusions 169

2. COMPUTER SECURITY IN A DISTRIBUTED DATA PROCESSING

ENVIRONMENT 170

2.1 INTRODUCTION 170

2.2 FEDERAL COMPUTER SECURITY ISSUES AND POLICIES 170

2.2.1 The Anatomy of Computer Security Abuse 179

2.2.1.1 Perpetrators 179

2.2.1.2 Motivations for Error/Abuse 181

2.2.1.3 Access 184

2.2.1.4 Process or Resource That is Influenced,

Modified, or Used 184

2.2.1.5 Action and Type of Authorization 186

2.2.1.6 Strategy 188

2.2.1.7 Effects and Impacts 189

2.3 DISTRIBUTED DATA PROCESSING: IMPLICATIONS

FOR COMPUTER SECURITY PRACTICES 190

2.3.1 DDP System Security Practices 194

2.4 DATA PROCESSING OPERATIONS: TECHNOLOGY

TRENDS AND DESCRIPTIVE MODELS 194

2.4.1 Trends in Data Processing Technology and Use 195

2.4.2 Federal Data Processing Descriptive Models 195

2.4.2.1 Data Processing Activities 197

2.4.2.2 Case Example: Project Management Support 203

2.5 CASE EXAMPLE: A NEFARIOUS AND UNMERITORIOUS

SCHEME 214

2.5.1 The Payroll-Change Model 215

2.5.1.1 Payroll Change in a Centralized Environment 215

2.5.1.2 Payroll Change in a Distributed Environment 217

2.5.1.3 Payroll Change Security Analysis 218

2.6 CONCLUSIONS AND SUMMARY 225

FOOTNOTES 230

APPENDIX: STAFF COMMENT 234

PART IV: MANAGEMENT IMPLICATIONS OF THE TRENDS IN

INFORMATION TECHNOLOGY 237

PREFACE 239

1. INTRODUCTION 239

2. THE TECHNOLOGY TRENDS 240

3. THE NON-TECHNICAL/ORIGANIZATIONAL ISSUES 242

vi i
3.1 MANAGEMENT STRUCTURE 24 2

3.1.1 Policy Makers 242

3.1.2 Information Resource Managers 246

3.1.3 Computer/telecommunications Operations Managers 249

3.1.4 Functional Managers 249

3.1.5 Planners 250

3.2 PLANNING 251

3.2.1 Technology Forecasts and Assessments 252

3.2.2 Technology Transfer 253

3.2.3 Pilot Projects 253

3.2.4 Analyses of System Architectures: Needs

Assessments 255

3.2.5 Analyses of Data Architectures 256

3.3 PERSONNEL 257

3.3.1 Training 258

3.3.2 Job Classification and Career Paths 259

3.4 ECONOMIC IMPACTS 260

3.4.1 Acquisition Costs 261

3.4.2 Use of the Budget Process 261

4. THE TECHNOLOGY-RELATED ISSUES 262

4.1 END-USER COMPUTING 262

4.1.1 Compatibility 263

4.2 NETWORKS AND ARCHITECTURE 265

4.2.1 Local Area Networks 267

4.2.2 Micr o- to-Ma inf r ame Links 268

4.3 SOFTWARE INVESTMENTS 270

4.3.1 Existing Software Application Systems 272

4.3.2 Proposed Software Application Systems 272

4.4 DECREASING TECHNOLOGY CYCLES 273

FOOTNOTES 275

APPENDIX A: STAFF COMMENTS 276

APPENDIX B: CLAUSES FROM GSA ' s MODEL RFP 277

PART V: TECHNOLOGY FORECAST WORKSHOP SUMMARY 283

PREFACE 285

1. PARTICIPANTS 285

2. SUMMARY OF THE WORKSHOP ON THE TELECOMMUNICATIONS

TECHNOLOGY FORECAST 286

3. SUMMARY OF THE WORKSHOP ON THE MANAGEMENT IMPLICATIONS

OF THE TRENDS IN INFORMATION TECHNOLOGY 288

vi i i
PART VI: FUTURE INFORMATION PROCESSING TECHNOLOGY 1983

REVISITED 293

1. THE 1983 TECHNOLOGY FORECAST REVISITED 295

GLOSSARY 303

ix
LIST OF FIGURES and CHARTS

Figure No.

Part I 1-1 The Seven-layer OSI Achitecture 13

1-2 Cost Trends for Computer Systems 1984-1999 19

3-la Standard Teleprocessing Configuration 31

3-lb Local Area Network as Extension of Computer

Teleprocessing System 31

3-2 Cost Structures for Local Network Alternatives 32

3-3 Relative Cost of Digital and Analog Microwave

Radio Systems as a Function of Path Length 37

3-4 Bit-rate Efficiency 40

3-5 Expected Cost/Performance Trends in Digital

Microwave 44

3-6 Traditional Architecture: Centralized

Intelligence 56

3-7 New Architecture: Distributing the Intelligence 57

3-8 Potential Migration of Switching Functions 58

3-9 Common Channel Signaling 60

3-10 A Step in Digital Augmentation of Originally

Analog Network 61

3-11 Dynamic Nonh ier arch ical Routing Network Plan 63

3-12 ISDN Network Concepts 71

3-13 Typical Use of "Digital Pipe" 73

3-14 Hybrid Microstrip MIC Construction 77

3-15 Circuit Elements: Cross-section View and

Equivalent Circuit 79

3-16 Two-Stage GaAsFET Amplifier 80

Part II

3-1 Increases In Average Subscriber Rates Per Month 151

3-2 Source of Revenues for REA Borrowers 152

Part III

2.1 Federal Automated Information and Computer

Security Policy Sets 176

2.2 Events Comprising People-Related Computer

Misuse 180

2.3 Proto-Typical Data Processing Models 196

2.4 DP Operations Subsystem Interconnections

(Illustration) 199

2.5 CDP Transaction Data Capture (Subsystem #1) 204

2.6 CDP Transaction Data Aggregation (Subsystem #2) 205

2.7 CDP Analysis and Reporting (Subsystem #7) 206

2.8 CDP Data Combination, Analysis and Reduction

(Subsystem #9) 207

2.9 Centralized Data Processing for Project

Management Support (Comprised of Subsystems

#1, 2, 3, 7 and 9) 208

2.10 DDP Transaction Data Capture (Subsystem #1) 209

2.11 DDP Transaction Aggregation (Subsystem #2) 210

X
2.12 DDP Data Combination, Analysis and Reduction

(Subsystem #9) 211

2.13 DDP Data Retrieval and Analysis (Subsystem #8) 212

2.14 Distibuted Processing Operations for Project

Management Support (Comprised of Subsystems

(#1, 2, 3, 8, and 9) ) 213

2.15 Payroll Change Processing: Macro Logic Model 216

2.16 Payroll Change: CDP Macro Model 226

2.17 Payroll Change Processing (CDP) Descriptive

Model 227

2.18 Payroll Change DDP Macro Model 228

2.19 Payroll Change Processing (DDP) Descriptive

Model 229

Part VI

1-1 Summary of Information System Product

Forecasts 297

X i
LIST OF TABLES

Table No.

Part I 3-1 Comparisons of Alternative LAN Technologies 30

3-2 1984 Digital Microwave Status 41

3-3 Growth in Capacity 47

3-4 Technical Characteristics of Today's Major

Digital Switching Systems 53

3-5 Present and Future Cost Breakdowns for Digital

Switches 64

3-6 Fourth-Generation Integrated Voice/Data PABXs 66

3-7 Electronic Properties of Silicon and Gallium

Arsenide 75

3- 8 Likely Evolution of Optical Logic 88

4- 1 Comparison of Approaches 92

4-2 Comparison of Groups 1-4 Facsimile 99

Part II

1-1 AT&T -C Services 130

1-2 Analog Private Line Service 134

1-3 ACCUNET T1.5 Service 135

Part III

2.1 Table of Federal Statutes and Executive Orders

Pertinent to Privacy and Security Aspects of

Computer-Related Crime 172

2.2 Institute for Computer Sciences and Technology

Computer Security Publications 173

2.3 0MB Ciculars Pertaining To Computer Security 175

2.4 GSA Federal Property Management Regulations

Related To Computer Security 175

2.5 Computer Security Policy Areas 177

2.6 Recommended Activities For A "Good" Computer

Security Program 178

2.7 Perpetrator (Who) 182

2.8 Motivation/Contributing Factor 183

2.9 Access to Computer Systems 185

2.10 Process/Resources - Mod if ied/ Influenced/Used 186

2.11 Actions Taken By Perpetrators 187

2.12 Strategy 188

2.13 Distributed Data Processing: Security

Vulnerabilities and Controls 191

2.14 Data Processing Subsystems 198

2.15 Vulnerability Profile For Payroll Change Model 218

2.16 Computer Security Policy Areas Analysis For

The Payroll Change Example 221

Part IV

1.1 Compatibility and Compatibility 264

1.2 Local Area Network Topologies 269

1.3 Selection of Link Technology 271

1.4 Link Technology Security 271

1.5 Sources of Information For Locating Packaged

Software 274

X i i
ABSTRACT

This document, the second in a series, focuses on telecommunications technology and related areas in computer organizations. It

contains four primary parts: the telecommunications forecast

through 1999, three perspectives on the divestiture of AT&T, a discussion of the general impacts of technology on computer

security, and the management implications of the trends in information technology. Additionally, it contains the summary of an

industry workshop on this forecast, a brief update of the 1983

forecast, and a glossary of terms. This forecast is a companion

to "Future Information Processing Technology - 1983" which contains fifteen year projections of computer hardware and software.

KEY WORDS: computer security; computers; divestiture; management

implications of technology; networks; security of distributed

systems; technology forecasting; telecommunications; trends in

information technology.

ACKNOWLEDGEMENTS

This report was funded by the Institute for Computer Sciences and

Technology, National Bureau of Standards, with funding contributions by the Internal Revenue Service and the Office of the

Secretary of Defense under contract number NB80SBCA-0405 with

Aurora Associates, Inc., Arthur D. Little, Inc. and Titan Systems

as major consultants. International Data Corporation (IDC) also

provided consultation services. Additional contributions were

made by Preston, Thorgrimson, Ellis, and Holman, Rural Electrification Administration (REA) , and the United States Department of

Agr icul ture .

We would like to thank Warren G. Bender and Frederic T.

Withington of Arthur D. Little, Inc. for their extensive contributions and the following Federal Agencies whose representatives

served on the technology forecast steering committee: Defense

Intelligence Agency, Defense Mapping Agency, Department of

Energy, Department of the Army, Environmental Protection Agency,

General Accounting Office, General Services Administration,

Housing and Urban Development, Internal Revenue Service, National

Aeronautical and Space Administration, National Security Agency,

Office of Management and Budget, Office of the Secretary of

Defense, Office of Technology Assessment, Smithsonian Institution, United States Department of Agriculture, United States

Information Agency.

Our thanks also go to Nicholas P. Miller of Preston, Thorgrimson,

Ellis and Holman, and John N. Rose of REA who prepared portions

of Part II; Marco Fiorello of Titan Systems and Mark Samblanet of

Aurora Associates, Inc. who prepared portions of Part III,

xiii
FOREWORD

The Institute for Computer Sciences and Technology (ICST) is

responsible for the development of standards and guidelines which

lead to "the economic and efficient purchase, lease, maintenance,

operation and utilization of automatic data processing equipment

by Federal departments and agencies" (Public Law 89-306) . In

order to fulfill its responsibilities, ' ICST gathers and integrates information needed for the timely selection of technical

areas to be investigated and for monitoring and revising existing

standards and guidelines. To those ends, ICST develops technology forecasts, gathers data relating to ICST product usage,

and conducts studies on the costs, benefits, and impacts of its

products

While the information gathered and compiled is primarily used to

help ICST guide its own program, certain studies are, we believe,

of more general interest. When widespread interest is expected,

ICST, through publication, disseminates the relevant documents.

Our periodic technology forecasts are in that category. Our

first forecast, in 1981, was published as a contractor's report.

Even with limited dissemination, so much interest surfaced that

in 1982 we "went public" for the planning of the subsequent

document. That forecast. Future Information Processing Technolocjy - 1983, was a joint effort by ICST, the Departments of

Energy and Agriculture, the Defense Intelligence Agency, and the

Environmental Protection Agency. A circulation draft was distributed throughout the Federal Government and 14 other agencies

provided substantive contributions. In addition, a panel of

industry ADP users and vendors reviewed the publication in a teleconference workshop. The document was published in the NBS

Special Publications Series (SP 500-103)

Interest in technology forecasting continued to build and for

this document we established an ad hoc steering committee

comprised of representatives of 16 agencies to help guide its

preparation. The 1984 edition. Future Information Technology - 1984. Telecommunicat ions , is intended as a companion volume to

the 1983 report. The recommendations of the steering committee

are reflected in the content of the new forecast.

The steering committee — now enlarged to include 24 agencies —

has already begun work on the next edition.

Part I, "Future Telecommunication Technology", was developed by

Arthur D. Little, Inc., and was based in part on a point-ofdeparture draft prepared by Bob Sobecki of the Department of

Agriculture. Certain sections are flagged by the words "staff

comment". The flagged sections are keyed to comments submitted

by knowledgeable staff members of Federal, State and local

governments and comments from industry participants who attended

the September 1984 workshop which is summarized in Part V. The

xi V
comments themselves, contained in an appendix to Part L, either

express divergent views from the material presented earlier or

provide additional information.

Part II addresses the AT&T divestiture from three perspectives.

Chapter 1 contains a technological overview developed by Arthur

D. Little. Chapter 2 presents a summary of a teleconference held

by ICST and ADP officials from various State and local governments. The material was developed by Nicholas P. Miller of the

law firm Preston, Thorgrimson, Ellis and Holman. Chapter 3, prepared by John Rose of the Rural Electrification Administration,

looks at divestiture from the perspective of rural telephony.

Part III discusses security issues in a distributed environment.

Chapter 1 again contains a technological overview by Arthur D.

Little. Chapter 2, a joint effort by Marco Fiorello, Mark

Samblanet, and Peg Kay of Titan Systems, Aurora Associates, and

ICST respectively, suggests a methodological framework for

security analysis. As in Part I, staff comments are included in

an appendix to Part III.

Part IV discusses the implications for management — of the

converging trends in ADP/telecommunicat ions technology. This

Part was prepared by ICST using poi nt-of -depar ture material

developed by the International Data Corporation. The chapter was

jointly funded by the Department of Defense and ICST. Again,

staff comments are included in an appendix to Part IV.

Part V summarizes the results of September 1984 workshops in

which private sector participants reviewed the circulation draft

of the forecast. The workshops were held at NBS at the request

of the participants in the 1983 industry teleconference,

mentioned earlier. The summary of the workshop dealing with Part

I quite clearly indicates that private sector requirements for a most-useful technology forecast differ somewhat from those of the

public sector. The public sector's major need is for information

on which to base acquisition plans. While this is also of

interest to private firms, they additionally need the forecasts

as input to their strategic plans. That is, the future of the

technology may very well influence what new areas the firms will

explore as possible business-entry opportunities. Thus, a forecast prepared for the public sector will emphasize areas of

stability; for the private sector, a more determinedly "futures"

document is needed. As we noted in the first paragraph of this

Foreword, ICST's, primary obligation is to the public sector.

However, it may be possible to jointly prepare a forecast — or

"co.mpanion" forecasts — so as to satisfy both requirements. We

are currently exploring this possibility with some of the workshop participants.

Part VI is a retrospective of this report's companion volume, the

1983 information processing technology forecast. It contains a summary figure and the table contents from that volume and a brief update of the 1983 material.

XV
The glossary covers terms used in either the 1983 or 1984

documents.

We have been very pleased by the enthusiastic cooperation of the

various Federal, State and local agencies. As you may infer from

the paragraph discussing Part V, the private sector — ADP/telecommunicat ions vendors and users alike — also did yeoman service

and we are grateful. It is our intent to periodically update the

forecast and we are looking forward to expanding the working consortium in subsequent editions.

We would very much appreciate comments and suggestions from our

readers, addressed to P. Powell, Information Processes Group,

Institute for Computer Sciences and Technology, National Bureau

of Standards, Bldg . 225, Room B253, Gai ther sburg , MD., 20899.

James H. Burrows, Director

Institute for Computer Sciences

and Technology

Peg Kay, Leader

Information Processes Group

XV i
PART I: FUTURE TELECOMMUNICATION

TECHNOLOGY

Prepared by

Arthur D. Little, Inc.

Contract number

NB 80SBCA-0405

Institute for Computer Sciences

and Technology

National Bureau of Standards

1

PREFACE

Part 1 is n forecast of telecornmunicat ions technology, prepared

for ICST by A.D, Little, Inc. The content of the forecast was

sugcrested, in the form of a detailed outline, by the Deportment

of Agriculture and agreed upon by ICST and the members of the ad

hoc steering committee. A.D. Little's early drafts were extensively reviewed by knowledgeable experts in Federal , State and

local government agencies. Despite that, when industry representatives met at ICST for a review workshop (See Part V), they

identified digital bandwidth compression technology (which is

expected to affect several types of telecommunications services)

and infrared communication technology as two important areas

which we have not covered. We apologize for the omissions.

The industry workshop participants strongly urged that they be

involved at an earlier stage when next year's forecast is

prepared. That is an offer we wouldn't dream of refusing.

Despite the omissions, the forecast covers an extensive amount of

material. This material is summarized in the chart immediately

following. Following the summary chart is a list of acroynms

used in this part of the document.

3
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ACRONYMS

ANSI American National Standards Institute

bps Bits Per Second

CCD Charge Coupled Device

CCITT International Telegraph & Telephone Consultive Committee

CRT Cathode Ray Tube

CSMA/CD Carrier Sense Multiple Access with Collision Detection

DBS Direct Broadcast Satellite

DNA Digital Network Architecture (DEC)

DOMSAT Domestic Satellite

ECMA European Computer Manufacturers Association

EIA Electronic Industries Association

FDM Frequency Division Multiplex

FIPS Federal Information Processing Standards

HDLC High-Level Data Link Control

ICST Institute for Computer Sciences & Technology

IDN Integrated Digital Network

IEEE Institute for Electrical & Electronics Engineers

ISDN Integrated Services Digital Network

ISO International Organization for Standardization

kbps Kilo (thousand) Bits Per Second

LAN Local Area Network

mbps Mega (million) Bits Per Second

MIC Microware Integrated Circuits

MICR Magnetic Ink Character Recognition

NCS National Communications System

OCR Optical Character Recognition

OSI Open Systems Interconnection

PABX Private Automated Branch Exchange

PCM Pulse Code Modulation

QAM Quadrature Amplitude Modulation

SCPC Single Channel Per Carrier

SNA System Network Architecture (IBM)

TDM Time Division Multiplexor

TWT Traveling Wave Tube

VLSI Very Large Scale Integration

6
1. NETWORK ARCHITECTURE

1.1 OPEN SYSTEMS INTERCONNECTION (OSI)*

1.1. I Introduction and Bnckground

Over the period 1960-1970, only computers or devices of the same

manufacturer and model could communicate with one another, due to

the unique signal structure and format built into each machine.

Even with identical source and receiving machines, a "handshaking" routine had to be pre-established for proper

communications

The problem of connecting machines of different manufacturers

that used different formats, speeds, etc., remained an engineering research activity. Under the continuous pressure of

increased data transfer requirements and higher speeds, development of worldwide standards for data transmission were initiated

by several organizations. Much has been accomplished, and many

manufacturers are attempting to make their equipment and devices

conform to these rules, but standardization is still in an

evolutionary stage.

1.1.1.1 Data Communications

Data communication takes place in two stages. The first is the

communication between the user and the machine and is highly

developed at this time. The second stage, which is the primary

concern of this discussion, is the transfer of the data from

machine to machine.

The original problem arose from the desire to interchange

information between relatively large central site computers with

their work station terminals, and other large computers.

Although this was partially solved by modems and direct wiring, a strong trend has developed, sparked by the availability of small,

programmable microprocessors, toward geographically distributed

processing systems. These systems break up the many functions

previously integrated in large CPUs into a network of small,

special-purpose computers whose proper control and handling of

data depend on strict adherence to a uniform code of data

transfer standards.

1.1.1.2 History of Standardization

Standardization work began to focus on information systems and

data communications during the early 1960s. At that time, the

International Organization for Standardization (ISO) organized

its Technical Committee 97 on Information Processing Systems and

* This section draws heavily on the Proceedings of the IEEE, Dec.

1983 .

7
several subcommittees, including Subcommittee (SC) 6 on Data

Communications. The International Telegraph and Telephone Consultative Committee (CCITT) formed Special Study Group A (now

called Study Group XVII) to deal with data transmission over

telephone networks. In addition, the European Computer Manufacturers Association (ECMA) and many national organizations began

to develop standards to deal with the newly emerging computer

technology

Progress was slow during the first 10 years but included the

establishment of the widely used Electronic Industries Association (EIA) RS-232 and CCITT V. 24 and V.28 physical services.

Work also proceeded with the development of character-oriented

protocols for transmission of data. These protocols are based

upon the International Alphabet Number 5 (IA5) and the U.S.

equivalent, ASCII.

In 1972, CCITT formed Study Group VII, Public Data Networks, to

pursue telecommunications services specifically tailored for data

communications. Activity proceeded with developing standards for

circuit-switched networks, along with a vague consideration of

the packet-switching technology that was then emerging.

At the same time, ISO was proceeding with the development of

"bit-oriented" data link protocols to provide a more comprehensive and efficient mechanism for data transmission. ISO

maintained close liaison with the CCITT Public Data Network

activity, and ECMA and participating national standards bodies

contributed to the work.

However, there was no "master plan" to assure that all requirements were being addressed properly, and many questions were left

unanswered — e.g., what was needed to make individual systems

capable of communicating freely with others?

In 1978, ISO Technical Committee 97 established a new subcommittee, SC 16, on Open Systems Interconnection. SC 16' s task

was to develop a reference model whose architecture would serve

as a basis for all future development of standards for worldwide

distributed information systems. Once the architecture had been

determined, existing standards were to be analyzed to determine

whether they met the requirements of the reference model and, if

not, what changes were needed to bring them into alignment. In

addition, areas that lacked standards were to be identified and

development action taken where appropriate.

In June 1983, the work finally resulted in the approval of ISO

International Standard 7498 and CCITT Recommendation X. 200 , which

specify the basic architecture of Open Systems Interconnection

(OSI). As these two approached publication, the texts were

completely aligned. There are no technical differences and very

few editorial differences.

8
In March 1983, the British Department of Industry announced its

support for application of OSI as a national policy in the United

Kingdom. In the U.S. the National Bureau of Standards has

contributed to and supported the ISO Reference Model since 1979.

France has adopted OSI as "ARCHITEL," and many other countries

are pursuing similar lines.

In its Master Plan, the American National Standards Institute

(ANSI) X3 Committee requires that all related standards work be

based on the OSI Reference Model. Every related ANSI standards

project must identify how it will ensure consistency with OSI.

The new work in CCITT for Integrated Services Digital Networks

(ISDN) is also incorporating the principles of OSI. CCITT is

developing standards for a worldwide switched digital telecommunications system that will support most of the familiar

services (voice, data, facsimile, electronic mail, video, etc.).

Newer requirements emerging from the ISDN work will be reflected

back to the OSI architecture in the form of additions, enhancements, and adjustments to ensure its continuing evolution.

Transport and Session layers will be ISO Standard's pending

publi cat ion

1.1.2 Present Approaches - The OSI Reference Model

The OSI reference model is a layered hierarchical structure of

communicating peer protocols. It is the base for coordinating

future standards efforts. The model defines:

o the functions of each layer,

o interlayer communications, and

o the protocols used for peer communication.

The approach is to use a layered architecture to break up the

problem into manageable pieces. Three levels of abstractions are

explicitly recognized: the architecture provided by the model

itself, the service definitions and the protocol specifications.

The OSI Architecture defines a seven-layer model for interprocess

communication that is constructed from the concepts of relations

and constraints. These concepts are used as a framework both for

coordinating the development of layer standards by OSI committees, and for the development of standards built on top of OSI.

The OSI Service Definitions represent a lower level of abstraction and define in greater detail the service provided by each

layer. A service defines the facilities provided to the user of

the service, independent of the mechanisms used to accomplish the

service.

The OSI Protocol Specifications represent the lowest level of

abstraction in the OSI standards scheme. Each protocol specification defines precisely what control information is to be sent

and what procedures are to be used to interpret this control

9
information. The protocol specifications represent the most

stringent design guidelines placed on implementations built to

conform to OSI standards.

Products can satisfy the much weaker constraints imposed by the

Reference Model, but still may not be able to communicate with

open systems. There can be many options at any layer that conform with the OSI model but may not allow intercommunication.

SC 16/WG 1 is charged with developing formal description methods

for defining the protocols so that they could be implemented

unambiguously by users all over the world. The method within WGl

currently being applied to 150 protocols was initially developed

by ICST.

1.2 THE ELEMENTS OF THE ARCHITECTURE - PROTOCOLS AND LAYERS

ISO 7498, the document describing the basic OSI Reference Model,

is divided into two major sections. The first of these describes

the elements of the architecture; these constitute the building

blocks used to construct the seven-layer model. The second

describes the services and functions of the layers.

In the OSI Reference Model, communication takes place among

application processes running in distinct systems. A system is

considered to be one or more autonomous computers and their

associated software, peripherals, and users that are capable of

information processing and/or transfer. Although OSI techniques

could be used within a system (and it would be desirable for

intra- and inter-system communication to appear as similar as

possible to the user) , it is not the intent of OSI to standardize

the internal operation of a system.

Layering is used as a structuring technique to allow the network

of open systems to be logically decomposed into independent,

smaller subsystems. A layer, therefore, comprises many entities

distributed among interconnected open systems. Entities in the

same layer are termed peer entities. Protocols are examples of

peer entities.

The basic idea of layering is that each layer adds value to

services provided by the set of lower layers in such a way that

the highest layer is offered the full set of services needed to

run distributed applications.

Another basic principle of layering is to ensure the independence

of each layer by defining the services provided by a layer to the

next higher layer, independent of the way that these services are

performed. This permits changes to be made in the way a layer or

a set of layers operates, provided they still offer the same

service to the next higher layer. This technique is similar to

the one used in structured programming, where only the functions

performed by a module (and not its internal functioning) are

known by its users.

10
1,2.1 Pro toco I

A protocol is the set of message exchange and format rules that

the peer communicating layers use to control and synchronize

their communication functions. The functions performed by a layer are reflected in the services provided by that layer.

Functions may be either centralized, or they may be distributed,

using the peer-layer protocol for communications and synchronization. A layer, therefore, need not have an associated protocol

if all of its functions are local and its only communication is

through its services to adjacent layers. Distributed functions,

however, need a communication mechanism to transport their protocol messages between their peer-layer modules. Thus, each layer

in the structure must present a communication function service to

the layer above it.

The communication services capabilities discussed earlier will,

therefore, become the concerns of the protocol supporting that

communication mechanism, and the following protocol elements will

appear in many protocols:

1. Addressing: The specification or representation of the

name of the source and the destination of information.

2. Error Control: The detection and recovery from errors

introduced by the lower-level communication mechanism.

3. Flow Control: The management of the flow of information

from the source to the destination.

4. Synchronization: The control and/or knowledge of the

state of each peer half-layer by the other half, so they

may remain in a consistent state and avoid deadlock.

5. Circuit Management: The connection and disconnection of

message paths or circuits in circuit-oriented communication mechanisms.

6. Sequencing: The management of an ordered, sequential

flow of information.

7. Message Management: The segmenting and reassembly of

messages and the management of buffers.

8. Priority: Providing differing grades of service through

the communication mechanism.

9. Switching or Routing: The selection of a path from

source to destination and the method for determining

that path.

10. Security: Providing secure communications.

11. Accounting: Providing a mechanism for accounting for

the use of network resources.

12. Performance: Achieving specified levels of performance,

given the characteristics of the underlying available

communication mechanism.

13. Robustness: Continuing to operate and being available

when nodes, links, or other resources fail.

14. Information Representation: The management of the

format, code set, size, etc., of the information transferred through the communication mechanism.

11
1,2.2 The Seven-Layer Model

The basic elements of the OSI Reference Model serve as the

building blocks for constructing the model of interprocess communication. In OSI, interprocess communication is subdivided

into seven independent layers. Each (N)-layer uses the services

of the lower (N-l)-layer and adds the functionality peculiar to

the (N)-layer to provide service to the (N+l)-layer above.

Layers have been chosen to break up the problem into smaller

problems that can be considered relatively independently. The

seven layers are as follows (see also figure 1-1)

Layer 1:

Layer 2:

Layer 3:

Layer 4:

Layer 5:

Layer 6:

Layer 7:

Physical - Data Link

link . Network

channels

Transport

source and

Session

municat ing

transmission

- creation

- reliable

of bits over the channels,

of error-free sequential

single-network logical

re li able transport between

systems

sess ions

- end-to-end

destination

management of

ent i t ies

Presentation - format transformations

Application - interstation dialogues.

between com1.2.2.1 Physical Layer

The Physical Layer provides the mechanical, electrical, functional, and procedural standards to access the physical medium.

1.2.2.2 Data Link Layer

The Data Link Layer provides the functional and procedural means

to transfer data between network entities and to detect and

possibly correct errors that may occur in the Physical Layer.

Typical Data Link protocols are High-level Data Link Control

(HDLC) for point-to-point and multipoint connections and IEEE 802

for local area networks. Data Link protocols and services are

very sensitive to the physical transfer technology. In the upper

layers, only a limited number of protocols are specified per

layer, but this is not the case in the lower layers. To ensure

efficient and effective use of various transfer technologies,

protocols designed to their specific characteristics will be

requi red

1.2.2.3 Network Layer

Tl:ie Network Layer provides independence from the data transfer

technology and provides relaying and routing. It masks from the

Transport Layer all the peculiarities of the actual transfer

medium, so that the Transport Layer need be concerned only with

the quality of service and its cost, not with whether optical

fiber, packet switching, satellites, or local area networks are

12
APPLICATION LAYER (layer 7)

Layer 7 is the source of data, usually consisting of services

which process data (i.e., data are combined, converted,

calculated and processed to create new data). Airline reservations and on-line banking are just two examples of possible

user applications.

PRESENTATION LAYER (layer 6)

Layer 6 provides data formats and data information, if needed.

Examples of presentation layer services are data translation,

data encoding/decoding, and command translation for virtual

terminals . SESSION LAYER (layer 5)

Layer 5 establishes, maintains, and terminates logical connections for the transfer of data between processes. Examples of

session layer services are: dialogue control, message unit

flow control, and segmentation of message data units.

TRANSPORT LAYER (layer 4)

Layer 4 provides end-to-end control signals from user terminal

to user terminal across the network (e.g., network acknowledgment of received information)

Network Layer ( layer 3)

Layer 3 provides the control needed for call establishment and

clearing through the switching network nodes.

DATA LINK LAYER (layer 2)

Layer 2 protocols provide reliable transmission over a single

data link including frame management, link flow control, and

the link initiation/release procedures.

PHYSICAL LAYER (layer 1)

Layer 1 provides the mechanical, electrical, functional, and

procedural characteristics needed to establish, maintain, and

release physical connections between the network termination

and the exchange.

Figure 1-1 The Seven-layer OSI Architecture

Source: Federal Communications Commission's notice of inquiry on

ISDN, adopted August 4, 1983.

13
being used. The Network Layer also relays and routes data

through as many concatenated networks as necessary while maintaining the quality of service parameters requested by the

Transport Layer.

1.2.2.4 Transport Layer

The purpose of the Transport Layer is to provide reliable and

transparent transfer of data between end systems, thus relieving

the upper layers from the task of providing reliable and costeffective data transfer. In some cases, the boundary between the

Transport and Network layers represents the traditional boundary

between the carrier and the customer. From this point of view,

the Transport Layer optimizes the use of network services and

provides additional reliability over that supplied by the Network

Service

1.2.2.5 Session Layer

The primary purpose of the Session Layer is to provide the

mechanisms for organizing and structuring the interactions among

application processes. The mechanisms provided in the Session

Layer allow for two-way simultaneous and two-way alternate operation, the establishment of major and minor synchronization

points, and the definition of special tokens for structuring

exchanges. In essence, the Session Layer provides the structure

for controlling the communications.

1.2.2.6 Presentation Layer

The primary purpose of the Presentation Layer is to make application processes independent of differences in data representation,

i.e., syntax. The Presentation Layer protocol allows the user to

select a "Presentation Context"; this may be specific to an

application (such as a library protocol or virtual terminal), to

a type of hardware (such as a particular machine representation)

or to some standard or canonical representation. OSI users may

use an existing context or define their own for registration with

ISO.

1.2.2.7 Application Layer

As the highest layer of OSI, the Application Layer does not

provide services to any other layer. The primary concern of the

Application Layer is with the semantics of the application. All

application processes reside in the Application Layer. However,

only part of the Application Layer is in the real OSI system,

i.e., those aspects of the application process concerned with

interprocess communication (called the application entity) . SC

16 is developing the Common Application Service Elements that

provide common procedures for constructing application protocols

and for accessing the services of OSI. SC 16 is also developing

three application protocols of general interest (virtual file,

virtual terminal, and job transfer and manipulation services), as well as OSI application and system management protocols.

14
1.2.2.8 Conclusions

The high cost of software production, the requirement that any

system in the world potentially be able to communicate with any

other, and the urgent need for open systems standards have caused

the OSI effort to depart from the traditional mode of developing

standards. It has been necessary to define standards that new

systems could converge to, rather than to standardize procedures

after the fact. SC 16 is now reorganized into SC5 and SC15 who

together are now on a schedule that is producing new Draft Proposed Standards at a rate of around two a year. Groups that are

developing standards for other areas or large corporate systems

are expected to benefit from this work and to use the Reference

Model for OSI and other Reference Models to organize and

coordinate their work in communications, databases, and large

application systems.

There is intense technological competition among these competing

systems, and different vendors are backing different approaches.

This point deserves to be highlighted because standardization

plays an essential role even at this early phase in the evolution

of local networks because the architecture of the network must be

in the public domain if the network is to accommodate the equipment of multiple vendors.

IEEE Standard — The first standard-setting activity to describe

is that of the Institute for Electrical and Electronic Engineers

(IEEE). The IEEE 802 technical committee is developing standards

for the two lowest level protocols of the OSI model, i.e., the

physical layer and the data link layer. This is the natural

place to begin since it determines the physical basis for compatibility among equipment. The committee began its work in

1979, and the results are now emerging.

The committee found that it was not possible to develop a single

standard for the various systems on the market. The two principal means for determining access to the transmission medium,

contention and token passing, are incompatible. The committee

therefore decided that the only feasible way to standardize LANs

was to develop a family of standards. Consequently, standards

are being developed for baseband and broadband bus media using

CSMA/CD (IEEE standard 802.3), for baseband and broadband bus

media using a token passing access method (IEEE standard 802.4),

and for baseband media using a token ring system (IEEE standard

802.5). The first two standards have already been completed for

baseband, and the third is expected next year.

In addition to local networks, the committee is developing a metropolitan area network (MAN) standard (IEEE standard 802.6).

A metropolitan area network is a form of LAN that comprises a radius of up to 25 km.

All of the standards have been specified to work under a single

logical link control standard (IEEE standard 802.2). Finally, a standard for layer three is being developed by ISO to integrate

15
the various LAN technologies into a concatenated network architecture by specifying a consistent method for internetworking,

addressing and managing local networks. This work is also beginning to be addressed by the IEEE 802.1 committee.

The timing of the IEEE family of standards is an important point

worth noting. A standard cannot be developed before there is an

adequate theoretical and practical knowledge base for developing

it. On the other hand, if proprietary systems become too well

established, there would be strong opposition to the development

of standards that did not conform to the proprietary standards.

Thus the timing of standards development is a critical matter.

1.2.3 Techno I ngi cn I Evolution

o 1984-1989 — The development of the OSI model and the

general increase in data transmission utilization have

accelerated the development of distributed processing

networks and emphasize the need for universally accepted

standards to facilitate their use. The current status in

1984 is that standards organizations, manufacturers, and

researchers are beginning to bring accepted theory into

real world practice. The progress already made in such

elementary services areas as RS 232, RS 449, X.25, V.24,

HDLC, etc., shows that enlightened self-interest plus a commitment by the major organizations such as IEEE, ANSI,

CCITT, ECMA and ICST can bring changes to the marketplace

and encourages optimism toward the future of universal

standardization.

At present, most modern computer communications can be

said to implement in some way the lowest five layers of

the OSI model, the Physical and Data Link layers. Such

issues as connectionless data transmission, security, and

compatibility with other layered models are being

addressed

Of particular significance is the continued position of

the industry leader, IBM, which supports its own System

Network Architecture (SNA) model which has many similarities to the OSI system. Nevertheless, many new entrants

in the Local Area Network (LAN) and Integrated Services

Digital Network (ISDN) equipment fields will probably

accept the IEEE, ISO, and associated standards as a costeffective marketing and engineering approach.

During this time period, we expect the continued manufacture and sale of computer communication products that do

not do so. This problem will encourage the design and

manufacture of "smart boxes" (at least at the lower

levels) , that provide services compatibility of current

products with standards or other widely distributed data

transmission equipment. Cautious and discriminating

procurement by users who wish to avoid equipment that

16
could quickly become obsolete will also spur manufacturers to adhere more closely to universally accepted

standards. [STAFF COMMENT 1]

o 1989-1994 — This should be a period of great growth in

both the standards area and in the design and manufacture

of computer communication products. Extensive interplay

between real-world demand and the development of standards should result in a nev; and improved equilibrium

between users and suppliers.

A number of layers of the OSI model will be well defined

and understood by the community and will be implemented

in the networks and equipment available. Protocols for

the first four or five layers will be highly developed,

while those for the remaining two upper layers will be

under continued development. An appreciable amount of

equipment or systems still in use are likely to have

compatibility problems with the new systems, but smartboxes will be designed to ease them. It is possible that

IBM will modify its SNA model to conform completely to

the OSI system or will market compatibility devices or

systems to accommodate it. In all, 1989-1994 should be a major transition period during which standardization will

begin to have a major impact on the industry. [STAFF

COMMENTS 2 and 3]

o 1994-1999 — This period should see worldwide standardizat ion reach the initial stages of maturity as a set

of standards for what we now define as data communications become firmly established. New standards will be

under development to accommodate the variety of new data

communications requirements expected from this dynamic

industry

.

The OSI model will be universally recognized but will be

continually evolving in anticipation of new designs and

user requirements. The process is analogous to the

development and growth of telecommunications under the

impact of North American (Bell) , European, and CCITT

standards work over the past fifty years. Much has been

accomplished, but much remains to be done to meet the

demands and opportunities of new data communications

technologies and users.

1.2.4 Computer Network Architectures

Every major computer manufacturer has a proprietary network

architecture to interconnect its systems. These "closed" systems

interconnection schemes enable the different equipment lines of

the manufacturer to operate together.

These architectures are all more or less compatible with the ISO

seven-layer Reference Model. IBM's Systems Network Architecture

comprises seven layers, which provide services quite similar to

17
the corresponding layers of OSI. A. D. Little believes that

IBM's evolutionary strategy for enabling its users to access the

OSI environment is through protocol conversion gateways, which

map the SNA network protocols into the OSI equivalents.

dec's Digital Network Architecture (DNA) is also based on a seven-layer model; it does not have a Presentation Layer equivalent, and its two upper layers together map into the OSI Application Layer, but otherwise DNA and OSI are quite similar. A. D.

Little believes that DEC intends to migrate toward direct incorporation of OSI protocols into DNA as the standards become

available, rather than adopt the gateway approach.

It appears clear, both from the widespread participation of all

major computer manufacturers and network providers and from the

similarity of existing proprietary vendor architectures to the

ISO model, that the manufacturers and the network providers will

evolve toward OSI product offerings as the standards become

finalized and the user market develops. However, this may still

not result in compatibility among manufacturers.

1,2,5 Cost Performnnce Trends

The design of new equipment that conforms to the OSI and

associated standards will require considerable engineering

development and research. Whether this equipment, once designed,

will be significantly more costly to produce than the present

devices and systems is debatable, particularly since the cost of

making VLSI solid-state equipment is dropping.

Taking these basics as a starting point, we have postulated a set

of trends (figure 1-2). The design and production of equipment

conforming to current standards (ISO, IEEE, ANSI etc.) will drive

costs upward, most notably in the 1984-1989 timeframe. Conventionally produced equipment, i.e., internally standardized only,

is shown as rising slightly to accommodate the greater complexity

undoubtedly required to meet new requirements; however, to make

this equipment truly compatible on a universal basis will require

the design and production of compatible "smart boxes," which will

rise sharply in cost. [STAFF COMMENT 4]

These projections indicate that, for a given investment in a computer communication system, a buyer would be well advised to

obtain OSI standard equipment to avoid "Band-Aid" solutions to

incompatibility., outright obsolescence, and rapid replacement of

systems. [STAFF COMMENTS 5 and 6]

18
Non-OS I Equipment

made Compatible

by Customized

Modifications

/

7

/

Universal

OSI Equipment

Conventional

Equipment

1984 1989 1994 1999

Figure i-2 COST TRENDS FOR COMPUTER SYSTEMS 1984-1999

19
1.2,6 S icrni f i cnnt Current Developments*

The U.S. Government has implemented programs to develop and

standardize OSI protocols. One of these is the Federal Telecommunications Standards Program, which is administered by the

National Communications System (NCS) . The program objective is

to promote interoperability of the Government's telecommunication

networks for both emergency and routine operations.

NCS participated with NBS in adopting CCITT Recommendation X-25

for Federal use. The resulting joint standard is designated as

FIPS 100/Federal Standard 1041.

The Federal Information Processing Standards (FIPS) Program is

conducted by the Institute for Computer Sciences and Technology/National Bureau of Standards (ICST). ICST has been very

active in developing draft FIPS in the Network and higher layers

of OSI, as well as in the lower layers for LANs, physical, link,

network and internetwork protocols.

ICST has focused on working with industry and other federal

agencies to develop commercial, off-the-shelf solutions to the

problem of government systems incompatibility and to advance the

state of the art in methodologies for formal description, computer-assisted protocol implementation, and automated testing and

measurement of layered protocols.

Draft FIPS for LANs, Transport, Session, Internetwork, Message

Systems, and File Transfer protocols were published in 1983 or

are due in 1984. All these standards have been coordinated with

the developing IEEE, ISO, and CCITT standards.

OSI has come of age. In six productive years beginning in March

1978, ISO has defined a Reference Model, services, and protocols

for several layers of interconnection. Unprecedented cooperation

among manufacturers, network providers, governments and users has

permitted OSI implementation to begin to appear in 1984. By the

end of the decade, most existing and new information systems will

evolve into an OSI capability to exchange information easily and

thus create a world information society.

* This material has drawn upon: Young, John H, "Effect of Standards on Information Technology R&D", a contractor's report

prepared for the Office of Technology Assessment Project

Information Technology Research and Development - Contract 33-

8890.0 - November 25, 1983.

20
2. NETWORK MODELING AND MONITORING

2.1 NETWORK MODELING

2.1.1 Background and Present Approaches

Since the AT&T divestiture, users can no longer turn to a unified

telecommunications supplier for their needs. From now on, they

have no alternative to taking a more active role in controlling

telecommunications. This will involve employing network planners

for effective network design, procuring network testing systems

to monitor performance, and considering new systems, media and

carrier service offerings.

Planning for new systems is always important, but it is especially critical in the new communication environment. Network

planning calls for modeling and optimization techniques. The

success of a network plan requires an understanding of network

performance with respect to user requirements and traffic.

Gathering good traffic information is generally the most difficult part of network planning. This process must be coupled with

projections of user requirements. In general, an iterative

planning process is required. After an initial basic projection

is developed, it is refined into a performance cost analysis for

the projected network architecture. It is customary for large

networks to undergo many iterations of fine-tuning.

In view of the numerous design criteria, planning for all but the

simplest networks requires a computer approach to ease the computational burden.

Network design begins with a model. Network modeling is a combination of art and science; it draws upon such disciplines as

queuing theory, combinatorics, graph theory and nonlinear

analysis

There are two extremes to approaching network analysis:

o The first is to simulate a system and apply an iterative

process to generate a network configuration. A statistical model of the expected traffic is then fed to that

configuration. An iterative cut-and-try procedure is

used to introduce changes in the network; this process

continues as long as the changes decrease the cost of the

network. When an apparent least-cost solution is

reached, the analysis ends.

o At the other extreme is a purely analytic approach based

on queuing theory. However, when the network exceeds a fairly small size, it cannot be manipulated by analytical

approaches. This problem may be overcome by making

simplifying assumptions that may or may not be valid in

the real world.

21
The most logical approach to network modeling is based upon a combination of these two (simulation and analytic) methods. Some

portions of a network may have straightforward analytic solutions, while others are exceptionally difficult and are best

treated by simulation.

There are many vendors of network modeling and optimization

software and services. Some network modeling is provided "free"

by vendors, as part of a proposal or as part of the management of

a network under contract. Two well-known providers of network

models are Contel Information Systems (formerly Network Analysis

Corporation) and AT&T Communications. Two sample programs from

AT&T Communications indicate the range of programs that are

aval lable

o Network Synthesis Module (NETSYN) . This module allocates

end-to-end blocking among trunks, access lines and offnet facilities for an electronic tandem network. It

assists in selecting optimum switch locations and calculates approximate network costs. It prescribes routing

and sizes of trunk groups for off-net facilities and

determines the size of bypass access trunk groups.

NETSYN can establish a two-level network hierarchy and

can size intermachine and access line groups to handle

predicted traffic.

o Network Service Evaluator Module (NETEVAL) . NETEVAL

prepares data from NETSYN, including user modifications,

and calculates end-to-end blocking for on-net and off-net

traffic as well as for inter-switch and intra-switch

traffic for a specified hour. NETEVAL also prices the

network and provides additional information useful for

designing queues for off-net facilities.

Network optimization tools are available from many small software

houses. One example is a product which is available for the IBM

PC computer and can design up to 150-node networks. A smaller

version for Apple II optimizes networks of up to 70 nodes. The

software is packaged in a conventional floppy disk and accompanied by a self-help user manual.

2,1,2 Technological Evolution

The evolution of network modeling and optimization will go handin-hand with the development of increasingly sophisticated software for use on personal computers with continually expanding

capabilities. It is unlikely that software costs will decrease

significantly. However, the modeling process will be simplified

and speeded up, increasing cost effectiveness and making the

optimization of larger networks feasible in the future.

22
2.2 NETWORK TECHNICAL MONITORING

2.2.1 Background and Present Approaches

Most communication channels available from common carriers are

analog in nature. That is, they respond to continuous signals in

a limited frequency band that was originally intended for voice

transmission. Terminals and computers communicate digitally

using a discrete set of symbols, usually ones and zeros. For

compatibility with analog channels, digital terminals and computers require a modem.

Different approaches can be used to locate faults in an overall

connection. If the faults are in the analog channel, they are

located by analog test instruments. If faults occur in the

modem or digital services, they are located by data analyzers. A

device "called a protocol analyzer, which is more sophisticated

than a data analyzer, may be inserted into a digital services to

simulate the terminal for the network and/or the network for the

terminal; in this way, end-to-end protocol compatibility, in

addition to transmission, may be analyzed or diagnosed. In

addition, ICST has recently developed a transaction analyzer (TA)

which may be inserted into the network as a transparent monitor.

Applicable to channel protocols and VLSI, the TA continuously

tracks the state of electronic systems. Operating in real time,

it is fast enough to keep up with the interface bus rate. Unlike

the protocol analyzer, it does no simulations and thus can catch

unpredictable errors.

At the present time, most networks have no built-in network

control facilities. For small networks, or in the early stages

of implementation, portable test equipment such as portable

transmission impairment measurement sets and portable protocol

analyzers are used. The use of portable test equipment generally

requires that a technician be present at each end of a channel.

When a network grows beyond a fairly modest size, the savings

possible by automation of network control facilities become

worthwhile. Once this capability has been established, it provides automatic remote measurement of performance and reporting

on trunks and data circuits throughout the system. Network

technical control that is centralized and automated is a quality

assurance system that will measure from one location the transmission quality of all circuits connected in the systems,

reducing technician labor hours and providing cost-effective

network testing.

If faults occur, a network technical control center is able to

o detect that the trouble exists;

o notify maintenance personnel of its existence and

sever ity

;

o verify that the trouble persists and is not transient;

23
o pinpoint the location of the fault by sect ionalization

and issue a dispatch notice to the correct person so that

the fault can be cleared; and

o indicate all is well once the trouble has been cleared.

2,2.2 Technological Evolution

Evolution of network control systems will follow two paths. One

of them will be a more universal application of widespread automatic testing in user networks. These are now growing rapidly

with the decreasing reliance on carriers to provide complete

operating and maintenance services. At the same time, cost

savings will result from diagnostics being built into processors

and computers to exercise lines and pinpoint troubles. In general, the cost-effectiveness of separate network control centers

is likely to remain constant for several years into the future as

they are applied more widely.

3. UNDERLYING TECHNOLOGIES

3.1 SYSTEM TECHNOLOGY

3.1,1 Local Area Networks*

3.1.1.1 Background and Present Approaches

A local area network (LAN) is a communications system used to

interconnect computers, terminals and other peripheral devices

within a building or campus. LANs permit work stations to be

used for multiple purposes. A LAN may extend for as little as

ten feet or, rarely, as far as tens of miles.

The term LAN embraces a variety of systems. Early local data

networks were based on computer-terminal processing systems and

were provided by mainframe vendors. Data switches and multiplexers were later introduced by communications component

suppliers to provide cost-effective alternatives for the local

interconnection of terminals and computers. Recently, PABX manufacturers have begun to introduce so-called third-generation

PABXs capable of switching both voice and data (see section

3.1.6).

The LANs generating the greatest interest today are those based

on the concept of distributed access of which Ethernet is

probably the best, known example. The most recent trend in LANs

has been the introduction of hybrid networks consisting of

distributed Ethernet- li ke access and centralized PABX switches.

* A further discussion of LANs, from the management perspective,

is contained in Part IV.

24
To assess the present role and future prospects of LANs, it is

useful to take a brief look at the evolution of local networking

in data processing. In the 1960s, an era of batch processing,

the terminal and computer facilities were concentrated in a single building, often in a single room. The early 1970s saw the

advent of remote terminal access whereby terminals accessing a mainframe could be distributed within a building. Communications

between computers and terminals were managed by the computer

teleprocessing system, which consisted of embedded communications

and host application software. A characteristic of these early

teleprocessing systems was that terminals were dedicated to a single application.

With the appearance of terminal-sharing in the mid-1970s, a single terminal was capable of addressing different applications

on the same computer. The management of the communications

function at the computer end was relegated to the front-end

communications processor, an arrangement that tended to separate, both logically and physically, communications functions

from the applications functions. This development was

accompanied by the implementation of clustered terminal controllers, which, under the management of a central communications

processor, could control local terminal clusters.

Two networking trends emerged in the mid- to late 1970s:

o In response to the growing number of remote terminals

that accessed a few computers, data switches with portcontention features were introduced. These gave added

value to terminals by allowing them to switch among

computers and applications, reduced wiring costs and,

most importantly, reduced the number of expensive computer ports needed to support a large number of

terminals

o Computer networking facilitated the sharing of both host

and peripheral resources and provided a foundation and

impetus for the new distributed switching LANs we see

today. The networks that made computer networking possible are based upon the principle of a layered architecture (see section 1.2). The significance of layered

architectures is that they logically separate the various

communications and applications processing functions. In

a sense, the acceptance of the layered architecture

concept marked the end of a trend toward the logical

separation of applications and communications processing,

a trend spanning roughly ten years. This is not to say

that the world now operates on the principles of a layered architecture; we mean only that the concept is

widely accepted, even though its full implementation

still lies far in the future.

In the 1980s the uses or applications of data and information

processing developed in the 1970s or earlier, should be very

widely disseminated. Long-standing efforts toward resource

25
sharing networks (e.g., ARPA) primarily benefited a limited

clientele, such as scientists. As LANs mature, this decade will

also be a period of democratization of the workplace — i.e., it

will be commonplace for individual workers to be given extensive

access to data and information processing resources. In sum, the

1980s will see greatly increased user-access and resource sharing

requirements. The LAN response will be to provide wide-bandwidth

communications media that offer easy access and low cost-peraccess. This response is further explored below.

The present approaches to local area networking are mixes of old

and new. By far, the most pervasive installed form of local area

networks is application-specific. That is, each system or

application has its own LAN, which is typically an integral part

of a host teleprocessing system. Such a local area network

application can be found in an IBM processing environment using

3270-type terminals connected to their cluster controllers,

which, in turn, connect to the mainframe front end processor.

Other application- or vendor-specific local area networks can be

found in the systems of data processing equipment vendors such as

Wang and DEC.

In addition to the vendor-specific networks are other application-specific networks not identified with any particular

vendor's system architecture. In this area, we find a myriad of

home-grown cabling systems that often provide simple point-topoint connections between communicating devices.

More sophisticated home-grown networks may include devices such

as multiplexers and data switches. In environments with modest

to large numbers of terminals, it is usually practical to concentrate traffic on a floor-wide basis, even within a small area, to

avoid having to run many parallel wires to the host site. Small

multiplexers are ideally suited and commonly used for this type

of concentration.

At another level of sophistication in local area networking,

"intelligent" devices are used to maximize the utilization of

costly resources. In the examples just described, the thrust in

local area networking was to economize and simplify wiring problems. In the present case, intelligent network devices such as data switches may be used to give large numbers of terminals

access to smaller numbers of computer ports. The idea behind

this networking technique, called port contention, is that all

terminals do not usually communicate with the computer at the

same time; therefore, a device that manages the "called" requests

of the terminals can be used to economize on the number of expensive terminal ports that must be installed on the host. Data

switches have been used for this application for approximately

ten years, and they offer a relatively low-cost and proven technological solution to the terminal-host access problem.

26
More recently, we have begun to see application of the newest LAN

technologies to the problems in the technologies we have just

described. These new technologies are described by fourthgeneration PABXs and cable-based local area networks.

o The PABXs are identical with data switches in terms of

their data and communications functionality. PABXs are,

of course, designed primarily for voice applications;

their use for local area networking is in its infancy

(See 3.1.6)

.

o Cable-based LANs are just beginning to come into use.

There is, perhaps, only about $150 million of installed

base of this technology. They are still regarded by many

potential users as new and risky. However, they are

growing rapidly and, with the acceptance of standards for

this technology, will probably continue to increase at a high rate.*

With the exception of systems that are vendor-specific and

homogeneous with respect to equipment type, protocols, etc., the

systems served by the newer technologies (cable-LANs and PABXs)

generally consist of relatively simple, asynchronous terminal

devices. Until recently, one of the most intractable barriers to

the widespread use of LANs to support factory automation has been

the reluctance of manufacturers to divulge details of equipment

operation. This problem has now been significantly reduced

through the cooperative efforts of ICST, General Motors, IBM,

Allen-Bradley, Concord Data Systems, Hewlett-Packard, Motorola,

DEC, and Gould. System interoperability, using the new standard

LAN protocols, was demonstrated at the 1984 National Computer

Conference . 3.1.1.2 Technological Evolution

o 1984-1989 — We expect a number of important developments

in the 1984-1989 time frame. In this period, we will see

much more widespread acceptance of standards; a resolution of the competition among the various technological

alternatives for LANs, accompanied by the emergence of

widely accepted approaches to local area networking; and

reductions in cost through the development of VLSI.

Another very important approach to local area networking

-- hybrid LANs employing both PABX and cable-type baseband LANs — will, we believe, become established as the

dominant technology before the end of this decade. The

basic technology for hybrid networks is at hand, but

* This does not imply ongoing R&D on coaxial cable for these

LANs. This cable is a commodity item with no future improvement likely (See 3.2.4).

27
their development requires market commitment by the suppliers who are best positioned to provide them — namely,

the PABX manufacturers. We are increasingly finding that

these suppliers are adding LAN capabilities to both

existing and new PABX systems.

The technology development that is necessary for all LAN

approaches is in the area of peer protocols and access

methods, e.g., CMSA/CD. To date, as noted earlier, services available on the new LANs are limited to the most

common types of applications. A wider range of options

will be developed. This development will extend beyond

the 1990 time frame, but the services needed to serve the

most common types of equipment will certainly be available by 1990. Interface development is primarily

software-based. Where the numbers justify it, custom

Very Large Scale Integrated (VLSI) chips are being

developed to handle services such as X.25.

1989-1999 —In the 1990s, we expect less significant

change , primarily the maturing of some component technologies such as better fiber optic infrastructure to

support LANs. [STAFF COMMENT 7]

The ongoing development of the IEEE 802 standard for LANs

will have, we believe, an accelerating effect on the

development and user acceptance of LAN technologies. The

current diversity of LAN architectures will decrease

substantially as many suppliers simply fade out of the

business and others attempt to realign their products

with accepted standards.

An important technological competition should be resolved

by 1990 — namely, the conflict between broadband and

baseband transmission techniques for cable-based LANs.

We expect this to be resolved in favor of broadband

systems and that suppliers of baseband LANs will add

broadband systems to their product lines. [STAFF COMMENT

8]

For 1990 and beyond, we expect developments in LAN technology to be more evolutionary than revolutionary. With

the acceptance of standards, more extensive use of VLSI

technology should reduce system costs, primarily those of

services. Developments in other areas will include

further price reductions of fiber optical cable and the

maturing of "infrastructure" techniques (e.g., fiber

optical cable installation) . These developments will give

fiber a cost-competitive position with respect to other

cabling alternatives such as coax and twisted pair. Lowcost means of accomplishing connecting and tapping functions in fibers will be needed to make this transmission

medium cost-competitive. We expect these developments to

be in place by the early 1990s.

28
3.1.1.3 Conclusions

Costs for all approaches to local area networking are decreasing,

some more rapidly than others. Table 3-1 lists the approximate

costs of three generic approaches to local area networking: data

switches, cable-based LANs, and PABXs. [STAFF COMMENT 9] The

most mature of these technologies, data switches, presently

offers slightly lower cost, and least performance. Cable-based

LANs are somewhat higher priced, but will experience a more rapid

price decline than data switches because they are more amenable

to VLSI cost reductions. Finally, PABXs, which are intended

primarily for voice applications and are, therefore, subject to

somewhat different economic considerations, will be very competitive with both data switches and cable-LANs on an incremental

cost basis. The table summarizes these cost characteristics,

along with other basic features of the three technologies.

One potential cost/performance benefit of LANs derives from

savings on wiring costs and the elimination of multiport computer

connections. The latter is illustrated in figure 3-la which

shows both a standard teleprocessing configuration and one in

which the local area network becomes an extension of the computer

teleprocessing system. [STAFF COMMENT 10]

In the standard configuration, each time a new terminal is added

to the system, a communications port must be implemented in the

front-end processor of the computer. Communication ports are

generally expensive and require, in addition to the implementation of a port, dedicated wiring from the terminal to the

computer

When the computer has communications multiplexing hardware

(figure 3-lb) , several independent data streams can be transmitted by a single connection. These data streams can be

addressed and sorted out by the local area network, to which many

terminals may be connected. In this configuration, the local

area network saves computer boards and the wiring cost for connecting each terminal with its dedicated line directly to the

computer. These cost savings are weighed against the added costs

of the intelligent multiplexing hardware and the processing service on the computer and the corresponding intelligence that must

be implemented in the local area network.

Figure 3-2 is a simplified illustration of the cost structures

for various local network alternatives. The curves in this

figure should be regarded as approximate. The specific cost

assumptions underlying the curves are highly variable, depending

upon the specifics of the physical installation and the

teleprocessing system. The critical assumptions used in this

figure are as follows:

o Wiring Costs. We assume that the cost of cabling is

approximately $30 per meter for baseband. This cost can

easily double for certain installations, including broadband especially in metropolitan areas like New York City,

29
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Figures 3-la & b LAN ARCHITECTURES

31
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Mqure 3-2 COST STRUCTURES FOR LOCAL NETWORK ALTERNATIVES

32
where tall buildings are commonplace and union wage

scales are high. We also assume that the average length

of the cable run from computer port to terminal is about

30 meters for the standard teleprocessing configuration.

For the cable-based LAN, which may be either a ring or

bus topology, the length of the bus or ring is assumed to

be 500 meters, and we add $50-$150 to the wiring costs

for each terminal-drop from the bus or ring. Finally, in

the case of the PABX, we assume that the wiring costs

have been covered in the telephone installation; that is,

no additional wiring is needed to support a data device.

o Port Costs . The incremental cost for ports on a computer

IS assumed to be $300. The port costs for cable-based

LANs are associated with the access devices to which the

terminals connect. The port cost for a cable-LAN is

assumed to be $500. This is an estimate based upon the

prices of established LAN suppliers. In the case of the

PABX, the incremental cost for providing a data connection is assumed to be $600 per port. These costs are in

addition to normal communication processor front-end port

costs

.

Neglecting the fixed cost for communications software in the

computer front-end processor, the figure 3-2 shows a sharply

rising linear cost curve for the standard teleprocessing configuration. The slope of this curve is dominated by the wiring

cost for each terminal. In contrast, the cable-based LAN curve

exhibits a high front-end cost (attributable to the installation

of the bus or ring) and a relatively moderate incremental cost

for adding terminals, based on the cost of the wiring drop and

the port access device required for each terminal. In this case,

wiring cost is a minor portion of the incremental cost per terminal connection. Finally, the PABX-based network shows the

least cost of all on an incremental basis. Here, it is assumed

that the cost of the PABX installation has been justified solely

on the basis of the voice service it provides and that we attribute only the incremental costs for providing data connections to

the local area network. [STAFF COMMENT 11]

The curves suggest that if in fact a third-generation PABX can be

cost- justified for voice service, it may offer the most costeffective LAN solution of all. In applications where the PABX is

not a reasonable alternative, the economics of the other two

alternatives must be carefully evaluated. The qualitative behavior of the cost structures will remain as shown in figure 3-2,

but the crossover point of the curves may occur at a different

number of terminals. In any case, the cost must be weighed

against the operational performance advantages already discussed

that a LAN offers; for many users, these operational performance

advantages may outweigh cost disadvantages.

The developments we have described will have several important

impacts. First, the acceptance of standards and the later reduction of cost through VLSI technology will be major factors in

33
stimulating the application of local area networks. These developments are coming at a time when the demands for local area

networking are increasing rapidly. The proliferation of personal

computers as desktop multi-function terminals and the general

growth of sophisticated office automation systems will demand the

communications features, resource sharing data base technology

and ease of use offered by the new LAN technology.

On the supply side, as we have already suggested, new developments will soon establish the dominant LAN approaches.

Currently, about 200 LAN suppliers are offering any number of

approaches utilizing differing access methods, differing frequencies, differing topologies, and so on. The number of

suppliers will drop dramatically as tne market converges on the

dominant approaches. As that occurs, standards will permit

mixed-vendor systems. LAN ports will be bundled inside much

equipment; in this case, LANs will not be an identifiable

product. Because of their positions as large suppliers with

established reputations, PABX vendors will, we believe, play a major role in the future of local area networking; the PABX will

be itself in a natural position to satisfy many LAN requirements

by virtue of its technological capabilities and cost-competitiveness. By providing LAN-like functions over twisted pairs or by

incorporating cable-based networks into their product lines, PABX

suppliers will be able to offer hybrid network solutions. These

will satisfy a variety of local area networking requirements,

such as broadband with data rates as high as the megabit range,

to low- to medium-speed data to terminal to computer access, and

inter-networking communications where the PABX itself serves as

the hub for interconnecting other local area networks.

The benefits of local area networks are primarily those of operational convenience. Cost benefits, if any, can be assessed only

in terms of very specific system applications and requirements.

The significance of this technology lies in the following operational features:

o Add ing New Dev ices . One of the principal benefits of a local area network is the convenience and the ease of

attaching terminal devices as needed, regardless of

whether a bus, star, or ring topology is used. With a bus or ring topology, the device may be connected by

dropping a cable from the nearest point of the passing

bus or ring; with a star topology, typically implemented

with a PABX, the twisted pair cabling used for telephone

sets may also be used for data devices.

o Moves and Changes . These are facilitated in the same way

as the addition of terminal devices as noted above.

o Mul t i-Networ

. A LAN environment need not be homogenous.

Isolated LANs may be implemented to support highly

localized systems of processors and terminals. Where it

becomes necessary to communicate off-network, gateways to

other networks (local or long-distance) facilitate ex34
panded access. Multi-network configurations particularly

suited to this kind of requirement are based on the PABX;

as a hub, the PABX can interconnect LANs with one another

and with long-haul networks.

o Device Protocol Compatibility . This feature is presently

less critical than the foregoing but may become more so.

With homogenous data processing environments, problems of

protocol incompatibility do not exist. However, as it

becomes desirable to integrate different systems that may

use different types of equipment, protocol compatibility

is a serious problem. LANs are often promoted for their

capability to link incompatible devices. This is not

strictly accurate; LANs can facilitate the interconnection of otherwise incompatible devices. Incompatibility

is a problem that frequently arises as data processing

systems grow and the purchasers of these systems wish to

retain flexibility with respect to equipment selection.

With protocol conversion devices, which may be integrated

with the LAN or installed as standalone equipment, the

LANs provide a "universal" communications medium. This

capability is significant, because it may free systems

developers to choose systems on the basis of their

suitability for new applications rather than their compatibility with existing systems or hardware.

3.1.2 Digital Microwave Radio

3.1.2.1 Background and Present Approaches

Microwave radio relay systems form the backbone of the national

telecommmunicat ions network. Approximately two-thirds of all

toll telephone traffic in the United States is transmitted over

microwave links. Despite the advent of satellites and fiber

optic cables, microwave radio is expected to remain a major

medium of transmission of all kinds, voice and data, for the

foreseeable future.

An advantage of microwave is the ability to establish links

quickly but it is limited to line of sight.

The main applications for microwave radio systems include:

o long-haul high-density telephone trunking

o short-haul and thin-route trunking

o metropolitan junction transmission

o private microwave systems

o broadcast and cable TV distribution

o portable and transportable TV transmission, including

"electronic newsgather ing"

Of the above, the first three categories account for the majority

of installations (and investment) . They are likely to remain the

primary applications of interest, although fiber optic cables

will become increasingly cost-competitive.

35
Microwave radio development began during the 1930s, but the first

significant commercial service began in the late 1940s, when it

was adopted as the primary common carrier transmission medium for

distances longer than 25-50 miles, and for private communications

systems by railroads, pipeline companies and electric power

utilities. A vast proliferation of microwave systems continued

well into the 1970s based mainly on analog frequency modulation

(FM) and frequency division multiplex (FDM) technology.

A wide range of frequencies is used for microwave transmission —

from less than 1 GHz to over 40 GHz for commercial applications

but the most widely used are in the range of 2-13 GHz for

long- and medium-distance links. The higher frequencies, which

are more subject to atmospheric propagation losses in rain and

fog, are used for short-distance and single-hop applications.

An increasingly troublesome concern is congestion of frequencies,

especially in larger cities.

FM microwave radio, the industry standard for over 20 years, was

technologically mature by the early 1970s. Its position as the

dominant backbone transmission technology was coming under competitive fire by then from newer technologies, such as satellite

and long-distance waveguide transmission, as well as from improvements in older coaxial cable technology. Early research and

development results on optical waveguide systems and fiber optic

cables were beginning to attract attention. All of these alternative transmission technologies held out the promise of lower

cost.

In addition, it had become evident that the telecommunications

networks of the future would be based on digital transmission and

switching, not the analog modulation used by FDM/FM microwave

radio. The merits of digital technology compared to analog were

already well documented. By the early 1970s, various types of

digital microwave radio systems had been developed, and some had

been placed in commercial service.*

Originally, digital microwave was of interest mainly because it

promised a lower overall system cost; even though digital microwave radios were (and still are) more costly than analog radios,

the PCM multiplex used with digital microwave is much less expensive than the FDM multiplex used with analog radios. In general,

digital microwave is less costly on a system basis for relatively

short, repeatered path lengths, where multiplex costs dominate;

analog systems are cheaper for long path lengths with many repeatered hops, where radio equipment costs dominate.

* The first instance was in Japan in 1962, the year the first T-1

digital cable conversion system was placed in service in the

United States.

36
The economic cross-over path length for digital microwave over

analog depends on many factors. It can vary from less than 200

miles to over 400 miles. Figure 3-3 illustrates the principles.

Average cost cross-over distances are decreasing steadily as

digital radio technology advances.

Figure 3-3 Relative Cost of Digital and Analog

Microwave Radio Systems as a Function of Path

Length

Digital microwave radios are more expensive then analog primarily

because they are inherently more complex. By its nature, an

analog modulation system is transparent to the modulation frequency, and the information-bearing signal is carried through the

modulation-demodulation process without information state conversion. In contrast, most digitally modulated systems convert the

digitally-encoded information-bearing signal into a different

form for transmission (e.g., a three-level PCM-encoded signal may

be converted into an M-ary phase-shift keyed signal by the radio

system modulator) . To recover the original information in the

37
receiver, certain information must be precisely determined from

the characteristics of the received signal itself, including the

carrier frequency and the modulation rate.

These equipment functions, which require costly precision circuit

components in the digital radio, are not needed in analog

systems. This cost disadvantage is inherent in the digital radio

technique, and comparatively little hardware cost reduction has

been realized over the past ten years relative to the cost of

conventional analog radio.

A second disadvantage of digital radio compared with analog is

lower spectral efficiency, as measured by voice channel capacity

for a given radio frequency (RF) channel bandwidth. For example,

a typical 6-GHz heterodyne FDM-FM microwave radio system can

carry 1800-2400 4-khz voice telephone channels over a 30-MHz RF

channel. In contrast, early digital radios carried fewer than

300 voice channels over the same RF channel. Because of this

performance limitation, the FCC in 1973 mandated a minimum bandwidth efficiency requirement on digital microwave radios for use

in common carrier systems of one bit per second (bps) per hertz

of bandwidth. Since standard PCM-encoding of voice signals requires 64 kbps per voice channel, the FCC requirement technically

implied a minimum of 469 voice channels in a 30-MHz RF band.

However, as system capacities must be compatible with the standard PCM multiplex hierarchy, the ruling really implied a minimum

of 576 channels (equivalent to 24 T-1 carrier channels)

From that time on, the emphasis in digital microwave radio development focused on increasing spectral efficiency through the use

of higher level modulation techniques. While the FCC minimum of

1 bps/Hz presented a challenge to the industry in 1973, it was

recognized that the theoretical performance limit was much

higher. The well-known Shannon equation shows this limit to be,

under ideal conditions:

C = W log (1 + S/N)

2

where: C is the signaling rate in bps

S/N is the signal-to-noise power ratio;

and VJ is the channel bandwidth in Hertz.

Therefore, assuming a signal-to-noise ratio of 27 decibels (dB)

(a factor of 500) , it should be theoretically possible to achieve

a spectral efficiency of about 9 bps/Hz. In actuality, the

Shannon limit cannot be achieved because of intersymbol interference, an impairment that varies with the form of digital

encoding and modulation used as well as to the signal-to-noise

ratio. In general, for a given type of modulation and a specified transmission error rate, the spectral (bit-rate) efficiency

will increase as the number of modulation symbol states increases; however, the required S/N ratio will increase also, as

38
shown in figure 3-4. The most spectrally-efficient digital

microwave radio systems demonstrated to date have achieved 4.5 to

6 bps/Hz, using 64-level quadrature amplitude modulation (QAM).

As spectral efficiency increases, overall system costs decrease,

because additional channel capacity is made available at little

or no incremental cost.

Early digital microwave systems often used simple phase-shift-key

(PSK) or frequency-shift-key (FSK) modulations, the latter being

used primarily to convert existing FM radio systems designed for

analog transmission to digital operation. PSK modulation is more

spectrally efficient than FSK, and early 4-level phase modulation

schemes were able to meet the FCC's 1973 1 bps/Hz requirement.

More modern equipment designs soon employed 8-level PSK, which is

capable of 2-3 bps/Hz in practical systems. By the early 1980s,

however, 16-level quadrature amplitude modulation (16-QAM) became

the technique of choice for new equipment designs. QAM combines

phase and amplitude modulation to create multiple signal states.

It is capable of slightly higher spectral efficiency than PSK and

is simpler to implement for higher level modulation schemes,

because it is less critically affected by circuit and component

impairments and therefore requires a lower minimum S/N ratio.

Practical 16-QAM systems in use today have spectral efficiencies

of 3 bps/Hz.

A natural extension of 16-QAM is 64-QAM. This modulation permits

increasing the bit rate by a factor of 1.5 while maintaining the

same baud rate. A spectral efficiency of 4.5 bps/Hz has been

achieved in commercial service using 64-QAM. Digital radios

operating in the 6-GHz band with a 30-MHz RF channel bandwidth

and 135-Mbps information rate (the equivalent of 3 DS-3 multiplexed bit streams) represent the 1984 state-of-the-art in the

United States. More efficient systems have been demonstrated in

Japan, at up to 6 bps/Hz, but only through relaxation of filtering requirements below FCC limits, which are designed to prevent

excessive adjacent channel interference.

o Adapt ive Equal izat ion — Higher level modulation schemes

such as 64-QAM are much more sensitive to dispersion due

to multipath fading than are lower level systems or FM

systems. Adaptive equalizers can greatly reduce the

effects of such propagation path impairments, and their

use has become standard in all modern equipment designs.

The theory of adaptive equalization has been known and

documented for many years. However, the importance of

adaptive equalization has increased with the use of highlevel modulation schemes, and the development of equalization techniques is probably the most dynamic aspect of

digital microwave radio R&D today.

The most serious problem in high-level modulation systems

is caused by fad ing- induced amplitude response slopes

over the signal passband , which can cause serious quadrature distortion in the demodulation process.

39
40
The earliest adaptive equalizers were circuits that

simply sensed and corrected amplitude slopes in the receiver. More advanced forms of equalizers also correct

for midband notch distortion. The most sophisticated

equalizer in use today is called the baseband transverse

adaptive equalizer, in which the in-phase and quadrature

baseband signals are shaped by raultitap transversal filters after being demodulated. These signals are then

regenerated using the recovered timing waveform. The use

of adaptive transversal equalizers has permitted highermodulation-level 64-QAM systems to perform as well as, or

better than, 16-QAM systems on the market today that are

equipped only with slope equalizers.

Transversal equalizers for high-capacity digital microwave radio systems have become practical only with the

development of thin-film integrated circuitry, miniaturized delay elements and advances in carrier and timing

recovery circuitry. Further advances in these technologies will be needed to support the continued

development of higher capacity equipment.

Table 3-2 summarizes the 1984 state-of-the-art in digital

microwave radio technology, in terms of the spectral

efficiency of the various types of modulation used.

Phase shift key (PSK) modulation has been the most common

modulation used in commercial equipment for the past

decade, but QAM is clearly the choice today. Quadrature

partial response (QPR) , a variation of QAM used mainly in

narrowband systems at 2 GHz, has not proven practical for

broader bandwidth, higher frequency equipment.

Table 3-2

198 4 DIGITAL MICROWAVE STATUS

Frequency Band Spectral Efficiency

Modulation (GHz) (bps/Hz)

4-PSK 18 1.0

8-PSK 6,11 3.0

16-QAM 2,6,11 3.0

QPR-7 2 3.5

64-QAM 6,11 4.5

3.1.2.2 Technological Evolution

o 1984-1989 — As digital radio technology advances, it

seems certain that it will rapidly replace analog for

almost all short- and medium-distance requirements

(competing against optical fiber cables for some applications) , while analog microwave will retain a gradually

41
decreasing share of long distance requirements. For the

highest density routes, optical fiber cables will often

be preferred.

Special consideration will be given to upgrading and

expanding the more than 100,000 route miles of existing

long-haul analog microwave systems, most of which are

owned by AT& T-Commun icat ions . Existing equipment can be

upgraded at comparatively little cost by converting to

single-sideband AM microwave. Using recently developed

techniques, analog voice channel capacity per 30-MHz

radio channel can be increased from the present average

of about 1800 to approximately 6000, which would greatly

reduce the cost per voice channel and extend the life of

analog radio systems for many years.

On the other hand, it will become increasingly desirable

to convert at least a portion of the existing capability

to digital operation, to facilitate the expansion of

high-speed data services and allow the evolution of a national ISDN. Significant introduction of long-haul

digital microwave systems operating in the 4- and 6-GHz

bands may be expected on existing routes as well as some

new routes over the next 10-15 years.

The main thrust of future development will be toward

higher spectral efficiency. Digital microwave is already

approaching the efficiency of conventional FDM/FM analog

equipment; on a total system basis, it may be substantially more spectrally efficient already, since the

same frequencies may be reused in closer physical proximity — i.e., on nearby parallel routes or on subsequent

links in a tandem relay chain. Digital systems have

inherently greater immunity to co-channel and adjacent

channel interference. Nevertheless, further increases in

channel capacity are possible, and digital microwave

manufacturers have a strong incentive to achieve such

gains to keep pace with competing technology.

1989-1999 — The current practical spectral efficiency

1 imit of equipment meeting FCC adjacent-channel filter

requirements is about 4.5 bps/Hz. Improvements in

filtering and adaptive equalization should allow an increase to about 6 bps/Hz for 64-QAM by 1989.

Continued' refinements to 64 QAM systems may yield a spectral efficiency of up to 7 bps/Hz, but still higher

level techniques will be needed by 1994. Assuming that

QAM remains the preferred format, we expect that 256-QAM

will be used in commercial equipment, yielding

efficiencies of up to 10 bps/Hz by 1999. Of course, it

is possible that an entirely different technique may be

introduced, much as QAM superseded PSK in recent years.

42
3.1.2.3 Conclusions

The projections discussed above are shown in Figure 3-5, along

with projected proportionate decreases in cost per unit of transmission. The cost to transmit digital information by digital

microwave will be reduced to about 45 percent of 1984 costs by

1999, based on improved spectral efficiency alone.

To achieve this cos t/per f ormance improvement, higher level

modulation will be required, which implies a higher signal-tonoise ratio. This, in turn, implies more sophisticated adaptive

equalization as well as improvements in solid-state microwave

components such as gallium arsenide field effect transistors

(GaAs FETs) and higher power solid-state transmitter sources such

as high-power GaAs FETs. Particularly at 11 GHz and above,

achievement of such improvements will also require continued

advancements in microwave circuit miniaturization, mainly through

further development of microwave integrated circuits of the thinfilm hybrid and GaAs monolithic varieties.

The evolution of telecommunications networks will be based on

further improvements in microwave radio technology as well as on

newer fiber optic technology. Digital radio seems certain to

replace analog for many short- and medium-distance routes,

competing in individual applications with fiber optic cables.

Digital radio will also be used in some long haul systems,

particularly to upgrade existing routes; however, fiber optic

cables are likely to be the medium of choice there.

3.1.3 Satellite Comwun i cat ion

3.1.3.1 Background and Present Approaches

The start of operations by INTELSAT in the 1960s enabled major

industrialized countries throughout the world to communicate by

satellite. By the mid-1970s domestic satellite communication was

fully operational in Canada, the United States and the Soviet

Union; other countries were initiating plans to install the

necessary equipment.

The 1970s were marked by increased use of satellites for television distribution, business, and military applications. During

this period, the C-band frequency spectrum was assigned to

specific users, and the higher frequency Ku-band was opened up

for satellite communications.

The technology of satellite communication has undergone rapid

change in the past 20 years. The channel capacity of satellites

has been increased dramatically by developments in power amplifiers, low-noise amplifiers and antenna structures, greater

launch capability and space-proven prime power systems.

43
O 00 vO •4' CM

44
Furthermore, the cost of satellite systems has dropped greatly

over the past 20 years: INTELSAT earth stations with 30-meter

antennas sold for $10 million (U.S.) during the 1960s, while

those now being placed in service for two-way communication (such

as the INTELSAT B stations) sell for one-tenth as much. Receiveonly stations for a single television channel are also dropping

dramatically in price — from $50,000 - $75,000 ten years ago to

a few thousand dollars now.

Modulation techniques initially used for multi-channel voice

systems on satellites relied heavily on the traditional FM/FDM

channelization and had little flexibility in trunking and routing

of channels. Today, numerous modulation and access techniques

are in development or in use:

o FM message — most economical for point-to-point

trunk ing ; o FM video — for network and cable video;

o SCPC — most cost effective for thin-route communications, audio, video, and computer systems;

o TDM/FDM — most cost effective for high duty-cycle pointto-point systems; and

o TDM/TDM — most cost effective for large networks.

New developments require a wide variety of channelizations

utilizing various data rates. For example, satellite systems

will be using the following bit rates:

o 56 kbps for data systems;

o 1.544 or 2.048 Mbps for data channels;

o 6.44 or 8.448 Mbps for high-speed data channels;

o 16, 32 and 64 kbps for voice channels;

o 1.544 or 2.048 Mbps for one-way video conferencing; and

o 56 or 64 kbps for freeze-frame video.

An important consideration in the use of satellites is its

vulnerability to jamming. Sensitive information transmitted by

satellite must be encrypted along with satellite control

circuits . 3.1.3.2 Technological Evolution

o 1984-1989 — New services will require further satellite

communication developments during this period. For example, direct broadcast satellite systems will require

more powerful satellite amplifiers and improved antenna

design for regional broadcasting. Direct broadcasting and

videoconferencing will expand dramatically with the advent of better bandwidth compression techniques and

utilization of lower bit rates (1.544 or 2.048 Mbps).

Educational and medical information services will place

additional demands on channel capacities.

45
The increased demand for communications services throughout the world will spur the development of higher

frequency systems. The saturation of the 4/6 GHz region

in the United States has already caused greater use of

the 11/14 GHz spectrum. Systems are now being developed

for the 20/30 GHz region, and their feasibility has been

demons tr a ted

Other technological developments in 1984-1994 will include multi-beam satellite antennas, on-board satellite

switching, high frequency/high power systems, and lower

cost earth stations to provide services direct to

customer premises. Specific development areas include

the following

The next-generation DOMSAT satell i te system has been

developed utilizing the C-band spectrum for transmission. This has been possible because of improvements

in satellite and ground-station subsystems and the

increased capacity and reliability of systems through

the use of state-of-the-art, space-proven components.

Systems that utilize the Ku-band require large downlink margins to overcome the fading that can be caused

by precipitation in the transmission path; therefore,

they will have to use high-power transmitters with

traveling wave tube (TWT) amplifiers for the next

decade. C-band amplifiers, on the other hand, can

employ the more reliable solid-state technology of

GaAs FETs

Ku-band station locations are not limited by the

radio-frequency interference (RFI) and congestion of

terrestrial microwave networks, but frequency coordination for C-band stations has been difficult in the

past. It is now a less formidable problem, because

interference levels can be precisely measured on-site,

and natural or artificial shielding can be judiciously

used . Design improvements and higher antenna gains can

double the traffic capacity per transponder of current

satellites. Receivers using GaAs FET in both the 6-

GHz amplifier and 4-GHz receiver sections can reduce

noise by over 3 dB.

The replacement of traveling wave tubes (TWT) amplifiers by an all-solid-state GaAs FET power amplifier

in all frequency bands will significantly improve both

the linearity and reliability of the final amplifier.

For a given signal quality, the input back-off required is approximately 5 dB less than that for a TWT

amplifier. This will result in greater channel

capacity for the same signal-to-noise ratio. Further,

46
the elimination of the hot-cathode life limitation of

the TWTAs will enhance the probability that the amplifier will meet a 10-year mission requirement.

Along with improvements in the satellite power, amplifier linearity, and channel response, enhancements of

terrestrial equipment will permit a doubling of

traffic capacity per standard 40-MHz transponder

channel. For example, the figure of merit (G/T) of

the receiving earth station in the DOMSAT system has

been improved by the use of recently available thermoelectrically cooled low-noise amplifiers (LNAs)

providing no ise- temper a ture performance on the order

of 35 degrees K. These LNAs are replacing cryogenically cooled amplifiers because of their inherently

superior reliability, performance and reduced maintenance expense.

Table 3-3 shows a projection of growth in equivalent

standard 40-MHz transponders:

Table 3-3

GROWTH IN CAPACITY

(Equivalent 40-MHz Transponders)

Year World U.S.

1980 426 156

1985 1, 410 478

1990 3,100 756

1995 5, 580 1,135

2000 9 , 870 1,655

Source

IEEE Communications, May

The capacity of the DOMSAT systems has been increased

from 1,000 to 2,000 circuits per transponder by the

use of compandors. These enhance the signal-to-noise

ratio in a channel by compressing the dynamic range of

a voice signal prior to transmission to the satellite

channel and expanding it to its original range at the

receiver. The S/N ratio can then be reduced to the

original value by decreasing the per-channel FM deviation, allowing more channels in the baseband with no

perceived loss in quality.

To further improve signal quality, DOMSAT systems are

utilizing adaptive echo cancellers. These devices are

significantly superior to conventional echo suppressors, because they estimate the echo level on a given

path and exactly cancel it.

47
Provision has been made for the transmission of wideband 56-kbps data to dedicated 5-meter duplex earth

stations on customer premises. All data carriers will

use forward error correction codes with expected performance of a data channel equal to a bit error rate

of one error in ten million bits transmitted at an

availability of 99.95 percent.

For some time, INTELSAT has offered a wide range of

digital services via dedicated PCM-PSK (pulse code

modulation-phase shift keying) channels, providing

transmission at speeds of 50 and 64 kbps and 1.5 Mbps

and, by submultiplexing , meeting current international

data needs. INTELSAT is now changing to time division

multiple access (TDMA) techniques, which will be the

operational method of the future. TDMA is required to

meet the vast communication requirements now on the

horizon; dynamic satellite-switched TDMA (SS-TDMA)

systems, operating to multi-beamed satellites, are

essential to achieve future effective reuse of frequencies in satellite systems. On-board regeneration

and processing techniques will also be utilized in

future systems.

The INTELSAT VI satellite, scheduled for launch in

1986, incorporates a 6 x 6 satellite switched matrix.

This switch provides for full interconnectivity between two hemispheric beams and four overlaid zone

beams, two in each hemisphere. Frequency reuse with

the overlaid zone beams is achieved by orthogonal

polarization to the corresponding hemisphere beams.

In addition to the six beams at C-band , there are two

steerable Ku-band spot beams, normally one in each

hemisphere, and two global 4/6 GHz beams. The spot

beams can be interconnected to each other or to the

6/4 GHz hemispheric transponders via a static switch.

There is also full interconnectivity between the two

11/14 GHz spots and the six 4/6 GHz beams.

Home reception of microwave signals transmitted from a direct-broadcast satellite (DBS) is now becoming a reality with the authorization by the Federal Communications Commission in the United States to several

corporations and with the development of a number of

European and Japanese systems. Consumer acceptance of

the DBS concept will largely depend on the size of the

equipment and its cost. Present system concepts call

for an antenna size of one meter and the use of monolithic microwave components for the 12-GHz receivers.

Several recent developments in antenna structures, and

electronic equipment for proposed DBS systems are

aimed at minimizing the equipment size and reducing

costs

48
Developments in Japan have produced a monolithic

microwave integrated circuit using gallium arsenide

for the down converter-receiver. These subsystems

have an adequate (3.6 dB) noise figure over a 500-MHz

bandwidth. The intermediate frequency band (821.4

MHz) will require further conversion to TV-set frequencies. In the 400-800 MHz range, field-effect

transistor amplifiers can be used in the first stage

with a gain of over 40 dB. Bioolar transistor

amplifiers are used for the second and third stages.

Scientific Atlanta, in the United States, has developed a down converter from 12 GHz to 2770 MHz with a noise figure of 3.1 dB and a gain of 56 dB. This unit

can be mounted directly on the antenna. The intermediate frequency (IF) signal is conveyed to an indoor

unit via a low-loss cable. The indoor unit is designed to perform an additional frequency conversion,

signal demodulation, video and audio processing and

remodulation to produce an output compatible with

existing television sets.

The use of thin-route satellite systems has increased

in several countries. For example, in Alaska and the

sparsely populated northern sections of Canada, thinroute systems provide private two-way telephone

communication for remote villages and access to the

main telecommunications network. Continued development of these systems and the reduction in equipment

costs will permit their economic implementation. An

important feature of these systems is the increasing

application of demand assignment multiple access

(DAMA) to reduce costly space-segment bandwidth and

power utilization. Centralized control and mesh

rather than star configurations improve performance

and decrease the probability of double-hop (i.e.,

ear th-sa tell ite-earth-satel lite-ear th) connections .

1989-1994 — There will be slow growth in applications as

optical fiber economies cause displacement of satellite

tr ansmiss ion

.

1994-1999 — Growth will be limited to special geographical applications such as trans ocean and archipelagos.

49
3.1.4 Cellular Radio

3.1.4.1 Background and Present Approaches

Nearly fifteen years after the invention of the cellular mobile

radiotelephone by Bell Laboratories and significant development

efforts, principally by Motorola, the first commercial systems

are now being installed. Cellular radio technology is principally used to provide common carrier switched mobile radiotelephone service interworking with the public switched telephone

ne twor k

Cellular radio is one of a class of system approaches for better

utilizing the scarce natural resource of the frequency spectrum.

Previously, radiotelephone systems were implemented using highpower transmitters that saturated an entire metropolitan area.

Because of the limited frequency spectrum and competing demands

for other uses, only a limited number of frequencies were

available for mobile radiotelephone use. This had the impact of

limiting mobile radiotelephones to only several hundred users per

major metropolitan area.

Present commercial systems are being implemented with narrowband

FM transmission in the 800-MHz microwave mobile radio band. A

maximum repertoire of 300 channel-pairs is allocated to any one

system. These frequencies, in turn, are zoned into hexagonal

cells that form a blanket network covering a metropolitan area.

The cells are extended as necessary and adjusted in radius to

cover geometries of various shape. Cells may be sub-divided

into smaller cells within a group. Within any one zone, or cell,

frequency assignments are chosen which are not used in adjoining

cells. Frequencies are re-used at a predetermined distance measured in number of cells from a cell of interest. In this way a large geographic area can be covered with a small number of

frequencies without interference.

When a mobile unit passes over a cell boundary, a centralized

control system dynamically reallocates the mobile unit to the

frequency of the adjacent cell and simultaneously switches the

wireline public switched telephone circuit to the new cell base

Stat ion

Current FCC regulations and posture require nationwide

compatibility so that service will be available anywhere within

the nation. All products now being marketed are of the mobile

(vehicle-mounted) type. However, portable (hand-held) units the

size of a standard brick have been demonstrated and will be

commercially available soon.

3.1.4.2 Technological Evolution [STAFF COMMENT 12]

o 1984-1989 — During this time period, products presently

on the market will proliferate with little change in the

basic systems concept and performance. More widespread

\

50
use of portables may be expected toward the end of the

period; higher degrees of semiconductor integration and

the learning curves associated with volume will permit

cost reduction. Of particular importance in this application will be monolithic integrated circuits employing

gallium arsenide front ends. Cost reductions in highpower silicon radio-frequency devices will result from

increased yields. Battery technology developments, in

the form of rechargeable lithium and possibly zinc/air

technology, will make portable operation more feasible.

o 1989-1994 — Toward the end of this time frame, systems

will begin to reach saturation capacity of some 200,000

to 300,000 users per system. Costs will decline to a point where upscale consumer demand (as opposed to business demand) will begin to develop, and technologies will

begin to be investigated that have a potential for increasing system capacities up to tens of millions of

subscribers per city.

During this time period, hand-held portables will proliferate widely and begin to displace vehicle-mounted

mobiles, since cells will have split into smaller cells

that do not require high-power mobile transmitters.

System technologies will have to provide upward compatibility with frequency assignments, since nearly all the

reserve frequency spectrums will have been utilized and

no additional room for growth will exist because adjacent

frequency segments will also have been allocated.

o 1994-1999 Spread-spectrum modulation technologies along

with digitized, efficiently coded audio will be utilized

to provide cellular radio-type structures on the same

frequencies currently used for the conventional FM nonspread-spectrum system. In this way, both upward and

downward compatibility can be provided as cellular

systems develop.

Field tests of the spread-spectrum, high-capacity mobile

radiotelephone system will begin during this period.

While the technology will be ripe for exploitation by

then, the government might well delay its implementation

for as much as 10 years. The history of similar developments indicates that cellular technologies will develop

most rapidly where regulatory structures are more conducive to industry/government partnership, such as in

Japan and Europe.

3.1.4.3 Conclusions

Present mobile radiotelephone systems are priced in the $2,000

range, and portables are expected to be introduced in the $2,500

range. These costs should rapidly but asymptotically approach

51
$300 per unit by the 1999 planning horizon. Improvements in the

performance will be limited; instead, technology improvements

will be channelled into cost reduction.

With cost reductions, the utility of personal and mobile

radiotelephones that provide functionality similar to that of

land-line telephones will arouse widespread consumer demand. We

do not expect, however, that even high-capacity, spread-spectrum

technology will increase cost performance to the point where

cellular telephones displace conventional ones. While cellular

radio systems may become theoretically capable of serving all

residences within a metropolitan area, they will simply not be

cost-competitive. [STAFF COMMENT 13]

3,1,5 Circuit Switching

3.1.5.1 Background and Present Approaches

The basic function of a circuit switching system is to interconnect two or more ports on demand. Traditional switching

systems consist of three basic functional building blocks:

o The por t serv ices examines the ports for request for

services, prov ides ringing and signaling, and connects

the ports through the switching network;

o The switching network provides paths between the ports

through the port services; and

o The control system (or intelligence) recognizes subscriber needs and organizes all the portions of the

switch to effect the connections in the network as

required . By 1979 it had been agreed by all switching manufacturers that

the future of digital switching lay entirely in stored program

controlled digital networks. All manufacturers have introduced

first-generation digital switches, and these are being installed

almost universally throughout the world in new switching offices.

Table 3-4 lists currently available, important digital central

office switches and their principal characteristics.

3.1.5.2 Technological Evolution

o 1984-1994 — There are now indications of what succeeding

generations of digital switches will be like. The key

technology trends that will affect the next generation of

switching systems include the following:

o Much larger memory will reduce the cost and simplify the

structure of the time division switching portion of the

switch

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o Higher speed memory will provide faster access and increase the size of the switch that can be implemented

entirely using time division digital techniques without

resorting to intermediate analog switching stages;

o Cheaper memory promises to reduce the cost of circuitry;

o Improved m icroprocessors promise more effective control

and the opportunity to distribute increasing capability

at minimum cost throughout a switch. Increased capability includes operation with more digits, more memory

and more flexible application opportunity;

o High-voltage semiconductors are finally permitting the

replacement of all iron-core components such as relays

and transformers in subscriber services circuits. This

offers the promise of much more compact line circuits of

greater reliability and lower cost;

o Arch i tecture is becoming more refined as digital switching develops, permitting increased cost-effectiveness;

and

o Distr ibut ion of intell igence is a corollary of improved

architecture, and its effects are profound.

Figure 3-6 shows the traditional distribution of functions in a stored program controlled analog or first-generation digital

switch. With the advent of incredibly inexpensive and capable

intelligence, control is being distributed as shown in figure 3-

7. This approach has several important advantages, including

graceful cost-ver sus-growth functions and a high degree of flexibility and reliability.

Sv;itches are beginning to operate more in the way that biological

systems operate, i.e., with the intelligence being distributed

and duplicated throughout the system. A new-generation switching

system may have literally thousands of microprocessors; in fact,

the ultimate will probably be to have one or more microprocessors

for each incoming line. Since a given call may encounter only a few of these microprocessors, the failure of any one part will

not result in an emergency situation. If a microprocessor fails

before a call is set up through it, a distributed system is

generally able to ignore that microprocessor and find an alternative set of processors and routes to establish the call. A

conversation may be lost if a microprocessor fails, but the low

probability of this should be acceptable.

One of the benefits of the new technology in switching systems is

the modularity of approach, leading to more powerful switches

with distributed intelligence (which includes distributed logic

and memory); these can be configured to perform local or transit

(toll or tandem) and remote switching unit functions, as illustrated in figure 3-8. The elements of the concentrated switch

shown in the upper diagram can be separated and put in different

55
Lines

Trunks

jy^y^ Intelligence

Control

System

Switching

Network

Figure 3-6 TRADITIONAL ARCHITECTURE: CENTRALIZED INTELLIGENCE

56
Figure 3-7 NEW ARCHITECTURE; DISTRIBUTING THE INTELLIGENCE

57
Sub Switch Net Trunk

a. Concentrated

Net

b. Distributed

D

O

Transit

Figure 3-8 POTENTIAL MIGRATION OF SWITCHING FUNCTIONS

58
functional or geographical locations, taking their associated

intelligence along with them. Thus, one switch (lower diagram)

can serve as a master for remote switching units and provide the

functions of a conventional local switch and an associated transit switch at the same time. The latter is a more attractive

alternative with digital switching than with analog switching,

since analog switching can be either two-wire or four-wire, which

might make it unsuitable for transit applications; digital

switches are inherently four-wire, so there is no distinction

between the treatment of transit traffic and local traffic. The

remote switching unit becomes feasible because the link between

it and the central office is a low-cost digital highway similar

to the one used internally in the standard switch.

The basic advantages of digital systems, which are already being

enjoyed, will continue to become more attractive in the future.

These include decreases in size, weight, and (to a small extent)

power consumption.

Maintenance is less troublesome in a modern digital switch,

because it is facilitated by diagnostic programs that indicate

the specific piece of equipment in which a fault is located.

Repair consists of replacing the faulty board. The inherent

nature of digital switching has also made feasible remote testing

(diagnosis and fault location) from a centralized maintenance

center that serves a number of exchanges through associated

digital transmission paths.

In addition to the distributed intelligence and stored program

control operation already discussed, another significant driving

force for changes in telephone switching topology is common

channel inter-office signaling. This links processes in various

switches with high-speed data links, leading to higher speed,

lower cost, and more reliable set-up of connections. It also

permits the transfer of packets of information for more flexible

call control.

Common channel signaling can take two basic forms, as shown in

figure 3-9. The simplest, called associated signaling, uses a link that operates independently of all the voice paths interconnecting the central offices (C.O.s). This may be an appropriate

first step; however, to realize the full advantage of common

channel signaling, non-associated signaling is more flexible.

Here, the signaling links operate on a network containing signal

transfer points; these are packet switched nodes (see section

3.1.7) that provide packet intercommunication between the central

offices in the network.

Future national network topologies must take into account the

transition from an analog network with analog switches and analog

transmission links. Important issues in the transition to digital technology are shown in figure 3-10. Here we see an analog

transit exchange network with dependent analog local exchanges.

With the addition of nearby digital transit exchanges and digital

59
Signaling Link O =(

Q Q Voice Path

a. Asscxriated Signaling

Signal Transfer Point

b. Non-associated Signaling

Figure 3-9 COMMON CHANNEL SIGNALING

60
I

I

^

Digital Remote Subscriber Switch

Analog Local Exchange

j j Analog Transit Exchange

^\ Digital Local Exchange

Digital Transit Exchange

A/D or D/A Conversion

Figure 3-10 A STEP IN DIGITAL AUGMENTATION OF ORIGINALLY ANALOG NETWORK

61
combined end-offices and transit exchanges, analog-to-digital

services are required on the trunks between them. Whether the

trunk is analog or digital — that is, which end of the trunk the

A/D conversion takes place — is a matter of economics. The

diagram illustrates a stage approximately halfway through the

transition to digital switches and shows the use of combined

local transit switches, digital transit switches and remote subscriber units connected by digital trunk facilities.

Another likely trend in the future, made possible by the widespread distribution of intelligence and stored program control,

is the advent of a dynamic non-hierarchical routing network

(DNRN), illustrated in figure 3-11. There is only one class of

toll switch within the DNRN. End-offices may home on these or on

intermediate tandem exchanges. Dynamic routing rules are used

between pairs of DNRN nodes, which appear as a large network of

regional centers with complete in terconnec t iv i ty

Dynamic routing selects minimum-cost paths between originating

and terminating nodes and permits the design of time-varying

routing patterns to achieve minimum-cost trunking by capitalizing

on non-coincident network busy periods.

The dynamic nature of this routing scheme is achieved by storing

several route choices in each of the switches. The routes consist of different sequences of paths designed to satisfy given

overall blocking requirements. Off-line centralized computations

test these routing patterns and continuously readjust them to

restructure the network. Simulation of this approach for the

Bell System toll network indicates potentially very large

savings. Much research must be done before the equivalent can be

said for small national networks, but the idea of not restructuring routing to an inflexible hierarchy appears to be an important

strategy for the future.

During this period, in the 1984-1989 timeframe, steady replacement of U.S. central office switches with digital units will

cont inue .

By the early 1990s, the toll network will be completely digital.

Digital switches will be replacing analog electronic units.

Distribution of switches into subscriber plant will become widespread. [STAFF COMMENT 14]

o 1994-1999 — A new generation of modular distributed

switches will be available and there will be few

suppliers left. The incorporation of ISDN - oriented

switches will be widespread. [STAFF COMMENT 15]

62
Figure 3-11 DYNAMIC NONHIERARCHICAL ROUTING NETWORK PLAN

63
3.1.5.3 Conclusions

Although prices differ widely, large Central Office switches in

the United States presently cost in the range of $300 to $500 per

line. The costs of the equipment portion of digital exchanges

are expected to continue to decrease throughout the next decade,

for the following reasons:

o The costs of memory, microprocessors and other hardware

items will continue their rapid decline;

o Economies of scale will result from rapidly increasing

production runs of digital switching; and

o Productivity will improve as the manufacture of digital

switches ascends the learning curve.

Projected future cost breakdowns for digital switches are estimated in table 3-5 where the cost elements are grouped into

identifiable technologies. The services show a decrease from 22

percent of the 1984 installed cost to 18 percent in constant

dollars because of the advance of high-voltage semiconductors.

The control portion will decline even further (from 13 percent to

9 percent) , as will the network (12 percent to 7 percent) . The

power supply and mechanical parts, however, offer little possibility for future economies and will remain constant in an amount

equal to 17 percent of the 1984 installed cost. Thus, the total

cost of hardware will decline from 64 percent to 51 percent of

today's total.

Table 3-5

PRESENT AND FUTURE COST BREAKDOWNS FOR DIGITAL SWITCHES

Cost Element 1984 1989 1994

Interface 22% 20% 18%

Control 13% 11% 9%

Network 12% 9% 7%

Power Supply 10% 10% 10%

Mechanical 7% 7% 7%

TOTAL HARDWARE 64% 57% 51%

Software 18% 25% 35%

Installation 18% 40% 55%

TOTAL COST 100% 122% 141%

However, the two labor-intensive portions of a switch — software

and installation — which are now estimated to be approximately

equal and total 36 percent, will increase dramatically: software

will rise from 18 percent to 35 percent, and installation (which

will be geared directly to skilled labor costs) even more, from

64
18 percent to 55 percent, despite cost-cutting efforts by manufacturers. The reason that the software costs will not increase

as rapidly as installation costs is that there is hope for some

automation of the production of software. The total cost in 1984

dollars will increase about 41 percent by 1994.

3.2.6 PABXs

3.1.6.1 Background and Present Approaches

A private automatic branch exchange (PABX) provides local

switching services on a customer's premises. PABXs have been

evolving since before World War II. Historically, they started

as manual switching systems with operators using cords and plugs

to complete the calls (PBXs) . The "first generation" of automatic PBXs (or PABXs) were based on early electro-mechanical

switching technology used in telephone central offices. These

switches used either step-by-step or crossbar networks. Now,

"PBX" and "PABX" are used interchangeably.

The advent of analog electronic switching with stored program

control produced a generation of PABXs that offered many enhanced

features. The development of these "second-generation" PABXs was

enhanced by the competitive restructuring of customer premises

equipment, which began with the Carterfone decision in 1968.

In the mid-1970s it became evident that digital approaches,

rather than analog were attractive for switching, even in a basically analog environment. The digital technology that has

evolved in central office switching also found its way into

PABXs; these PABXs are often referred to as "third-generation."

"Fourth-generation" switches, which are just beginning to emerge,

embody the blending of data front-end processers and controllers

with digitized voice. These switches may be thought of as either

digital PABXs with data-handling capacity or computer front-end

processors with voice-handling capability. There is considerable

uncertainty as to exactly what form or forms of fourth-generation

systems will be dominant.

Third-generation switches are characterized by software-driven

computer control, distributed architecture, internal digital

transmission interfacing with local area networks (LANs) , and

readily engineerable capacity but fixed bandwidth of transmiss ion . The emerging fourth-generation switches often include integrated

LANs and invariably include distributed architecture with modular

hardware as well as software. Transmission is digital in nature,

capacity is readily engineerable, and bandwidth may be allocated

according to need.

The characteristics of seven representative fourth-generation

integrated voice/data PABXs are summarized in table 3-6. All of

the data transmission speeds indicated are full-duplex, and all

65
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66
switches include modem-pooling as a feature. The trunk services

referred to are: DS-1 — the services for the industry standard

1.544-Mbs (Tl) carrier facilities such as AT&T's ACUNET 1.5

service; DMI — AT&T's digital multiplex services; and CPI — the

Northern Telecom computer- to-PABX "open world" services.

3.1.6.2 Technological Evolution

o 1984-1989 — During this period the fourth-generation

PABX should become ubiquitous and acquire increasing

features for both voice and data.

o 1989-1994 — It is impossible to predict with assurance

what the fifth generation will be like in detail, but it

will doubtlessly consist of completely distributed,

universal modular blocks of hardware and software working

together to provide all possible combinations of voice

and data needs for business organizations in buildings

and campuses. The use of these systems for building

management, security and even manufacturing process control will become commonplace.

o 1994-1999 — Front end processor, voice/data processor

completely merged. New designations will have emerged

for new devices.

3.1.6.3 Conclusions

In 1989 the real cost per port is expected to be approximately 70

percent of the 1984 cost (which, as shown by the previous tables,

is in the order of $1000, not including installation). By 1994,

the cost in real dollars should be approximately half of what it

is today. Further cost reductions will not be as dramatic.

The benefits of an integrated voice/data PABX are that it provides a common, universal communication management resource,

which allocates bandwidths according to need, permits easy

changes in the system, and provides cost allocation among different functions and organizations. The incremental cost for

handling data in addition to voice (or voice in addition to data)

is small and will decrease with time.

There are many driving forces toward widespread application of

these systems. They include increased competition with probably

more competitors than the market will ultimately sustain. The

wildfire proliferation of personal computers is placing a demand

on local voice/data communication that was not anticipated even a few years ago. In addition, with increased reliance on electronic mail and store-and-forward messaging, the need for smart

networks is increasing. At the same time, Tl (1.544-Mbps) capabilities are becoming widely available to support the very large

bandwidths that fourth-generation PABXs will handle. Technology

will drive the real cost down, making these systems more attractive. The increasing availability of database information, both

public and private, will further stimulate demand.

67
One barrier that has existed within many types of end-user organizations has been the organizational conflicts between data

processing, office management, and telecommunication functions.

As they recognize these conflicts, more organizations are taking

steps to integrate the three functions.

The future outlook indicates increased presence of integrated

solutions with proliferation of new applications and more penetration . 3.2.7 Pocket Switching

3.1.7.1 Background and Present Approaches

Packet switching has been used for data transmission since the

end of the 1960s. The initial incentive for implementing this

technique was to provide lower-cost transmission paths for data,

in order to develop EDP resource shar ing/ teleprocess ing ; transmission services offered by the various telephone administrations

and carriers at that time were almost exclusively suited for

voice rather than data transmission. Packet switching thus

emerged as an alternative to circuit switching for specialized

appl ica t ions

Since the 1970s, packet switching networks have been developed

for experimental purposes, for private data transmission services, and for public data transmission services; examples are

the ARPA network, the Federal Reserve network and GTE Telenet

respectively.

While circuit switching techniques allocate a fixed amount of

bandwidth (typically 4 kHz or 64 kbps) to a given communication

for its duration, packet switching does not allocate bandwidth to

a given communication; bandwidth is dynamically shared by various

communications on a contention basis. This implies that information must be sent in short packets, rather than in a continuous

flow. VJhen a particular switch reaches saturation, it will block

calls (if using circuit switching) or will store packets in queue

(if using packet switching).

The main functional advantages of packet switching are that it

offers

o Multiple logical accesses through a single physical port,

where each flow of data corresponding to one logical

access is dynamically multiplexed on the physical link

attached to the physical port;

o Capability of speed, code, and protocol conversions,

since the packet technique works in a store-and-forward

way, enabling a packet switch to process a received

packet before forwarding it; and

o Better utilization of bandwidth, since it is dynamically

shared and used only when transmission is actually

68
occurring. As a result, costs are much less durationdependent and speed-dependent than with circuit

switching

The main functional disadvantages of packet switching are:

o Transmission delay, which is variable and dependent on

the line speed, network load and the configuration of the

network; and

o The cost of packet switching ports, which is presently

several times that of circuit switching ports.

Packet switching today is used almost exclusively for data transmission, primarily because of differences in traffic characteristics among various types of applications. The applications

which can most benefit from data concentration are the terminalconversational and interactive ones while the other applications,

particularly voice, have much lower data-concentration advantages, with respect to circuit switching. [STAFF COMMENT 16]

Typical applications for packet switching are:

o EDP networks (e.g., IBM/SNA, CII-HB/DSA)

,

o Private data transmission networks (e.g.. Northern Telecom, SESA)

,

o Public data transmission networks (e.g., GTE Telenet,

Transpac) , and

o Shared-use networks (e.g., SITA)

A trend toward packet switching in such networks is evident in

the United States, Canada, France, the United Kingdom, and West

Germany. While packet switching was developed primarily by EDP

companies, software houses, and value-added network carriers, a limited number of traditional telecommunications companies now

have access to this technique. An important factor in the future

of packet switching is the success of ISDNs (see section 3.1.8).

Packet techniques may offer significant benefits for voice as

well as for data. The integration of digital voice with data in

a common packet-switched system offers potential cost savings

through sharing of switching and transmission resources, as well

as enhanced services for users who require access to both voice

and data communications. Packet internetworking techniques can

be applied to provide intercommunication among voice users on

different types of networks. Significant channel capacity savings for packet voice can be achieved by transmitting packets

only when speakers are actually talking. Packet networks have

advantages for digital voice conferencing in terms of channel

utilization (only one of the conferees needs to use channel

capacity at any given time) and in terms of control flexibility.

The digitization of voice in packet systems provides an opportu69
nity to apply security techniques. (Secure packet data communication techniques can be applied as well for data users who

require this service.) Packet networks also provide a system

environment for effective exploitation of variable-bit-rate voice

tranmission techniques, either to reduce average end-to-end bit

rate or to dynamically adapt voice bit rate to network

cond it ions

3.1.7.2 Technological Evolution

o 1984-1989 -- The success of packetized speech is highly

speculative at the present time and predictions are too

uncertain to be useful. Widespread application of packet

switching for value added data services will grow.

o 1989-1994 — Probably some application for packet

switched voice will be found. Packet continues as overlay switching method.

o 1994-1999 — Packet switching will be dominant for data

and important for other services.

3.2.8 / SDN

3.1.8.1 Background and Present Approaches

The concept of an integrated services digital network (ISDN) has

gained popular acceptance among telecommunications planners.

There is some argument as to the precise definition of an ISDN,

but the following characteristics are generally recognized:

o The ISDN is a Ne twor

— It is generally agreed that it

is a public network and that it is made up of nodes and

branches extending over a geographic area. The ISDN

controls the flow of information to and from users.

o The ISDN is Dig i tal -- Its services handle all information in a dig ital Form. Switching, processing inside the

network, and transmission are all accomplished using

digital means. Predefined and accepted protocols are

necessary at the digital services.

o The ISDN implies Integrated Serv ices — It is intended to

, handle a wide variety of services and signals, including

both voice and non-voice traffic. The ISDN is aimed at a wide variety of user needs.

Figure 3-12 shows a conceptual arrangement of an ISDN with

various terminal devices.

70
71
Between 10 and 15 years ago, it became evident that digital

techniques were most attractive economically for voice switching.

When switching and transmission are combined in digital form,

still greater economies are obtained, since digital signals can

be transmitted and switched entirely in digital form. This

combination of digital switching and digital transmission (still

geared to analog telephony) is called an Integrated Digital

Network (IDN). IDNs are now being established all over the

world

The obvious next step is to make everything digital, from beginning to end-— i.e., to treat all signals, analog and digital, in a digital mode. Analog signals can be readily digitized at their

origin to obtain the economies and flexibilities of an alldigital network. Furthermore, new services now emerging are

inherently digital and can be efficiently combined with existing

digitized services. However, whether there will be enough

digital services to mix with voice to make an overall ISDN

economically attractive is not yet clear.

Each customer of an ISDN obtains a telecommunications transport

capacity with a very high bit rate —i.e., a digital pipe as shown

in Figure 3-13. While there is no universally accepted standard,

the current trend is toward a pipe capacity of 144 kbps in both

directions. This capacity can provide two digitized channels at

64 kbps for voice or high-speed data; some of the remaining 16

kbps capacity must be used to control the network, but most of it

can also be used for data transmission.

It is quite practical to transmit 144 kbps over ordinary copper

wire pairs found in conventional telephone loop plant, as long as

distances are limited to about seven or eight kilometers. Three

modes of two-way transmission are under serious consideration:

o Separating the frequency bands of signals in the two

directions;

o Using an electronic adaptive echo canceller to sort out

the two directions of transmission; or

o Alternating the signals in each direction by means of

time-burst transmission.

While the method (s) finally adopted will depend upon cost, none

of the above appears to offer a significant cost advantage at

present. The echo canceller technique probably has the most

potential for cost saving from very-large-scale integrated

circuits

72

At the central office end of an ISDN loop, voice signals in

digital form and digital data signals are separated. The voice

signal is connected to a voice switch and to the public switched

voice network. (To realize the full benefits of an ISDN, this

switch should be digital, although analog switching is possible.)

Data streams from the ISDN loop are routed to a data network,

which may be either circuit switched or packet switched.

For business users, where the services may connect with a digital

PABX or voice-data switch, the large bit rate available should be

attractive for handling the concentrated traffic generated at a business location. The principal use of ISDN will probably be

for business applications in areas serviced by digital central

office switches. ISDN is attractive for these business applications, because it will provide substantial data capability at

less cost than with present modems. ISDN performance advantages

include higher speeds and independence from traffic on the voice

network.

The numerous potential ISDN services include personal message

service, facsimile, teleprinting, computer- to-computer

transmission, word processing, information retrieval, monitoring,

transactions, and teleconferencing. These and many more will be

available, but they will not be inexpensive; furthermore, their

full potential will not be realized unless the local office is

d ig i tal

3.1.8.2 Technological Evolution

o 1984-1989 — First limited trials completed and definitions solidified. Some business use will start.

o 1989-1994 — Serious introduction of ISDN-oriented

switches and loops for business applications will begin.

o 1994-1999 — Application of ISDN to business will be

widespread. Residential use will still be minimal.

3.2 DEVICES AND MEDIA

3.2.2 Microwave Semiconductors

3.2.1.1 Background and Present Approaches

Microwave integrated circuits (MICs) serve the same purposes as

conventional digital integrated circuits: they are intended to

reduce the size, weight and cost of quantity-produced complex

circuit components. However, conventional integrated circuit

design and fabrication techniques, based on single-crystal

silicon wafer material, are unsuitable for use at microwave

frequencies. The resistivity of silicon material is too low for

low-loss microwave transmission and the types and quality of

active microwave devices that can be fabricated in integrated

form from this material are very limited.

74
A far superior semiconductor material for microwave integrated

circuits is gallium arsenide (GaAs) . Its much lower intrinsic

carrier concentration and high electron mobility have long made

it a most attractive material compared with silicon, as shown in

table 3-7. However, the techniques for making and processing

compound semiconductors are far more difficult and less easily

controlled than those for silicon. The development of highquality, reproducible GaAs devices and integrated circuits has

been underway since the 1950s, but many serious problems remain.

TABLE 3-7

ELECTRONIC PROPERTIES OF SILICON AND GALLIUM ARSENIDE

(at 270c)

Si GaAs

Energy Gap (ev)

Intrinsic Carrier Concentration

n^Cctn"^)

Intrinsic Electron Mobility

(cm^ /sec)

1.1

1.45 X IQIO

1350

1.4

9 X 106

8600

Dielectric Constant 11.7 12

While GaAs monolithic MICs only recently have begun to be

available for limited commercial applications, the use of hybrid

MICs is widespread, both for military and commercial use. Most

hybrid MICs consist of metallic conductors deposited to form a transmission line pattern on a high-dielectric ceramic substrate

onto which active and passive components are attached to form a multifunction microwave circuit. The ceramic substrate commonly

used is polished, high-purity alumina, while the metallic conductors are formed by vapor deposition of a chrome-gold thin film.

The transmission lines and other conductor patterns are formed by

photoetch ing , after which they are gold-plated to a sufficient

thickness for acceptable electrical conductivity. Active and

passive devices, such as field-effect and bipolar transistors,

Schottky diodes, PIN and varactor diodes and capacitors and

resistors are then affixed by welding, soldering, cementing or

some other process.

Hybrid MICs are widely used in all telecommunications equipment

operating at microwave frequencies, including terrestrial as well

as satellite systems. Compared with systems that use waveguides,

coaxial cables, cavities and strip transmission lines, hybrid

75
MICs are much smaller, lighter and generally more uniformly

reproducible in performance. However, except in certain highvolume applications such as some military radar antenna arrays,

appreciably lower cost is generally not achieved. Only through

further improvement of monolithic MIC techniques will truly low

costs be attained.

At the present time, the most important commercial monolithic MIC

application appears to be for microwave receivers for 12-GHz

direct broadcast satellite (DBS) subscriber stations. Here,

receiver costs of only a few tens of dollars each in large

volumes are required, rather than a few hundred dollars each as

is now the case.

o The design and fabrication of hybrid MICs, based on thinf ilm-on-alumina technology, is now quite mature. The

basic approach is shown in figure 3-14. Signal flow

within the circuit is via so-called microstrip transmission lines. Microstrip is a transverse electromagnetic

(TEM) mode transmission line, using a strip conductor

over a ground plane. This configuration has propagation

characteristics similar to those of a coaxial line.

Radiation from the unshielded strip conductor is

negligible beyond approximately one strip width away from

the conductor, because the electromagnetic fields are

well-confined to the high-dielectric substrate. The

dielectric constant of alumina is about 9.7.

The open construction of the microstrip line allows easy

attachment of semiconductor and other devices, which are

usually in unencapsulated chip form. Final packaging of

the circuit is typically in a metal housing wih coaxial

connectors or, in some cases, direct connection to an

antenna feed or to a baseband or intermediate-frequency

circuit component.

This technology has been in practical use for more than

15 years, and only small refinements are likely to be

made in the future. While less costly than previous

approaches to microwave circuit fabrication, hybrid MICs

still require several different, costly process steps,

from initial preparation of the alumina substrate to

packaging of the finished circuit. While these costs are

not excessive for relatively low-volume high-price equipment such as digital microwave radios for common carrier

networks, they are far too high to achieve the cost goals

for DBS receivers.

o For Monolithic MICs, many types of active microwave GaAs

devices have been developed over the past 25 years, most

notably varactors, field-effect transistors (FETs) , Gunn

and IMPATT devices, and Schottky barrier diodes. The

higher electron mobility of GaAs compared with silicon

yields superior performance at microwave frequencies.

With such promising individual devices at hand, the

76
METAL

ENCLOSURE

PLANE

Figure 3-14 HYBRID MICROSTRIP MIC CONSTRUCTION

77
development of techniques for integration of multiple

devices with suitable interconnections on a single GaAs

chip is highly desirable.

A major requirement for circuit integration is electrical

isolation of the various components. For MICs, a further

requirement is for minimal distributed transmission loss

through the circuit. Both requirements imply the use of

a very-high-resistivity substrate material. GaAs satisfies this requirement better than any other practical

semiconductor material; it is much better than silicon in

this regard, having an intrinsic carrier concentration

more than three orders of magnitude lower.

Excellent large-diameter GaAs crystals, liquidencapsulated Czochralski grown from pyrolytic boron

nitride crucibles can now be reliably produced, yielding

high crystal purity and stable resistivity. For many

years, the development of semi- insulat ing GaAs was

plagued by tendencies of available materials to lose

their semi- insulat ing characteristics during subsequent

device processing requiring annealing at high temperatures. The problems of substrate reproducibility and

stabilization are now recognized as being mostly due to

excessive and variable concentrations of silicon and

chromium impurities, which are redistributed during hightemperature processing. Materials preparation techniques

were developed in the 1978-1980 period that have overcome

these problems, making possible the availability of

stable semi-insulating substrates with resistivities of

the order of 100 million ohm-cm.

Active devices such as FETs are usually formed by direct

ion implantation of dopants to form the active GaAs

layer, although epitaxially-grown active layers are also

used. Standard gold metalization is used for conductor

patterns, while gold/platinum/titanium alloys are

commonly used for ohmic contacts. Chemically-vapor

deposited silicon dioxide is used to passivate active

devices as well as for capacitor dielectrics. Sputtered

tantalum oxide dielectric may also be used for capacitors. Figure 3-15 shows a typical circuit fabrication

cross-section and its equivalent circuit.

78
Figure 3-15

Circuit Elements: Cro.' s-section Vdev and Equivalent Circuit

o DBS Receivers ~ The 12-GHz direct broadcast satellite

(DBS) are the most important current application for GaAs monolithic MICs. Currently, they are under active development by several Japanese and U.S. companies. Singleand multiple-stage, single-chip low-noise FET amplifiers have been developed, as well as complete receivers com- prising a monolithic low-noise amplifier, down-converter

and IF amplifier on separate chips. First deliveries of such devices are expected before the end of 1984. An illustration of this technology is shown by the photo- micrograph of a two-stage GaAs FET amplifier in figure 3-

16

3.2.1.2 Technological Evolution

o 1984-1989 -- The key elements required to sustain lowcost, large-scale production of such monolithic MICs are:

1. Good-quality, large-diameter, semi-insulating GaAs substrates ;

2. High-yield wafer processing;

3. High-speed automated testing; and

4. Low-cost circuit packaging.

79
Photograph of Amplifier Chip

m7

FET 2

HI—r—[r>--CI}-| —1^W—

Equivalent Circuit

Figure 3-16 TWO-STAGE GaAsFET AMPLIFIER

80
Continued development of each of these elements is proceeding.

Many years and many millions of dollars of research and development work have already gone into the achievement of existing

results, and much more will follow. Commercial telecommunications market applications alone, such as DBS receivers, cannot

justify the scope of effort needed, but similar technologies are

needed to support other high-volume applications, such as highdensity Large Scale Integrated (LSI) circuits for future supercomputers, as well as for many critical military radar, missile

and space applications. Most of the R&D funding has come from

U.S. military agencies, but a very active program also exists in

Japan, where interest in supercomputers is very high.

The Japanese interest in DBS, which is viewed in Japan as an

extension of the consumer electronics industry rather than the

telecommunications industry, is also high. The most impressive

monolithic circuits for DBS receivers to date have been developed

in Japan, and it appears likely that Japanese electronics manufacturers will be the first to market them commercially in the

United States.

With future R&D funding tied mainly to non- telecommun icat ions

applications, we can infer that new GaAs MIC technologies available for telecommunications applications will be mostly limited

to adaptations of devices developed for other purposes. Whether

large-scale monolithic integration of microwave radio equipment

circuits will ever occur is highly questionable, although it may

some day be economically attractive to develop an adaptation of a DBS receiver front end for some microwave radio applications, as

well as for other types of satellite earth station receivers.

Such eventualities may be dependent on the ultimate success of

DBS in the marketplace; at present, this is very uncertain.

However, there appear to be enough other potentially large volume

applications for low-cost satellite receivers that the incentive

to develop them will probably persist.

A likely timetable for further evolution is difficult to estimate. Significant achievements in the microwave semiconductor

field tend to come via breakthroughs after long, unpredictable

periods of slow progress. The last major breakthroughs occurred

in the late 1970s, when the process for high-quality, stable,

semi- insulating GaAs was finally made reproducible. Steady

development of monolithic circuits has ensued; without any new

breakthrough, continued development should follow a standard

learning curve, with market volume a key factor in determining

the schedule. By 1989, circuits for large-scale DBS receiver

production (say, in quantities of over one million per year) may

cost $10-50 each, or about one-tenth the cost of hybrid DBS MICs

today. Beyond that time, costs are not expected to change

significantly for similar technology. New technology will

undoubtedly be sought, perhaps based on other materials, to

achieve higher levels of system integration at higher frequencies, mostly for initial military applications.

81
with respect to the latter, there has long been a need for reliable, low-cost millimeter wave (30-300 GHz) MIC technology for

applications such as terminal missile guidance, inter-satellite

communications links, high-resolution radar and secure high-speed

terrestrial data links. Although some work has been underway in

the field for at least 15 years, progress has been limited. The

most significant recent developments have concentrated on

dielectric waveguides with discretely mounted active semiconductor devices. No viable approach to monolithic integration at

millimeter-wave frequencies has been developed as yet, and no

sign of a breakthrough is apparent.

It is far more likely that significant developments will occur at

the opposite end of the microwave spectrum, in the 800-900 MHz

range, where cellular mobile radio telephone systems are currently being extensively implemented. The use of GaAs MICs for

receivers and (possibly) for transmitters may become economically

attractive after further experience is gained. Competition is

certain to drive down mobile equipment prices, and manufacturers

will be seeking cost-reducing component technologies.

In summary, during the 1984 - 1989 period, the higher frequency,

higher power, lower cost trend continues; also, circuit costs for

DBS receivers will drop considerably.

o 1989-1994 — Large scale demand for cellular mobile and

other consumer equipment will spur continuing cost/effectiveness improvements.

o 1994-1999 — Evolutionary rather than revolutionary

advances in devices will continue.

3.2.1.3 Conclusions

Microwave integrated circuits are important to the development of

mass-market microwave communications systems, such as direct

broadcast satellites and possibly other types of radio communications such as cellular radiotelephone systems. Support for

technology development will continue to come mostly from military

sources in the United States, so commercial telecommunications

developments will benefit to the extent that the basic technology

will be "free." However, Japanese developers see such applications as direct development targets and have so far had the

advantage of more focused technological efforts.

3,2.2 Optical Fiber Transmission

3.2.2.1 Background and Present Approaches

The transmission of information — voice, data, or video — by

fiber optics has been made possible through the development of

ultra-high-purity glass fiber lightguides, diode lasers, light

emitting diodes, and photodiodes. Glass fiber cables are very

strong, flexible, lightweight, immune to electromagnetic disturbances and secure. They also provide electrical isolation from

82
transmitter to receiver, require no surge protectors and allow

spans between repeaters much longer than obtained with metallic

paired or coaxial cable.

Lightguides used in optical telecommunications are fabricated of

high-purity fused silicon dioxide (silica) doped with precise

amounts of germanium, phosphorus or boron, Two types are in use

-- multimode and single mode. Both have circular cross sections

with outer cladding diameters typically 125 microns. The core of

multimode lightguide typically has a diameter of 50 microns.

This is one of the sizes that is widely available, but there is

currently considerable discussion on this subject taking place in

X3T95. IBM has proposed a 140 micron cladding with a 100 micron

core. Bell likes 125 micron cladding and 62.5 micron core, and

has many thousands of miles of fiber of this size installed.

Corning likes 125 micron cladding and 85 micron core. They argue

that the larger core sizes facilitate connector izat ion and fiber

switching when the latter is needed to bypass a failed node. To

reduce mode velocity dispersion, the core refractive index is

highest in the center and drops to a value slightly above that of

the cladding at its periphery; this increases the information

bandwidth of multimode lightguide to about 1500 MHz km in product ion runs . Many systems of short and intermediate length have been installed

using multimode lightguide. Most systems installed prior to 1981

operate in the wavelength band of 820 to 900 nanometers (nm)

,

known as short-wave operation. The most recent multimode systems

operate in the long-wavelength band of 1290 to 1550 nm

.

The core of single-mode lightguide typically has a diameter of

five to seven microns and a slightly higher index of refraction

than the cladding. The index may be varied, as in multimode

fiber. Most recent systems of intermediate and long length use

single-mode lightguide and are operated in the long-wave band to

minimize attenuation of the light signal.

The current status of lightwave component technology is outlined

below

.

o Lightwave Gu ide — The materials composing optical fiber

include silicon dioxide and germanium dioxide. Modes and

attenuations for the most useful wavelengths are as

follows

o Transmitters -- Both diode lasers and light-emitting

d iodes are used as transmitters, with the following

typical characteristics:

Wavelength

(nm) Mode

Attenuation

(dB/km)

820-900

1290-1350

1490-1550

Multi

Multi & Single

Single

3.0

0.5

0.2

83
Output Power

(milliwatts)

Wavelength

(nm)

Diode Laser LED

820-850

1290-1350

1490-1550

1

1

5

0.1

0.1*

0.4*

Cleaved-coupled cavity tunable single mode diode lasers

are the most recent advance in this technology, promising

higher powers, linearity and low noise output. [STAFF

COMMENT 17]

o Rece iver

— Avalanche photodiodes (APD) or conventional

photodiodes are used in the receiver front ends. Their

typical characteristics are as follows:

Wave division multiplex technology is being used to

multiplex two or more lightwave carriers on a singlefiber waveguide. The light waves differ by about 40 nm

and do not interfere with each other. Each lightwave

carrier may be modulated by independent information

sources. Signal separation is done at the receiving end

with selective filtering.

The application of wave division multiplex techniques to

existing fiber cables and new systems will enable the

systems to carry additional channels of information,

potentially doubling or trebling the existing capacity.

3.2.2.2 Technological Evolution

o 1984-1989 — Lightwave transmission systems are being

employed in North America, the United Kingdom, Europe,

Saudi Arabia and the Far East in a variety of land-based

applications. These are classified into four basic categories: long haul, metropolitan trunking, rural exchange

trunks, the loop plant. Transoceanic systems using

optical technology are being planned for installation

within five years.

* These are available as laboratory models only.

Wavelength (nm) Dark Current (microAmp)

820-850

1290-1350

1490-1550

0. 001

1.0

0.01

84
o Long-haul routes average about 900 miles in length and

offer high capacity (typically 20,000-60,000 voice circuits) . The most recent Bell System long-haul system is

type FT4E, which is a fiber-optic version of the DS4E

transmission system. It uses single-mode lightguide,

operates at 432 Mbps, and carries up to 6,048 voice

circuits over a single fiber in each direction. Repeaters are 20 miles apart. These systems compete

economically with microwave and have so underpriced

coaxial cable in the United State^ that AT&T Technologies, the manufacturing arm of AT&T, has stopped

making coaxial systems.

o Metropolitan trunking systems have high capacity, short

spans and relatively short circuit lengths. Metropolitan

trunking circuits have an average length of 7.8 miles and

may have as many as 100,000 voice circuits in a trunk

group. Most facilities are installed in underground conduits and are repeater less , joining telephone exchanges

in a metropolitan or city area. Included in this category are microwave entrance link routes from microwave

facilities at a city perimeter to the main telephone

exchange building downtown.

o Rural exchange trunks have circuit lengths ranging from

25 to 100 miles and link towns and villages. In the

United States they often connect the exchanges of different telephone companies. Most of these systems have

fewer than 5,000 voice circuits. The technology used in

these applications competes with thin-route microwave

rad io systems .

o Loop plant extensions are loop circuits that are run out

to clusters of rural subscribers remote from the serving

exchange. They utilize lightwave subscriber carrier

systems. Four-fiber optical cables connect the exchange

office to an electronic concentrator 10 or more miles

distant, providing service to a hundred or more subscribers. In the United States these systems (typified

by AT&T's SLC-96) are economically competitive with

repeatered metallic cables and TDM-PCM cable with concentrators . A fifth major worldwide application of lightwave communications

is in transoceanic systems, which are being developed for spanning the Atlantic and the Pacific. The transatlantic system

TAT-8, to be owned jointly by AT&T and several European telecommunications organizations, illustrates the use of lightwave

technology for very long distance, unattended transmission. The

TAT-8 will have a route length of 6500 kilometers and a capacity

of 36,000 voice channels. The 200 repeaters will be spaced 30-35

km apart. The system will use TDM-PCM transmission at a bit rate

of 274 Mbps. Diode lasers and single-mode fiber operated at

1300-nm wavelength will be used. As presently planned, the

lasers will have quadruple redundancy at each repeater, and

85
optical switches will be used to connect one of the lasers to the

transmitting fiber. When a laser degrades with age, it will be

switched out of service and another will be switched into the

system at the repeater in question. The cable will be armored

and protected for prolonged deep-sea submersion. Its diameter

will be slightly greater than one inch, and the entire length

will be carried on one cable-laying ship.

o 1989-1994 — Widespread application in medium- and shorthaul systems as well as carrier subscriber systems.

Transoceanic systems will proliferate.

o 1994-1999 — Fiber transmission into homes will begin.

Fiber will be the dominant transmission medium for virtually all fixed applications.

3.2.2.3 Conclusions

A major benefit to the telecommunications organization that installs a lightwave system is the capability of adding circuits to

a given route at a later date by changing the electronic multiplexers or by adding wave division multiplex hardware at each

end. The number of voice circuits that can be carried by lightwave cables is now limited by the multiplexers and associated

light sources and detectors.

Other benefits include savings in duct space, because the cables

can be installed in subducts inside the existing ductway. For

metropolitan trunking applications, this approach permits the

operating telephone company to postpone costly civil works construction of new ductways.

There are no problems in installing lightwave systems alongside

power transmission cables or overhead wires, because optical

cables are immune to interference from such systems. Similarly

the security of fiber transmission is superior to radio or electrical transmission since light transmission cannot be detected

outside of the medium. The use of common rights of way has

obvious economic benefits as well.

3.2.3 Optical Locfic

3.2.3.1 Background and Present Approaches

Several different physical effects exist in which electric fields

modulate light beams, or light beams modulate other light beams,

without requiring conversion from optical energy to electrical

energy and back again. Repeaters for optical fiber communication

systems now must go through this multiple conversion. These

direct electro-optical interaction effects have been used in

laboratory demonstrations of logic and switching circuits. In

principle, any logic circuit that can be implemented in electrical logic can also be implemented in optical logic. The virtue

of doing so is speed: the basic rise times of optical pulses

86
demonstrated in some laboratory experiments are in the subpicosecond range. Conceivable optical logic circuits could be

built that are faster than anything achievable electronically.

Unfortunately, it appears that more power will be required per

logic element in optical than in electron logic. The result will

be a higher level of heat dissipation per gate, which will constrain the minimum sizes of the circuits. The operating speeds

of the circuits will be a good deal less than the theoretical

maximums, because of the signal propagation times through the

volumes of materials needed to dissipate the heat. Electron

logic is already constrained more by signal propagation times

than by pulse rise times, so this requirement for higher power in

optical logic appears to be a serious barrier to its widespread

practical use.

A more promising application of optical logic is to the switching

function in optic fiber communication systems. The concept involves bringing many fiber optic lines into a single switching

matrix, where they are switched to various outgoing lines by

means of conductors that are laid across the fibers and apply

appropriately located electric fields. In this application, the

switching operations occur only occasionally, so heat dissipation

is not a serious problem, and the high data rates of optical

fiber propagation are not reduced because of a need to convert

signals to electric form for switching and back to optical form

again

At the present time, U.S. effort is limited to low-level R&D,

mainly in universities. However, there is evidence that R&D

efforts are being undertaken in Japan. Published information in

the public domain is very scarce in this field.

3.2.3.2 Technological Evolution

The likely evolution of optical logic is shown in Table 3-8.

[STAFF COMMENT 18]

3.2.3.3 Conclusions

It appears that optical logic will be useful in certain specialized forms in association with optical fiber technology, and

probably also in optical transducer arrays used in image processing and communications applications. High-speed optical logic is

unlikely to form an attractive alternative to electron logic in

areas where it is presently dominant, but basic research in major

laboratories in the United States, Japan, and Europe can be

expected to continue.

The technology of optical logic is in an early, embryonic stage,

and cost/performance trends are unpredictable.

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3.2.4 Coaxial Cable

3.2.4.1 Present Situation

This section on coaxial cable is included for completeness.

Coaxial cable has been an important medium for:

o Long distance telephone carrier systems,

o Undersea cable carrier systems,

o Wiring for local area networks (LANs) , and

o A medium for cable television (CATV)

The first two applications are no longer viable, and major manufacturers are scrapping coax production facilities,

3.2.4.2 Technological Evolution

o 1984-1989 — Some applications will be continued for

LANs. No further R&D is being done on this basic medium.

o 1989-1999 — For CATV, optical fibers will also eventually supplant coaxial. Coaxial is a commodity item.

Some residual use for small systems and expansion of

existing systems still likely. [STAFF COMMENT 19]

4. INPUT/OUTPUT

4.1 VOICE SYNTHESIS/RESPONSE

Voice synthesis and analysis are closely related and are, in

fact, two faces of the same coin. We will nevertheless consider

them separately here.

4,1.1 Voice Synthesis

4.1.1.1 Background and Present Approaches

We will consider devices that can be programmed to speak different words or sentences in response to different types of

inputs. Voice response systems, which have been on the market

for many years, have been used mostly in connection with the

telephone. In this application, a key-pad attached to a telephone terminal is used to transmit data via the telephone to a computer, which is connected to a voice response system. The

voice response system then selects certain words or sentences and

transmits these back to the user via the telephone. Such systems

have been used for network messages, for announcement services,

for transaction processing such as order entry, and for telephone

answering service operations. The best-known example is the IBM

7770, which is a complete subsystem for the IBM 360 and 370

mainframe computers.

Until a few years ago, all voice response systems used recorded

voice segments that could be assembled in different ways. Frequently, entire sentences were recorded in order to avoid

89
problems associated with assembling separate voice segments into

voice responses of acceptable quality. The big computer and

telecommunications companies did not pay very much attention to

this area; IBM, for example, has not offered a successor to its

aging 7770 voice response system.

The general interest in voice response rose sharply when semiconductor manufacturers introduced voice synthesizers based on

powerful large-scale integrated circuitry. The most familiar

application was Texas Instruments' "Speak & Spell" device. The

availability of inexpensive voice synthesizers has opened up an

entire range of voice response applications in appliances, toys,

aids for the handicapped and office equipment. In addition,

voice synthesizers will make inroads into the traditional areas

of recorded voice systems for network messages, announcement

services, transaction processing, and information systems.

Recorded voice systems are programmed to respond to specific

input signals or characters by selecting various segments from

the analog recording and assembling them into an intelligible

voice output. Synthesizers, on the other hand, use individual

words or phonemes — the basic sound elements of speech — stored

in compressed digital form. The synthesizer translates the

digital pattern of phonemes or words into an analog output and

intelligible speech by activating a number of resonators. [STAFF

COMMENT 20] A synthesizer system usually consists of three

parts: (1) a storage subsystem, usually a Read-only Memory (ROM)

chip that stores the digital word or phoneme patterns, (2) the

actual synthesizer subsystem, and (3) a microprocessor or microcomputer that controls the entire process. Whereas systems

storing entire words or utterances are restricted to the use of

these recordings, phoneme-based systems can also accept general

text input and translate it into voice output.

As indicated above, there are some significant differences between synthesizers and recorded voice systems. In addition, the

quality of the voice output of recorded voice systems is far

superior to that presently achieved by synthesizers. Most synthesizers still have robot-like voices, without much intonation.

This, however, is changing. The last year alone has seen some

impressive improvement in the quality of synthesized voice output . While the voice quality synthesizer is not as good as that of

recorded voice Systems, synthesizers have many advantages. To

record a given number of minutes of speech, they require several

6rders of magnitude less storage capacity than do recorded voice

systems. According to international telephone standards, the

recording of voice in digital form requires 64 kbps. In contrast

to this, synthesizers require only from 100 to a few thousand

bps . Furthermore, random access to and multiplexing of recorded voice

segments is costly. Analog recording has to be laid out on a disk that must also contain a digital recording of address infor90
mation. The comparatively small amounts of digital storage

required for synthesizers makes random access and multiplexing

much easier.

Recorded voice systems are always limited to the vocabulary and

types of voices that have been recorded. A phoneme-based synthesizer, in contrast, has at least the potential of unlimited

vocabulary and types of voice.

We believe that the long-terra future potential of recorded voice

systems is limited. On the other hand, we expect tremendous

improvements and increasing applications of voice synthesizers.

Within the next 10-15 years, synthesizers may completely replace

recorded voice systems.

Two approaches to voice synthesis are presently in use:

(1) The first is based on storing a compressed digital image

for each word or utterance. It is accomplished by

converting speech input into digital form, which is then

submitted to a type of spectral analysis for extracting

and compressing a number of nonredundant parameters that

represent the spoken word.

In response to a keyboard or computer input, the parameter set corresponding to the selected word is

retrieved from storage and the parameter extraction

process is reversed. The parameters are expanded and

activate a number of resonators to create analog speech

output. Several versions of this process currently use

different techniques of parameter extraction and synthesis: the linear predictive coding method, developed

by Texas Instruments; "waveform" digitization, used by

National Semiconductor; and the partial correlation

technique, developed by Nippon Telegraph and Telephone.

(2) An entirely different approach is the phoneme or formant

coding method, such as DECTALK. Such systems are based

on the fixed storage of a limited set of " allophones ,

which are variations of phonemes with different linkage

and intonation characteristics. Each allophone is

identified with a control word. When a given word is to

be synthesized, the word is first partitioned into its

phonemes. By applying a fairly complex set of rules

regarding linkage and intonation, the appropriate

allophones are selected. The decoded control words

corresponding to the selected allophones then drive a parametric synthesizer —basically by activating resonators —to create the analog speech output. [STAFF COMMENT

21]

A comparison of these two approaches to speech synthesis shows

that phoneme coding has a number of significant advantages over

the compressed digital technique (see table 4-1). The greatest

advantage of phoneme coding is the possibility of an unlimited

91
vocabulary, since in principle all words and utterances can be

constructed from the basic set of phonemes. This feature also

makes text input possible, and allows the user to change the

vocabulary without specialized and expensive equipment.

The greatest advantage of the first method is that, so far, the

quality of the voice output is higher, because this approach does

not truly synthesize speech but compiles recorded segments of

actual speech. The phoneme-based approach still suffers from

inadequate rules and algorithms for selecting and linking

phonemes. However, impressive progress has been accomplished,

and we expect this to continue in the future.

TABLE 4-1

COMPARISON OF APPROACHES

Linear Predictive Coding

Partial Correlation

Waveform Dig i t i za t ion

o Higher-quality voice

(currently)

o Less complicated processing

hardware

Phoneme Cod ing

o Potential for larger

(possibly unlimited)

vocabulary

o Lower storage and transfer rate requirements

o Text input capacity

o User can extend vocabulary without specialized

equipment

Phoneme-based systems also have much greater potential for more

sophisticated applications such as announcement services, transaction processing, information systems, and telephone answering

services. Linear predictive coding and related methods will

probably be used more in applications that require only a limited

vocabulary and which are highly cost-sensitive, such as appliances, toys and office equipment.

4.1.1.2 Technological Evolution

We anticipate the following developments:

92
Speech Synthesizer Voice Response System

1984 - 1989 Parameter extraction

and compression and

parametric synthesis

r ef ined

Word-to-phrase linking

preferred

o Phoneme selection and

linking improved

o Word-to-phrase linking

improved

o Chip set and/or single

chip prices to

stabilize around $5

o Integration with voice

recognition systems

o Use of newly available

videodiscs possible

o Selected incorporation

of speech synthesizers

o Entry (and re-entry) of

mainframe computer

manufacturer s

1989 - 1994 o Synthesis to reach

quality of recorded

voice segments

o Human-like and

personalized speech

for unlimited vocabulary text-to-speech

transcr ipt ion

o Widespread incorporation of speech

synthes i zer s

o Larger and userexpandable vocabulary,

growing to virtually

unlimited vocabulary

o Choice of voice,

personalized speech

1994 - 1999 o Automatic typewriter

available

o Human-like two-way interaction

will be possible.

4,1.2 Voice Recognition

4.1.2.1 Background and Present Approaches

Until very recently, to convey information to a machine, a user

was obliged to employ a great variety of switches, buttons, and

keyboards, and to read the machine's response optically.

The possibility of voice recognition opens up many new opportunities. While no one today can tell exactly where or in what

form voice recognition technology will be applied five or ten

years hence, it is clear that voice recognition is developing

very rapidly due to the availability of large amounts of cheap

93
processing power and storage capacity through the development of

large-scale integrated circuits. Commercial voice recognition

systems can now recognize several hundred discrete words. However, we are still far from the capability of recognizing

continuous speech with unlimited vocabulary. The generalpurpose, voice-activated typewriter is not yet in sight.

Speech recognition systems translate voice input into a corresponding character code. They can be employed to switch

appliances or toys, to help handicapped persons, to enter data

while the operator's hands are busy with other tasks, to control

equipment in factories, to effect transactions by telephone, and

to retrieve information from computerized information systems.

Clearly, no one type of speech recognition system can serve

equally well the entire range of possible applications.

Systems vary in complexity along at least seven dimensions:

o discrete word versus continuous speech,

o vocabulary size,

o ability to recognize more than one speaker,

o response time,

o required quality of voice input,

o amount of background noise, and

o amount of training required. [STAFF COMMENT 22]

Current research on continuous speech recognition follows various

approaches. One approach concentrates on broadening and perfecting the knowledge and use of many aspects of language, such

as its acoustics, phonetics, and syntax; so far, however, it is

not clear how such knowledge should be represented, nor how much

of it is necessary to achieve reasonable recognition. Another

approach is to let the recognizer organize itself automatically

from the processing of speech data, rather than by using

linguistic rules.

4.1.2.2 Technological Evolution

In the short and medium term at least, a more fruitful approach

could very well be to develop application-specific or taskoriented continuous speech recognition systems. Here the recognition process relies on a store of phoneme templates (similar to

those of formant synthesizers) and on a knowledge base store.

The latter contains task- or application-specific information

about phoneme syntax, vocabulary, and linkage structure. The

speech analyzer extracts and normalizes parameters for the

sampled time segments. These are then compared with the phoneme

templates stored, to identify likely phoneme strings. Alternative strings of phonemes and words are then explored in a type of

decision tree, and are evaluated by using the knowledge base

store. This search-and-evaluat ion process is iterative until an

optimal phoneme string and word sequence has been found. This is

then accepted as the recognized speech and translated into a character code output.

94
While we will probably not see unlimited-vocabulary, unconstrained, continuous speech recognition until the 1990s, we will

see some significant improvements in speech recognition capabilities. Chip sets for discrete-word, single-speaker recognition

devices with vocabularies of 20 words are commercially available

today for less than twenty dollars. As processing power and

storage capacity increase and prices decrease, we will probably

see some limited-vocabulary, continuous speech recognizers in

commercial applications before 1989. Voice recognition and voice

response systems will be combined for such applications as order

processing and pay-by-phone. As voice recognition becomes increasingly important as a data entry method, we expect to see

products from mainframe computer manufacturers.

During the beginning of the 1990s, we expect some commercial

application of task-oriented, syntax-driven, continuous speech

systems for several speakers and with vocabularies in the order

of 1,000 words. Similar general-purpose systems could be available by the middle of the 1990s.

4.2 CHARACTER RECOGNITION

4.2,1 Bn ckqround

Character recognition systems can read characters from typed,

printed, or hand-printed documents, forms, and regular pages.

Their output can be either a character code in some standard

format (such as ASCII) or the input documents themselves, sorted

according to specific criteria on the basis of characters read

from the documents.

The principal components of a character recognition system are a document transport device, a scanner, a recognition unit, and a processor. The most critical components are usually the scanner

and the recognition unit. The document transport device moves

the input documents past the scanner. The scanner then passes

the digitized image to the recognition unit, which extracts the

characters. The processor controls the different components,

including the document transport and various types of support

subsystems, such as storage devices, printers, and output

sor ter s

The technology, applications, and markets for character recognition systems are fairly mature in comparison to voice recognition

systems. New character recognition systems will offer more

powerful and versatile recognition capabilities, and will be

smaller and less expensive.

4,2.2 Document Readers/Sorters

Character recognition systems have been particularly successful

in applications that require processing extremely high volumes of

standard documents, the quality of which can be fairly well

controlled. For this reason, batch processing of standard

payments documents (such as checks) is by far the biggest appli95
cation area for character recognition. Both magnetic (MICR) and

optical (OCR) character recognition methods are commonly used in

this application. Large systems read at a rate in the order of

10/000 characters per second and can process over 100,000 documents per hour. Other applications markets for document

readers/sorters are much smaller, but some are growing faster,

such as transaction processing systems, which typically operate

in a start-stop mode with human operator input (e.g., processing

of turnaround documents at a service counter).

4.2.3 Page Readers

Whereas document reader-and-sor ter systems normally read only one

or several lines of selected fonts, high-speed page readers are

often much more versatile in terms of acceptable fonts and

character sets. General data entry systems, for example, can

read information from order forms, invoices, packing lists,

social security forms, etc. Smaller page readers in OCR and

other forms capture text prepared on typewriters for subsequent

processing by word-processing, text-editing, and photocomposition

systems. In another application, page readers capture text for

subsequent communication by telex or TWX.

4.2.4 Hond-held Readers

Stationary hand-held readers are used mostly in department stores

to read product labels imprinted with OCR font. Portable systems

are also used to read preprinted item tickets and labels, in

warehousing and distribution applications. Hand-held readers

currently represent the fastest-growing segment of the market for

character recognition systems.

4.2.5 Scanners

Most scanners are based on various types of linear photode tec tor

arrays. We expect to see more use of integrated solid-state

detector arrays with large-scale integrated circuits. Either

charge-coupled devices or charge injection devices could be used.

Interrogation logic, buffer storage, and switching are expected

to be integrated into the scanner circuitry. Another interesting

development is the solid-state-based flying spot laser scanner;

with digital controls, this could become a very flexible and

powerful device for a number of applications.

4.2.6 Recognition Units

Recognition units will benefit from the availability of more

powerful and inexpensive processors. Use of such processors will

allow the implementation of more complex algorithms for processing the image and recognition of characters. Of particular

interest are algorithms that can be trained to recognize a wide

variety of character fonts, including handwriting.

96
4,2.7 New Systems

Over the next ten years we will probably see a movement away from

today's very large, centralized document batch processing operations and toward a more decentralized approach. The following

systems are likely to appear on the market over the next ten

years

o A small document transaction processor with limited font

capability and slow reading speed, co be used as a decentralized terminal in counter-type operations in banks and

post offices.

o Low-cost multifont page readers with medium speed, to be

connected to word processors and text-oriented telecommunications terminals as part of the trend in office

automation

o Compact and truly portable readers with slow reading

speeds and exchangeable fonts, to be used as stand-alone

units or as attachments to mobile data entry terminals.

o Omnifont readers that can be trained to read most typed

and printed fonts and hand-print at medium to high speeds

to capture general text for input into information banks.

In addition, in the 1990s recognition systems may become available which can be trained to read individualized, connected

handwriting. Even though current technology is far from achieving this, there is little doubt that it can be done, if a supplier is willing to engage in a major software development

program. The key question is whether there would be sufficient

demand for this capability.

4.3 FACSIMILE

4,3.1 Background nnd Present Approaches

Although facsimile was patented by Alexander Bain of Scotland in

1843, it has only recently emerged from a long development stage

and is now rapidly expanding. The primary reason for its slow

early growth was the lack of several relevant technologies, such

as photocells, amplifiers, transmission lines, modulation technology, and miniature circuitry. In addition, facsimile required

computer arts such as software and microprocessing before its

price/performance and utility could stimulate and supply a significant office market.

The technical feasibility of using the telephone to deliver a facsimile signal (telephone coupling) was demonstrated in 1935.

However, except for news pictures and the transmission of fingerprints by the FBI (deemed to be in the public interest),

regulatory authorities in the United States strictly forbade

coupling of facsimile and other "foreign" signals into the

switched telephone network.

97
A series of court decisions permitted the use of acoustic

coupling, which enabled the Xerox/Magnavox Telecopier to circumvent the prohibition against interconnection in 1966, and other

restrictions were removed by the Carterfone decision of 1968.

The rules for the certification of interconnected equipment had

been established by 1977 when the FCC permitted facsimile and

other equipment to be connected directly to the telephone network

without either acoustic coupling or telephone-company-supplied

connecting arrangements. [STAFF COMMENT 23]

Leading-edge facsimile technology is now designed to meet the

following goals:

o To place the burden of processing on software, while

minimizing the use of hardware;

o To optimize the cost, reliability, and produceability of

essential optical and printing transducers;

o To improve human factors (ergonomics)

o To keep pace with evolution of the International Standards Organization (ISO) Open Systems Interconnect

reference model;

o To optimize compatibility with the developing integrated

services digital network (ISDN); and

o To establish facsimile printers as the universal nonimpact printers of choice to replace or enhance typewriters, office copiers, computer output printers,

microfilm blowback copiers, and daisywheel printers.

To achieve these goals, development efforts are concentrating on

compression codes, modems, scanners,' printers, circuitry, electronic filing and optical storage, mail delivery techniques,

image terminals, distributed office communications protocols, and

ergonomics

Mail delivers an original, and communicating word processors can

deliver documents with the quality of the original. In contrast,

most facsimile equipment cannot deliver a copy that even approximates the quality of the original.

Facsimile equipment is classified according to four "groups,"

numbered 1-4. Table 4-2 shows some of the more important

characteristics of each group.

Group 1 and Group 2 facsimile copies, at 96 lines per inch (3.85

lines/mm) , are barely of borderline quality for 10-point type and

are legible only in context for 8-point type. An alternative

mode at 64 lines per inch (2.5 lines/mm) is barely legible for

10-point type. It is an effort to read such "fuzzy" copy; eye

and mental strain cause the reader to tire and even to develop

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99
subconscious hostility toward the sender. Poor copy quality is

the primary obstacle to general use of facsimile as a preferred

document delivery method.

Groups 3 and 4 offer much higher resolution and speed, and also

some form of "punch-through" error correction techniques that

lower the transmission rate when repeating a block containing an

error

Various manufacturers offer equipment for groups 1-3; these

devices usually operate together satisfactorily, because of

standards issued by the International Consultative Committee on

Telephone and Telegraph (CCITT) , which have been adopted worldwide. Standards for Group 4 are expected before the end of 1984.

4.3.1.1 Compression Codes

Compression codes are sophisticated algorithms that act upon the

digitized facsimile signal to reduce redundancy in the bit stream

created by scanning the image. As employed in Group 3 devices,

an analog facsimile scan is digitally encoded in terms of run

lengths, or distances between horizontal changes in the picture.

A second set of codes of ascending length describe run lengths of

descending probability, so that the set of run lengths is described in a minimum of bits. This process is called "compression," because it compresses the description of a page into fewer

bits of information. Since adjacent lines in facsimile are often

very similar, a line can be encoded, not with new data, but by

comparison with the preceding line. In 1969 Dacom developed such

a run length code, plus a line comparison code every other line.

These codes were incorporated into equipment supplied to compress

newspaper facsimile transmissions of the Wall Street Journal

between San Francisco and a publishing site in Riverside,

Cal i f or n ia

A year later, CBS and Savin Business Machines Company acquired

Dacom and enlisted Ricoh as a partner in a venture to develop an

office facsimile terminal based on data compression using the

Dacom code. Although the product was developed and tested in the

United States, it was made in Ricoh's Atsugi plant in Japan. In

1974 the CBS/Savin/Ricoh product, called the Rapifax 100, was

introduced. Subsequently, Ricoh bought the CBS, Savin, and Dacom

interests, obtaining 100 percent ownership of the Rapifax

program

Rapifax production helped to stimulate a major national effort to

advance facsimile technology among Japanese manufacturers.

Kokusai Denshin Denwa (KDD) , the Japanese government-owned international telephone carrier, developed an improvement over the

Dacom code called the Relative Address Code and offered it as an

international standard. Six other codes were offered by AT&T,

3M, IBM, Xerox, the British Post Office, and the West German

Bundespost. The CCITT selected a British modification of the

100
Japanese code; after still further modification, the latter became known as the Modified READ (Relative Address Designate)

Code, which was adopted in 1980 by the quadrennial CCITT Plenary

Session as an international recommendation (standard)

Higher compressions have been achieved by Compression Labs Inc.,

Bell Telephone Labs, and Bell Northern Research by use of a combined Modified READ and "dictionary" code system, in which

each new "lump" (a letter-size mark surrounded by white) , found

on the page is given a short code and assigned to an accumulating

"dictionary" of symbols. Both sender and receiver compile these

dictionaries as transmission progresses. The next time the

sender sees the same symbol, it merely sends the short code

rather than the full Modified READ description and thereby avoids

transmitting many bits. The dictionary codes must allow tolerances for recognizing the previously accumulated symbols in the

dictionary; therefore, the reproduction is not exact, but the

practical difference is small.

The Modified READ Code was selected as a standard because it is

an efficient compressor and is also reasonably forgiving when bit

errors occur during transmission over the telephone. To assure

that "shadows" of bit errors do not spoil the rest of the page, a fresh start, coding with new run lengths, is made every onefiftieth of an inch down the page —i.e., every two lines at 100

lines per inch (3.85 lines/mm) or every four lines at 200 lines

per inch (7.7 lines/mm).

Group 3 devices employ a considerable amount of error correction

within the device itself. In contrast. Group 4 devices will use

data links; therefore, the technology of the data link must

ensure low-error delivery of the bit stream. Group 4 devices can

employ a code that need not be tolerant of errors, permitting a corresponding reduction in bit overhead related to error detection and correction. CCITT Study Group VIII has tentatively

adopted the Modified READ Code, but without restarting every onefiftieth of an inch, a variation known as "Infinite K" or

"Wraparound .

The effectiveness of compression codes is demonstrated by the

fact that Group 1 facsimile at 96 lines per inch (3.85 lines/mm)

requires six minutes of telephone time to transmit a page. Group

3, using a compression algorithm, can transmit the same amount of

text in less than a minute with twice the number of lines per

inch. The exact amount of compression depends on the amount of

image detail on the page; for a typical letter, transmission of

the page (using a 9600-bps modem) takes only 24 seconds of telephone time.

4.3.1.2 Array Scanners

Traditional electro-mechanical facsimile scanners examined the

diffuse optical reflectance of copy to be sent by looking at the

light reflected from a single, small spot (called a pixel or

"picture element"). The small spot sweeps across the page from

101
left to right and line by line from top to bottom, until the spot

content of the page has been completely reported. The usual

practice is for the copy to be mounted on a spinning drum under

stationary optical systems.

The new technology scans the original very differently. A linear

array of photocells on an elongated silicon chip scans all the

picture elements across a page of text in parallel. The output

video signal, proportional to the reflectance values, is reported

from each photocell in turn. The video signals from each photocell are thresholded to represent either black or white, a process called "digitizing." Group 3 scanners have 1,728 photocells (2,048 if they can scan 10.1 inches, as many Japanese Group

3 machines can) . The current favorite among cell array designs

is the charge coupled device (CCD) , which has advantages in

shifting the individual cell signals without distorting their

levels .

The facsimile scanner is built like a camera, with the CCD array

occupying the position normally held by the film. The camera

focuses on an illuminated line across the width of the subject

copy. The copy is fed by a stepper motor, which advances to the

next line whenever the first line has been scanned, digitized and

compressed. In many Group 3 terminals, the stepper motor and

paper feed are the only moving parts, and the terminals are

virtually silent in operation.

4.3.1.3 Optical Character Recognition Scanners

The marriage of facsimile with optical character recognition

offers a number of advantages for the communication of printed

material and the input of documents into future integrated office

systems

According to industry estimates, 80 percent of the facsimile page

volume transmitted in the United States consists of alphanumeric

text or a mixture of text and graphics. The ability of combined

OCR and facsimile technologies to recognize individual letters as

eight-bit character codes would not only achieve data compression

ratios of more than 50:1 but would also permit the recognized

text to be edited by a full-text document retrieval system and

transmitted by alphanumeric electronic mail systems. Mixed-mode

documents, such as letters containing a corporate logo and signature, could be captured without the loss of either information or

pictorial content. OCR would also facilitate communication between the facsimile scanner units and byte code-oriented

computer systems. Such a system is envisaged in the CCITT

^'mixed-mode" version of Group 4 facsimile.

The marriage of OCR and facsimile in Group 4 mixed-mode should

allow the capture of all incoming documents for transmission and

processing by an integrated office system. A primary factor

delaying the integration of facsimile and OCR technologies has

102
been image quality. While Group 3 facsimile offers a resolution

of 200 lines per inch, most OCR readers require 400 scan lines

per inch to recognize alphanumeric characters. [STAFF COMMENT 24]

The availability of Group 4 facsimile scanners with 400- lineper-inch resolution should eliminate any barrier to the mating of

OCR and facsimile technologies. HiTech Canada Ltd., a Canadian

OCR vendor, has addressed the issue of resolution quality by

interfacing a standard Muirhead Group 3 facsimile unit with a PDP-11/23 microcomputer; using proprietary K:.oftware to recognize

typewritten fonts, it has achieved a 64:1 data compression ratio.

Kurzweil Computer Products of Cambridge, Massachusetts (a subsidiary of Xerox) markets a high-end OCR system that uses

artificial intelligence techniques to recognize any printed or

typewritten font. Because of the costly software development

effort and the computer characteristics needed to drive "omnifont" OCR, a typical configuration of the Kurzweil Data Entry

Machine (KDEM) now costs $60 , 000-$ 100 , 000 . However, amortization

of programming costs and advances in microcomputer chip technology will probably reduce the price of omnifont recognition

sufficiently so that it will be commonly bundled with OCR scanner

units by 1990. In the meantime, Kurzweil is rumored to be

developing new software that would allow its units to transmit

digital facsimile through a distributed network.

Several Japanese facsimile vendors have either announced or are

developing products that combine facsimile capabilities with

conventional low-end OCR page readers. Toshiba, Matsushita

(Panafax) , and NEC are all known to have units that can recognize

multiple typewritten fonts and can also transmit Group 3 protocols. Ricoh has shown a system for the Japanese market which

combines store-and-forward capabilities for computer services.

Group 3 facsimile, and software to recognize handwritten and

printed Japanese characters. [STAFF COMMENT 25]

4.3.1.4 Array Printers

Like the recent scanners, modern printers are based on the use of

arrays. For archival copy, a page-wide row of styli deposits

charges on dielectric paper to form an electrostatic latent

image, which first is rendered visible by toning and then fixed

by heat, pressure or both. The most advanced example yet on the

U.S. market, the NEC III-C, uses two interleaved stylus rows,

each with 200 styli/inch; the charge depositions are properly

timed to recreate the 400 dots/inch observed by the scanner

(which has a CCD with 4,096 cells). The copy quality exceeds

that of many office copiers.

Lower-cost Group 3 printers use 200 tiny heater elements per inch

(called nibs), 1,728 of which are arrayed across a standard 8.5-

inch page. A special paper with a surface emulsion of a leuco

dye is used. The surface is white unless it is heated above a certain temperature (typically 235 degrees Farenheit) , at which

the emulsion collapses and appears dark. The nibs are heated

electrically to this temperature for only about 2 milliseconds

103
when a mark is desired. When de-energized, the nibs quickly

become too cool to cause a mark. In this way the array of

thermal nibs produces marks that replicate the dot pattern of the

transmitted digital image.

The above is a one-step marking process, requiring no further

action. The copy is not archival, as the thermal mark can fade

with time, particularly when in contact with plastic or exposed

to many common liquids. An archival copy, if needed, can be made

from the thermal copy on a plain paper office copier. The thermal paper process is inexpensive because it is simple. The

typical Group 3 terminal rendering archival toned copy costs

about $10,500, while the equivalent Group 3 thermal terminal

costs about $7,500.

4.3.1.5 Laser Printing Systems

High-speed laser printing systems will also play an important

role in future facsimile products. These systems will offer the

high-resolution output required by Group 4 protocols, the ability

to mix bit-mapped graphics printing with press-quality ASCII

character-fonts, and printing speeds of hundreds of pages per

minute on ordinary paper. Since these units are being configured

as the "print server" of many distributed office automation

networks, their ability to display facsimile output is important

to the integration of facsimile with the multifunctional office

systems of the late 1980s.

Laser printing systems, like the electrostatic and xerographic

printers that preceded them, are based upon the principle of

recording a latent electrostatic image on a photosensitive drum.

The drum rotates through a toning station, where the toned image

is transferred to paper. In a facsimile printing system, the

scanned digital representation of an image is used to control the

output of a laser that scans the drum, much as a lens directs

reflected light in a photocopier.

The price of the fastest laser printers ($100,000- $350,000) has

limited their use to the most demanding data processing applications. However, several lower-speed units that produce 10 to 36

copies per minute have recently been introduced; these cost

$10,000 to $20,000 and have all the graphic capabilities of the

more expensive systems. Cannon's $9,000 LBP-10 desktop unit has

been adopted by several U.S. manufacturers of computer workstations. Xerox began selling its graphics-capable Model 2700 laser

page printer in July 1981, priced at $19,000. Both Hitachi and

Fujitsu have demonstrated low-cost integrated systems offering

CCD page scanning, photocopying, and laser printing functionality. These units will inevitably be adapted for facsimile.

4,3,2 Technological Evolution

o 1984-1989 — The average per-page cost of delivering a facsimile copy in the United States and Canada in 1982

(including the costs of both delivery service and equip104
ment) was 69 cents. This cost is strongly affected by the

scale of operation. Greater traffic obviously reduces

the cost of equipment on a per-page basis. Faster terminals have also reduced cost in two ways: (1) lower

telephone charges for a shorter transmission time per

page, and (2) spreading terminal costs over a greater

number of pages per terminal per unit time. High traffic

volumes, particularly those expected with messageswitched Group 4, will permit batching of traffic for

delivery on wide-bandwidth channels (e.g., satellites),

which will reduce per-page costs. Over the 1966-1982

period, each 10 percent decrease in per-page delivery

cost corresponded to a 20 percent increase in the overall

market. Substantial further decreases in delivery cost

and corresponding increases in facsimile usage can be

expected through at least the mid-1990s.

Group 4 will become common during the 1984-1989 period.

o 1989-1999 — Lower costs will lead to continued expansion

oiE use .

4.4 TERMINALS

4.4.1 Background nnd Present Appronches

"Terminal is an umbrella term that covers an array of equipment

on the premises of the user, whose functions include voice or

alphanumeric graphic communications in either video or printed

form. The most common voice terminal is the ubiquitous telephone

set. Alphanumeric terminals include a variety of sub-categories

such as: (a) teleprinters and receive-only printers, (b) keyboard/display units, (c) remote batch devices, and (d) communicating word processors. Similarly, graphic terminals include

the following

o Analog facsimile,

o Digital facsimile,

o Non-impact printers,

o Telepr inters

o Intelligent copiers, and

o Graphic keyboard/displays.

o Alphanumer ic Terminals -- Alphanumeric terminals with

typewriter-like implementation and employing electromechanical technology were the most common units until

the late 1960s. Following the Carterfone Decision in

1968, and led by advances in computer technology during

the last decade, their development has been rapid. These

typewriter-like devices employ some form of storage for

intelligence; this was originally punched paper tape,

later displaced by magnetic tape cassettes, floppy-disks,

bubble memory, and rotating hard disks. Keyboards and

video displays are now used extensively and have almost

replaced teletypewriter terminals in new installations.

105
Before the liberalized interconnection policies that

followed the Carterfone Decision, teleprinter technology

in the United States was dominated by the Teletype Corporation. Terminals were included in carrier services

such as telex, TWX and Dataphone , as well as in privateline message and data communication systems. The most

common teleprinters during this period were the Teletype

Models 33 and 35/ for light and heavy-duty service

respectively. These terminals were designed for the

ASCII Character Set, which employs a 7-bit code to define

128 printer actions. Of these, approximately 96 actions

are printed characters; the remaining 32 for functions

such as line feed, carriage return, and backspace.

Electromechanical switching systems, used in private line

operation, transmitted control sequences to the teleprinter-type terminals for polling operations. In

effect, the switching system allocated its own internal

resources to each terminal in turn, and asked if the

teleprinters had a message (on tape) ready to send. If

the terminal contained no tapes to send, its negative

response caused the switch to interrogate the next printer in the sequence.

These printer polling controllers used relay technology

and a few discrete electronic components. All-solidstate controllers, such as the Western Union 11708 Solidstate Selector, had been developed by the early 1960s,

but electromechanical designs were significantly cheaper

and substantially equal in reliability until the early

1970s. Today, most control circuitry is of solid-state

design

During the past decade, a number of new character-forming

printing technologies have been introduced, many of which

employ percussion concepts — namely, the typeball, daisy

wheel, and serial impact matrix-type printers. Among the

non-percussion designs, some use ink-jet sprays to form

the characters; others use lasers to burn the character

into the paper or form an electrostatic charge that

attracts toners, as in the xerographic process. Thermal

printers employ localized heating to discolor special

paper

Of these various designs, the dot matrix is probably the

most widely used. One manufacturer claims to have sold

more printers of this design than all other types

comb ined

Dot matrix printers are now available in three standard

pitches (10, 12, and 15 characters per inch) . They can

also print elongated characters, bold face, and superand sub-scripts. They operate up to 20 times faster, are

half as heavy, and cost half as much as "letter-quality"

printers. These significant advantages suggest that the

106
daisy wheel and other kinds of fully formed character

printers will not be economically competitive in a few

year s .

o Keyboard and Displays — A typewriter-like keyboard with

a cathode ray tube (CRT) display is presently the

dominant terminal technology. CRT terminals were first

used commercially in the mid-1960s with the IBM 2260

Video-Display Terminal, Other companies, such as Baker

and Bunker-Ramo, also offered CRT terminals at that time

for stock-quotation services. Teleprinter replacement

products were developed by other manufacturers after the

TWX acquisition by Western Union. The Bell System emphasized terminals with higher baud rates, since it was

enjoined from selling low-speed terminal devices. During

this period, they introduced the Teletype Model 40 CRT

keyboard terminal.

Keyboard and display terminals are differentiated primarily by the level of intelligence incorporated within

the terminal itself. The initial units were designed to

access the processing power of the central computer with

such functions as interactive time-sharing data entries

and information retrieval. Many of them also had primitive editing capabilities using combinatorial logic.

Later, more intelligence was added for such functions as

stored forms and syntax checking of data that had been

entered into the fields of such forms.

The main thrust of this direction encouraged microprocessor developments; for example, Datapoint stimulated the

development of the Intel 8080 microprocessor. Other

independent manufacturers, such as Sycor and Incoterm,

competed in the intelligent-terminal arena with similar

concepts and technology,

"Dumb" keyboard CRT terminals (i.e., those with little or

no editing capability) range in price from $1,000 to

$2,000. These are used principally for time-sharing and

transaction-type processing in which the host performs

all syntax and other processing functions. "Smart" terminals perform editing functions and cover a broad price

range; for example, the IBM 3270 compatible versions are

supplied in stand-alone, small-cluster and large-cluster

versions. The average price of the stand-alone version

ranges from $2,000 to $3,000; of the small-cluster

version, $20,000 to $40,000; and of the large-cluster

version, $50,000 to $120,000.

"Intelligent" terminals are considered to be those with

one or more programming languages available to permit the

generation of programs within the terminal configuration

itself. The language can be either general-purpose, such

as basic COBOL, or special-purpose, such as data entry

107
language. These range in price from about $2,000 to

$15,000 and include most personal computers with communication ability.

Telephone Equipment — The telephone set represents a technology and concept that evolved in the late 1890s

and, although improved continuously, differs in no important concept from the earliest versions. Its most

significant feature is the carbon-button microphone or

transmitter. This device has the distinction of offering

a real power gain of about 30 decibels (dB) — i.e., a power gain of about 1000 times — when transducing from

acoustical to electrical power; almost all other forms

of microphone technology introduce a loss of about 20 dB

or more when converting acoustical to electrical power.

These other microphones must be connected to an amplifier

that supplies 50-60 dB of gain to equal the output of the

carbon-button microphone. Since the latter costs three

dollars or less, there is little reason to switch to

something else.

This unusual characteristic of the carbon-button microphone has influenced the design of subscriber outside

plant of all telephone companies worldwide. The outside

plant design depends upon the fact that the carbon-button

microphone will deliver about 30 dB of gain. The energy

that is amplified must come from a power source of some

sort in this case, a d-c voltage supplied by the local

central office.

The gain of the microphone varies with the amount of

current that flows through it; i.e., the gain is reduced

as the current is reduced. In practice, this means that

the output of the carbon-button microphone tends to drop

in proportion to the length of the subscriber's line.

This is avoided by employing conductors of larger gauge

(hence lower resistance) , and by using booster batteries

at the central office for the longer lines. Many modern

carbon-button microphones become virtually inoperable

when the current drops below about 20 mill iamperes ; thus,

subscriber outside plant must be designed to provide at

least this amount of current to all subscribers.

The current for the carbon-button microphone is usually

fed over the copper or other metallic line which connects

the station apparatus with the central office equipment.

This has caused no real problems in the past, other than

the fact that the output of the microphone is reduced

with distant subscribers. Accordingly, the length of

subscriber lines is limited, depending upon the gauge of

the conductor. It has become increasingly difficult with

more modern techniques to supply the current from the

central office, and a local power source is sometimes

needed to provide current for the microphone. This will

108
become an absolute necessity when optical fiber replaces

metallic conductors in the subscriber loop, or when some

kind of carrier-derived pair-gain system is used.

Thus, some future telephone sets will include battery

systems with built-in chargers that can be energized by

"plugging into the wall." A distinct advantage that

derives from this approach is that the current supplied

to the microphone will no longer vary with the length of

the line that connects it to the central office equipment, and the output of the carbon-button microphone will

be stabilized. At the same time, other microphone technologies will become more competitive, because the cost

of electronic circuitry to supply 50 or 60 dB of gain

will drop.

4.4.2 Technological Evolution

o 1984-1989 The telephone industry can expect the

development of electronic circuitry which can extract a single digital voice channel from a large number of

channels on the customer's premises. Initially, the

purpose will be to extend digital transmission of voice

all the way to the subscriber, and to provide the capability for the Integrated Services Digital Network (see

section 3.1.8) .

In general, during this period personal computer-based

terminals enter general use.

o 1989-1994 — Voice, character, and image functions will

converge

o 1994-1999 — Extremely user-friendly conversational

interaction with voice-data systems will become commonplace .

4.5 TELECONFERENCING

4.5.1 Background and Present Approaches

There are two major types of teleconferences: telelectures and

telemee tings . Telelectures can be characterized as teleconferences where the primary flow of information is from a single

source outbound to multiple destinations. For example, the

Chairman of the board conducting multiple stockholder meetings in

many cities, or the marketing Vice President of a large corporation addresses his field sales staff. Telelecture meetings are

usually scheduled and coordinated well in advance. The information flow outbound to the multiple sites is generally rich with

graphics and prepared slides. At telelectures, physical

materials, such as slides with remote slide projectors, can be

delivered to the sites well in advance of the actual event. The

recent low cost of satellite video-transmission systems facilitates full-motion video transmission to the outbound sites. The

109
flow of information from the outbound sites to the central site

is generally restricted to audio only. The bulk of teleconferencing now actually taking place consists of telelec tures

Telemee tings , on the other hand, are generally arranged on an ad

hoc basis. They usually consist of one-to-one interactions between individuals or small groups, and are generally point-topoint with only two locations involved. For example, members of

the design engineering department of a manufacturing organization

located in a city may wish to discuss a manufacturing problem

with their manufacturing engineering counterparts located at a factory in a distant city. Another important telemeeting application is for corporate executives to communicate with divisional

management staff to save on travel time.

In both types of teleconferences, the information flow both

inbound and outbound may consist of any combination of the

following

o Vo i c e , o Facsimile or hard copy,

o Slow-scan video,

o Slow-motion conference quality video,

o Full-motion broadcast quality video,

o Remote control slide projectors,

o Computer graphics, and

o Electronic blackboards.

Because telelectures are generally scheduled in advance and

carefully orchestrated, electronic blackboards have little application to this form of teleconference use. Some limited

applications could exist during question and answer sessions in

telelectures but the limited availability of full-motion video

zooming in on a conventional blackboard would limit even this

usage . Most telemeetings today are conducted using two-way audio only

(e.g., speakerphones) . Some organizations have, in fact,

equipped conference rooms with speakerphones and some one-minute

facsimile machines to facilitate written communications. An

electronic blackboard which permits information drawn on location

A, using a conventional writing implement or a special stylus,

can simultaneously appear at location B and facilitate the ad hoc

written and spoken dialogue that takes place during the

telemeeting

Electronic blackboard products, and indeed telemeetings in general, are not in widespread use. However, there are several

experimental products that have been introduced.

AT&T Bell Laboratories has demonstrated an experimental product

called Gemini, which consists of a blackboard-like transmitting

device at the originating location and conventional television

monitors at the receiving locations. Conventional digitizer

technology locates the X and Y coordinates of the stylus that is

110
writing on the blackboard. These X and Y coordinates, coded in

digital form are sent using conventional data communications

links over voice circuits to the distant location. At the distant location the transmission is decoded which results in vector

stroke entries being mapped in a printing memory image bit plane.

Video display generator technology, such as used in video games

and personal computers, changes the spatial representation in the

memory bit plane into a serial U.S. broadcast quality television

s ignal

Nippon Electric Corporation (NEC) has developed a simple system

called Telesketch. The input device at the originating station

resembles a familiar child's toy consisting of a soft blackpitch

pad with a waxpaper overlay. In the NEC telesketch system, the

pad consists of flexible plastic with facing linear matrix electrodes. One plastic sheet has the electrodes running in the X

direction, the other the electrodes running in the Y direction.

The electrodes terminate at the edge of the sheets where they

butt with a material of considerable resistivity. A sheet of

paper can be layed over the telesketch pad and when written upon

with a conventional writing implement, the pressure deforms the

plastic sheet and causes the electrodes to contact each other.

By means of only four wires running into the telesketch pad,

external circuitry can resolve the X and Y locations by measuring

the resistance from one end of the bonding electrode to the

other. Resolution and accuracy are sufficient to transmit both

occidental and oriental handwriting. At the remote end the image

can be displayed on a television monitor in a manner similar to

the Gemini system.

Other forms of image transmission technology are competitive with

electronic blackboards in that they allow the ad hoc spontaneous

interaction and communication of written material. These competitive systems include:

o All television technologies from slow scan to full

motion

o High-speed facsimile,

o Computer graphics — since data typed on the keyboard,

and graphics data entered with pointing devices, can be

transmitted

These competitive technologies are already highly developed and

in use for Computer Aided Design and business graphics applications. While they are perfectly suitable for telemeetings , they

have not yet been exploited for such applications.

4.5.2 Technological Evolution

o 1984-1989 — During the next five years we expect telemeeting technology and services to undergo periods of

experimentation and further development. We expect the

personal computer and the manager ial/ technical executive

workstation to drive these applications. We do not expect stand-alone electronic blackboards, separate from

111
personal computers, to find significant usage. A

possible exception may be in educational institutions

employing central teaching staff. While this use represents a perfect technology fit, labor, institutional and

structional barriers may slow development of this

appl icat ion

Low cost personal computers with graphics input capability already exist; for example, the Apple Macintosh

and Apple Lisa, and Xerox-Star workstation. The mouse is

currently and will continue to be the predominant input

form during this timeframe. XY digitizing cards, using

low-cost technology similar to the NEC Telesketch and

other conventional techniques such as ultrasonic soundranging, and field-disturbance senses, will be employed.

Transmission of images will be through conventional data

transmission technologies with upper limits in the 1200

bps range. Generated images are likely to consist of

alphageometric coding techniques such as the North

American Presentation Level Protocol Syntax (NAPLPS)

with some color possible. The system resolution will be

comparable to that provided by NTSC television limiting

written text to the order of 40 characters per line and

24 lines.

1989-1994 — During this time period, improvement will

most likely be observed in the following:

Data transmission range.

Image compression techniques making more efficient use

of data communication channels.

Increased resolution, and

Increased use of color.

In addition, expansion in forms of input devices will be

used with software specifically oriented for personal

computers functioning as electronic blackboards beginning

to proliferate with some commercial use.

We expect pointing devices, such as light pens, to see

wider use during this timeframe. XY digitizing pads will

reach larger volume production and decrease significantly

in cost. We expect the availability of low-cost data

transmission systems in the 4800 bps range to be available and, in installations where higher cost can be

justified, speeds of 9600 bps will be used. Low-cost

signal processing systems and technology will permit

highly compressed images to be efficiently coded for

rapid response in transmission of sketch material.

Resolutions of black and white systems, and monochrome

systems should double beyond the U.S. broadcast TV standard and high resolution color displays capable of displaying 80 characters per line and 24 lines should become

available

112
o 1994-1999 — During this five-year timeframe the trends

of the preceding five years will continue in addition to

the use of electronic blackboards provided in the personal computer workstation. Other functions will be

integrated and share the data compression and data transmission systems. These should include television camera

input for documents and faces in addition to high-level

software retrieval, manipulation, and editing of entered

images and sketches and using the electronic blackboard

input device. Performance improvements should permit the

transmission of TV quality images over dial-up circuits

in the subminute-per-f rame time range.

4.5.3 Con clus i ons

The availability and widespread proliferation of personal computers providing electronic blackboard and other teleconferencing

functions will allow practical and economical ad hoc telemeetings

to flourish. We expect more widespread use of telemeetings as an

alternative to travel with attendant increases in executive and

managerial productivity.

At the present time no commercial hardware exists for performing

the electronic blackboard function, therefore, no prices have

been established. However, personal computers with pointing

devices, graphics display and storage functionality are available

in the $2,000 range. To provide basic electronic blackboard

functions with these devices will require nothing more than

software to accommodate these needs. Since a widespread mass

business market has already been established, future developments

will go into improving the performance rather than significant

reductions in cost. During the next 15 years we expect the

primary performance improvements to be:

o Increased resolution,

o Widespread use of color , o Hard-copy high resolution in color graphics output, and

o Rapid speed transmission through use of high-speed data

communications and compression algorithms.

113

APPENDIX

STAFF COMMENTS

The staff comments in this section are keyed to the body of the

text of Part I. For example in section 1.2.3, [STAFF COMMENT 1]

appears in the body of the text. Below, the comment is labeled

1.2.3 and STAFF COMMENT 1.

1.2.3

STAFF COMMENT 1

While manufacturers will continue to supply products not based on

standards, this period should experience a major growth in the

area of products conforming to standards. An indication of this

is the continued workshops originally held in preparation for the

NCC '84 demonstration.

STAFF COMMENT 2

Sometime during this period intercommunication between computers

of different manufacturers should be fairly routine.

STAFF COMMENT 3

We find this unclear. We believe that even in the 1990s 6th and

7th level standards will still be under development for some

present services.

1.2.5

STAFF COMMENT 4

Currently, manufacturers are factoring the standards into their

product planning cycles. It is more likely that as products

evolve to the communication standards, little, if any, additional

costs would be incurred. The expected trend is for the gradual

replacement of internal standards with international standards.

STAFF COMMENT 5

Figure 1-2 indeed supports the contention that universal OSI

equipment will be a better bargain than band-aid solutions.

However, the cost differential between OSI and conventional

equipment is discouraging. It will take a lot of convincing to

stimulate initial investments in universal OSI equipment.

STAFF COMMENT 6

Advising a buyer to obtain OSI standard equipment doesn't solve

his problem as suggested in this paragraph. Consider X.25 which

has too many options. In this case, a user is better advised to

not only consider OSI, but to consider a specific set of options

from an OSI protocol suite, for example, NBS FIPS 100. The point

is, specifing OSI is not sufficient.

115
APPENDIX

3.1.1.3

STAFF COMMENT 7

We feel that the changes in component technologies will occur

before the 1989-1999 time period.

STAFF COMMENT 8

A different opinion on the conflict between broadband and baseband transmission techniques for cable-based LANS is that the

conflict will not be resolved but that both will continue to

exist

3.1.1.4

STAFF COMMENT 9

Table 3-1 lists the price of a data switch as $175 to $275 per

port plus $250 for installation and for a cable-based network,

$500 per port plus $100 for installation. Both of these estimates seem to be low.

STAFF COMMENT 10

This section skips around the primary benefit of LANs, namely

device integration. LANs enable people to use their workstations

for multiple purposes, thus enhancing LANs' cost-effectiveness.

3.1.1.4

STAFF COMMENT 11

It should be remembered least cost is not the only factor; the

services given by the LAN are far more extensive than the other

techniques.

3.1.4.3

STAFF COMMENT 12

I realize that I probably hold a minority viewpoint, but I believe that the concept of cellular mobile radiotelephone has been

oversold and its market potential overestimated.

I believe that there are only a relatively limited number of

persons in the civilian environment that require continuous access to the switched telephone network. There are many more that

require continuous capability for communication, but these are

largely specialized services such as law enforcement, fire or

other emergency services. Their requirements are best served by

the dedicated communications networks that they have established,

as these do not have the access delays associated with dialing on

the switched telephone network. Similarly, military command and

116
APPENDIX

control requires a continuous communications capability, but I do

not personally visualize cellular radio as playing a major role

in this.

The market that I anticipate for cellular radio is comprised

largely of the following:

a) Some members of the medical profession. Out of hours calls

are presently directed through, and filtered by, doctors'

referral services. In many instances the current "beepers"

will prove to be more cost effective than portable cellular

radiotelephones

b) Certain handicapped persons. Handicapped persons that are

able to drive a specially equipped car, but not to walk,

might find the cellular system to be a cost effective

system to ensure that assistance could always be summoned

in the event of a breakdown.

c) Prestige users. This is the same group of business executives and bureaucrats that use the chauffeured limousines

or buy the big Mercedes and Rolls.

d) Speculators in options or commodities. Here, the ability

to learn about and react to market changes in a responsive

manner can make cellular radio a cost effective tool.

e) Certain limited classes of sales work and of maintenance

work. A large fraction of the persons in these sorts of

activities can more effectively keep in touch with their

offices using a borrowed customer phone or a pay phone.

f) Others. There are undoubtedly others that I cannot think

of at the moment, but I do not believe that their numbers

will begin to be large enough to fill the expectations of

the purveyors of cellular radio. Personally, I would not

give $10 per month to have one in my car.

3.1.4.5

STAFF COMMENT 13

We think that cellular radio may prove useful for data applications as well as for voice.

3.1.5.3

STAFF COMMENT 14

We believe that toll networks will be all digital and a new

generation of modular distributed switches will occur in the

1984-1999 time period.

117
APPENDIX

STAFF COMMENT 15

We believe that ISDN will be in general use before the 1994-1999

time period.

3.1.7.1

STAFF COMMENT 16

Packet switching delay times need to be considered when discussing packet switching of speech and video data. If there is a fixed delay time between packets of information, reassembling the

data can be done without problems. If there is a mixed delay

time between packets of information, buffers, which are large

enough to accommodate for the maximum delay, are required to

avoid discontinuity of speech and video data.

3.2.2.2

STAFF COMMENT 17

The LED powers listed here are not necessarily useful, because

LED's will actually "launch" only a comparatively small portion

of their radiated power into a fiber, and this is a function of

the size of the emitter, the core diameter of the fiber, and

numerical aperture (cone of acceptance) of the fibers. The

emitter suface may be large compared to the core area, so a lower

powered but smaller LED may actually launch more power than a more powerful but larger LED.

3.2.3.3

STAFF COMMENT 18

We think optical logic technology and applications will develop

somewhat more rapidly in the 1989 to 1999 time period.

3.2.4.1

STAFF COMMENT 19

While we agree that coax cable technology is mature, we believe

LANS and CATV will be using much more of it.

4.1.1.1

STAFF COMMENT 20

In the discussion of the synthesis process, it is not entirely

accurate to say that "a number of resonators" are activated. A

more accurate discussion would indicate that an electrical model

of the vocal tract is activated. The vocal tract is modeled by

its transfer function in terms of resonances of the vocal tract

and the source excitation is modeled by noise or a series of

impulses. This constitutes the basis of a formant synthesizer.

118
APPENDIX

Formant synthesis becomes the basis of phoneme-based systems

through the incorporation of rules for the formation of the

phonemes from synthesis of the formants. Formants or phonemebased systems accept general text input and translate it into

voice output with the additional use of rule processors to translate input text to a sequence of phonemes, modified by additional

rules to account for variations in pitch, loudness, and duration

and exceptions to the general phonetic rule set,

4.1.1.2

STAFF COMMENT 21

A recent and potentially very significant product for speech

synthesis using formant coding is DECTALK mentioned in the text.

This could be considered an early speech output product offered

by a main frame manufacturer, as forecast in this report. It

offers the personalized speech cited in the forecast by means of

user selection and/or adjustment of important speech parameters.

4.1.2

STAFF COMMENT 22

Comments on several of these dimensions are:

"Required Quality of Voice Input" per se is meaningless. Presumably this refers to intr a-speaker variability for the input

speech or individual utterances. This is the characteristic that

Doddington [IEEE Spectrum, September 1981, page 26] refers to

when considering if systems perform as well for "goats" as

"sheep"

"Response Time" is an unusual 'dimension'. Present indications

are that systems must respond with little or no perceived delay,

or essentially in real time. It is not clear that significant

delays will be acceptable in any interactive application, whereas

the highest performance present research systems require substantial processing time. Systems with other than real time

performance will thus be unacceptable, and there will probably

not be a continuum of acceptable response times if other than

real time.

"Amount of Training Required" is an important dimension, but

there is no general agreement that a system with an extended

adaptive training or enrollment process would be undesirable. To

the contrary, such a system may ultimately perform at a higher

level than a system built on a limited training sample set. Key

factors that might be critical include the required training for

initial minimally acceptable performance and the total training

required for acceptable performance over an extended period.

"Amount of background noise" per se is meaningless. The key

factor in determining performance in the presence of noise is

related to the input signal-to-noise characteristics. The use or

119
APPENDIX

non-use of noise cancelling or press-to- talk microphones is a key

factor, as is the need for close-talking microphones. The input signal-to-noise characteristics indicate the severity of the

challenges put upon the recognizer in the presence of noise,

whereas the "amount of background noise" may not accurately

represent these challenges if the microphones perform optimally

from noise cancelling considerations but place undesirable constraints on the users. Collectively, the amount of background

noise (including its temporal variability) and the use of special

microphones define this "dimension", and it is reflected in the

input signal-to-noise characteristics.

4.3.1

STAFF COMMENT 23

As additional background, the wide use of facsimile equipment to

handle Western Union telegrams at least 30 years ago should be

recognized. I had such a unit in my plant then and used it

extensively to communicate with a large number of suppliers.

4.3.3.3

STAFF COMMENT 24

Section 4.4.3.3 addresses OCR equipment technology. We have a special interest in this area since our agency will shortly

implement a pilot project to allow companies to file certain

documents in digitized format. Since it is not possible to

provide a signature page contemporaneously with digitized transmission, an alternative approach was needed. We resolved this

problem by using assigned personnel identification numbers, PINS,

which will be transmitted along with digitized text as signature

symbols of authorized persons. Of course, this is only an

interim solution. The text refers to this type of problem which

states, in part, the "....marriage of Group 4 facsimile technology..." Hopefully, the realization of this technology will

resolve problems of this type in future systems applications. In

an unrelated project we have conducted OCR experiments with only

limited success. We encountered numerous problems with a variety

of diverse multifont text and graphic format images of the source

documents

STAFF COMMENT 25

As data entry for processing and telecommunications, OCR and bar

code recognition technologies are beginning to play major roles.

These two technologies should be considered when planning for the

future. For example:

Banks are hoping to do more with OCR by reading the convenience

line (numeric dollar value) of checks which is written by both

machine and hand. The biggest problem other than the individual

lettering styles is the spectral response of the wide variety of

commonly-used writing materials (inks) .

120
APPENDIX

OCR in the retail area got into trouble and gained a poor reputation there due to store management failing to keep equipment up

and using labels with poor print quality.

Bar codes are not mentioned. Although they are coming on strong,

they are running into print quality problems.

121

PART II: THE AT&T DIVESTITURE: THREE

PERSPECTIVES

Arthur D. Little, Inc.

Preston, Thorgrimson, Ellis, and Holman

Rural Electrification Administration

123

PREFACE

For many years, the structure of our national communications

system was in a state of eauilibrium. The AT&T divestiture has

chancfed that.

Since the early 1930 's, the pace and direction of telecommunications technolocry has been nearly as dependent on the recfulatory

and judicial environment as on engineering advances. That has

not changed. Because regulatory and judicial actions are more

difficult to predict than are technologica I changes, large users

of telecommunications are in a guandry vis a vis their long-range

planning. This part discusses the divestiture from three

per spec t ives

Chapter 1, prepared hy A. D, Little, provides an overview of the

subject, emphasizing the technology.

Chapter 2, prepared by Nicholas P, Miller of the law firm

Preston, Thorgr irrmson , Ellis, and Holman, emphasizes the

regulataory aspects. This chapter is an update of a talk Mr,

Miller presented several months ago in a telephone conference

with ICST and about 20 State and local ADP/ t e I ecommun i ca t i ons

officials.

Chapter 3, prepared by John N, Hose of the Rur^l Electrification

Administration, USDA, discusses the divestiture from the perspective of rural telephony. Given the growing trend toward

distributed data process ing and the concomitant dependence on telecommunications this discussion is of particular interest

to sub-Fedemi governments as well as Federal agencies with sites

in rura I areas

1. DIVESTITURE: OVERVIEW

ARTHUR D. LITTLE, INC.

1.1 CARRIER OFFERINGS AND THE IMPACT OF AT&T DIVESTITURE

On January 1, 1984 the Bell System ceased to exist. This radical

change was the result of many forces acting over the past two

decades. The most evident of these was a political move to

encourage competition, but underlying it was the technology

explosion that made the introduction of competition possible, and

perhaps inevitable.

The change was solidified by the January 8, 1982 settlement of

the antitrust suit known as the United States v. AT&T, et al.

This settlement is called the Modified Final Judgment (MFJ)

because it replaced the 1956 Final Judgment of an earlier AT&T

antitrust suit. The MFJ defined the divestiture of the local

Bell companies from the parent, AT&T, which retained its long

distance and telecommunication equipment manufacturing

125
businesses. The detailed Plan of Reorganization (POR) , filed by

AT&T on December 16, 1982 and subject to amendments by the Court,

provided the architecture of a new structure for the U.S.

telephone industry. The 22 Bell Operating Companies (BOCs) have

now been grouped into seven regional companies.

The MFJ and POR further divide the franchised areas of the seven

regional companies into about 160 Local Access and Transport

Areas (LATAs) . These are geographically defined areas of service

responsibility, within which the regional operating companies are

authorized to route and transport communications traffic. The

BOCs are not permitted to handle any inter-LATA traffic.

The primary businesses of the regional companies are the

provision of exchange and exchange access communications within

the LATA boundaries. Traffic that crosses the LATA boundaries,

even into contiguous communities, must be handled by inter-LATA

carriers on an equal opportunity basis. A subsidiary of AT&T,

known as AT&T Communications (AT&T-C) is just one of those

competing carriers, albeit the dominant one.

This section addresses the impact of these changes. It should be

borne in mind that:

o Dramatic changes are continuing, making it almost

impossible to predict conditions 15 weeks in the future,

much less 15 years; and

o The primary driving forces are not technical; much more

important are regulatory, judicial, legislative and

marketplace forces.

2.1.2 Other Common Carriers (OCCs), Value Added Networks (VANs)

and Domestic Satellite Carriers (DOMSATs)

A wide and rapidly changing selection of service offerings is

available to users. A representative sample includes:

o Private Line Facilities (MCI) MCI provides point-to-point

communication channels for voice, data, facsimile and

various wide-band applications.

o Private Line Facilities (GTE Sprint Communications

Corp .) These are point-to-point voice bandwith channels

for voice, data, facsimile, or other applications.

o Private Line Facilities (Western Union Telegraph Co.)

Low-speed data channels are offered on a full-time rental

basis,

o Satellite Channels (American Satellite Corp.) These are

point-to-point satellite communication channels for

voice, data, facsimile and various wide-band applications

furnished by domestic satellite in combination with

conventional land line access facilities.

126
o Satellite Channels (RCA American Communications, Inc.)

These channels are similar to those provided by American

Satellite Corp.

o Communications Network Service (Satellite Business

Systems) This is a two-point network service operating

between SBS network access centers located on customer

premises

o Packet Switch Data Service (GTE Telenet and Tymnet)

These are packet switched data communications services

offering station-to-station transmission between 50 bits

per second (bps) and 56 kbps. Differences in speed or

protocol are compensated by the network. Data is transmitted in 1,024-bit blocks called packets with automatic

error detection and correction. This service interconnects with Datapac in concentrating on graphic and

textual material.

o Voice Message Telephone Service These are switched

national message services. "Sprint" is offered by GTE

Sprint Communications Co., "Execunet" is provided by MCI,

and "Private Line Switched Service" is provided by RCA

American Communications.

Competition here is entirely on the basis of price. As AT&T

lowers its prices, the market should settle at a point that will

enable AT&T to argue that it is no longer dominant. If this

thrust succeeds in removing regulations, a chaotic situation

similar to that in the airline industry may result.

1.1.2 AT&T

1.1.2.1 Background and Present Approaches

AT&T provides two forms of communication services: regulated via

its AT&T Communications (ATT-C) subsidiary and unregulated

through its AT&T Information Systems (ATT-IS) subsidiary.

AT&T Communications is the largest common carrier in the United

States with an estimated 60%-70% share of the long-distance

market. It provides both interstate and intrastate inter-LATA

communication services under the regulation of the FCC and the

state Public Utility Commissions, respectively. Because of the

restrictions imposed by the FCC Computer Inquiry-II order, these

services are limited to basis end-to-end communication transport

and do not include computer processing enhancements. AT&T

channels are provided through use of its wholly owned inter-LATA

communications network. This includes basic transmission,

switching and control facilities. ATT-C supplies a vast array of

services to the consumer. These generally can be placed in one

of two categories (switched and non-switched) as follows:

127
o Switched services can be "addressed" by the sender and

delivered to the proper destination via the telephone

network. Most telephone services are switched.

o Non-switched services represent dedicated point-to-point

communication paths. Leased lines are typical nonswitched services.

These two categories can be further subdivided by their basic

approach to information transmission: analog or digital as well

as narrow and or wideband. In addition, switched services may be

divided into two categories as follows:

o Circuit switched in which a unique end-to-end transmission path is dedicated to a subscriber for the entire

length of his conversation.

o Packet switched in which data transmissions are subdivided into bursts of information (packets) and travel

over differing transmission paths to and from a subscribers premises.

AT&T also provides enhanced network services through its

unregulated subsidiary ATT-IS. To date this entity provides only

one service which will be described in the next section. ATT-IS

does not own or operate any network transmission or basic central

facilities. It does, however, own and operate equipment (computers, databases, etc.) necessary to provide enhanced services.

ATT-C provides a large number of services to the business and

residential communications subscriber. These services are listed

in table 1.1. However, because of ATT-C s move into the more

competitive environment it has chosen to rename many of its

offerings. Thus, each offering is shown with both its old and

new name together with an abbreviated description.

The services shown in table 1-1 are covered by tariffs filed with

and approved by the FCC and the local Public Utility Commissions.

ATT-IS basically provides a single network service referred to as

NET 1000. Previously, this service has been referred to as the

Advanced Communications Service (ACS) and NET 1. Net 1000 is an

enhanced communications packet switched service for computer

processing as well as data transmission, storage and protocol

conversion. It is based on the use of ATT-C Private Line ACCUNET

Packet Service and is available in 15-20 centers around the

United States.

1.1.2.2 Technological Evolution

Over the next fifteen years there will be a major change in the

character of the ATT-C communications network. These changes can

be placed in four broad categories: network design, communications medium, transmission techniques/devices, and switching.

Each of these will be examined briefly.

128
o Network Design

Over the next fifteen years the major thrust of ATT-C

will be to develop a software-controlled all digital

network. However, in the short term the emphasis will be

on providing digital connectivity between the major

business centers in the United States. This overall

d ig i tali zat ion plan is reflected in the application of

newer and more technologically advanced transmission and

switching devices.

ATT-C s second thrust will be to provide customers with

conveniently located points-of -presence or POPs which

have the capability of not only connecting subscribers to

the AT&T long distance network but also of bundling and

unbundling U.S. industry basic T-1 1.544 mbps digital

pulse streams into subrate channels which can be more

easily used by subscribers.

o Communications Media

For the terrestrial portion of its network, ATT-C

presently relies on microwave radio, coaxial cable, and

copper cable as its basic transmission media. However,

there has recently been an increasing trend towards the

installation of fiber optic cable particularly on the

Eastern seaboard and in the Atlantic Ocean. Between 1980

and 1983 almost 200 high capacity fiber optic based

systems have been installed by AT&T. This trend will

continue at an accelerated pace throughout the 1980' s and

1990 ' s.

o Transmission Techniques and Devices

Much of the long haul AT&T network is based on the use of

analog transmission systems. Although in the past much

of this network has been adapted for the transmission of

data, through use of techniques such as Data Under Voice

(DUV) , this is by no means the most efficient way to

provide a low cost, digitally connected network.

Therefore, in the next five to ten years there will be

increasing emphasis on installing digital microwave radio

systems and high digital capacity fiber guide systems.

In addition, there will also be an emphasis on increasing

the capacity of those digital systems already in place.

This will be accomplished through increasing use of Bit

Compression Multiple (BCM) techniques. Devices based on

the use of this approach derive 44 voice band channels

from a T-1 1.544 mbps signal which normally provides only

24 voice channels.

Satellite systems are used by ATT-C in its long haul

network, although satellite transmission accounts for

only about 3 percent of all domestic long-distance voice

transmission

129
Table 1-1 AT&T -C Services

OLD NAME NEW NAME

I. Public Switched Network Services

DESCRIPTION

DDD

Dial-It 900 Service

WATS

800 or expanded

800 Service

Operator Handled

Services

AT&T Long Distance

AT&T Dial-It 900

Service

AT&T WATS Service

AT&T 800

o Single Number SerV ice

o Customized Call

Routing Service

o Variable Call Routing Service

Video Teleconferencing No change

Audio and Audiographic Alliance Teleconferencing Services

o Alliance 1000 Service

o Alliance 2000 Service

No change

II. Private Line Services

HCSDS

FTS

SAS

SKYNET 1.5 Service

SKYNET Television

Service

SKYNET Audio Service

Basic long distance voice

service

Prearranged recorded announcement available on a direct

dial basis

Special bulk calling arrangement for directly dialed one station to many station toll

calls

A toll free service for

inward calling to a single

number

Two-way video teleconferencing services

Up to 59 party audio con- ferencing

Up to 59 party analog graphics

te leconf erencing

Provision of person-to-person,

collect, calling card, and

third party calling as well as dialing assistance

Provides satellite 1.544 Mbps

channels between earth

stations

Provides satellite television

signal transmission between

earth stations

Provides satellite dual 7.5

khz or 15 khz audio signals

between two or more earth

Stat ions

130
Table 1-1 AT&T -C Services (continued)

OLD NAME

HCTDS

HSSDS

BPSS/PTN

DDS

CSDC

Private Line Series

o 2000

o 3000

o 4000

o 8000

NEW NAME

ACCUNET T1.5 Service

ACCUNET Reserved TI .

Service

ACCUNET Packet Service

DATAPHONE Digital Service (A member of the

ACCUNET family)

ACCUNET Switched 56

Service

"Analog Private Line"

o Telegraph Service

o Voice Service

o Data Service

o Wideband Service

DESCRIPTION

Provides terrestrial 1.5 & 4 mbps digital channels between

two locations

A terrestrial based digital

network switching system

which provides for the

simultaneous two way transmission of either 1.544 or 3.0 mbps signals

Provides a customer dedicated

packet switching system

Provides terrestrially based

2.4, 4.8, 9.6 and 56 kbps

dedicated digital two-way

circuits

Not yet tariffed. Will provide

a terrestrial based switched

56 kbps digital circuit

Provides point-to-point

dedicated analog circuits for

o low speed signalling and

teletypewriter channels

o voice channels

o data transmission to 9.6

kbps

o data transmission between

19.2 and 230.4 kbps

131
It is doubtful whether satellite transmission will

overtake a large share of the transmission market because

it is generally less economical than improved microwave

or fiber optic transmission. ]n the long term, fiber

optic transmission should supersede satellite transmission for switched and private-line transmission services,

but it is not likely before the mid 1990' s.

In contrast to the long haul network, the medium haul

intercity and short haul metropolitan networks currently

make heavy use of digital transmission systems, such as

Tl. For parts of the networks which remained with ATT-C

after divestiture, there will be an emphasis on increasing digital carrying capacity by using BCM and in some

instances replacing copper cables with fiber optic

cables

o Switching

AT&T's long distance network is almost entirely computer

controlled and 80 percent of it utilizes digital

switches. Over the next five to ten years the remainder

of the network will be converted to digital switching and

software control. In addition, POPs will make increasing

use of digital cross connect devices which permit convenient, customer responsive bundling, unbundling,

administration, and switching of the standard T-1 1.544

mbps signals.

.• To support Value Added Networks, there will also be a trend towards the installation of additional packet

switching capability. The need for increased capability

in this area will be heavily dependent on the success of

- such service offerings as Local Area Data Transport

(LADT) by the Regional Bell Operating Go's, Net 1000, by

ATT-IS and Tymnet/Telenet services.

1.1.2.3 Impact of Expected Development

As evidenced by recent market actions and filings before the FCC,

ATT-C is attempting to:

o Obtain an increasing measure of deregulation of the

inter-LATA telecommunications market;

o Become more competitive in terms of basic network service

offerings, optional calling plans, and operator services;

' and

o Become more price competitive with the other interchange •carriers.

From a technological perspective these goals have been supported,

in part, since:

132
o Making use of new digital and 'optical systems lowers the

cost of providing service and, therefore, lowers the

price that can be charged the customer.

o Making increasing use of modernized software controlled

devices such as DACs and digital switches permits the

easy provision of new sub-rate digital services, billing

services and other basic service enhancements.

The provision of an increased digital capability by AT&T could

result in reduced costs for the ACCUNET family of services and,

thereby, substantially increase the demand for both these digital

services and the subsidiary services which depend on them. These

include

o Video teleconferencing, such as Picturephone Meeting

Service, which utilized ACCUNET Reserved 1-5 Service;

o Videotex, which in turn depends on ACCUNET Packet

Service

o VAN, which utilize ACCUNET Packet Service; and

o Private User bypass networks.

1.1.2.4 Cost/Performance Trends

Because of the AT&T divestiture of its local operating companies

and the attendant attempt to eliminate local and toll service

cross-subsidization, there is a massive rate restructuring now

taking place in the telecommunications industry. The major

effects to-date of this restructuring have been the following:

o A reduction of 6.1 percent in the rates associated with

ATT-C Long Distance, WATS, and 800 Service, effective May

1984 .

o The imposition of a $6 (maximum) access line charge on

large business customers effective May 1984.

o Filed tariffs (tentatively effective July 1985) to

restructure the rates for all private line services

(SKYNET, ACCUNET, Analog Private Line, etc.).

o The imposition of a $2 (maximum) access line charge on

residential customers effective in 1985.

o Long Distance price reductions by ATT-C competitors

particularly MCI (6 percent) and GTE Sprint.

Given the confusion in the rate making arena today, it is very

difficult to predict specific outcomes. However, the trends for

the following services are becoming evident:

133
o Long Distance and WATS — Over the next ten years

competition will result in significant reductions in the

price of these services. The May 25, 1984 6.1 percent

price reduction is just a beginning. Late in 1984, ATT-C

indicates that if rate restructuring proceeded according

to plan it would like to reduce Long Distance Service

rates by an average of 10.5 percent and WATS Service by

6.9 percent. Some observers believe that rates could

ultimately fall by as much as 50 percent.

o Private Line Services — Over the past few years the

monthly tariffs for Analog Private Line Service have

increased at an accelerated pace. These increases resulted from a realization on the part of ATT-C and the

FCC that the tariffs for these services did not adequately reflect the cost to provide them with a fair market

return on investment. This trend is expected to continue

on a mileage selective basis. Thus, in July 1984 the

monthly cost for a 50 mile analog private line is expected to increase 59 percent and the cost for a 1500

mile line is expected to decrease by 9 percent. (see

table 1-2) Similar rate changes are planned for ACCUNET

T1.5 Service (see table 1-3).

Over the next ten years it is anticipated that the costs

for Analog Private Line Services will continue to increase, since this is based on an old technology and

tariff structure. The cost of digitally based services

such as ACCUNET, however, after a catch up period should

either level off or actually decrease. This would be a direct result of the cost savings obtained from network

digitalization

Table 1-2 Analog Private Line Service

OLD RATES NEW RATES

Mi les Monthly Cost Monthly Cost

25

50

100

500

203 . 52

244 .02

325 .02

701.01

348 .00

388 .00

468 .00

848 .00

1,000

1,500

2 ,000

1,171.08

1,572.10

1,751.02

1,223 . 00

1,423.00

1,623.00

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Table 1-3 ACCUNET Tl . 5 Service

OLD RATES NEW RATES

Mi les Monthly Cost Montly Cost

25

50

100

500

2,621.00

3 ,786 . 00

5,236.00

17 ,286 . 00

32 ,286 .00

47 ,286 .00

62 ,286 .00

4,690.00

5 ,690 . 00

7 ,190 . 00

18,390.00

30 ,890 . 00

43 ,390 .00

55,890.00

1,000

1,500

2 ,000

1.1.2.5 Conclusions

Many actions are being taken by ATT-C in both the regulatory,

technological, marketing and pricing arena:

o Because of competition from OCCs and in spite of ATT-C'

aggressive pricing, ATT-C will lose market share in the

inter-LATA marketplace. It is not unconceivable that its

share will drop to 40 percent - 50 percent.

o Beginning in the late 1980' s, the regulatory restrictions

on ATT-C will be loosened and probably entirely

eliminated by the late 1990's.

o The Computer Inquiry-II restrictions which artificially

separate the communication activities of ATT-C and ATT-IS

will be eliminated by the mid-1990' s.

o Because of competition, the price charged for normal Long

Distance service will be lowered to the extent that WATS

will no longer be attractive. Thus, the traditional

reseller market segment will no longer exist.

o The ATT-C network will become increasingly digital during

the late 1980s and early 1990s until the distinction

between analog and digital based services will be

eliminated

o Because of the capabilities of a digital network the

distinction between switched, non-switched and private

line services will be eliminated. These latter services

will be provided with a "virtual circuit" established as

long as needed under software control.

o The provision of digital services at a sub T-1 rate will

become common place and the concept of the Integrated

Services Digital Network (ISDN) will become a reality, at

least at the ATT-C POP.

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1.1.3 Rese I I ers

Before addressing Resellers and Bypass, we should point out that

the development of both of these markets is almost solely

dependent on future regulatory developments.

A continuing market for the resale of telecommunications services

depends on regulators at both state and Federal level maintaining

the present arbitrage opportunities contained in the existing

Wide Area Telephone Service (WATS) and Private Line Tariffs. A

significant increase in monthly lease costs coupled with a significant decrease in usage rates would signal the beginning of

the end for Resellers.

1,1.3.1 Background and Present Approaches

The FCC's Other Common Carrier decision opened up the U.S. long

distance market to competition in the late 1960s. The first new

entrants into this market were carriers such as MCI which perceived an opportunity in the leasing of call carrying capacity

from established carriers (such as AT&T and the local telephone

companies) and then re-selling this capacity at lower rates. The

opportunity existed in the ability to attract large numbers of

users to their systems, while realizing a profit through volume

sales. The opportunity certainly existed; a number of these

companies flourished. Many, such as MCI, went on to build their

own networks and to leave the resale business. However, many

Resellers remain, and many new ones have entered the market. The

function they provide is discounted long distance or interexchange telephone service. To be sure, the idea of paying less

than what AT&T charges for service has captured the imagination

of the U.S. public. On the residential side, this appears to be

primarily due to the increased mobility of the U.S. population

and the subsequent increase in the need to use long distance

telephone service. For business users, the use of the telephone

can help control expenses formerly incurred for travel to meetings and the like.

The technology involved in the resale business has not changed

much over time. There remains a heavy reliance on WATS and

private line services. In order to serve a given market a Reseller needs to install a central office type switch through

which subscribers can access the high capacity lines that have

been leased (most common are WATS type line) . In many cases

access to the switch is available over a dedicated private line

circuit. With the existing tariffs, rates charged for such

service remain well below those of AT&T message telephone

tariffs. However, a second level of competition is developing

between the OCC's and Resellers. Now, the Resellers are holding

their own. However, they are at a disadvantage. Their ability to

expand their network is dependent upon the availability of

facilities from the established providers of communications

service. Often such facilities are not readily available. Thus,

Resellers have been limited in their ability to expand geographic

coverage and increase market share.

136
1.1.3.2 Technological Evolution

o 1984-1989 — By the late 1980s, regulation of the U.S.

Long Distance Telecommunications will be lessened.

Today, the FCC does not regulate OCC's or Resellers. The

FCC is also currently examining the future treatment it

should accord AT&T. The most logical near-term scenario

involves the lessening of regulation of AT&T as equal

access becomes available (no later than 1987) . As a response to competition posed by the Resellers, AT&T and

other providers of WATS type services (e.g., MCI) would

restructure their rates to limit the present arbitrate

potential. Most Resellers, faced with increased operating expenses due to increased charges for access to the

local network and limited arbitrage opportunities in the

tariffs, will be squeezed out of the market by 1990.

1.1.3.3 Conclusions

As Stated above. Resellers will be squeezed out of the U.S. long

distance market. However, some limited opportunities may remain.

First, expect some acquisition activity such as United Telephone's purchase of U.S. Telephone. Second, any surviving

Resellers will probably turn their attention to more limited

markets. An example of this could be Lexitel which only serves a limited number of states in the mid-West. Another possibility

would be the re-sale of Telecommunications service on an intrastate basis in selected states (e.g., California, New York).

When discussing the re-sale market it is significant to talk

about cost/value trends, since Resellers have prospered based on

subscribers perception of the value of the service provided.

During the seventies, and until today, the cost/value trend for

Resellers was on an upswing. Due to recent regulatory

developments, such as the FCC ' s access charge decision of May 25,

1984, the trend has reached stasis. For the remainder of the

1980s, it will be on the downturn.

Although their history will have been short, it is safe to say

that Resellers will have played an important role in developing

the competitiveness of the market. It is, however, rather ironic

that they will most likely be one of competition's first victims.

1.1.4 Bypass

1,1.4.1 Background and Present Approaches

Bypass is the circumvention of the local telephone company plant

or services by users who employ alternative means of telecommunications . The Bypass phenomenon can be traced to the FCC ' s opening up of

the long distance market to competition in the late 1960s. At

the time, however, it was limited to Bypas of the long distance

137
company. Now, more and more attention is being paid to Bypass of

the local network.

The use of Bypass may be stimulated by a number of factors.

Foremost among them are:

o Price differentials making Bypass more economical than

the local telephone company's network offerings;

o Unsatisfactory local network service;

o Technological superiority of the Bypass system;

o Preference for owning communications facilities to

increase security or privacy; and

o Anticipation of inferior service or higher local service

costs . The major Bypass technologies in use in the U.S. today can be

grouped into four broad categories:

(1) Radio Based Systems — Private microwave or digital

termination systems;

(2) Cable Based Systems — CATV or fiber optics;

(3) Intra Office Systems Electronic PABXs or Local Area

Networks (LANs) ; and

(4) Multiple Technology Systems — Teleports using a combination of the above technologies.

1.1.4.2 Technological Evolution

o 1984-1989 — The Bypass market is currently estimated at

approximately $100 million per year and growing rapidly.

The late 1980' s should see a proliferation of the satellite earth station farm—teleport concept, enhanced

communications and ventures in which real estate

developers provide telecommunication for tenants.

o 1989-1994 — It is during this time frame that the acid

test for Bypass will occur. It will be here that we

will see the effects, if any, of regulatory action in

the area of Bypass. The two scenarios that have been

developing are:

(1) Regulators, both State and Federal, impose fees

(similar to access charges) on Bypassers making it

a less attractive economic alternative and thus,

preventing losses to local telephone companies.

Hence, the industry will never really fulfill its

potential, and

138
(2) Regulators allow both ATT-C and the local telephone

companies to compete in the Bypass area themselves.

In this case, the Bypass market could increase to

over $10 billion dollars annually and be a significant portion of the U.S. telecommunications

industry. The definition of Bypass in this case

becomes meaningless.

o 1994-1999 — Depends solely on regulatory developments in

the 1989-1994 time frame.

1.1.4.3 Conclusions

Regulators can stop the Bypass industry in its tracks. If this

were to happen, advances in local distribution and service technology would become available primarily through the local

telephone company. On the other hand, if regulators decide to

allow open entry into the Bypass market, technological innovation

at the local level may be markedly enhanced, e.g., proliferation

of two-way interactive CATV systems.

Absent regulatory intervention, technological advancements,

coupled with the trend for increased rates for service on the

public switched network, will likely make for very impressive

cost/performance ratios for Bypass. However, any type of surcharge imposed by regulators will more than likely offset any

gains from technology and reduce cost/performance.

The Bypass phenomena has occurred primarily as a result of technology. If we could be certain that it would remain a child of

technology, it would have an extremely bright future and serve as

a primary source of technological innovation. Unfortunately,

this future is now clouded by the potential impact that regulators and their policies will have on it.

139
2. IMPLICATIONS OF THE AT&T DIVESTITURE

FOR COMMUNICATIONS OFFICERS

Nicholas P. Miller*

2.1 INTRODUCTION

It has been nearly nine months since the massive reorganization

of the American Telephone & Telegraph Company took effect on

January 1, 1984. Since the divestiture went into effect, the

U.S. telephone industry has undergone sweeping changes affecting

telephone users at every level. This article will briefly review

the divestiture, discuss some of the recent and probable future

changes in the American telephone industry and assess their

impact upon the procurement of telephone services, and finally,

provide some guidance to communications officers in understanding

the AT&T divestiture and working within its framework.

WHAT WAS THE DIVESTITURE?

The divestiture is not difficult to understand provided one does

not dwell on the details of the actual split up of the phone

system. Quite simply, in mid-December 1981, the Department of

Justice and AT&T reached a settlement of the antitrust suit

against AT&T which, effective January 1, 1984, split those

services perceived as being competitive in today's telecommunications market from those services perceived as remaining

monopolistic and therefore not subject to effective competition.

Background Of The Divestiture

In 1974, the Department of Justice initiated suit against AT&T,

alleging that AT&T was using its market dominance to inhibit

competition in the telephone industry. The Department sought

divestiture of AT&T as a means to ensure that AT&T would no

longer be able to use revenues from its regulated, local monopoly

services to subsidize its competitive services.

Several years ago the FCC reached the conclusion that terminal

equipment could be subject to effective competition. The FCC

drew the same conclusion with regard to the long-distance

services. It was generally conceded, however, that the local

telephone exchange had all the characteristics of a natural

monopoly

* Mr. Miller is a partner in the Washington, D.C. law firm of

Preston, Thorgrimson, Ellis & Holman and is active in the

practice of communications law. He is a former Communications

Counsel for the Senate Commerce Committee and White House advisor

on communications policy. He can be reached at (202) 628-1700.

140
The general purpose of divestiture was to split the two competitive areas, terminal equipment and long-distance service, from

the one area that was viewed as non-competitive. Such a split

would, among other things, eliminate the competitive problems

associated with AT&T's providing exchange access through its Bell

operating companies (BOCs) , to its competitors. Thus, the Bell

terminal equipment services were transferred to a new AT&T

organization (AT&T Information Systems) and the long distance

operations to AT&T Communications. Ownership of the local telephone networks was transferred to seven new regional BOC's which

are independent of AT&T.

2.2 THE EFFECTS OF DIVESTITURE AND COMPETITION

The AT&T divestiture, although conceptually simple, effectively

spawned radical changes in the telecommunications industry and

the way competitive and non-competitive services are offered.

The most important changes involve the way long distance service

is provided. AT&T's competitors have been unable to compete on

an equal basis since AT&T, through its historic ownership of the

local telephone network, designed its local networks to access

only one toll network. Because AT&T's competitors (Other Common

Carriers or OCCs) have had more difficult and complicated exchange access, called "unequal access," they currently pay a reduced access charge — 45 percent of the amount paid by AT&T —

for their use of the local exchange to originate and terminate

long-distance calls.

The industry, however, is moving towards a system of "equal

access." Under the new system, the OCC will pay the same access

charge as that paid by AT&T but in return will have the capacity

to offer their subscribers a service equivalent to that provided

by AT&T. In essence, this means that OCC subscribers will be

able to complete long-distance calls using rotary telephones and

will no longer have to dial the extra-digit codes which they

currently must use in placing long-distance calls. OCC will also

be provided with automatic number identification and answer

supervision capabilities which will allow them to identify the

caller without use of the current identification codes and give

them the ability to commence charging only when a call is

answered at the distant location. Thus, under equal access, the

OCCs will have the capacity to provide long-distance service on a basis comparable to that of AT&T's service.

The transition to equal access for the BOCs began in July 1984

and should be completed by September 1986 under the consent

decree. (Some 1400 independent telephone companies are not affected by the consent decree. However, the FCC has proposed

regulations which would also require most of them to eventually

provide equal access also.) Under the new system, telephone

users will pre-subscr ibe to one of the available long-distance

services. The impending pre-se lect ion process has resulted in a massive advertising and publicity campaign by the long-distance

companies, each hoping to increase its share of the lucrative $45

bi llion-a-year long-distance market. AT&T, whose long-distance

141
rates were reduced 6.1 percent effective May 25, 1984, has lost

customers since the divestiture. In addition to a shift of subscribers to OCCs, the BOCs handle a significant amount of local

toll traffic, which is permitted under the consent decree (within

defined areas called LATAs)

Exchange Access Charges

This transition in the treatment of long-distance service has had

an impact on local service as well. Local telephone service uses

many of the same facilities as long-distance services. Longdistance revenues contribute to the cost of these "joint and

common facilities" and have held local rates at relatively low

levels. With the breakup of AT&T, however, AT&T and the OCCs have

sought to reduce these payments for jointly used facilities, thus

forcing the local telephone subscriber to pay more of the cost of

these facilities. In an effort to more accurately allocate the

costs for use of local exchange facilities, the FCC has devised a system of access charges, including end-user access charges,

which are intended to cover the non-traffic sensitive costs

associated with the common use of the "local loop" between telephone central office and the subscriber.

Under this new access charge system, which began May 25, 1984,

multi-line business users pay an initial monthly fee of $6 per

line to the local telephone companies for the privilege of accessing the interstate long-distance network. Similar end-user

charges for residential and single-line business customers will

supposedly go into effect on June 1, 1985. The FCC had originally slated all end-user charges to begin simultaneously, but in

the face of congressional pressure, elected to delay residential

and single-line user charges in order to further study the consequences of their implementation. The proposed monthly rate for

residential and single-line business end-user charges will initially be $2 per line, with this rate not to exceed $4 until at

least 1990. All of these end user charges are for access to the

interstate toll network only. State regulatory commissions are

likely to apply a similar charge, if they haven't already, for

access to the intrastate toll network.

With regard to access charges on Centrex-CO lines, the FCC has

ruled that such lines are equivalent to business lines and thus

should be assessed end-user charges in the same manner that

business line charges are imposed. Critics had argued that

applying per-line access charges to Centrex-CO lines would bring

about the demise of Centrex-CO service since one such line is

required for each telephone extension, while PBX systems require

significantly fewer network access lines. The FCC rejected this

argument, choosing instead to implement access charges for

Centrex-CO lines on a gradual basis. Thus, for all Centrex-CO

lines in place on July 27, 1983, the monthly per-line charge is

initially set at $2. Centrex-CO lines not in place or on order

on that date, however, are assessed the full $6 monthly per-line

charge. All Centrex-CO lines will eventually be charged the full

business end-user fee.

142
In addition to end-user fees, large users will soon be faced with

implementation of the controversial tariffs on "special access,"

the dedicated local facilities used for connecting the longdistance private line and other facilities to the large users'

premises. The proposed special access tariffs were initially

filed in October, 1983 by the National Exchange Carrier Association (NECA) and by some of the BOCs, which filed separate but

similar tariffs. Examination of the proposed tariffs revealed

that major rate increases were in store. The FCC took a dim view

of these tariffs, finding the rate structures unreasonable,

discriminatory and contrary to FCC policy, and ordered them

mod i f ied . Revised special access tariffs were filed on March 15 and 19,

1984, and again they met a storm of protest from a number of

inter exchange carriers and large users. As a result of its

review and the adverse comment received, the FCC has suspended

the effectiveness of the special access portions of the tariffs

until November 13, 1984, pending completion of a more thorough

investigation. In the meantime, the interim intercarrier agreements negotiated earlier this year, which largely reflect the

settlement provisions and costs in effect prior to the AT&T

divestiture on January 1, 1984, will remain in effect. However,

the FCC announced that it would allow the special $25 monthly

surcharge on private lines commencing in August 1984. Users may

avoid this surcharge if they certify that their private lines

cannot be interconnected to the local telephone exchange

f aci li t ies

The eventual implementation of all access charges, could have

important consequences for large users. With their imposition,

long-distance rates will include a reduced part of the costs of

local facilities and thus should be driven downward. Conversely,

local telephone rates will be forced substantially upward since

they will have to cover a larger share of the local facility

costs. As a result, while the new charges overall may deter some

large users of long-distance service from seeking alternatives,

some access charges (particularly special access) may well induce

other large users to bypass the local network. Falling prices

and technological improvements in coaxial and fiber-optic cable,

microwave radio, satellites, and other bypass systems have already led some large users to develop their own private bypass

facilities

The potential savings from developing private networks and bypassing the local telephone company can be substantial. These

potential savings have already been recognized by such corporate

entities as West inghouse , Sears Roebuck & Co., and Bank of

America, and by government agencies such as South Carolina, New

York State, and New York City.

However, if enough bypass operations occur, they will seriously

affect local exchange revenues, thus driving up local telephone

costs and rates even more. Consequently, the BOCs and indepen143
dent telephone companies have begun efforts to minimize potential

revenue losses and in many cases are even willing to provide bypass facilities themselves.

2.3 COMPETITIVE OPERATIONS BY AT&T AND THE BOCs

The BOCs may enter competitive markets closely related to local

service such as customer premises equipment and enhanced services

on a limited and supervised basis, but the FCC requires that they

form separate subsidiaries for the provision of such services.

The BOCs ability to enter competitive markets unrelated to local

service, however, has been sharply restricted. In a July 26, 1984

decision, U.S. District Court Judge Harold Greene, who presided

over the divestiture of AT&T, ruled that the BOCs must concentrate on the provision of local service and may not branch out

into such activities long-distance service and new business

ventures. Greene's ruling was specifically aimed at a request by

BellSouth for permission to bid on a contract for construction of

a telecommunications network for the National Aeronautics and

Space Administration.

While Judge Greene had previously indicated that he would not

approve new business ventures if they were potentially anticompetitive, the new order established four conditions for the

approval of new ventures. To gain such approval, the BOCs must:

(1) place new ventures in separate subsidiaries; (2) establish

methods to insulate local phone customers from any financial

consequences arising from new ventures; (3) limit the size of the

new venture to no more than 10 percent of total company revenues;

and (4) agree to the monitoring of these new ventures by the

Department of Justice. Thus, the new order makes it difficult

for BOCs to significantly expand their business beyond providing

local telephone service.

While the consent decree removed all legal restrictions on the

ability of the post-divestiture AT&T to embark on new business

ventures in diverse, unregulated markets, under the FCC's

Computer II restrictions, AT&T must provide "enhanced" communications services, such as data processing and customer premises

equipment, through separate subsidiaries with separate accounting

systems. AT&T has taken full advantage of this new freedom,

entering both the business and personal computer markets within

the past year.

AT&T has filed a request with the FCC to remove certain Computer

II restrictions on it. While the Commission has yet to act on

this request, it has partially relaxed the restrictions. In a June 27, 1984 decision, the Commission ruled that AT&T Information Systems may provide domestic interstate transmission service

through the resale of the lines of any carrier, including those

of AT&T Communications.

144
2.4 POLICY IMPLICATIONS AND PRACTICAL ADVICE FOR COMMUNICATIONS

OFFICERS

The divestiture of AT&T and the related developments in the telephone industry carry significant implications for governmental

communications officers. The ultimate goal of communication

officers, and probably their most difficult task as well, is to

keep pace with the changing developments within the industry in

order to obtain the most efficient, cost-effective services

available. As rates for both local and long-distance telephone

services are driven more towards actual costs, communications

officers must pay increasing attention to the development of

alternatives to traditional telephone services.

With regard to particular developments within the industry, the

impending implementation of equal access and the other structural

changes related to the divestiture significantly alters the procurement of long-distance services. As the equal access date for

a city approaches, each of the long-distance competitors, including AT&T, will be soliciting large users, claiming that they

can offer the most effective services at the best rate. Communications officers should recognize that this initial attack will

produce an abundance of creative schemes to attract large uses,

and they must carefully examine each company's ability to provide

effective, efficient service over the long-term. An important

point to recognize is that the rate structures of the various

carriers are simply not comparable on an absolute basis.

Rather, the costs of long-distance service will vary both according to geographic location and the usage patterns of individual

customers

Communications officers should also recognize that the long-term

effect of the move to "equal access" may have some ironic consequences. While the transition is intended to enable all longdistance carriers to compete on an equal basis, it may reinforce

and expand the market power of AT&T. The ability of OCCs to provide service during the past few years at significantly lower

rates than those of AT&T, has resulted in a gradual erosion in

AT&T's share of the long-distance market. Evidence indicates,

however, that these companies have been able to offer cheaper

service not so much because of lower costs, but rather largely

because of the lower access rate paid to the local BOC's due to

unequal access. Once equal access is implemented, the gap in

rates between AT&T and its competition will likely narrow, and

while the OCCs will most likely continue to expand their respective shares of the market, their operating margins will be

reduced. The "resale carriers" are likely to experience greater

difficulties than facility based carriers since their operating

margins are dependent upon the arbitrage between long-distance

rates and the rates for WATS and private line services. This

will likely result in consolidations among competitors like the

recent acquisition by United Telephone of U.S. Telephone.

145
In addition to changes in the long-distance market, recent developments in local service will have a significant impact on large

users as well. As noted above, the implementation of access

charges, particularly special access charges, will significantly

affect service costs for large users. While the precise resolution of the controversial special access tariffs cannot be

predicted, some general observations can be made. First, special

access costs will increase overall, although the increase will

vary geographically and among users. Some users, depending on

their location, type of facilities used, and their level of

participation before the FCC, will experience much smaller increases than other users. Non-recurring charges, which in the

past have not been entirely cost-based, are likely to increase

the most. Second, it is possible that the FCC will cushion the

largest increases for certain classes of users by ordering a transition period. Third, while the FCC may require some simplification of the currently proposed rate structures and

regulations, the new rates are certain to be more complex than

the current pricing structure.

The bottom line is that communications managers for large users

should pay extraordinary attention to these tariffs and

participate in the FCC proceedings in which they are being tested

and the related issues resolved. As indicated above, while

interexchange costs are generally going down, the reverse will

be true for that "last mile" from the interexchange carrier's

local terminal to the user's premises. Large users of voice and

data communications services that make heavy use of dedicated

local access facilities should review the relevant tariffs to

ascertain their impact. If rate increases are in store for them,

the FCC should be advised. Unless the FCC receives objections

about a specific rate element, it is unlikely to require any

changes in the rate element.

As mentioned above, bypass will become increasingly attractive.

While the potential savings from bypassing the local exchange may

be substantial, they could be temporary depending on regulatory

developments. Thus communications officers should carefully

explore bypass alternatives, but they should commit substantial

capital investment to them only when they are convinced that

regulatory changes will not reverse their economies in the near

future

In addition to rapid technological advances in the development of

bypass networks, most telecommunications managers are aware of

the increasing interdependence of communications and computing/data processing technologies. Terminal equipment development

is increasingly moving toward combining voice and data

communications in a single terminal. There will be very strong

price competition among hardware vendors, comparable to that

found in today's home computer market. Communications officers

must constantly reconsider their changing needs and must recognize that rapid technological developments may quickly render

existing equipment obsolete. Before making substantial investments in services equipment, large users should make special

146
efforts to ascertain the likely future effects of making such

purchases, and must recognize that what may be an excellent

purchase today may result in substantial financial losses down

the road. The potential for economic losses is very often foreseeable, and telecommunications managers can thus avoid such

losses by constantly monitoring the changing developments in the

industry and the regulatory environment.

The changing developments in the telecommunications industry may

give rise to potential conflicts of interest for state officers.

As public servants and employers of elected officials, they will

support low overall telephone rates for all citizens in their

jurisdictions. But as telecommunications managers for large

users, the same individuals will be interested in new service

offerings and new price structures allowing substantial cost

reductions for large users. The conflict emerges because, as the

large user's costs are cut, residential and small business users

will face rate increases necessarily imposed to make up for the

lost revenue. These tensions will not disappear during the next

few years, and in fact will continue to face every political

jurisdiction in the country. Communications officers, therefore,

must seek new ways to balance the overall responsibility of the

government to protect the welfare of its citizens against the

government's interest as a user in obtaining efficient, costeffective telephone service.

2.5 CONCLUSION

Keeping abreast of developments within the telephone industry

during the next several years will be extremely difficult, and

communications officers will face a nearly impossible task in

doing so unless they enlist outside assistance.

They should consult with each other frequently and read trade

publications in order to keep abreast of developments within the

industry. Communications officers who are isolated may be unable

to keep on top of industry developments. By maintaining close

contact with each other and exchanging views on common problems,

communications officers will increase their ability to identify

trends which either offer opportunities to save money or which

present the potential for being locked into inefficient systems

or usage patterns.

As new technological and policy developments become increasingly

difficult to monitor, telecommunication managers will find it

necessary to solicit the advice of specialized consultants.

Telecommunication consultants are in a position to closely

monitor industry developments on a continuing basis, and they

generally have extensive resources to provide accurate and

effective analysis and to foresee future industry trends. Communications officers should recognize the increasing importance

of seeking the assistance of specialists prior to making substantial investments in telecommunications services.

147
Finally, in order to keep track of and understand policy issues,

the rapid policy changes and regulatory developments, advice from

the legal community will become increasingly important. These

policy and regulatory developments carry far-reaching implications for the procurement of telecommunications services. While

these future trends and consequences may not be immediately

apparent to the telecommunications manager or even the technical

consultant, the communications attorneys are in a position to

carefully analyze and predict likely policy and regulatory

changes and assess their probable impact upon particular large

users

148
3. A RURAL PERSPECTIVE OF THE RESTRUCTURED

TELECOMMUNICATIONS INDUSTRY

John N. Rose

Rural Electrification Administration

3.1 INTRODUCTION

Judge Harold Greene, the author of the most significant antitrust

case in decades, the AT&T divestiture, said that it was caused by

three major forces: antitrust laws, changes in technology, and

competition forces. He went on to say that because of the

growing strength of these forces, the breakup of AT&T was

inevitable

I agree that the breakup of AT&T was inevitable; however, I believe there was only one driving force, technology . Technology

provided the means for companies to compete with AT&T. Technology provided low cost incrementally priced alternatives for

industry and for new common carriers. Technology provided a wide

range of new services not available at first from traditional

common carriers. In fact, technology spawned the competition,

AT&T reactions, and thus the Justice Department's reasons for

filing suit based on the antitrust laws.

New technology, along with a vast pent up customer demand for new

and cheaper communication services, is driving much of the

communications industry toward deregulation. The AT&T divestiture is a result of this movement, not a cause. Therefore, REA

views the divestiture in the context of being a part and parcel

of the whole movement toward deregulation.

The word deregulation is so general that it obscures a host of

problems. The basic one is deciding what part of the communications industry should remain regulated and what part should be

deregulated. With deregulation comes changes in both who pays

and how much they pay. As with all changes, there are winners

and losers. The losers in telecommunications deregulation will

pay much higher prices. And if those prices are too high,

decisions must be made as to what should be done to preserve

universal service, a goal that has been enunciated by the Federal

Communications Commission (FCC) and is embodied in REA's basic

enabling legislation.

In order to integrate the new competitive toll market with the

still regulated local exchange market, and concurrently accomplish some of the requirements of the divestiture's Modified

Final Judgment, the FCC decided upon a system of access charges.

This is a nine billion dollar (based on 1981) decision industrywide. The nine billion dollars are costs that are being shifted

from one group to another. It will affect every telephone

company and every telephone customer in the United States to a greater or lesser extent.

149
In making the decision to shift these costs, known as access

charges, the FCC believed that toll customers, especially big

users like large business firms, were paying too much of these

costs through their toll rates. The FCC feared that in order to

lower costs, these big businesses would build their own telephone

systems and bypass the present network. This would leave everyone who was left, small businesses and residential customers, to

pay that nine billion dollars. To make sure those big businesses

did not bypass, the FCC decided to take some of the costs they

were paying and shift them to the local telephone customer.

By the drastic shifting of these costs to the local customers,

REA believes that universal telephone service is endangered.

[Charts 3-1 and 3-2 demonstrate the effects of this cost shifting

to rural telephone systems and rural telephone customers.] I feel that pricing rural residential telephone service so high

that people are forced to drop off the line and substitute CB

radio or other modes of communication creates the ult imate form

of bypass.

Chart 3-1 shows how much higher local rates will be under the

access charge plan. As you can see, over two thirds of the rural

telephone systems financed by REA will have to at least double

local rates. Some will quadruple, 0£ more . If state regulatory

bodies adopt an access charge plan for intrastate long distance

calls similar to the one adopted by the FCC, local rates of 25

dollars or more will be common. In the Western states where

customers are even more spread out than in rural areas of the

South and East, the local monthly rate could be 35 dollars or

more. You have to remember that access charges must be paid by

all customers, including those who may never make long distance

calls. Again, these increases are caused by a shift in who pays

the costs of the local exchange - that nine billion dollars.

[Chart 3-2 shows that shift in a different way.] If this whole

system was in place in 1981, instead of the average rural telephone system getting two thirds of the money it needs to operate

from the toll carrier and one third from the local customer, it

would get only one quarter of its revenues from the toll carriers

and three quarters from the local customer. The important fact

to remember is that none of what is happening changes the costs

that need to be paid — all that is happening is^ a change in who

pays

3.2 FOUR BASIC ISSUES

From the rural point of view, divestiture is only one of the

major changes taking place in the industry, sorting out the

changes and the potential effects is difficult at best. Both the

quality and quantity of new and present services for rural areas

depends on adequate revenues for rural systems and reasonable

rates for rural subscribers. In order to achieve both adequate

revenues and reasonable rates REA has framed the changes into

four basic issues accompanied by recommended solutions:

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Summary of Four Basic Issues

I . Issue - Universal Service

The achievement of the goal of universal service in rural

areas, both local and long distance, is threatened by the

numerous regulatory changes currently impacting the telecommunications industry.

Solution

Continuing to strive to provide universal service in

rural America is an important policy goal which we hope

that the REA and FCC share. Determining appropriate

relief for high cost rural areas must take into account

all the increased costs in order to ensure that rates,

both local and toll, remain at a universal service level.

II, Issue - Paying for Use of the Local Exchange

The local exchange carriers must be properly compensated

for the use of their investments, while at the same time,

the amount of local costs loaded onto toll rates must be

reduced . Solut ion

A level of interstate allocation approaching the level of

subscriber line usage (SLU) should be applied on either a flat rate or usage basis to compensate the local exchange

carrier. At this level of compensation, access charges

to the end user may not be necessary as the increase in

revenue requirements can be included in local rates.

III. Issue - High Cost Fund

In order to properly recognize the truly high cost nature

of providing adequate telephone service to rural

Americans, an appropriate high cost fund (HCF) mechanism

must be installed.

Solut ion

Local exchange telephone companies and cooperatives that

have 100,000 or less loops per study area or under 25

loops per square mile should be eligible for relief

amounting to 90 percent of all costs exceeding 110

percent of the national average. To properly direct

compensation to the systems that most need it, an overall

interstate rate of return of on net telephone plant

should be used in calculating the High Cost Fund.

153
IV. Issue - Reasonable Long Distance Rates for Rural Areas

Competition in the long-distance segment of the industry

appears to be leading towards a deaveraging of toll

rates. Such an occurrence would dramatically rise rates

on rural toll routes and would deter achievement of the

goal of universal service.

Solution

Non-competitive toll routes should be regulated and

priced to allow all long distance carriers to use them

and afford rural residents the benefits of competition.

If necessary, a small surcharge on all toll routes should

be used to support non-competitive routes. Intra-LATA

trunking costs to the LATA point of presence (POP) should

be averaged and pooled to the greatest possible extent.

REA believes that if these four basic points are

implemented, universal service to rural America can be

preserved and enhanced at minimal cost.

Discussion of Four Basic Issues

I . Achieving Universal Service

The proper resolution of the four points raised by REA

are crucial to achieving universal service to consumers

served by the more than 1,000 small rural independent

telephone companies and cooperatives financed by REA.

These telephone systems, covering more than half of the

geographic area of the United States, have been dedicated

and innovative in coping with the problems of serving

high-cost rural areas. The four and a half million

consumers served by REA-financed systems are important to

the economic well-being of the nation and must continue

to receive affordable priced telephone service, both

local and toll.

The Rural Electrification Act of 1936, and its telephone

amendment in 1949 which established a rural telephone

program, were enacted by Congress to improve the quality

of life for rural Americans. Through the telephone

companies and cooperatives it finances, REA attempts to

assure, on a universal service basis, that rural

customers receive the same grades and quality of services

as are enjoyed by urban residents.

Rural families have the same, if not greater, need for

the grades and quality of telephone service provided

those living in the cities, suburbs and small towns. It

is because of this need that Congress has mandated REA to

assure universal availability of adequate telephone

services in rural areas. The REA believes that:

154
1.

2.

Rural residents need access to facilities that enable

them to enjoy adequate telecommunications service

with rates that cause no undue hardships or

inequities

Improved telephone service in rural areas

both rural and urban residents.

benef its

3. Rural residents as well as urban residents

reasonable and affordable local and toll rates.

need

There are many industry changes that will ultimately

influence rates, and thus affect universal service.

Several of these are significant regulatory changes.

They will either increase rates or force a greater

interstate allocation to maintain universal service.

Some of the regulatory changes are detailed below:

Changes Potential Results

Direct Assignment of

WATS Access Lines

Phase-Out of Terminal

Equipment from

Separ at ions

Possible Changes in

Central Office

Equipment Separations

Depreciation Rate

Increases

Possible Deaveraging

of Toll Rates

Higher Local Rates

Higher Local Rates

Higher Local Rates

Increased Expenses

Higher Local Rates

Higher Toll Rates in

Rural Areas

Cost-Based Pricing of

Installation for New

Customer s Customer Access Charges

Usage-Sensitive Pricing

9. Bypass

Incentives Against

Adding New Customers

Higher Local Rates

No Cost-Lowering Benefits In Rural Areas

Potential Loss of Large

Business Customers Resulting In Higher Local

Rates

10. Competition Benefits Flow Mostly To

Urban Areas

155
11. Rate-of -Return Reduction in Toll Settlements and Higher

Local Service Rates

12. New Uniform Systems

of Accounts

Imposition of Additional

Costs on Independent

Telephone Companies

The 12 regulatory and other factors which are identified

above, all have the potential to contribute to higher

rates and result in a threat to universal service.

Studies will be very helpful to the FCC in determining

the proper level and eligibility for the High Cost Fund

(HCF) ; however, any study will be limited if it is retrospective in nature. Studies should take a prospective

view to be a greater assistance to the Commission in

promoting universal service. The full impact of many of

these regulatory changes has yet to be felt.

The difficult question is to balance competing interests.

On one hand, the decision and proposed rules following

the Second Supplemental Notice in CC Docket 78-72,

adopted in 1980 , required all services (i.e., MTS , WATS

and Private Line) and interexchange carriers (i.e., AT&T

and the OCCs) to be burdened at the Subscriber Plant

Factor (SPF) level for access to the local loop. This

was an incentive for interexchange carriers to bypass

local exchange facilities. On the other hand, the

Commission's decision following the Fourth Supplemental

Notice in CC Docket 78-72, released in early 1983, to

phase out the carrier's carrier charge for NTS telephone

plant, except for contributions to the HCF, posed a threat to universal service — especially in rural areas.

This threat was further aggravated by other regulatory

changes which resulted in lower revenues and higher

expenses to exchange carriers. The dilemma now facing

the FCC is how to establish a system of pricing that will

balance bypass with universal service, and preserve a national network which benefits all customers. The FCC

must provide an answer that accomplishes the following:

1) pricing for the use of the local exchange plant by

toll services so that minimal bypass occurs; 2) pricing

local service so customers will stay on the network; and

3) recovering the embedded costs.

A palatable compromise would be to move from a SPF to a subscr ibe r- line usage (SLU) allocation to the interexchange carrier. In this manner, a much smaller HCF would

be necessary for high-cost areas such as Alaska and many

western states. Even if a usage-based allocator such as

SLU is found not to be appropriate, a non-usage-based

allocator approximating the level of SLU could be sub3.3 The Proper Interstate Allocation

156
stituted; e.g. 1) a flat amount per toll trunk; 2) a flat

amount per line-side connection used for interexchange

services; or 3) a gross allocator assigned to toll carriers. Reducing the allocation to a SLU level would

reduce the incentives to bypass, promote universal service and minimize the HCF. An additional benefit would

be that state regulatory bodies would have the flexibility to structure local rates and access charges

according to community needs.

3.4 The Appropriate High Cost Mechanism

Given the access charge and separations uncertainty

present at this time, the most objective formula for

ensuring universal service should contain a HCF that

provides 90 percent of all costs exceeding 110 percent of

the national average. This level of assistance is

necessary to offset not only above-average non-traffic

sensitive (NTS) costs, but high traffic sensitive costs,

and other high costs resulting from the new telecommunications environment, including the inevitability of

deaveraged toll rates.

Qualification for the HCF should be limited to those

systems with less than 100,000 loops per study area or a density less than 25 loops per square mile per study

area. Within the above parameters, arbitrary size distinctions have not been shown to accurately correlate

with the cost. The eligibility limit on the number of

loops per study area is basically a simplified method of

distinguishing companies that have urban areas with which

to average with those which do not. Absent the necessity

for making that distinction, uniformly comparing NTS

costs with the national average within the suggested

range more closely approximates need.

The high-cost formula should not be targeted on the basis

of high growth. The high-growth rate of a study area may

be irrelevent to costs for many reasons. Other considerations, such as extreme environmental conditions, where

the life of the outside plant is shortened, also should

not be a targeting factor. These factors are reflected

in costs.

In many circumstances, large independent exchange

carriers have an advantage over small carriers in recovering above-average costs. For example, many Bell

Operating Companies, which serve both urban areas and

high-cost rural communities, are able to average costs to

offset the expense of serving rural areas. On the other

hand, some large independents serve high-cost areas without the benefit of having lower-cost urban exchanges in

the same study area. Less densely-populated areas of the

country are no more economically attractive to large

companies than smaller companies. Every carrier, how157
ever, is mandated by the Communications Act to serve the

public interest, whet-her those markets served are lucrative or high-cost. Should this be the case, a waiver

process should be made available to those companies with

a limit of 100,000 loops per study area and density limit

of over 25 loops per square mile, so they may qualify for

HCF assistance.

The eligibility and compensation requirements for the HCF

should include all . This would include outside plant,

line terminations, the mainframe, repeaters, loop extenders, carrier equipment, and land and buildings

associated with this equipment. The intent of the HCF is

to keep end user charges within reasonable bounds. The

costs of NTS plant are the basis for those charges.

The sliding scale for compensation previously proposed is

inadequate to preserve universal service, and creates

only a marginally greater incentive for cost efficiency

by local carriers than using a flat rate of 90 percent.

It does not reflect an appropriate balance between bypass

considerations and universal service. The sliding scale

does not provide adequate funds for high cost carriers to

prevent large rate increases. The imposition of high

subscriber rates would greatly threaten the survival of

universal service.

Providing less than 90 percent compensation is a redundant incentive since sufficient incentives for efficiency

already exist. Incomplete compensation, especially at

the sliding scale level, is a signal that telephone

service to rural Americans is not an important goal.

Clearly, if the Commission finds it necessary to impose

an incentive factor, any rate less than 90 percent of all

non-traffic sensitive costs over 100 percent would be a threat to universal service.

We recognize that there is concern by the FCC with the

overall size of the HCF. A large fund is seen as a mechanism that will encourage bypass. Yet, out of the 9

billion dollar shift of costs from interexchange carriers

to local customers, only a small amount will be spent on

maintaining universal service. Thus far, both the Joint

Board and the FCC appear to have made the bypass issue

their paramount concern. However, at present there are

no studies' showing at what price bypass may occur and to

what extent non-economic reasons are involved. It seems

more than reasonable that the Commission could impose a small charge in exchange for the guarantee of universal

service, thus increasing the value of service for all

customers . The FCC's suggested use of the actual cost-of-debt and

the interstate return-on-equi ty will shift HCF compensation away from the small rural systems that need it most.

158
Because this aspect of cost determination misdirects the

fund from systems originally targeted for assistance,

these systems will experience substantial hardships.

Small independent companies and cooperatives have always

relied on the industry interstate or intrastate rate-ofreturn because of the partnership in the provision of

toll service. Because of circumstances beyond the control of independents, that partnership has been severed.

REA-financed systems will have to deal with yet another

reduction in revenues. An overall interstate rate-ofreturn on net telephone plant should be used in receiving

compensation from the HCF. This compensation would work

toward preserving universal service.

3.5 Deaveraging of Toll Rates

The inquiry into the appropriate long-run regulation of

AT&T's basic interstate telecommunication service is_ a significant rural issue . Maintaining high-quality interstate long-distance services at reasonable rates for

rural areas must be a vital part of the public discussion

on regulatory policies involving AT&T. At this time and

for the foreseeable future, AT&T will carry almost all of

the interstate toll traffic generated by rural customers

because of the lack of interest in the rural market by

other interexchange carriers. Maintaining a national

network, partly competitive and partly regulated, is a goal with major benefits to the nation as a whole. Section 202(a) of the Communications Act of 1934 sets

national policy and states that unreasonable discrimination in charges, regulation, and services to any class of

persons, localities or on any other basis should be

prohibited. Therefore, any deregulation of AT&T should

include specific assurances that quality long-distance

service to rural areas will continue to be available at

reasonable rates. Such a policy benefits the nation as a whole

Selective relaxation of regulation to allow competition

is a positive step as long as rural high-cost areas continue to receive equivalently priced quality toll

service. We have always been convinced that the concept

of universal service includes both local and toll service. Adequate and affordable local and toll service in

rural areas benefit both rural and urban residents. In

order to maintain universal local and toll service, the

Commission need only look to its own Act. Nondiscrimination in charges promoted by the Communications Act of

1934 includes reasonable equality in rates for equivalent

value of service.

Rural areas have high long-distance costs for several

reasons. First, the costs of providing long-distance

service to and from rural areas are significantly higher

than providing that service between urban areas. Second,

159
urban local calling areas are immensely larger than rural

local areas. Thus, rural people make many more relatively expensive short-haul toll calls.

The national policy of competition for inter-LATA longdistance service can benefit the nation as a whole if the

following policies are pursued:

1. Non-competitive routes should be regulated and priced

so that all long-distance carriers can use them and

extend their networks to all areas of the country.

2. A small surcharge on all routes should be used to

support non-competitive routes.

3. On regulated routes, AT&T would be a carriers'

carrier.

4. Intra-LATA trunking costs to the point of presence in

the LATA should be averaged and pooled as much as

possible

5. An adequate transition and continuing review of the

entire issue is crucial.

As you can see, the deregulation of the telecommunications

industry is inextricably intertwined with the AT&T divestiture

and has the potential to dramatically impact the achievement of

universal telephone service in rural America. In order to prevent the isolation of rural families, the recommendations stated

in this paper concerning our four basic issues must be understood

and addressed by those in a policy making capacity in the telecommunications industry.

160
PART III: SECURITY IN A DISTRIBUTED ENVIRONMENT

Prepared by

Arthur D. Little, Inc.

Aurora Associates, Inc.

Institute for Computer Sciences and Technology

Titan Systems, Inc.

Contract number

NB 80SBCA-0405

Institute for Computer Sciences

and Technology

National Bureau of Standards

161

PREFACE

Wherever the technology may lead us, we wi I I still have to protect the integrity and reliability of our data. The problem,

therefore, is not only that of predicting where the techno logy is

going but also how it will affect the security of our ADP systems. This Port cons iders some of the security issues associated

with the technology trends.

Chapter I contains an overview and forecast of the computer

secur i ty technology itself.

Chapter 2 di scusses computer security in the context of a distributed datr processing environment and presents a two part

methodology for use in computer security and risk analysis. The

first pnrt of the methodology consists of a framework for constructing a "profile of abuse," The second part involves the use

of descriptive modeling techniques , These techniques are adapted

from earlier work at ICST.

About two yenrs ago, ICST began the development of a new approach

to cost-benefit studies. The concept is a simple one: if we were

to hnve reasonably accurate descript ive models of the various

elements thnt comprise the Federal data process ing environment, then we would be able to trace the pro})able effects of

planned changes on specific points in that environment. In other

words, we would hove a much better ide'' of where to look for

costs and benefits of proposed or actual change (e,g,, an ADP

standard). To date, we have constructed models of two elements:

data processing operations [I] and applications software developmen t f 2 ]

As we considered the pot ent ia I effects of the trend toward distributed data resources on computer secur i ty , it seemed that the

descriptive models would provide a useful analytic tool in that

context. We therefore adapted some of the cost-benefit work to

the security problem. The results of the adapt'^tion are shown in

section 2.4. We would appreciate your comments on the usefulness

of this approach.

163
1. SECURITYi OVERVIEW AND FORECAST

1.1 SECURE TRANSMISSION AND STORAGE

I. 1.1 Background nnd Present Approaches

With the widespread availability of personal computers and remote

terminals in extensive use on public common carrier telecommunications systems, the possibility of eavesdropping, interception

and unauthorized access to data transmission and computer systems

has greatly increased. For both military and business communications, privacy and secrecy of data are now severely threatened.

In addition, U.S. industry is on the verge of establishing widespread home, consumer information and transaction services

following the European Videotex model. Such services might include home banking, shopping and personal information storage;

and would, therefore, also require private and secure data communications. Current networks of bank automatic teller machines

and data communications also are vunerable to electronic theft,

further increasing the need for cost effective security means for

the transmission and storage of information.

Systems providing for secure data transmission and information

storage are not widely used in 1984. This is despite the fact

that a widely accepted Data Encryption Standard (DES) has been

issued by the ICST/Nat ional Bureau of Standards. During the

early part of this decade, a number of manufacturers did, in

fact, offer data link encryption and ciphering equipment at

reasonable prices ($4,000 - $12,000) for commercial sale. Sales

results were quite disappointing and many of these products were,

in fact, withdrawn. At the present time, the predominant usage

of data security systems is in specialized military systems,

federal government non military systems and small numbers of

commercial and banking systems employing the ICST DES.

Several firms, such as V7estern Digital Corporation, offer integrated circuits which perform the ICST DES. The DES requires

that encryption be performed with hardware as opposed to software. The present ICST DES employs a single well defined

private key encryption technique requiring a variable, user

selected, 56 bit key. Data is blocked, and encrypted by

combining the use of multiple feedback shift-registers with the

56 bit key. The data must be decrypted using the identical 56

bit key as was used at the encrypting end. At slow data speeds

(1200 bps and less) single chip microcomputer based implementations of the DES suffices. For higher speeds, custom LSI chips

are available ranging from $10 for 640 bit per second data rates

(bps) to 10 million bps devices at $120 each. With support

electronics and a package, slow speed, low-cost devices could be

fabricated for under $500, The data encryption standard is quite

suitable for coding of the information for storage on magnetic

media? however, it is not widely used due to speed/throughput

limitations of reasonable cost hardware. There are, however, a number of software based ciphering techniques available for

164
encrypting data to be stored on magnetic storage. These ciphering techniques pre-date the ICST DES, and are more widely used.

2.2.2. Technological Evolution

o 1984-1989 — During this time period improved technology

custom large scale integrated circuits (LSI) will implement DES at lower cost while permitting higher speeds and

increased functionality. We expect that the growth of

consumer home information transaction services, with home

banking as the key component, will create large massmarket demands for low cost 1200-2400 bps DES chips which

will spill over into additional industrial applications.

During this time period, additional hardware for providing data compression will begin to be employed to make

more efficient use of the slow-speed switched telephone

network. A by-product of employing data compression

hardware will be the provision for encryption at little

or no incremental cost. Also during this period, public

key ciphers will begin to be validated and employed.

Such public key ciphers differ from the ICST single

private key DES in that the encrypting and decrypting

keys are different. In a two key, public key system,

knowledge of matched plain text, cipher text and one of

the two public keys, is not sufficient to deduce the

other non-public key. This public key cipher technology

is now known but has not been subject to sufficient

analysis and scrutiny to have widely accepted levels of

comfort. Already, software based public key ciphers are

being marketed by small firms for use on personal computers. We expect, by the end of the next five-year time

period, that the level of comfort of these public key

systems will grow and their use will begin to proliferate, in particular in applications in conjunction with

the faster, secret key DES system.

Work in the ANSI X9.E9 committee to develop well-defined

Key Management Standards should be released during this

timeframe

o 1989-1994 — During this time period, low cost implementat ions of ICST DES will be available and widely utilized. The difficulty of maintaining security and distribution of private key will provide impetus for shifting

to public key ciphers. Such public key ciphers will also

provide, the electronic equivalent of a signature which

can be authorized, validated and authenticated by electronic means. While the DES can be used in this mode

also, key management poses a logistics problem. Public

key hardware implementation will be developed during this

time period and supported by custom chips. We expect a public key cipher standard, similar to the ICST DES, to

be adopted toward the 1994 timeframe. Also during this

timeframe, low bit rate digital voice coding hardware

will become cost effective and when utilized with encryp165
tion systems, the combination will provide voice security

over common carrier communications circuits.

Together, these trends will further reduce operational

and logistical barriers to employing encryption systems.

o 1994-1999 — During this time period, the ICST DES will

become all but extinct. Public key ciphers will be widely

used for both the encrypting and coding of information.

Disk storage and other bulk magnetic and optical media

will be controlled by dedicated high-speed processors

with public key cipher an integral part of the design.

The advance of very large storage bulk media, such as

optical devices, will permit interesting applications of

the public key cipher. For example, it will be costeffective to publish an entire software company's repertoire on a single optical disk but code sections of it

with different public key ciphers. In that way, purchasers will be able to obtain access to pieces of software in a controlled manner by simply placing a telephone

or computer call and receiving the public key deciphering

code for that portion of the software which they wish to

buy. Hardware will be available in high-speed gallium

arsenide based integrated circuits and optical computing

techniques to do the high-speed ciphering of digital data

in the 100 megabit range suitable for digital television

video transmission. Such ciphering costs will be miniscule given the already substantial processing power to do

the digital coding and compression.

2.2.3 Cone I us ions

Wide-spread consumer financial information transactions will

cause the development of low-cost encryption hardware and support

components such as integrated circuits to proliferate. This

natural evolution will extend to industrial applications also,

permitting cost reductions and performance improvements in existing hardware. The net result will be by the end of the 1999

planning horizon, data encryption for both transmission and storage will be widely used.

Technology will facilitate both significant cost reduction and

performance improvements. Performance improvements will permit

the high-speed real-time ciphering in the hundreds of megabit

range suitable for digitized video transmission and other images.

Costs will decline from the present $10 for 640 bps, $120 for

mbps to almost no incremental cost as ciphering is subsumed by

other processing power available for compression.

With the proliferation of public key data encryption systems,

privacy issues, management barriers and misgivings about the

development of consumer and business data communications and

distributed computing services will disappear. Encryption

systems will be widely utilized and public confidence in their

integrity will be high, thereby fostering an additional greater

166
usage. Failure of a public key data encryption standard to

emerge will slow down the development of such distributed computing applications as local area networks, metropolitan area

networks, and long-haul inter-city data communication systems.

1.2 ACCESS CONTROL USING BIOMETRICS

1.2,1 Background and Present Approaches

Three basic techniques are known for authenticating an

individual's right to obtain access to a closed area:

o Some secret the individual knows such as a personal

identification number (PIN).

o Some physical item the user has such as a magnet-striped

card

o Something the user is, that is a physical attribute of

their being.

Passwords, PINs and access devices ranging from keys to card

media are widely used today. However, they are easily subject to

compromise, by theft, interception, eavesdropping, or unauthorized disclosure of information. A key can be acquired by

unauthorized individuals and information or passwords can be

compromised by interception, or calculated by exhaustive search.

Passwords and physical devices can be lost or forgotten at inappropriate times. The ideal situation would be to authenticate

access to an area or system by means of physical attributes of an

ind i vidual

Biometric access control devices are not widely used today.

Research has been performed by the military and at least one

company has received a contract to supply biometric access

control devices to military personnel desiring access to ultrasecure areas such as missile silos. Interest among private

utility operators of nuclear power plants for such devices is

also high. It can be expected that should the cost, convenience,

and utility of devices improve, that they would be of general

widespread interest to other commercial entities. A variety of

biometric features that can be recognized and authenticated are

possible and indeed all have been investigated:

o Hand geometry — the length of individual fingers on a hand is measured.

o Speaker recognition — spoken voice utterances are compared to previously entered normalized templates of

particular utterances.

o Signature analysis — the static or dynamic features of

the user signing his name using a special stylus on a digitizing tablet is analyzed and compared to normalized

templates previously entered.

167
^ Fingerpr int recognition — an image of a finger, palm or

handprint is compared to normalized previously stored

templates

° Face recognition — an image of the user is compared to

previously stored input.

^ Retinal ve in patterns imaging device of veins or

microphotogr aph oE ETTe interior of the eye compares

retinal vein patterns to previously stored normalized

templates

It is known that work is currently underway with the goal of

development of low-cost point-of-sale signature dynamics analysis

for the identification of people associated with credit cards.

Such a system would employ the dynamics of a stylus on an XY

digitizing pad to perform verification. Experimental installations of speaker identification systems have been developed,

although not currently commercially offered. There are, however,

computer facilities now protected by such a speaker identification system.

1.2,2 Technological Evolution

° 1984-1989 — During this time period the advent of lowcost 5ig ital signal processing microcomputing and integrated circuit devices, additional research into the

algorithms of pattern recognition and development of systems of feature classification will permit the development of functional low-cost biometric access control

devices. These devices will have utility in access at

locations and also for physical access to areas in conjunction with or supplanting conventional mechanical door

locks. Areas for fruitful commercial exploitation include: handwriting dynamic analyzers, finger prints and

speech analyzers. Speech input devices have the utility

of being capable of being operated over conventional

voice grade telephone circuits. The systems employed

during this period will exhibit only marginal performance

as measured in terms of their probability of correct

detection and probability of false alarm. They will

therefore need to be used to augment conventional password protected and physical media protected systems. A

typical system would involve a magnetic stripe credit

card inserted in a slot. The user will then enter a secret identification number through a keyboard and provide spoken or handwritten signature information for

biometric input. Only if all three levels of access meet

the preselected balance will the user be granted access.

During this timeframe speaker recognition systems will

become practical but still too expensive for wide-scale

proliferation

o 1989-1994 — During this time period, low-cost memory,

solid-state imaging devices and higher speed digital

168
signal processing hardware will permit imaging systems to

become feasible for use in biometrics. In addition the

performance of the speech recognition systems will be

considerably improved as discriminate functions are

better understood. Speech systems will migrate down from

expensive military uses to wider scale commercial exploitation while image systems will still be confined to the

highest security areas such as sensitive commercial industries, the military, and secure facilities such as

nuclear power plants. These systems will all share the

common characteristics of employing remote data gathering

devices with the authentication performed centrally.

o 1994-1999 — During this timeframe, low-cost highcapaci ty optical storage devices will become available.

This in combination with the continued evolution and

development of biometric devices will permit the template

information to be carried by the user. The whole graphic

or optical storage technique employed can be secure

enough against counterfeiting to permit template information to be read locally rather than at a central source.

This will facilitate more complex image analysis, voice,

or possibly fingerprint verification. Without the need

for access to a real time central computer on a highspeed data communications link between the data access

points; small, standalone systems will be possible.

2.2.3 Con c lus i ons

By providing clear accountability that cannot be compromised both

business and industry will use more distributed data processing

and remote terminal access systems hardware. These systems will

deter theft and system compromise, and prevent catastrophic

access to highly secure areas by unauthorized persons. Peace of

mind gained by such systems will also encourage consumers and

users to make wide-spread use of electronic funds transfer and

consumer home information and transaction services.

Cost and performance will improve significantly during this timeframe. Performance will be measured in terms of correct

rejection going from rates of 70 percent to better than 99.9

percent with false acceptance going from the order of 3 percent

to far less than 1 percent. Cost will go from thousands of

dollars down to tens of dollars, making proliferation even at the

retail store level probable.

If secure access control systems employing biometrics fail to

materialize, this will significantly deter a variety of consumer

point-of-sale, home information, business, and financial transactions services based on distributed data development. The

appearance of these systems will not in itself assure the success

of these other systems, but will be a major catalyst toward their

development

169
2 COMPUTER SECURITY

IN A DISTRIBUTED DATA PROCESSING ENVIRONMENT

2.1 INTRODUCTION

The primary objective of this chapter is to assess the implications for Federal computer security policies and practices resulting from anticipated technology changes and (2) provide a framework to help managers understand, compare, and evaluate CSRM

actions. Additional objectives are to: review the nature and

magnitude of the computer security and risk management (CSRM)

problem in the Federal Government and describe an essential set

of CSRM policies that constitutes good security practice.

The remainder of this chapter is presented in three sections.

Section 2.2 discusses computer security issues and policies, and

presents a framework that will be used throughout the chapter.

Section 2.3 discusses the implications of distributed processing

for CSRM policy and practice. Section 2.4 notes some important

trends in data processing technology, provides descriptive models

fo prototypical centralized and distributed systems, and — using

a case example — demonstates how descriptive models can be used

in CSRM analyses. Section 2.5 uses another case example

framework presented in section 2.2 and the descriptive modeling

techniques shown in section 2.4. Section 2.6 contains some

conclusions and a summary.

Additional objectives are to: review the nature and magnitude of

the computer security and risk management (CSRM) problem in the

Federal Government; and describe an essential set of CSRM

policies that constitutes good security practice.

2.2 FEDERAL COMPUTER SECURITY ISSUES AND POLICIES

Computer security entails policies and related activities to

protect and safeguard computer resources and the assets they

control. The general goal of Federal computer security policies

is to achieve and maintain the required level of confidentiality,

accuracy, integrity, and availability of data processing as set

by the controlling organizations. That goal encompasses broad

Federal functions and responsibilities in national security,

government program effectiveness, computer misuse prevention and

detection, and the safeguarding of individual rights and privacy

[3] . All major government activities are critically dependent upon

computerized systems to achieve their objectives. Thus, ensuring

that computer systems are correctly collecting, processing,

storing and retrieving essential data is of vital importance.

Additionally, the value of the computer resources themselves

warrant special safeguards against misuse. As of 1980, the

Federal Government's investment in computer systems (excluding

computers in weapons systems) exceeded $5.5 billion [4] and

170
projected ADP-related acquisitions of information technology

systems, facilities and services for the 1983-86 time frame are

about $25 billion [5]

The concern about — and evidence of — Federal data processing

system vulnerabilities to misuse and accidents have been documented in a variety of reports over the years [6]. There is a consensus that computer misuse does exist, that "hard" estimates

of the magnitude of actual instances are not available, and that

too many Federal computer systems have inadequate safeguards

against misuse and accidents [7] . Any given computer security problem can be divided into three

components: (1) The cause: who or what and how, (2) The effect,

and (3) The response: the actions designed to prevent or control

the problem.

The cause of computer security problems can be either people or

disasters (such as fire or earthquake) . Those caused by people

are, by far, the more ubiquitous [8] and will therefore provide

the focus for the remainder of this discussion.

The primary effects of the problem; are a mixed bag which include:

o Loss of data integrity through errors and omissions

o Fraud and embezzlement

o Privacy invasions

o Loss of data integrity through alteration of records

o Theft of computerized information

o Unauthorized use of computerized information

o Denial of service

The first of the listed effects, loss of data integrity through

errors and omissions, appears to constitute the single largest

security problem — roughly 50 percent to 80 percent of computer

losses [9]. That, combined with the next item, fraud and abuse,

appears to account for 70 percent to 90 percent of the losses.

Although there are no hard data, conservative estimates place the

annual loss to the Federal Government at about $175 million due

to errors and omissions and $13 million due to fraud and

embezzlement [10]

Concern about the entire range of effects have led to a collection of responses that collectively make up Federal computer

security policy. There is no lack of comprehensive reviews of

Federal computer security policy [11] and only a brief overview

will be provided here. Controlling Federal Statutes and Executive Orders are listed in table 2.1; security-related publications from ICST are listed in table 2.2; 0MB circulars on the

171
TABLE 2 1 TABLE OF FEDERAL STATUTES AND EXECUTIVE ORDERS

PERTINENT TO PRIVACY AND SECURITY

ASPECTS OF COMPUTER-RELATED CRIME [3]

CITATION RECORDS AFFECTED TITLE OF THE STATUTE

5 U.S.C. 552 C Fredom of Information Act

5 U.S.C. 552a Q Thp Priuarw A/-t nf 1Q7U

12 U.S

3a01 et c.

seq. P Right to Financial Privacy MCI

13 U.S C. 9214 C Census Act

IS U.S C. 1666a P Fair Credit Billing Act

15 U.S C. 1681 p

15 U.S C. 1693 P Electronic Funds Transfer

ACl

18 U.S C. 641 c Embezzlement and Theft Pmhi hi t inn

18 U.S C. 793, 794 C Espionage Acts 18U.S C. 1343 C-P Wire Fraud Prohibition

18 U.S C. 1905 Trade Secrets Act

20 U.S C. 1232g p Family Educational Rights and Privacy Act

26 U.S.C. 6103,

7213, 7216, 7217 C-P Internal Revenue Code onConfidentiality

26 U.S C. 7609 p Special Procedures for Third

Party Summons

42 U.S C. 408(h) C Confidentiality of Social Security Numbers

12 U.S

(2) (e) C. 5103(b) C Confidentiality of Child Abuse

Information

44 U.S C. 3101-3315 C Records Management by

Federal Agencies

44 U.S C. 3508 c Interagency Information Exchange

E.O. 10865 c Safeguarding Classified Infor- mation within Industry

E.O. 12065 * c Rules Governing Classified

1 nformation KEY : C = Government Records Covered

P = Private Sector Records Covered

Source U.S. Department of Justice. Legislative Resource Manual. Bureau of Justice Statistics. Computer Crime: Washington, U.S. Govt. Print. Off., 1980.

* Superceded by E.O. 12356, 1982

172
TABLE 2.2 INSTITUTE FOR COMPUTER SCIENCES AND TECHNOLOGY

COMPUTER SECURITY PUBLICATIONS

Contingency Planning Physical Security

c 1 pc PI 1 p 07 c 1 pc PI 1 p OI orhL rUb 500-85

Database Security

• Privacy

FIPS PUB 88 FIPS PUB 41

SPEC PUB 451 SPEC PUB 500-10

CDC^ DIID CAA CA 5PtC PUB 500-50

Encryption KIDOID AOC NbblR 76-985

TECH NU 1 h 906

FIPS PUB 46 Monograph 157

FIPS PUB 74 CDP^ Dl ID li /* A SPEC PUB 469

rlrb rUB oi

SPEC PUB 500-20 Risk Management

brcL rUb 500-27

bPcC PUB 500-54 C 1 DC Dl 1 D ^3^ rlrb rUb i\

CDC/^ DtID CAA ^1 SPEC PUB 500-61 C 1 DC Dl ID C C rlrb rUb 65

NB5IR 76-1189

NbblK /7-12yi Software and Operating Systems

Evaluation of Computer SPEC PUB 500-2

Security SPEC PUB 500-24

SPEC PUB 500-25

SPEC PUB 500-19 SPEC PUB 500-67

orht- rUb 500-57 KIDCID iNDblK 1C irt/ii /0 IU4I

1 tL.n INU It b>l General Computer Security

User Authentication

FIPS PUB 39

FIPS PUB 73 FIPS PUB 48

SPEC PUB 500-24 FIPS PUB 83

SPEC PUB 500-25 SPEC PUB 500-9

SPEC PUB 500-33

NBSIR 76-1189

Network Security

SPEC PUB 500-21

SPEC PUB 500-33

SPEC PUB 500-24

173
subject are shown in table 2.3; and pertinent Federal Property

Management Regulations are in table 2.4. Figure 2.1 portrays

the general relationships among the Federal computer security

policies, and table 2.5 lists the major areas within which policy

can be classified.

The tables of policy documents are representative of the efforts

of the Federal Government to do something about computer security

problems. Responsibility for those efforts is shared by the

central management agencies, i.e., ICST, GSA, NSA, 0MB, and 0PM.

In addition to the centrally prepared and distributed documents,

individual agencies interpret the policies to prepare specific

computer security controls and activities [13]. Thus, there

seem to be sufficient policy directives vis a vis Federal computer security goals and objectives despite some concern expressed

over the putative policy shortcomings [14]. However, there are

widespread problems with inconsistent implementations and interpretation of that policy. For example, one authority [15] has

stated :

"- Federal agencies' top-level management lacks an awareness

of the nature and extent of computer and telecommunications abuses;

- there is a lack of specific guidance directed at

promoting effective security programs;

- computer and information systems security often has

little upper-level management support;

; - variations in policy and guidelines cause problems in

implement at ion

- available tools and techniques associated with computer

security are not always used;

- the information security function generally is misplaced

within Federal agencies; and

' - there is a lack of comprehensive management coordination

and oversight of Federal agencies' automated information

security programs, and there is a tendency to use a 'patchquilt' and 'band aid' approach to provide security

for Federal information resources."

The result of those problems is evident in the list of effects

noted above. For typical Federal computer facilities, good computer security policy and management practices can hold those

effects to tolerable levels. ICST has recommended a set of

activities (table 2.6) that comprises "good" computer security

174
TABLE 2.3 0MB CIRCULARS PERTAINING TO COMPUTER SECURITY

Circular A-71, Transmittal Memorandum No. 1, Security of Federal

Automated Information Systems , July 1978

Circular A-108, Responsibilities for the Maintenance of Records

About Individuals by Federal Agencies , August 1978

Circular A-109, Internal Controls Systems

TABLE 2. 4 CSA FEDERAL PROPERTY MANAGEMENT REGULATIONS RELATED

TO COMPUTER SECURITY

FPMR 101- 35. 304-308, Security Program Elements, August 1980

FPMR 101- 34. 1 7, Privacy and Data Security for ADP and Telecommunications Systems, August 1980

FPMR 101- 36. 17, Management and Control of Computer Rooms

and Related Support Areas, October 1980

175
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TABLE 2.5 COMPUTER SECURITY POLICY AREAS

1. Identification

2. Accountability

3. Authorization

4. Access Controls

5. Operations Controls

6. Consistent Performance

7. Recovery-Restart

8. Auditability

of system users, operators, data files,

database transactions, system devices,

system output products, input sources, and

telecommunication lines

of system users, operators, programmers,

and maintenance personnel

rules for the access levels of system users,

devices, and programs to system data and

software

for physical access, and for operational access to system components and resources

for ensuring that system devices, programs,

operating interfaces and databases can control the data and resources they share

in carrying out system functions and

operations correctly and consistently

according to program logic and performance

criteria

capabilities to recover in a timely and

planned manner from any disruption of

datafile access or processing capability

of all critical system functions and resources

to ensure that all the above 1-7 policies are properly implemented and performing as planned

17 7
TABLE 2.6 RECOMMENDED ACTIVITIES FOR A "GOOD"

COMPUTER SECURITY PROGRAM

I Policy and Administrative

Activities

• Develop a comprehensive organizational

policy covering management and indivi- dual responsibilities for computer

security, including internal and external review policies.

• Establish a focal point for computer

security information and assistance.

• Establish policies for employee selection and continued evaluation.

« Establish awareness of security and

personnel policies through bulletins, job descriptions, employee agreements.

• Develop and complete authorization agreements for all personnel who are

associated with computer utilization (users, computer managers, computer

operators, maintenance personnel,

systems personnel, and computer

security officers)

• Establish continuirig education programs emphasizing computer

security, accuracy, and reliability

• Identify organizational vital information and data processing functions.

• Prepare risk analyses, and update

annually or when there is a major

change in computer systems.

• Implement activities from Croups II, III, and IV as needed for a balanced program

of management and technical procedures.

1 1 1 Physical Security

Activities

• Analyze site requirements and select appropriate site.

• Establish a fire protection system.

• Select electrical power supply system(s).

• Establish access controls for buildings,

computer facilities, and terminals.

• Establish procedures for protection of data storage media.

• Establish a security labeling system for data storage media.

II Backup and Recovery

Activities

• Identify critical data processing

functions.

• Identify critical data processing hardware and software.

• Identify critical data resources.

• Identify alternate data processing

and data communications capabilities.

• Identify back-up personnel.

• Specify and document overall back-up strategy.

• Specify and document detailed contingency plans.

• Test and evaluate contingency

plans periodically.

IV Automated Technology/

Access Controls Activities

• Implement computer reliability and maintenance programs.

• Establish personal identification and authentication systems.

• Establish resource labeling and

authorization systems.

• Establish controls for data accuracy and integrity.

• Cenerate resource use audit trails; analyze when required.

• Establish controls to protect secrecy of data.

• Suppress electronic emanations and

interference.

178
practice. Depending upon the facility and organizational setting, computer system characteristics, and the nature of the

applications, the appropriate set of "responses" (passwords,

journalling, etc.) will vary — there are literally hundreds of

candidate actions that can be implemented singly or in combination [16] .

2.2.1 The Anatomy of Computer Security Abuse

The technology trends are leading toward an environment of decentralized small, but powerful, systems that can communicate with a central mainframe, as well as with one another, over a variety of

networks. Assessing how these trends will affect the already

problematic status of computer security requires a model with

explicit technology-related parameters, such as the one shown in

figure 2.2. That figure, which shows the anatomy of the cause

component of the security problem, embeds the technology parameters in a process model which details how computer misuse occurs

from the time that it is perpetrated to the time that it has its

effect

Computer misuse occurs when a perpetrator is motivated to access

a computer process and/or resource and take act ions , which may or

may not be author i zed , that affect an organizational through a selected strategy and result in an e ffe ct on the organization.

These events form the "dimensions" "oE tFie causal chain. The

dimensions are, in turn, defined by specific "elements" (e.g., an

"element" of the motivation dimension might be material gain).

An element from each dimension must be present for an effect to

occur. An "event" happens when an element is actually introduced

into an organizational environment to form part of the chain of

events leading to the effect . The dimensions of people-caused computer security problems are

discussed next and significant elements in each dimension are

enumerated.

2.2,1.1 Perpetrators

The sequence begins with a perpetrator who either has a deliberate motivation for committing an abuse or encounters a factor

(or factors) responsible for the inadvertent creation of an

error. The relative importance of the remaining dimensions and

the appropriate response to the effects of the misuse depends on

whether the motivation is deliberate or inadvertent.

The perpetrator must have a time and place to access or indirectly influence a computer system resource or process. Some

action, either authorized or unauthorized, which may be part of a coordinated strategy of related actions, must be taken by the

perpetrator (or an appropriate action omitted) in order to attack

a target resource. If this sequence is broken at some point, the

perpetrator cannot have the effect on the data processing system

179
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or its applications. Each d imension must be represented if an

ultimate impact is to occur Note that an effect can yield a gain for the perpetrator without implying an equivalent loss for

the organization and vice versa.

A list of typical perpetrators is shown in table 2.7. In the

category of fraud and abuse, the perpetrators of greatest concern

are data entry/terminal operators, officer/managers, and technically knowledgeable outsiders. In one study of 150 major cases

[17], those perpetrators, together, accounted for over 65 percent

of the losses. A variety of other evidence [18] supports the

hypothesis that most frauds are committed by data entry/terminal

operators

2.2.1.2 Motivations for Error/Abuse

Different motivations apply to inadvertent, as opposed to deliberate, acts (or omissions) that lead to errors and abuse in

computer systems. In fact, "motivation" is not really the correct term in the case of errors — here we are referring to any

specific factor (s) and environmental situation(s) that predispose

errors to occur more frequently than some achievable baseline

level

Table 2.8 characterizes both motivations for deliberate acts and

contributing factors for accidental errors and omissions.

It is important to recognize that an effective attempt to reduce

the motivation dimension of the computer security problem requires sensible implementation of organizational policies well

beyond those labeled "security policy." As an illustration,

consider the categories of ICST security publications listed in

table 2.2: contingency planning, database security, encryption,

evaluation of computer security, general computer security, physical security, privacy, risk management, software and operating

systems, and user authentication. None of the categories deals

with, for example, the deliberate motivations or the contributing

factor of "overworked staff", and only a handful of the associated publications takes up topics such as documentation procedures. For coverage of the entire motivation dimension, the

organization must maintain "good" practice not only in other

areas of ADP policy (e.g., see ICST's Manngement Guide for

Software Documentation, NBS Special Publication 500-87) but also

in all of the areas of general personnel policy.

Of deliberate motivations, material gain appears to be, by far,

the most significant in terms of causing problems for organizations [19]. Mischief /challenge and curiosity may well be more

frequent, although little data exist on this point, but we believe their effects are relatively small as compared to actions

motivated by material gain.

181
TABLE 2.7 PERPETRATOR (WHO)

1. Data Entry /Terminal Operator

2. Clerk/Teller

3. Systems Programmer

4. Application Programmer

5. Computer Operator

6. Inventory Control Staff

7. Officer /Manager

8. Other Staff

9. Outsider - Technically Knowledgeable

10. Outsider - Not Technically Knowledgeable

11. Maintenance Technician

12. Unknown

182
TABLE 2.8 MOTIVATION /CONTRIBUTING FACTOR

DELIBERATE ACCIDENTAL

1 . Material Gain 1. Ignorance

2. Power /Prestige 2. I ncompetence / Apathy /Carelessness

3. Malfeasence/Malevolence 3. Inadequate Cross Checks for Data

Verification

4. Mischief/Challenge/

Curiosity Inadequate Documentation Procedure

5. Inadequate Training

6. Inadequate Accounting/Audit Controls

In DP Procedures

7. Overworked Staff

8. Excessive Software Complexity

9. Residual Human Error, Inherent Despite

Use of State-of-the-Art Technology and

Practices.

183
Apart from the contributing factors that lead to accidental

errors and omissions, as shown in table 2.8, there is the residual level of errors, inherent in human nature and the present

state-of-the-art, that will occur even under the best of conditions. Most of these accidental factors are general in nature

and apply to a number of different kinds of errors. For example,

inadequate documentation could lead to both data entry errors and

software development mistakes.

2.2.1.3 Access

Categories for where and when a perpetrator may obtain access to

computer systems are shown in table 2.9. This is one of the

security model dimensions that is par t icular ly relevant to

technology trends . ~

It is important to know the predominant locations used for the

initiation of computer abuse for the placement of physical safeguards, as well as for the selection of safeguards related to

mode of access. Knowledge of when abuses occur may either encourage or discourage the application of time-dependent safeguards. Historically, the most significant access location of

vulnerabilities appears to be in the facility which houses the

computer system (i.e., the CPU room) and the key-entry area(s).

One might expect this to change in the future as the use of

microcomputers and distributed processing become more common.

2.2.1.4 Process or Resource That is Influenced, Modified, or Used

Table 2.10 categorizes the system resources and activities that

become the "vehicle" through which the abuse or error can occur.

This is not a tightly-defined element, in that its characteristics are a mixture of:

o Things — hardware, telecommunications links, media;

' o Activities — data input, system operations;

o Concepts — design philosophy; and

o Software — logic statements, application programs.

Yet, all of these diverse entities are important to successful

computer applications, and any can be subverted in order to

perpetrate an abuse, to commit an error, or to create a situation

in which abuses and errors are more easily accomplished and/or

more likely to be attempted. This is another of the security

model dimensions partic ularly relevant to technology trends

The vehicle of interest is the one primarily subverted to commit

a crime or abuse, or the one that is most directly the source for

an error. For instance, hardware and software are of necessity

utilized when a data entry clerk submits a fraudulent transaction, which is processed on the computer in conjunction with

legitimate transactions. However, the vehicle of interest here

184
TABLE 2.9 ACCESS TO COMPUTER SYSTEMS

WHERE WHEN

1On-Site Terminal 1. Regular Business Hours

riaraWare MTier vvoiK nours

- Dial-Up 3. Overnight

2. Off-Site Terminal 4. Weekends

3. Computer Program Development

^TTice Mreas ueveiopiiieni

4. (Forms Preparation)

5. Key-Entry Area (and related

ecjuipmeni J

Uala tntry ^SLaTT WOiK areaj

6. L^entrai computer oite

- Computer Console

joD ouomission

- Output Pickup

- Operations

7. Remote-Batch Terminal

— Manned

- Un-Manned

8. Adjacent to Main Site or Computer Communications Links

185
Table 2.10 PROCESS/RESOURCES - MODIFIED/INFLUENCED/USED

(VEHICLE)

1. Data (Files, Database)

2. Network Software; Communications

3. Data Input/Output Process

4 . Personnel/Procedures/Documentation

5. Operations Activity/Physical Security

6. Application Software

7. Processing/Storage Media

8. System Software (System Security)

9. System Design Philosophy

is the data input activity, where the incident occurs. Hardware

and software are included in order to represent those instances

where the hardware and/or software of a system are attacked

directly, and not necessarily in the course of some otherwise

normal system activity. However, if some direct attack on

software could only be undertaken under the camouflage of some

particular system operations activity, then both would be indicated as the vehicle. Overall, data input is indicated in several studies [20] as clearly being the most significant source

for fraud and abuse. In terms of inadvertent errors, data input,

general system philosophy, algorithm design, and application

software development are all significant sources [21]. In some

studies [22] data input errors are reported as the most serious

problem, while in others [23], software errors are reported as

more significant. However, different types of applications were

represented in these studies, and we are not aware of any study

sufficiently comprehensive to resolve this point. Whatever the

ultimate resolution, however, it is abundantly clear that these

two areas should be priority targets for preventive responses.

It should also be noted that there very likely are some causal

connections between inadvertent errors and deliberate abuse. For

instance, a user may accidentally discover that (due to a software error) the system does not behave in the expected manner

but, rather, in a way that makes the system vulnerable. For some

users, that constitutes an invitation and an opportunity to

perpetrate an abuse.

2.2.1.5 Action and Type of Authorization

Table 2.11 lists what actions may be taken by a perpetrator and

indicates that the action taken may or may not be of a type

186
TABLE 2.11 ACTIONS TAKEN BY PERPETRATORS

(WHAT) (NATURE)

1

Add / Delete /A Iter /Examine 1. Within Normal Job Activity/

Authority — Transactions — Data Files 2. Outside Normal Job Activity — Application Software — System Software 3. Authorized, but Atypical of

Normal Job Activity

2. Improper Use of — Communications System — Processing

3. Theft of ~ Output

-- Media (Tapes, Disks, etc.)

4. Covert Interception of

Communications — Electromagnetic Radiation

Detection — Wiretaps

5. Improper Hardware Wiring/

Connections

6. Inadvertent Circuitry/

Component Failure

7. Software Design Flaw

Incorporated /Executed

187
within that person's normal job authority. For example, the

preparation of fraudulent transactions is never authorized.

However, the act of entering specific types of transactions would

be authorized for certain terminal operators but not for programmers or for terminal operators in departments other than the one

in which those particular transactions are normally prepared.

There is a "gray area" in the case of officer/managers who may be

authorized to enter certain transactions under their cognizance,

but who do not normally enter transactions as part of their daily

job activity. This is another of the security model dimensions

par t icular ly relevant to technology trends

As noted in 2.2.1.4, data input may be the most significant

vehicle leading to loss. This is true whether the action is

a deliberate, fraudulent transaction [24] or inadvertent

error [25]. A reasonable inference to be drawn from the data

presented in the literature is that most fraud and abuse occur

within the scope of normal , author i zed job activity.

2.2.1.6 Strategy

To realize material gain and/or cause loss to an organization,

computer-related fraud or abuse must co-opt, obtain, or destroy

some resource managed or controlled by the data processing system. Common strategies are given in table 2.12. For example,

one perpetrator might modify (manipulate) application software to

serve as a vehicle for reaching the target resource, e.g., inventory materials. To another perpetrator, that same application

software might itself be the target of a scheme to sell pirated

software, and compromising the telecommunications could be the

strategy

In complex strategies, the target resource may be a system resource whose compromise yields no direct gain, but does provide a method for attempting a further attack on some other target of

value. There could be several such initial compromises, achieved

in the course of general system use, and the ultimate compromise

of a target resource. In the case of deliberate abuse, several

principles underlie the strategy dimension:

Table 2.12 STRATEGY

- 1. Disrupt

2. Compromise

3. Manipulate

o To compromise a system, a perpetrator must be able to

detect (and correctly interpret) data flows of interest

in use at the point of access.

o To manipulate a system, a perpetrator must be able to at

least compromise the system and also influence or con188
trol at least one point in a data processing system. A

key point of access may be accomplished by destroying

data, inserting noise, or severing linkages. It is not

necessary for the perpetrator to possess the in-depth

knowledge of system processing that might be required to

accomplish compromise or manipulation of data or assets.

o To disrupt a system, a perpetrator needs only to disrupt

any one layer, which may be accomplished by destroying

data, inserting noise, or severing linkages. It is not

necessary for the perpetrator to possess the in-depth

knowledge of system processing that might be required to

accomplish compromise or manipulation of data or assets.

As an illustration, to compromise a system by wiretapping, a perpetrator must be able not only to detect the electrical impulses in the phone line but also to interpret correctly those

impulses as characters in order to gain information. Secure

encryption prevents the perpetrator from correctly interpreting

any text in order to get to the desired information.

It is more difficult to manipulate a system by interrupting telephone communications. The perpetrator not only has to insert new

signals but also to have full knowledge of the system if the new

signals are to have the desired effects on, say, the data presentation while not affecting the rest of the system in any detectable way.

To disrupt a system communication, the perpetrator need only cut

the telephone line or inject noise into it; there is no need to

manipulate or compromise anything else. More extensive disruptions require either more extensive or more critical physical

destruction, or an ability to manipulate other parts of the

system. An instance of the latter is the submission of a program

that in fact "takes over" an operating system.

In general, detected errors or omissions are a form of disruption

-- they cause additional work to be performed to straighten them

out, and they slow down operations. Undetected errors and omissions are like manipulations — as they flow through a system,

they cause improper actions and opportunities for misuse.

2.2.1.7 Effects and Impacts

Earlier we enumerated and discussed some of the primary effects

(or outcomes) of 'the computer security problem, i.e., errors and

omissions, fraud and embezzlement, privacy intrusions, alteration

of records, theft of information, unauthorized use of information, and denial of service.

An "effect" or "outcome" is the last result of an intervention to

a process that can be directly and certainly attributed to that

intervention [26]. For instance, in the computing process, the

189
loss of data integrity due to deliberate omissions is an effect

that can certainly be attributed to a specific intervention: the

activity or activities committed by a perpetrator.

Beyond the immediate effects, however, are the broader "impacts"

on the environment. Unlike "effects", they are not directly

attributable to the intervention; their attribution depends on

some cause-and-ef f ect hypothesis. And, unlike "effects", the

results of an impact are not easily quantified. Nonetheless, the

impact can be devastating to an organization. For instance, the

loss of data integrity can be described in terms of "how many"

data are in error and in, say, a payroll system, "how much" money

was lost to the organization. However, it is a reasonable hypothesis that, for some organizations, disclosure of those results

would lead to extreme public embarrassment, loss of public confidence in the institution and — in the case of a private sector

organization — serious loss of business. Banking officials, for

example, believe that hypothesis to be true and in cases where

computer fraud and embezzlement are uncovered, banks typically

"cut a deal" with the discovered perpetrator. In return for

public silence by the perpetrator, the bank agrees not to prosecute.

The potential loss of confidence in publ ic organizations is, if

anything, ultimately more serious than the loss of confidence in

private ones. Unlike banks, democracies do not and should not

have the option of "hushing things up." Thus, the impact of

"computer errors" that lead to gross overpayments to welfare

recipients or, conversely, to denial of payments to qualified

recipients, is probably an erosion of public confidence in government in general. That kind of loss, which affects the entire

fabric of society, is not quantifiable in the terms of costbenefit analysis, but it can be no less real than the loss of a data element.

2.3 DISTRIBUTED DATA PROCESSING: IMPLICATIONS FOR COMPUTER

SECURITY PRACTICES

This section discusses the implications of the trend toward

distributed data processing (DDF) on computer security policy and

practices. The discussion will focus on the technology sensitive

dimensions of the computer security and risk management model

presented in section 2.2, i.e., access, actions, and process/resources. Within these dimensions, those vulnerabilities that are

unique to or increased by the distributed environment are noted

and a set of responses that lessen the risks are presented.

Table 2.13 displays some major DDF computer security vulnerabilities and controls. Column one lists the technologysensitive dimensions (access, process/resource, and actions)

defined in section 2.2.1. Column two classifies the major

security vulnerabilities according to those dimensions. Column

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column keys good security practices to the vulnerabilities.

Practices which are especially pertinent to DDP systems are

aster isked

In this chapter solutions to the security problem have been

addressed primarily by focusing on the implementation of policies

and procedures. Advances in computer technology are resulting in

hardware and software aimed specifically at reducing the vulnerability of computer systems. Whereas the implementation of

policies and procedures is an "active" approach to solving the

problem by requiring that users and staff make a conscious effort

at increasing security, the use of hardware/software is

"passive"

2,3.1 DDP System Security Practices

Computer security practices are the controls and procedures utilized as part of the system operations and support activities.

They are the operational steps to achieve computer security

policy. Typically computer security practices or safeguards fall

into three classes: Preventive, Detective, and Recovery. The

worth of a security safeguard is a function of how much it costs

to implement and maintain relative to its decreasing the potential losses associated with system vulnerabilities.

Safeguards, in general, do not have a one-for-one relationship

with vulnerabilities. For example, controlling an access vulnerability typically requires several safeguards (passwords, user

access controls, journalling . . .

) to achieve adequate user

account abi 1 ity

The safeguards associated with controlling the major DDP vulnerabilities are listed in column 4 of table 2.13. These safeguards

represent good computer security practices for the DDP environment. In any one setting, only a subset of the practices need be

implemented. The objective is to achieve a balance between the

costs of implementing safeguards and the costs of residual risks.

In part IV, "Management Implications of the Trends in Information

Technology", section 4.2.2 discusses related materials vis a vis

micro-to-mainframe link technology.

2.4 DATA PROCESSING OPERATIONS: TECHNOLOGY TRENDS AND

DESCRIPTIVE MODELS

This section discusses important trends in data processing technology and use, and introduces descriptive models of basic

Federal data processing operations. The purpose of the descriptive models is to introduce Federal managers to a tool for use in

analyzing their agencies' vulnerabilities.

194
2.4.1 Trends In Dnta Processing Technoloqy And Use

Virtually all aspects of information technology are undergoing

changes. Some changes will exacerbate existing security problems; other changes will have a mitigating effect.

Positive effects are expected from:

o Fiber optical technology, which does not emit electromagnetic radiation and is not susceptible to electromagnetic

pulse damage

o Closed-computer systems with "hard wired" programming

that cannot be altered through software commands

o "Trusted-Computer Systems" with the potential for formal

certification procedures

Computer vulnerability may be increased by:

o The "automated office" with machine-readable and -stored

data

o High density and capacity storage media that can be

easily concealed or lost

o Inexpensive, powerful microcomputers that can be used to

access data through networks

o Increasingly capable software packages that enable

greater numbers of people to use data processing

facilities

o A growing population of computer-literate individuals

o Advanced communications capabilities in

--networking

--teleconferencing

--electronic mail

For the purpose of this discussion, we will use two data processing prototypes: Centralized Data Processing (CDP) Systems with

batch and time-shared operations and Distributed Data Processing

(DDP) Systems with multi-level data processing and storage

(figure 2.3) . The CDP system represents much of the current

design. The DDP system represents the type of computer system

tpward which the Federal agencies are migrating. Descriptions of

a variety of DDP system designs can be found in James Martin's

Design and Strategy of Distr ibuted Data Processing [28] . 2.4.2 Federal Dnta Processing Descriptive Models

ICST is developing a set of descriptive models to represent the

data processing environment in the Federal Government. In this

subsection, we will describe the set of previously-identified

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activities that comprises the context of most Federal data processing [29] . We will then illustrate how descriptive models of

a subset of those activities can be combined to describe a representative area-of -interest in both a CDP and DDP environment. In

2.4.2.2 we will use a case example to show how the use of the

descriptive modeling technique can be used' to analyze system

vulnerabilities in either environment.

2.4.2.1 Data Processing Activities

The activities that make up Federal business-oriented data processing can be described by the 13 basic subsystems listed in

table 2.14. Figure 2.4 shows how those subsystems are typically

combined in a large data processing facility. The individual

subsystems are described below:

1. Transaction Data Capture ; the entry of data from individual transaction documents onto machine-readable media

for further processing. The results of this procedure

are a set of files which reside on various processing

media and which are often accompanied by physical documents and control totals to provide an audit trail. The

files are generally forwarded for processing under a subsystem 2 (transaction data aggregation) application.

Examples include accounting, inventory, and timekeeping

document entry, as well as the entry of corrections for

errors detected in later stages of processing. In the

project management support example used later in this

section, data captured would include narratives, cost

figures, milestones, and so forth.

2. Transaction Data Agg regat ion ; the collection of individual transaction records, when the data entered are

additive or cumulative. The results of this procedure

are a set of master files updated for a given period

and/or a set of merged transaction files for the period.

Besides the various accounting vouchers where dollar

amounts are cumulated, examples of transaction aggregation are found in inventory control, where stock balances are kept current and in employee timekeeping,

where staff hours by project are aggregated.

3. Recordkeeping : the processing of updates or changes to

information in master files (deferred update) or updates

to an on-line database (immediate update). Note that

the maintenance of historical data in a file (such as a personnel record showing previous position titles and

salaries) is recordkeeping not transaction data aggregation, which only describes cumulative transactions.

197
TABLE 2.14 DATA PROCESSING SUBSYSTEMS

1. Transaction Data Capture

2. Transaction Data Aggregation

3. Record Keeping

4. Transaction Disbursement

5. Technical Data Preparation

6. Automated Data Capture

7. Analysis and Reporting

8. Data Retrieval and Analysis

9. Data Combination, Analysis and Reduction

10. Specialized-Data Model Execution

n. Integrated-Data Model Execution

12. Computer-Aided Task Performance

13. Software Development

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Examples of recordkeeping may be found in payroll and

personnel systems, where changes to employee status or

salary and additions/deletions of employees are recorded. In our project management support example,

basic project data — target milestones, names, addresses, security clearances, and so forth are recorded.

Transaction Disbur semen

; the preparation of transaction documents to be distributed. The most familiar

example is preparation of checks.

Techn ical Data Preparat ion ; the maintenance of data

files by technical personnel, typically for use as inputs to computer models. Unlike the previous four subsystems, which generally involve formal processing

controls and audit trails, the integrity of the data in

this subsystem relies on the concern and attention to

detail of the responsible analyst.

Examples are data preparation for all manner of engineering, scientific, and economic models.

Automated Data Capture ; the processing of a stream of

real-time or recorded data samples to determine what

events of interest have transpired and to report those

events in a usable (or readable) format. This type of

subsystem is typically found in manufacturing and engineering applications.

Examples include the processing of satellite transmissions and the analysis of recorded data from engineering

field tests.

Analys is and Repor t ing ; primarily the preparation of

routine, standard, periodic reports. Typically, these

are "vanilla" COBOL applications, but they can also be

sophisticated reporting systems utilizing a DBMS or

other advanced technique.

The term "analysis" reflects limited manipulation of the

data (in addition to straightforward summary) which may

be performed to simplify use of the report's contents.

Examples include summary reports of project expenses and

progress toward milestones and lists flagging cost overruns or schedule delays.

Data Re tr ieval and Analys is ; the preparation of data

listings and processed reports at the initiation of the

end-user. This generally implies on-line, interactive

access, although batch programs may be used in lieu of

(or in addition to) on-line access. The two major uses

for this subsystem are data item display and data

analysis.

200
A. Data item display — retrieval of status information

or other data concerning specific items. Examples

include the retrieval of on-hand/on-order information for such things as inventory items, status

information on project expenditures, and employee

data from a personnel database.

B. Data analysis — the preparation of a variety of ad

hoc or special-purpose reports by supplying input

parameters to customized software or by using useroriented data manipulation languages. This includes

both generalized data manipulation languages, such

as the query languages often incorporated into a DBMS, and specialized languages dealing with a specific job or task. The data may be stored in

various file structures or maintained under a DBMS.

While data item display involves the retrieval and display of individual records, data analysis presents

aggregate data derived from sets of selected records.

9. Data Combination , Analysis , and Reduction ; the preparation of intermediate data files or special-purpose reports requiring data from more than one operational DP

system or management database. The software that makes

this possible may be viewed as a collection of utilities

that can be applied by an analyst to gather data from

different systems to perform planning calculations.

Such systems often require the cooperation of different

software groups, managers, and organizations for successful operations. They can be used either on a periodic or £d hoc basis.

In the project management example, actual project data

from the transaction data aggregation subsystem is integrated with planning data and basic reference data from

the recordkeeping subsystem.

10. Spec iali zed- Data Model Execut ion ; the use of models

that operated from "constructed" databases, such as the

output files from either subsystem 5 (technical data

preparation) or subsystem 9 (data combination, analysis,

and reduction) that are usually tailored to the needs of

the particular model. These models are normally used for

planning, analysis and problem-solving, and often will

be set up for use by specialists on an as-needed basis.

A. Accounting model computation — the use of standardized formulas and relationships to prepare estimates

for management planning or operations activity. An

example is the calculation of estimated retirement

benefits for an employee, on the basis of salary and

length-of -service data, using different date-ofretirement assumptions.

201
B. Representational model simulation -- the use of

mathematical models to represent more complex processes than might be handled by a simple accounting

model. These are used to predict outcomes on the

basis of varying system inputs or of various assumptions concerning the process modeled or the nature

of relationships among the variables. An example is

the computer simulation of the responses of a proposed weapon system in different operational

environments

11. Integra ted- Data Model Execution ; the use of models that

operate directly from operational data files or from

slightly processed versions of those files, as opposed

to tailored or highly aggregated databases (such as

those utilized for models in subsystem 10).

A. Decision suggestion — the use of a mathematical

algorithm to suggest managerial or operational

actions. A student/class scheduling model is an

example of decision suggestion.

B. Trade-off optimization — the use, for planning

purposes, of mathematical models that find the combination (s) of resources or system parameters that

maximize or minimize, within specified constraints,

the value of some selected goal variable. An example is the determination of the mix of spare parts

that provides the maximum expected aircraft availability for any specified level of additional

investment in spare parts.

12. Computer-aided Task Per f ormance ; the use of a computer

to enhance the ability of a person to perform a task by

executing various operations under immediate and interactive control by that person. Included here are any

applications where the computer acts to extend the capabilities of the user to perform some task in real-time.

Both printing and CRT terminals, with or without graphics capabilities, may be used. An example is the use of

computerized drafting systems.

13. Software Development ; the use of text editors,

compilers, and other system utilities to prepare either

application programs, computer system software, or job

control language. The output of this subsystem is the

variety of programs and control statements necessary to

implement the outputs of the previous 12 subsystems.

This subsystem includes only those activities that

directly involve DP operations [30].

Examples include all types of programs given as examples

under subsystem 1 through 12. These may be written in

one of the commonly-used programming languages or may be

202
developed using special-purpose languages such as DBMS

query commands.

2.4.2.2 Case Example: Project Management Support

Clearly, very few data processing applications utilize all of the

subsystems described above. In order to characterize a specific

application, it is necessary to identify (1) which of the subsystems are applicable and (2) how the identified subsystems

interrelate. Descriptive models illustrating this procedure

(figures 2.5 - 2.14) are shown at the end of the section.

In the case of centralized project management support, the

applicable subsystems are:

o Transaction data capture (subsystem 1)

o Transaction data aggregation (subsystem 2)

o Recordkeeping (subsystem 3)

o Analysis and reporting (subsystem 7) and

o Data combination, analysis and reduction (subsystem 9)

Figures 2.5 through 2.8 are descriptive models of subsystems 1,

2, 7, and 9 respectively as they normally operate in a CDP environment. (Subsystem 3 is a combination of subsystems 1 and 2).

Figure 2.9 shows the interrelationship of the subsystems as they

centrally support project management.

In a decentralized environment, four of the five identified

subsystems remain constant. There is one difference:

o In the decentralized setting. Data retrieval and analysis

(subsystem 8) replaces the centralized Analysis and reporting subsystem (subsystem 7).

Even though the process functions and products (with that single

exception) are essentially the same for the centralized and

decentralized systems, descriptive models of the decentralized

subsystems reveal that the different environments entail very

different procedures. Figures 2.10 through 2.13 contain descriptive models of the decentralized subsystems. Figure 2.14 shows

their interrelationships as they support decentralized project

management

Prototype descriptive models of all of the subsystems (developed

for CDP environments) are contained in Fiorello, et. al [31].

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2.5 CASE EXAMPLES A NEFARIOUS AND UNMERITORIOUS SCHEME

The discussion in section 2.4 described the use of descriptive

models for analyzing computer system vulnerabilities. In this

section we combine that technique with the analytic tools discussed in sections 2.2 and 2.3 in order to illustrate a powerful

methodology for analyzing system vulnerabilities. For that purpose we postulate a hypothetical scalawag of a General Management

(GM) employee bent on obtaining an undeser /ed merit increase,

construct a profile based on material presented in section 2,2,

and discuss how the evil intent may be thwarted in both decentralized and centralized environments. WARNING: To guard

against the remote possibility that some copycat scalawags may be

among our readers, we have deliberately omitted or changed some

steps in the bonus-payment process.

The primary focus of this example is computer security vulnerabilities and safeguards associated with fraud and embezzlement.

Given the hypothetical basis for the example, only a partial

computer system risk analysis is possible. A comprehensive

analysis would require details from site surveys and staff interviews that are beyond the scope of this example.

The particular hypothetical example was developed because it

illustrates several points commonly found in cases of computer

abuse : The perpetrator belongs to the organization being

V ict imi zed

—. The computer system is violated by the perpetrator

manipulating certain information within the system.

.^.S, This implies that the perpetrator has physical access to

the system, probably through a terminal, and has

; obtained information regarding the security measures

taken to protect data.

The perpetrator, while unable to access the files used

to generate the payroll, does have access to the

information which is used to determine the salary

- classification of the staff. Therefore, timing is

important, since any changes to appraisal information

must be made before it is used to recalculate payroll.

To obtain this information, the perpetrator must have

a knowledge of the personnel/payroll process within the

agency.

The chances of being detected are minimal until such

time as records are audited or a new review is scheduled. Even then there is a good chance that such manipulation may go unnoticed for prolonged periods of time.

214
2.5.2 The I'ayro I I -Change Model

A merit pay increase or bonus involves a payroll change. The

process begins when a merit review is scheduled and held with an

employee and supervisor present. The results of the review are

then forwarded to the personnel department for review and processing. In our case example, we assume that the payroll system

is automated and the payroll changes are computed based on the

results of the merit appraisal. In such cases, personnel department employees enter and verify the information, file hard

copies of the reviews in the employee's files, and forward a verification to both the employee and supervisor. This information now becomes part of the employee's automated records and is

used to compute the periodic payroll amount and any applicable

bonuses. In most cases, the appraisal information is not

reviewed until the next scheduled review. In addition to generating payroll, a number of accounting reports are generated for

the personnel and payroll departments.

Figure 2.15 is a macro-model of the process, showing the relevant

subsystems. It is applicable to either centralized or decentralized environments. The subsystem references in this figure

correlate with those shown in figure 2.4 (DP Operations Subsystem

Interconnections)

2.5.1.1 Payroll Change in a Centralized Environment

Figure 2.16 (figures 2.16 - 2.19 are shown at the end of this

section) is a "black box" model for the CDP version of the

payroll change example. In this example, the employee and supervisor complete the merit appraisal and forward the results to

the personnel department for processing. Prior to entering the

data into the computer, the personnel department must obtain

certain approvals and file copies of the review. The data are

then summarized, entered into the computer, aggregated with other

employee and department information, and analyzed. Once a new

pay scale has been determined, the payroll records will be

changed to reflect this information. Finally, periodic payrolls

are run, checks generated, and summary reports distributed.

Figure 2.17 indicates the specific points of vulnerability in the

system. It is possible to alter data at any of these points,

given the right set of circumstances. For this CDP system and

organization setting, the major computer security safeguards most

relevant to fraud and embezzlement vulnerabilities include:

Separation of duties among the staff. For example,

under no circumstances should the employee or supervisor

be involved in the review, approval, or entry of the

data, even if they are members of the personnel or payroll departments.

215
216
— Access to the computer system should be restricted to

individuals and, if possible, to specific terminals.

Passwords should be used to permit access only for

designated persons and, for those designated, only to

those functions which are necessary to perform their

duties.

All staff should be trained in computer security procedures and informed as to the actions to be taken if a breach of these procedures is witnessed. Random audits

should be instituted.

The check-generation process should require different

individuals to prepare the forms, enter the data, and

update the data.

Journals of all transactions should be printed and verified against the source documents. The journal should

be signed by the person performing the validation. — The computer software should have built-in edits to flag

information which falls outside predefined parameters.

It is necessary to obtain transaction-approval before

the computer system will accept this flagged data.

All data critical to the preparation of checks should be

encrypted in order to foil the casual perpetrator. By

requiring the additional effort necessary to decipher

the data, a browser will most likely cease any efforts

to violate the data.

2.5.1.2 Payroll Change In A Distributed Environment

In our hypothetical distributed environment — as is the case in

the real-Federal-wor Id — many reviews are performed at any given

time and numerous personnel actions are always in progress. In

order to handle this workload, functions are separated so that

they may be processed more efficiently. Our hypothetical agency,

adopting this principle with a vengeance, has decided that it

will process personnel actions at the district level (many

geographically separated offices) and payroll at the regional

level, with ultimate control at the national level. The "black

box" model of this concept is shown in figure 2.18.

A detailed descriptive model of the DDP model is shown in figure

2.19 with the principal points where data can be manipulated

being indicated by the circled letters. Relative to the CDP

settings, the DDP configuration has additional potential vulnerabilities. Since the staff size at any specific site will be

small, it is more difficult to maintain full separation for staff

functions (or conversely the convenience of cross training) for

input, update, validation, and auditing. Likewise, the computer

systems installed at each site will most likely be smaller than

the single CDP system, resulting in fewer staff to operate and

implement security safegards which are not normally inherent in

217
the manufacturer's system. The introduction of a telecommunications network has additional potential for breaking into the

system, since more processed data is likely to be transmitted

over the lines.

2.5.1.3 Payroll Change Security Analysis

The purpose and functional steps for payroll change processing

are the same in the DDP and CDF modes of operation. There are,

however, differences in the ways the payroll change process is

implemented and controlled, and where the data are processed,

stored and transmitted. The basic issue is: How do these

differences translate into claims processing fraud and

embezzlement vulnerabilities?

A chart of the events comprising people-related computer misuse

was presented in figure 2.2. This figure represented the components which lead up to computer misuse by people. In table

2.15 this same list of events is presented with a description of

items which compose the event for the payroll-change model. The

perpetrator is a general management employee of the agency who is

motivated by a desire to increase his/her salary despite a merit

review which dictates the contrary. Depending on which of the

scenarios (below) is used, there are several means of accessing

the system resources and several processes which can be used.

The action is always to change the data in the personnel record

so that the automated salary determination will set a higher

salary. This is a strategy of manipulation of the data to

achieve the impact of embezzling funds.

TABLE 2.15 VULNERABILITY PROFILE FOR PAYROLL CHANGE MODEL

This table is keyed to Figure 2.2, "Events Comprising PeopleRelated Computer Misuse."

Perpetrator: ~^ Management Employee

Material Gain

Authorized Terminals, either

On-site or Off-site

Communications Lines

Computer Room after Hours

Service Console

Direct Manipulation of Data Files

Substitution of Storage Media

Interception of Transmission

Collaboration with Persons having

Special Access

Misuse of Legitimate Access to

System

Mot i vat ion : Access :

Process :

218
Act ion

Alter Personnel Data Prior to Transmission to Headquarters which Determines Ultimate Pay and Produces

Paychecks

Strategy

Manipulat ion

Impact

Embezzlement of Funds by Receiving

Unearned Income

Given the vulnerability points noted in table 2.15, the following

questions must be answered:

How can any of the staff associated with the descriptive

model vulnerability points defraud the system?

How can the vulnerabilities be controlled?

To arrive at answers to the above questions, the computer security analyst must construct vulnerability profiles for fraud and

embezzlement using the computer misuse framework, prepare scenarios based upon the vulnerability profiles, and using descriptive

modeling tools, describe how the payroll change fraud and embezzlement can be effected. Then, given a specific scenario, the

magnitude of the vulnerabilities can be estimated and ranked in

terms of degree of risk so that candidate safeguards and practices can be evaluated based upon their implementation costs and

potential effectiveness in minimizing the risk of violations.

Several scenarios are presented below to illustrate techniques

for violating the payroll-change model in a distributed environment:

Scenar io 1 : Manager Manipulating System for Unearned Bonus

Tn th is scenario a manager at one of the remote sites desires to modify a poor or mediocre merit appraisal so that

he/she can receive a bonus award which would not normally be

forthcoming based upon the appraisal. Since he/she cannot

alter the source document which is under the control of

his/her supervisor, the approach to be taken is to manipulate the data after it has been entered into the local

computer system but before it is transmitted to the regional

payroll system. Two options are available to the perpetrator. If sufficient knowledge of the processing cycles is

available, he/she can access the data files directly through

either the personnel software or through specially written

programs. 'This assumes that this scoundrel may obtain the

access codes to the data files, which can be obtained

through being alert as others log on, asking questions of

friends who have access, walking up to a work station which

is not properly logged off, or through a trial and error

process (which is especially successful if the data is being

transmitted to the payroll system) . In order to successfully accomplish this task, the perpetrator must know when

the transmission is to occur, at which points the line can

219
be tapped, communications protocols in use, and format of

transmitted data. If the line can successfully be tapped,

data can be diverted into a buffer where it can be manipulated and the altered data transmitted to the payroll

system.

Scenar io 2 : Manipulation by Technical Staff Should one of

the agency staff decide tHat he/she wants to change some

personnel or payroll data and either works in the system

operations department or is extremely friendly with someone

who does, he/she can manipulate the system easily by

accessing the data through the system's master account and

accessing all information directly. Most small systems,

such as those which are used in a distributed mode, require

only one operator. Some have no requirement for a full time

operator. In this case, the person with the master account

can access any data on the system. With no other technical

person to oversee the activities, data can easily be

changed. It is even possible to guess the master account or

overhear it passed to other employees where security is lax.

Scenar io 3 ; Theft of Storage Med ia Since small systems

have Tess requiremen'E~for operat ions staff, they are many

times left open to many persons in the organization. Small

offices may be using systems which are small boxes stored

under a table or in a closet. If the data are stored on

removeable media, it is not difficult for someone in the

office to "borrow" the media late one night, take it to a similar system where the master password is known, change

the data, and return it early the next morning.

Scenar io 4 ; Theft of Backup Media Similar to the previous

scenario, in th is one the crook takes the backup media,

whether it be tape or disk. This is more practical in

systems where the main storage is not removeable. The media

is then taken to a similar system, manipulated, and returned

the next morning. The perpetrator then forces a system

crash whereby data must be restored from the system backup,

i.e., the media with the manipulated data.

Scenar io 5 ; Usage of the Service Access Mechanism Many

small systems go into a single user mode when service is

being performed. In this mode, the person performing the

service has access to all agency records and software that

are on the system. If an employee were to work with the

service person, he/she could access data while the system is

in the service mode. This could be done either with the

cooperation of the service or by distracting the service

representative at a opportune moment.

Table 2.16 identifies computer security policy areas, which were

presented in table 2.5. Within each policy area, one or more

problems are described with possible practices which can be

implemented to reduce the risk of security violations. Further,

specific concerns for a distributed environment are identified.

220
TABLE 2.16

COMPUTER SECURITY POLICY AREAS ANALYSIS FOR THE

PAYROLL CHANGE EXAMPLE

1. Identification Problem: Lack of mechanisms to

identify users.

DDP Concerns: Each site will have its

own user community which will impose its

unique demands on the site's facilities.

With a smaller user community it is

often difficult to enforce policies

regarding the protection of computer

identification numbers.

Practices: Install software and/or hardware which will process identification

codes. Each user should be assigned a unique identification. Should more

sophistication be desired, user identifications can be cross-referenced to

applications

2. Accountability Problem: Data is not being verified

after it has been transmitted.

Problem: Payroll change is not being

reviewed

Problem: Maintenance personnel have

unrestricted access to system resources

and leave console unattended or do not

properly control access to the account.

DDP concerns: The remoteness of the

processing sites makes the verification

process cumbersome.

DDP concerns: The signoff process can

be slow since the persons who must

sign the forms are at two geographically

different sites.

DDP concerns: DDP sites which have

limited personnel may not have the excess capacity to oversee maintenance

personnel or to perform the additional

work of backing up and restoring data.

Practices: Produce hard-copy of data

after transmission and compare received

data to initial source document of a similar output from the sending site.

221
TABLE 2.16 (continued)

COMPUTER SECURITY POLICY AREAS ANALYSIS FOR THE

PAYROLL CHANGE EXAMPLE

Practices: Require at least one signoff on payroll changes. Flag payroll

changes which appear to be out of line

with the employees' previous records

and/or with other employees in the same

, job. Perform random audits of records.

Practices: Backup data prior to service

and restore it upon completion of the

service. Oversee all actions of the

service representative. Disconnect devices which contain sensitive data by

using a keylock write protect, by unplugging from the system, by removing

the media, or by setting a switch which

deactivates the device. Remove all

maintenance accounts from system or, at

least, change the password once the

service representative has left.

3. Authorization Problem: Users who are authorized to

use the system can access system resources for which they should not have

author i zat ion

DDP concerns: The smaller machines

associated with a DDP site may not have

the ability to restrict access to devices. In fact, many of the machines

used in DDP facilities have no capacity

for physical access restriction. It is

not always possible to record audit

trails due to lack of resources to store

such information.

Practices: Require passwords to access

system devices. Mount devices in a restricted exclusive mode. Assign a table of authorized applications, files,

and devices to users based upon their

logon ID. Record and analyze audit

trails which record transactions and the

ID of the user making the transaction.

Change passwords at random intervals and

inform only those with a "need to know"

of the new passwords. Record the ID of

any persons attempting access, even if

222
TABLE 2.16 (continued)

COMPUTER SECURITY POLICY AREAS ANALYSIS FOR THE

PAYROLL CHANGE EXAMPLE

access is denied. Note that the

National Bureau of Standards has issued

standards for the assignment and control

of user IDs and passwords.

4. Access Controls Problem: Persons are using devices

which are not in their area to access

system resources which normally would

not be at their disposal.

DDP concerns: A distributed environment

has been selected to put the computing

capability closer to the person requiring the information. By locking

terminals, information is being restricted to users, thus negating the

initial purpose.

Practices: Lock devices after hours,

either within a room or using a device

which attaches to the power supply. Key

user IDs to physical devices so that

they cannot use devices which are not

assigned to their ID.

5. Operations Controls Not Applicable to Payroll Change Example

6. Consistent

Performance Not Applicable to Payroll Change Example

7. Recovery-Restart Not Applicable to Payroll Change Example

8. Auditability Problem: Lack of enforcement of

pol ic ies

Problem: Data is not entering the pay

determination model with the same information input from the review document.

DDP concerns: The smaller staff size

and operations budgets of the DDP sites

make audits less likely. If the headquarters or regional offices, which have

larger budgets, perform the audits, the

audits will be more costly as a result

of increased travel costs.

223
TABLE 2.16 (continued)

COMPUTER SECURITY POLICY AREAS ANALYSIS FOR THE

PAYROLL CHANGE EXAMPLE

Practices: Always have more than one

person responsible for security so that

they can monitor and control the other's

performance. Conduct audits of enforcement of security procedures at random

intervals, preferably by an outside

party. Educate both the operations

staff and user community in the security

procedures and what to do if they identify a breach of these procedures.

Practices: Maintain audit trails. Compare information with original source

documents prior to implementing the

payroll change. Require the supervisor

who completed the review to approve the

payroll change.

224
2.6 CONCLUSIONS AND SUMMARY

As the changing technology influences the decision to move from a large centralized system to smaller, communicating distributed

systems, a new perspective must be taken to reduce the risk of

security violations, whether intentional or accidental. New

systems are being developed at alarming rates with less time

being spent to develop security features. Furthermore, the hardware used in the distributed systems requires less interaction

from the user in order to keep it operating, which also results

in fewer personnel with the technical knowledge to enforce security measures and identify violations.

The trends in technology that will lead from the centralized to

the distributed system are then seen, through the subsystem

descriptive models, to lead to different processing modes

different numbers and types of people, location and types of

hardware, communication methods and procedures, data storage

media and location, operations activities and so forth. These

same factors are those associated with the computer security

model described in section 2.2 and tailored security controls and

accountability procedures will be necessary for the systems resulting from the technology changes. The impacts on security

policy and practices were discussed in the section 2.3.

DDP System security vulnerabilities to disruption, compromise,

manipulation and errors include all those of concern in GDP

systems, plus additional risks from telecommunication and the

greater number of access-actions-process combinations to misuse

the system.

As with CDP system security, the preference is for preventive

controls as compared to after-the-fact detection practices.

The major policy areas (Identification, Accountability, Authorization, Access Controls, Operations Controls, Operations Consistency, Restart/Recovery, and Aud i tabi li ty ) can all be implemented

effectively, in the DDP setting, through the proper selection

from the safeguards and practices noted in table 2.16 and the

policies listed in table 2.6. In any one setting, the potential

security problems must be identified, assigned priorities, and

evaluated in terms of their costs and benefits (risk reduction).

The overall security policy for a DDP system should be arrived at

through a systematic process so that the effects of combinations

of available safeguards and their interdependencies can be taken

into account. [STAFF COMMENT]

225
226
227

229
FOOTNOTES

1. Fiorello, M. , Eirich, P., and Kay, P. Toward an Improved

FIPS Cost-Benef i t Me thodo I ocjy , Phase 11: Descriptive

Models —Data Processing Operations, NBS SP 500-100 , National

Bureau of Standards, January 1983.

2. Fiorello, M. , Chipman, M. L., Snead , M. , Kay, P., and

Powell, P. Toward on Improved FIPS Cost-Benefit

Methodology, Phase 11: Descriptive Mode I s--Genera I Purpose

Application Software Development ond Maintenance, NBS SP

500-16, National Bureau of Standards, June 1984.

3. Becker, L. Computer Security: An Overview of National

Concerns and Challenges, Report No. 83-135SPR, Congressional

Research Service, The Library of Congress, February 1983.

4. Gray, M. An Assessment and Forecast of ADP in the Federal

Government , NBS SP 500-79, National Bureau of Standards,

1981; Computers in the Federal Government: A Compi la t ion

of Statistics — 1978, 1979, 1980, 198 1 , National Bureau of

Standards, 1981; and Fedeml ADP Equipment: A Compi lat ion

of Statistics, NBS SP 500-97, National Bureau of Standards,

1982.

5. A Five Year Plan: Meeting the Automatic Data Processing and

Te I e commun i en t i ons Needs of the Federal Government , 0MB,

April 1983.

6. Fiorello, M. and Eirich, P. Preliminary Base Scenario for

Use in Assess ing the Impacts of n Prospective User Access

Control Author i zat ion Standard, Fiorello, Shaw and

Associates, July 1982 and the following GAO reports:

Computer-Related Crimes in Federal Programs (FGMSD-76-

27) , April 27 , 1976.

Managers Need to Provide Better Protect ion for Federal

Automatic Data ProcessingActivities (FGMSD-76-40) , May

10, 1976.

Improvements Needed in Managing Automated Decision-Making

by Computers Throughout the Federal Government (FGMSD-76-

5) , April 23 , 19 76.

Vulnerabilities of Telecommunications Systems to Unauthorized Use (LCD-77-102) , March 31, 1977.'

New Methods Needed for Checking Payments Made by Computers Throughout the Federal Government (FGMSD-76-82)

November 7, 1977.

Procedures to Safeguard Social Security Beneficiary Records Can and Should be Improved (HRD-78-116) , June 5,

1978.

230
Fedeml Acrencies Can, and Should, Do More to Combo t Fraud

in Government Procrrams (GGD-78-62) , September 19 , 1978 . Automated Systems Secur i ty-~Federa I Agencies Should

Strengthen Safegunrds Over Personal and Other Sensitive

Data (LCDZ-78-123) , January 23 , 1979 . Flaws in Controls Over the Supplemental Security Income

Computerized System Cause Million in Erroneous Payments

(HRD-79-104) , August 9, 1979.

The Social Security Administration Needs to Develop a Structured and Planned Approach for Managing and Controlling the Design, Development, and Modification of its

Supplemental Security Income Computerized System Letter

report to the Secretary of HEW, (HRD-80-5) , October 16,

1979 . Federal Information Sources and Systems 1980 (A Directory

issued by the Comptrroller General) , Program Analysis

Division, GAO, 1980, (GPO #020-000-00183-6).

GAO Findings on Federal Internal Audit--A Summay (FGMSD80-39) , May 27 , 1980.

Continuing and Widespead Weaknesses in Intenal Controls

Result in Losses Through Fraud, Waste, and Abuse (FGMSD80-39) , August 28 , 1980

How Extensive is Fraud in Government and Who Commits It?

1981.

Millions Paid Out in Duplicate and Forged Government

Checks (AFMD-81-68) , October 1, 1981.

Fraud in Government Programs: How Extensive is It? How

Can It Be Controlled Volume I, (AFMD-81-57) , Volume II,

(AFMD-81-73) , Volume III, (AFMD-82-3) . November 6, 1981.

Federal information Systems Remain Highly Vulnerable to

Fraudulent , Wasteful , Abusive, and Illegal Practices

(MASAO-82-18) , April 21, 1982.

7. Kusserow, R. Computer-Related Fraud and Abuse in Govenment

Agenc i es , U-. S . Department of Health and Human Services, June

1983 and Becker, L. op . c it

(footnote 3).

8. Courtney, R. "A Systematic Approach to Data Security",

Computers and Security, No. 1, 1982, Dinardo, C. [Ed],

Computers and Security, National Computer Conferences, Vol.

Ill, AFIPS Press, Montvale, N.J., 1973, and Fiorello M. and

Eirich, P. op . c i t

(footnote 6) .

9. Ibid, Courtney, R.

231
10. Op. cit. Fiorello M. and Eirich, P. (footnote 6).

11. For example, National Communications Security Committee,

Computer Security Working Group, Policy Survey Subcommittee,

Survey of Federal Computer Security Policies, OSD/DoD,

November 1980 and Becker, L. op. cit. (footnote 3).

12. Ibid. National Communications Security Committee.

13. For example, ADP Systems Manual, Part 6 —ADP Systems Security, Department of Health and Human Services, Washington,

D. C., 1982.

14. Op. cit., GAO, April 27, 1976 (footnote 6).

15. Op. cit., Becker, L. (footnote 3).

16. Fitzgerald, J. nternal Controls for Computerized Systems,

E. M. Underwood, San Leandro, California, 1978; Landwehr , C.

E. Best Available Technologies (BATs) for Computer Security, Naval Research Laboratory, December 21, 1981; and

Ruder, B., Madden, J., and Blanc, R. [Eds] An Analysis of

Computer Security and Safeguards for Detecting and Preventing Intenational Computer Misuse, NBS SP 500-25, January

1978.

17. Allen, B. "The Biggest Computer Frauds - Lessons fo CPAs",

Jounnl of Accountancy, May 1977.

18. Op. cit., Foello, M. and Eirich, P. (footnote 6).

19. Op. cits., Courtney R. (footnote 8) and Kusserow (footnote

7) .

20. Op. cits., Allen, B. (footnote 17) and GAO, November 7, 1977

( footnote 6)

21. Martin, J. Security, Accuracy, and Privacy in Computer

Systems, Prentice-Hall, New Jersey, 1973.

22. Op. cit., GAO, August 9, 1979 (footnote 6).

23. Op. cit., GAO, November 7, 1977 (footnote 6).

24. Op. cits., Allen, B. (footnote 17), Fiorello, M. and Eirich,

P. (footnote 6), and GAO, April 27, 1976 (footnote 6).

25. Op. cits., Fiorello, M. and Eirich, P. (footnote 6) and GAO,

January 23, 1979 (footnote 6)

26. Nay, J. and Kay, P. Government Oversight and Evaluability

Assessment , Lexington Books, D.C. Heath and Company,

Lexington, MA., 1982.

232
27. Kneer, D. and Lampe , J. "Distributed Data Processing:

Internal Control Issues and Safeguards", EDPACS , Vol. X, No.

12, June 1983; Martin, J. Design and Strategy of Distributed

Data Processing, Prentice-Hall, 1981; Steinauer, D. Security

Considerat ions for Small ADP Systems, (Working Draft), NBS

Internal Report, 1983; and Winters, C. "Auditing Data Communications Networks", EDPACS, Vol. X, No. 2, August 1982.

28. Ibid, Martin, J.

29. Op. cit., Fiorello, M. et . al

(footnote 1).

30. Descriptive models of other aspects of software development

(e.g., planning, documentation) can be found in Fiorello, M.

et . al

, op . ci t

(footnote 2) .

31. Op. cit., Fiorello, M. et . al(footnote 1).

233
APPENDIX

STAFF COMMENT

STAFF COMMENT: The following note, from a Federal agency

reviewer, was received too late to permit incorporation into the

text of chapter 2, We feel, however, that the points are well

taken and are therefore including it as a "staff comment".

That standards are needed is inarguable. The basis of communication is understanding and the basis of understanding is agreement

on the meaning of symbols. Agreement on the meaning of symbols

is a definition of the process of developing standards, the

agreed upon meaning of the symbols.

Communication is the exchange of data and information. This data

does not initially exist in the form of symbols that are recognizable, but must be translated into a lexicon which is mutually

agreeable by those systems which are communicating. The simplest

form of communication is a binary system; yet even this type of

communication is incredibly complex, involving translation,

broadcast, reception, and retranslation . Simplifying even this

type and considering only the processes of translation and

retranslation, we find that both must be unambiguous and consistent. Mathematicians speak of "one-to-one functions" that

allow for unique inverses. That is, one symbol is directly

translatable into only one datum or piece of information and that

datum or piece of information can only be translated into one

symbol. Notice that even in this simple system, symbols must be

translated for broadcast and must be retranslated upon reception

in a step that is different from the initial and final translations . Three characteristics of any system are: Security, Reliability,

and Continuity of Operations. Without any one of these, the

system is unusable. Systems can be as simple as a single entity

or multiple entities. For example, a computer program can be

composed of one module or many modules. In either case, the

system, in order to be usable, must have the three characteristics. Security consists also of three components: integrity,

reliability, and accessibility. Integrity is that component that

is concerned with understanding and whether or not a piece of

information or data is interpreted at the receiving end in the

same fashion that it was interpreted prior to transmission.

Reliability is that component which relates to the number of

times a system will operate in the way in which it was intended.

Accessibility refers to the ability of different components of

the system to communicate with each other. Although these

components are similar to the characteristics of a system, the

difference is scope. The components of security are related to

each component of the system and each part of the system must be

tested to ensure security, or, again, the system may be rendered

unusable

Each component of a system, then, must be able to communicate

with every other (or other selected) component of the system as

well as itself. The basis of this communication is the develop234
APPENDIX

ment of standards. Each component of a system may not need

standards to communicate with itself at a given time, however, as

time passes the symbols used by each component will change.

Similarly, meanings for the symbols used by a given component

developed in a vacuum will only by chance agree with those developed for another component. For example, in a computer program,

subroutines may be developed in a vacuum (thought to be a great

advantage of using distinct modules) . However, unless the symbol

is defined in each module or unless the meaning of the symbol has

been standardized, the interpretation of the symbol X may be the

slope of a line in one subroutine and may be the temperature of a piece of pipe in another, both subroutines being components of

the same computer program. Even greater problems arise when two

or more existing programs are merged into a new program or, when

two or more systems are combined. Many examples exist of projects

which fail because large amounts of code cannot be reconciled.

To return to the ultimate results of a lack of building in standards from the beginning, failure of a system will occur in any

one of the three characteristics. Zeroing in on Security, failure will occur if any component does not possess integrity, is

not reliable, or, allows either more or less accessibility to

data or information than intended. Reliability and accessibility

are fairly well covered in the ICST document. Integrity, however, is another problem.

Lack of integrity in a simple binary system leads to immediate

misunderstanding. To most people, the word "gun" may induce a mental image which includes a threat to personal safety. To a photographer, "gun" poses no threat but, rather, a means for

artistic satisfaction. Thus, to one person, a gun presents a vulnerability but it does not to another. The photographer might

even be bewildered if it were so suggested. Identification of

vulnerabilities in computer systems follows a similar pattern. A

programmer knows what he means when he writes a line of code and

can follow his logic through a program module. Another person,

however, interprets part of the code and changes the rest to

conform. Suddenly, the program works, but not in the way it was

originally intended. The vulnerability may never be discovered

if the code was not well-documented to include definitions of the

variables. Or, a designer of a computer installation may not

recognize the need for shielding because he cannot "see" the

leakage of information through compromising emanations. To him,

the vulnerability does not exist. In both cases, lack of definition has led to an information gap in the detection and

elimination of vulnerabilities.

235

PART IV: MANAGEMENT IMPLICATIONS OF THE TRENDS

IN INFORMATION TECHNOLOGY

Prepared by

Institute for Computer Sciences and Technology

237

PREFACE

When the nd hoc steering cornrnittee first wet to plan the cont ent s of this year's forecast, we achieved a rare unanimity in deciding

that a piece on the management implications of the new

techno logies should be an important component. This Port, which

discusses those implications, is a distillation of the work of

many people and organizations.

The initial "point of departure" papers were prepared by the

International Data Corporation. Those papers provided the

springboard for a two-day workshop in which 15 Federal agencies

participated, for extensive comments by the members of the Arkansas Association for Users of Telecommunications and Information

Systems (AUTIS), and for review sess ions by managers from the

Department of Commerce and Mart in-Mariet ta Data Systems. This new

material was incorporated into our first "circulation" dm f t

which was distributed to nearly 100 Federal, State and local

government IRM offices . Many of the reviewers made substantial

contributions to subsequent drafts. We would like to particularly thank Ray Oman, now with the Office of the Chief, Corps of

Engineers and Roger Bed^rd and Thelma D. Jacobs of the V . S . Army

Management Systems Support Agency, who provided us with draft

material they were developing for their own agenc i es . We cribbed

shamelessly from their documents.

The resulting "Management Implications" draft was then circulated

to over 50 knowledgeable individuals in industry — representing

both large ADP users and vendors. Their written comments were

incorporated into the document printed here. Further, about a dozen of those rev i ewer s met in a workshop at ICST last Sept ember

to discuss the material. A summary of that workshop is included

in Part V.

MANAGEMENT IMPLICATIUNS OF THE

TRENDS IN INFORMATION TECHNOLOGY

1. INTRODUCTION

There are three dominant trends in information technology:

o the continuing microprocessor revolution,

o the increasing sophistication and usefulness of packaged

software , o and the growing use of telecommunications networks.

Taken together, those three trends have major implications for

the Federal automated data processing/telecommunications managers, for their "functional" or "program" counterparts and for

senior policy makers. The financial managers, the heads of

personnel departments, the people who manage the manpower pro239
grams, and the people who deal with issues of international trade

-— we are all affected by the technology and we should all be

prepared for its impact.

This section is divided into three parts. First, it briefly

discusses the trends themselves. Next, it discusses some of the

non-technical, organizational issues that arise from the trends.

Finally, it highlights some of the more technical areas that

require re-examination in light of the way the technology is

going

2. THE TECHNOLOGY TRENDS

Microprocessor technology is the deus ex mach ina that made the

personal computer possible and it is the personal computer that

is leading us into an entirely new information-technology environment. It is almost impossible to grasp the impact that this

technology has had and will continue to have, but two facts will

serve to indicate the scope: (1) personal computers are being

accepted at a faster rate than was the telephone and (2) IBM is

turning out one personal computer every seven seconds. Given the

concomitant trends in software and telecommunications networking,

the impact of information technology on the way we do business

could easily approach that of the telephone.

Advances in software packages are the impetus behind the acceptance of the microprocessors. Software contains the instructions

that tell the machines what to do. Until fairly recently, almost

all software was written organization by organization, application by application. Programmers were the fount of all instructions. Then came VisiCalc and by 1982 there were about 500,000

users of that package. Mushroom-like, other application software

packages sprang up on the shelves of computer stores, of bookstores and —- we expect in the near future — supermarkets.

There are spreadsheet packages like VisiCalc, editing packages

like Wordstar, database management packages like DB-II. Microprocessor technology had been available for many years before it

infiltrated the normal workplace to a significant extent. It was

the appearance of the software packages that presaged the deluge.

As such advances as moving graphics and videotex enter the mass

market, the deluge is likely to inundate the executive suites.

Such technologies offer instant information, easily assimilated;

they are qualitatively different from the stacks of computer

printouts previously presented to exasperated policy makers.

Even with the sophisticated application software packages, however, the stand-alone personal computers do not completely satisfy the needs of the end-users. For instance, the users of standalone equipment cannot work together on a document. Nor can they

update the material stored with the institution's mainframe. For

these uses, the networking technologies are required. These

technologies will eventually free us from the isolation of the

stand-alone personal computers. They will permit computers of

all sizes to talk to other computers, to pool the data they

240
contain, to quickly gather and analyze information stored all

over the organization or even outside the organization, and to

quickly update information stored anyplace on the network. Networks have been with us for a long time. The difference is that

we are now seeing the development of standard communications

"protocols" — the rules by which data is transmitted among

computers. These protocols perm.it computers to communicate over

varying distances in increasingly sophisticated ways. Currently,

many of these protocols are manufacturer-specific. However, the

international standards organizations are developing protocols

that will ultimately permit computers to be networked economically regardless of make and model (some stop-gap products are here

already). In some ways, this development is analogous to the

development of the application software packages since it means

that we will no longer have to custom-engineer each network in

its entirety. Standard, off-the-shelf components eventually will

allow any computer to talk with any other computer — for good or

ill

Taken together, these three technology trends have already led us

from a state in which a large central computer was dominant to

one in which it is commonplace for data to be processed at many

locations in the organization and will continue to lead us to an

environment in which the information resources will be distributed throughout the organization. That environment must be

managed .

An illustration [1], taken from private industry, will serve to

highlight just one aspect of the management difficulties facing

us. The business-computing expenditures in one manufacturing

company increased from $25 million in 1970 to $90 million in

1980. In 1970, the data processing manager had direct control

over all of the $25 million expenditure. In 1980, the data

processing manager directly controlled only 60 percent of the

expenditures. In 1980, in that company, the amount of businesscomputing expenditure not centrally controlled exceeded the total

amount of business-computing expenditure in 1970.

That illustration highlights the budgetary aspects of the situation. An analogous situation exists vis a vis information. That

is, the organization's information resources will vastly increase. However, a growing proportion of that information will

be dispersed throughout the organization. That is not necessarily a bad thing to happen since the dispersion creates an environment in which it is possible that (1) the combined pool of

information will grow and (2) the information will be accessible

to whomever needs it. But we must recognize that the shift will

require organizational responses if we are to avoid both huge,

unnecessary expenses and an electronic Babel of misinformation.

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3. THE NON-TECHNICAL/ORGANIZATIONAL ISSUES

This Section discusses four issues that are common to every

organization but which assume particular urgency in a rapidly

changing high-technology environment. They are Management Structure, Planning, Personnel, and the Economic Impact of Change.

These issues are closely intertwined and are presented separately

only for the sake of clarity. It should not be inferred that the

issues themselves are divisible.

3.1 MANAGEMENT STRUCTURE

The way the management of an organization is structured determines who will deal with the issues and the manner in which they

will deal with them. There is no management structure that is

"right" for all organizations or for any single organization for

all time. But certain entities will always exist in one form or

another within any organization that uses a lot of information

and information technology. For instance, there will always be

policy makers, managers responsible for information collection

and distribution, computer/telecommunications operations managers, "functional" managers who direct the various mission

activities of the organization, and staff members who draft the

long-range/strategic plans.

The following discussion deals with some of those entities and

the roles they play in managing information in an environment

characterized by distributed information resources and dependent

on computer/telecommunications technologies.

3.1.2 Policy Mnkers

This discussion of the role of the policy makers, draws heavily

on a survey of 127 companies as reported by Richard L. Nolan [2]

While his survey included only private sector organizations, most

of his findings are equally relevant to the Federal Government.

Nolan discovered that the pol icy mak ing function was handled most

effectively by an Executive Steer ing Committee , which included

the chief executive officer oT the corporation and between 5 and

10 executives drawn from all over the organization. There is (at

least) one relevant difference between the makeup of a private

sector executive committee and one established by the Federal

Government. In the private sector, the policy makers are likely

to have come up through the organization and, thus, are well

acquainted with the operations and idiosyncrasies of their companies. In the Federal Government, the policy makers are most

often political appointees without any long-term immersion in the

organizations they direct. Therefore, a Federal executive

steering committee should include both appointees with decision

making "clout" and knowledgeable bureaucrats, including someone

from the "business" side of the house (e.g., the comptroller) and

someone with line responsibility for mission. While managementby-committee is not usually effective, in the d istr ibuted-resource environment it makes sense. Almost everybody is (or soon

242
will be) affected by the technology trends and the various perspectives should be represented at the policy level if we are to

avoid egregious actions. Again according to Nolan, the Executive

Steering Committee should meet quarterly for one or two hours -- often enough to stay on top of the situation but not so often

that the meetings wreak havoc with busy schedules. Nolan's

survey identified five essential functions for the Executive

Steering Committee:

1. Direct ion setting or the linking of corporate (or, in our

case, agency) strategy and computer strategy. "It consists of setting objectives for the use of computers,

formulating strategy to focus on... goals, devising

policies to ensure that the organization's actions are

consistent with these objectives, and reviewing and

approving the long-range plan for computers...."

2. Rat ion ing or the reconciliation of the commitment of

agency resources to computers with commitments to other

activities.

3. Str uctur ing , which focuses on an appropriate organization

design. This function deals with a number of issues

critical to the management and use of the new technologies. Structuring will assume even greater importance

as the technology becomes increasingly multi-functional,

with capabilities that cut across organizational lines.

Even now, organizations are dealing with limited multifunctional capabilities in bizarre ways. For example,

one corporation has placed personal computers in the

offices of all functional managers. However, the p.c.'s

may only be used for computation; they may not be used as

word processors. Word processing is the prerogative of

the Word Processing Department. One can only wonder at

the circumstances that led to rendering unto Word Processing sole responsibility for the Word but detatched

the Number from Budget.

We will briefly discuss, here, three important issues related to

the structuring function, i.e., centralization vs. decentralization, chartering, and the designation of core information systems .

A. Centralization vs. Decentralization

The term "decentralization" is not clearly defined and is

variously used to describe a number of different structures. Understandably, this has led to some confusion.

In some cases, "decentralization" is used synonymously

with "distributed data processing", or a structure in

which separate computers share the same information

resources for their respective information processing

functions: for example, a high performance network

connecting a number of dedicated workstations which are

243
tied into a central mainframe computer. In this definition, the processing is "decentralized", the database

itself is "centralized."

At other times, the term has been used to describe "disassociated processing", wherein specific functional units

within the organization use their own computers to perform tasks (e.g., financial planning, forecasting,

project management) without relationship to other parts

of the organization.

In other cases, the term refers to the locus of budgetary

control over the data processing function.

In still other cases, the term refers to the locus of

substantive control over the use of data processing

equipment. In these cases, "centralization" may refer

simply to the use of agency or government-wide standards

or, in the extreme, to actual line authority of the

information resource manager.

Because of the catch-all quality of the terms, it is

essential that the Executive Steering Committee decide —

at the outset of discussions — what they mean by "decentralization." Without a common understanding of the

terms, a great deal of time will be wasted in talking at

cross-purposes

B. Chartering

The Executive Steering Committee establishes charters for

various organizational units — for example, who has the

charter for providing the staff of the Executive Steering

Committee itself or who has the charter for defining the

common agency-wide data elements. In a distributed data

processing environment (where information resources are

"centralized" and much of the processing is "decentralized") it is obvious that a common "data dictionary"

is required. ICST has gone a long way toward specifying a Federal Information Processing Standard (FIPS) for data

dictionary software. In addition, ICST has developed a number of data element standards for government-wide

functions. However, many terms are agency-specific and

cannot be dealt with on a government-wide basis. Granting the "charter" for determining the definition of

agency-wide data elements is one of the most important

functions of the Executive Steering Committee.

C. Designation of Core Information Systems

The structuring function also deals with the designation

of the core information systems which must be designed,

operated, and maintained on a uniform basis as well as

the related decisions on the organization of the computer, telecommunications, and records management

244
functions. This topic will be dealt with further when we

discuss the analyses of the data architecture. For now,

it is only necessary to point out that the selection of

elements for the core system has enormous implications in

a distributed processing environment. At present, in

most cases, important information is held by individual

"owners" (often functional managers) for a specified

period before it is due to be reported to the next level.

This time lag allows the owner to "play the float" — or

indulge in the classic organizational technique of postponing the day of reckoning by withholding negative

information until the "due date." Thoughtful designation

of "core" elements to be entered into the system in "real

time" will allow the information "owners" and their

superiors to have all of the available data virtually

simultaneously. Note that this does not imply that they

all will know everything simultaneously — it means only

that the data will be available for their perusal.

Questions of who has access to what information is also

part of this function. As a general rule, top management

will have authorized access to all non-classified

material. All management will have authorized access to

information pertinent to its functional responsibilities.

Other personnel will be authorized on "need to know"

bases. The general guidelines on who falls into what

category of access is a matter of approval by the Executive Steering Committee.

4. Staff ing , which for the most part speaks for itself. It

should be noted, however, that the Federal Government has

had difficulty in coming to grips with the concept of

Information Resource Management. Much of the source of

that difficulty lies in the way we typically staff our

IRM offices which are often no more than renamed management information system offices. This issue will be

discussed in some detail under 3.1.2. It is sufficient

to point out here that the guidelines for staffing the

IRM office will, to a large extent, determine whether or

not the organization does, in fact, manage its information resources.

5. Advising and Auditing , which keeps the information

activities on track . " Through advising, the committee

assists top computer managers with problem solving [such

as] the 'failure of a vendor to deliver a piece of hardware on schedule...." The audit function evaluates the

agency's performance in using computers. Nolan recommends that the audit be performed annually by an outsider

to ensure objectivity. While this is, in principle, a good idea, its feasibility in the Federal environment is

moot. Government-wide, both the definition and allowable

amount of "consulting" contracts are being reevaluated.

Should this type of audit fall under a new definition, it

may not be feasible to contract out for the service. We

245
suspect that interpretations of any new definition will

vary from agency to agency (as is the case with the

current definition) . If outside contracting proves

infeasible or — for whatever reason — undesirable,

there are at least two outs ide- the-agency alternatives

which should be considered, i.e., FEDSIM or an exchange

of auditing services between two or more agencies.

One more function should be added to che five described

by Nolan , i . e .

6. Methods of budgeting and f inane ing for the distributed

systems that supply mformat ion to the central offices

(the "bottom-up" information systems), including the use

of shared resources such as telecommunications systems.

3.1.2 1 n f >) r:>in t i on Resource Managers

These are the people who are responsible for managing the

collection and dissemination of information throughout the

organi zat ion

In the absence of definitive evaluation techniques to measure the

value of information resource management to the Federal Government there is some understandable scepticism over whether IRM is

in fact a valid approach or whether it is just another passing

fad. Without the "bottom line" measures that are available to

industry, it is difficult to reach a persuasive conclusion.

However, if we assume that industry's experience is analogous to

Government's, we are amply justified in moving ahead with the

implementation of IRM. In a 1982 study [3], SRI found that

companies applying a formal information resource management

approach outperformed those firms in the rest of the study sample

by an average of 300 percent on three key financial measures:

return on equity, return on total capital, and net profit margin.

Thus, while we have not yet developed credible surrogates for the

private sector's financial measures we do have some assurance

that IRM is a reasonable direction.

Federal agencies have been having trouble defining the role of

the information resource manager and part of that trouble is

rooted in history. In many agencies, "information resource

management" seems to be a new name for "information technology

management" with a little bit of management information system

administration added to the position description. The failure to

adapt to a true information resource management mode reflects the

difficulty in moving from the individual applications common to

the large central computer "batch" environment to the totally

integrated system that the new technologies make possible.

In order to make the adjustment to IRM it is necessary to understand how IRM differs from management information system (MIS)

administration [4]. IRM considers both manual and computerized

information systems for all users in an organization, while MIS

focuses on computerized information systems that support manage246
ment. IRM goes beyond the MIS concept. It uses the analysis of

organization-wide information requirements to drive information

systems planning and policymaking. MIS, while it considers

needs, concentrates on the technology. The organization-wide

focus of IRM provides a perspective on the universal interconnection of devices and integration of systems that is not central to

MIS. Thus, while MIS administration may form part of the IRM

system, it is by no means the totality of IRM.

Many Federal IRM offices are almost entirely managed and staffed

by data processing professionals. Very few IRM staff members

"grew up" in mission-oriented units or service-oriented units

(such as the library) . This staffing has tended to give a disproportionate MIS flavor to our IRM approaches.

Last February, ICST held a workshop to address the issues raised

by the technology trends. The conference was planned and managed

by a team of consultants chosen for their expertise in technology

trend projection and in the Federal data processing environment.

Participants came from IRM offices all over the government and

appeared to reflect the composition of those offices. Almost all

of the participants were data processing professionals? they

were all dedicated, competent people who have been wrestling with

IRM issues over the past few years. But, in the absence of

workshop leaders who were versed in IRM, they were unable to

come to grips with the concept of information resource management. For example, they developed the following list of

candidates which should be considered for common policy, staff

direction, and organizational alignment within an integrated

information resource management system.

1. Design, operation, and maintenance of routine

administrative and business systems (specifically those

supported by general purpose, commercially available

computers, i.e., the traditional ADP/MIS function).

2. Telecommunication , i.e., voice, data, text, graphics

( spec i f ically , that utilized by the routine administrative and business systems)

3. Records Management , both current and archival (specifically, those generated by the routine administrative and

business systems)

4 . Libraries

5 . Publications

6 . Reproduction

7 . Forms Management

8 . Reports Management

9. Mail

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While that list is an extremely useful one for the intermediate

stages of reorganization toward true information resource management, it does not define the role of the IRM which is to:

o Identify who has what information, who needs what information, and how channels of information flow can be

constructed so as to get the information, in a timely

fashion, into the hands of those who need it.

o Develop and maintain whatever mechanisms are necessary to

satisfy the information needs of the organization.

The workshop results, which reflect the absence of functional

managers from the roster of participants as well as the absence

of "real" IRM personnel among the workshop leaders, highlights

the necessity for broad-based staffing of our IRM offices. This

is not to say that experienced data processing professionals

should be "written out" of key roles in the IRM offices. Without

their active participation, we would likely encounter calamities

such as the accidental loss of databases and unauthorized distribution of confidential material. The point is that a wide variety

of experience and expertise is required and data processing

professionals alone cannot do the job.

Certainly the candidate list produced by the workshop participants would be among the mechanisms required to satisfy the

information needs of the organization. But that list satisfies

only a fraction of an organization's information needs. Management scientists have been developing systematic methods for

identifying information needs but there is little evidence that

IRM personnel are acquainted with their existence — let alone

that they have used them. One exception is the Evaluability

Assessment methodology, developed by the Urban Institute, which

has seen some limited, but promising, application for this purpose [5] Looked at from the perspective of the organization's

information needs, it is clear that the functions of the office

of the IRM should include:

o Formulation and dissemination of technology assessments

and forecasts (more about that in the discussion of

Planning

o Analysis of technical issues as they relate to strategic

objectives

o Translation of key policy, management, and technical

issues into the variety of "languages" understood at the

various levels of the organization

o Maintenance of agency-wide data interfaces — including

both technology-dependent interfaces and more traditional

interfaces such as the library

o Analysis and acquisition of the technology system architecture — this includes the long-range acquisition plans

248
o Identification of an agency-wide data dictionary relying,

where applicable, on Government-wide standards

o Development and maintenance of the "core" data systems

identified by the policy makers

o Responsibility for disaster backup facilities

o Implementation of periodic needs assessments

Needs assessments are addressed below, in the discussion of the

analyses of system architectures (section 3.2.4).

3.1.3 Cnwput er / t e I e commurr i cn t i ons Operations Managers

In the integrated environment under discussion, the operations

m^anagers are responsible not only for keeping things running, but

also for providing the IRM with technologically sound evaluations

of strategic decisions. The functions of the Operations Managers

should include

o Evaluation of the tactical impact of strategic decisions.

That is, what will be the effect, for instance, of a decision to decentralize on acquisitions, budget, personnel and space requirements and so forth.

o Evaluation of the system architecture analyses prepared in

the IRM office in terms of its impact on the current

system

o Maintenance of the telecommunications networks and the

central ADP facility

o Administration of the "core" information systems

o Maintenance of data integrity

o Responsibility for training staff in concepts of

- Computing

- Records Management

- Security

- Equipment and software acquisition and maintenance

o Responsibility for in-house user meetings (and, if possible, publication of user newsletters)

o Provision of user-oriented documentation for all centrally purchased or developed software packages

3.1.4 Functional Managers

In a distributed resource environment, the roles of the functional managers are critical to the success of information

resource management. A great deal of information is generated

249
and processed at this level and flows up through the organization. The responsibilities of the functional managers should

include :

o A good lay knowledge of the capabilities of the technology available to the department

o Assurance of the integrity of data generated by end-users

o Evaluation of the impact of strategic decisions on agency

miss ions

o Acquisition of personal computers. The extent of this

responsibility depends on the nature of the agency's

decentralization. In those agencies where central budgetary control is maintained, the functional manager's

responsibility is limited to approval of requests for

acquisitions

o Documentation of ad hoc pilot projects (more of this in

sect ion 3.2.3)

The responsibility for assuring the integrity of data generated

by end-users is particularly important when end-users are allowed

(or required) to update data stored on the mainframe. Consider,

for instance, a not-unlikely requirement for frequent updates of

status on funds or personnel. Such a requirement would call for

equally frequent interactive data submission by personnel in the

functional areas affected without the traditional time allowed

for error correction. In a "batch" environment, it is standard

procedure to institute a series of audits before material is

entered into the institutional database. The functional managers

must provide a similar level of assurance in the distributed

environment, developing new quality control techniques as

necessary

3.2.5 Planners —

Most large organizations have a quasi-independent strategic planning office which, in theory, formally gathers and analyzes data,

formulates The Plan, "sells" it to the policy makers, and disseminates it throughout the organization for implementation.

Evaluation of the results of the implementation becomes part of

the data stream that feeds into the subsequent cycle of The Plan

formulation. In practice, this seldom works either in government

or in private industry [6].

Because the planning function is so closely related to the function of the IRM, we suggest that it be located in that office.

However, arguments can be made for its location in the budget

office, the office of management and organization, or even established as a unit on its own. Wherever it is located, however, a major stumbling block to an effective planning process is the

concept of a quas i- independent planning unit that does nothing

but plan. Without a working relationship with the policy makers

250
(a relationship not necessarily related to the planning function)

it is doubtful whether the planners can get close enough to the

policy makers to sell tomorrow's newspaper, let alone a strategic

plan. It would be well to consider locating other functions

(such as staffing the Executive Steering Committee) with the

planners

It is equally important that the planners have working relationships with the functional managers. This is difficult, but not

impossible, in an environment of distributed resources. Planning

personnel normally assume that when The Plan is not correctly

implemented, the failure is due to the recalcitrance of functional managers. More often, the case is that The Plan is not

amenable to implementation. If strategic planners are to be

effective, they must know how their organization works. It would

be well to consider locating a function like program reviews in

the planning office.

With all that, care should be taken to locate only stable, predictable functions in the planning office. The planners should

not have "f iref ighting" responsibility. If they are continually

involved in firefights, the planning will never get done.

It is not important that the planners have the official designation of "Planner." It is important that the planning function

exists, that responsibility for planning be assigned, and that

the planners occupy an organizational linch-pin position between

the functional managers and the policy makers.

3.2 PLANNING

Whether, and how well, an organization takes advantage of the new

technologies will depend in large measure on the effectiveness of

its planning process. A too-common approach to planning is one

in which an organization's overall information systems plan is a collection of individual project plans collated into what amounts

to little more than a numerical sum. This type of plan, typical

of the large central computer environment of the past, often

results in a number of loosely coordinated systems with considerable hardware, software, and data redundancy as well as

incompatibilities. Not uncommonly, very few of the system users

(or even the "owners") are aware of what is available throughout

the system.

At the other extreme is the attempt to v/rap nearly all new development into a huge and inflexible system that would take three

to five years to develop and would require all available

resources. That approach is prone to excessive overhead, vulnerable to incorrect assumptions and decreasing technology cycles,

and likely to go over budget and beyond schedule while failing to

provide what is really needed.

An effective planning system requires a number of integrated

components (discussed below) that are used as tools to continually monitor and update the institution's plans. The process of

251
planning for change is particularly difficult in the Federal

environment where success and failure is often measured in terms

of implementing a plan which may have become as obsolete as last

year's technology. The agencies which will be most successful in

planning will be those which are able to streamline their

approval processes and to adapt their management structure to

this new environment.

3.2.1 Technology Forecasts and Assessments

Until recently, technology forecasting was often handled as an

incidental adjunct to the acquisition process. However, the new

technologies have real impact on the strategic objectives of the

organization and the rate of technological change may have a devastating impact on the budget. Therefore, technology forecasting has become an indispensable tool for the planners. There

are upwards of 70 techniques available for forecasting [7],

falling into the three general categories of time series and

projections, models and simulations, and qualitative and holistic

methods. The techniques serve different purposes and are accomplished at different levels of expenditure. However, it is

doubtful that any of the techniques are as useful for planning

purposes as a frequently updated "expert" forecast (one of the

holistic methods) combined with forecasts of market structure and

an organization's ovm assessment of its current resources.

While "expert" forecasts tend to be somewhat less expensive than

those that rely on computer-based simulations, they are nonetheless costly — a knowledgeable, well-presented "expert" general

ADP technology forecast bought in the price-range of $50,000-

$100,000 is considered a good buy. It therefore makes sense for

agencies to band together to fund a cooperative forecast, like

the one sponsored by ICST, which concentrates on areas of mutual

interest. This leaves agencies free to develop their own

spec ial- interest forecasts and to detail the implications of the

coming technologies for the individual agencies. Agency documents should include:

o Areas of special technological interest (e.g., supercomputers)

o Areas of technological stability and skills requirements

(and shortfalls) within the organization

o Capital investment requirements and, insofar as possible,

benefit ratios

o An index of current applicable guidelines and regulations, and

o An index of Federal and industry standards with fallback

plans for cases where needed products do not comply

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3.2.2 Technology Transfer

The trends in information technology have led to a situation in

which increasing numbers and kinds of people are:

o using computers,

o aware that they are affected by the organization's use

of computers,

o in possession of application-specific information related

to computers

o involved in the computer-acquisition decision process,

o responsible for the dissemination of computer -generated

information

It follows that increasing numbers and kinds of people had better

be included in the planning process if the plans are to be implementable and implemented. Planning should not be done solely by

the data processing professionals — indeed, it should not be

done solely by the IRM's staff. Rather, the planning process

should include the policy makers, operations managers, and

functional managers. It is up to the IRM to manage the process,

not to go it alone.

The concept of technology transfer has to be expanded from a model that envisions the technologically-smart data processing

professional "selling" a plan to the decision-maker and

"educating" the functional managers to that of a model in which

the decision-makers, functional managers, and data processing

professionals each contribute the relevant information contained

in their respective areas of expertise. The data processing professional will never (or at least should never) "sell" a plan

that the policy makers do not need and the functional managers

cannot use. Mixed-bag seminars and workshops are effective vehicles for this type of technology transfer.

In addition, we are beginning to see instances where some functional personnel are more familiar with the potential of their

microcomputers than are the data processing professionals, whose

experience may be limited to the mainframes. Even in technical

dp matters, technology transfer is a two-way process.

3.2.3 Pilot '-rojects

Pilot projects are not necessarily scheduled, planned efforts.

In this era of end-user computing, virtually every desk-top

computer in the hands of a professional leads to some sort of ad

hoc pilot. Endless discussions, which have centered around

whether these "renegade" pilots should be encouraged or discouraged, have produced a number of trenchant comments. The

following comments came from the February workshop mentioned

earlier.

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o A successful end-user pilot on database development will

be the absolutely right answer for that end-user's shop

and absolutely wrong for the institution.

o In terms of time and resources expended, a pedestrian

success may be worse than a failure.

o Small group pilot projects are similar to under-funded

small business successes. Upgrading the pilot to a standard agency system demands refinement, documentation, and

training by the operations staff. Operations managers

soon learn that they cannot afford too much success with

pilots.

o End-user computing will not end the backlogs in the data

processing shops although the nature of the backlogs will

change. Most central organizations will continue to

retain responsibility for agency-wide data collection and

applications such as payroll, general ledger, various

financial consolidations, and employee database maintenance and reporting. Added to these retained functions

are the increasing requirements for user training and

general hand-holding. Thus, while the capabilities of

the microcomputers will eliminate many small database

requirements in the backlog of the central shop, some

backlog will continue to exist. This is a major point

which planners need to recognize.

o Functional managers are more upset about ad hoc desk-top

pilots than are the data processing managers because they

have more to lose.

However interesting these discussions may be, they have about as

much point as discussions centering around whether to stop the

ocean tides. "Renegade" pilots are going to occur in increasing

numbers as more professionals understand the capabilities of the

newly-available technologies (i.e., personal computers, applications software packages, computer networks). The real question

is how the pilots can be harnessed so that their power is of

benefit to the organization.

One method might be to reward promising pilots with help from the

central data processing shop, contingent on the resources available to that shop. A competition for central help should not be

used as a vehicle to stop projects deemed less promising; such

actions would simply serve to limit the number of competition

entries rather than the "renegade" pilots themselves. However,

formal competition would serve two useful purposes. First, it

would give the most promising projects the greatest chance for

success while shaping them into a form that might be efficiently

expanded for organization-wide use. Second, it would surface

pilot plans from all over the organization and minimize duplication of effort.

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A second method would be to reward, through citation or cash

bonus, documentation of successes and failures alike. While this

goes against the grain of our success-oriented society, the

analysis of failure can be at least as instructive as the trumpet

of success.

Whatever methods are used to harness the "renegade" pilots, it is

essential that the functional managers be brought into the

process. As the last comment from the workshop points out, they

have the most to lose if operations get out of control.

Conversely, they have the most to gain if the pilots are successfully harnessed.

Apart from the "renegade" pilots, the central shop should

consider a more formal approach to pilot projects. Again, the

participation of the functional managers is crucial.

However the pilots are handled, they should be documented and

publicized a^ they proceed . Because of the propensity of the

functional managers to experiment with their micros, it is

imperative that they be acquainted with both the potential and

pitfalls of what they have in mind. Widely disseminated documentation of pilots- in-progress will help mightily.

3.2.4 Analyses of System Architectures: Needs Assessment s Formal analyses of system architectures, including requirements

for computation, word processing, and communications are essential to adequate planning. The discussion of technical issues

will deal with the analyses of the system architecture in a little more depth. For now, we will confine our remarks to the

general topic of needs assessments.

There are needs and there are needs and none of the needs should

be neglected.

o Every large organization has overall information needs

that directly relate to the organization's strategic

ob j ect i ves .

o Within any organization there are individual units (e.g.

office units) that have specific needs.

o Some organizational needs can be satisfied through the

use of information technology

-- The technology requirements comprise a third level

of "need"

In order to specify correctly the technological requirements,

the first two levels of need must be assessed and their organizational relationships understood.

Some vendors now include needs assessment methodologies as components of integrated office automation packages. These

methodologies usually include the use of surveys relating to word

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processing, administrative support, professional performances,

secretarial productivity, network design, and so forth. The

survey results will normally indicate a "need" for enhanced

services such as electronic mail, mixed media input, teleconferencing, and electronic document communications.

For the most part, the methodologies concentrate on quantitative

data (e.g., how much paper flows from Department A to Department

B, how much time executives spend in face-to-face meetings).

Once the assessment is complete, the recommended system is designed to perform more efficiently the time- or paper-intensive

tasks. For instance, electronic mail is often recommended for

paths of frequent paper-flow; teleconferencing as a substitute

for face-to-face meetings. These kinds of needs assessments are

fine as far as they go, but they do not go far enough.

Two things determine the idiosyncratic ways that an organization

conducts its business: the predilections of the people who are

in the organization and the tools that are available. The new

technologies provide additional tools and in order to make good

use of them, it is necessary not only to examine what we do but

also why we do it. For example, some face-to-face meetings are

held for the purpose of exchanging information. Teleconferencing

would cut travel time but it would not — by itself — improve

the quality of the information exchanged. However, given the

database, an appropriate database management system would address

that issue. For instance, a spreadsheet package would do admirably for a conference of budget analysts; technical conferees

would require something else.

Needs assessments should always do more than point the way toward

doing the same thing more efficiently. They should provide the

basis for performing a function more effectively.

3.2.5 Analyses of Dntn Architectures

The architecture of an institution's data system is analogous to

the architecture of its computer -communicat ions system. That is,

the data system has a "backbone" of institutional data, which is

relatively stable just as the communications network provides a relatively stable "backbone" for the computer/communications

network (again, more on this when we get to the technology issues

in section 4.2) . For example, payroll and personnel data are

contained in "backbone" systems which, while they must be maintained, are not subject to frequent, violent upheavals. Other

information is of a more volatile nature; its form and content

changing as strategic objectives evolve and as people —with

their infinite variety of work habits and biases — move in and

out of the organization.

The analysis of the data architecture should focus on several

areas :

o Who needs what information? Who has what information?

How can the information be brought from where it is to

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where it is needed? (Nearly the position description

of the IRM)

o What is the backbone information administered by the

central data processing shop and what information should

be distributed? What are the appropriate interfaces, in

terms of people, hardware, and software, between the

centrally administered and the distributed information?

o What information properly "flows down" through the organization? What information comes "bottom-up?" What bidirectional channels need to be constructed?

o Where are the information "sinks?" (That is, where does

information disappear, never to be heard of again?) Who

is authorized to drain those sinks?

3 . 3 PERSONNEL

Personnel issues encompass a variety of areas including:

o Training, job descriptions, and career paths

- Compensation and turnover

- Motivation

- Retention and recruitment

o Security clearances and practices

o The "fear of /res istance to" syndrome

o Contracting out

Some of these areas are covered at length in last year's technology forecast, in 0MB Circulars A-76 and A-120, and in the

computer security section of this year's forecast. The remarks

here will be confined to some issues that either aren't raised in

those documents or where particular emphasis is needed.

The technology trends imply that the future will require a skillmix which is different from that which is currently present in

the Federal Government. Specifically, we expect:

o Fewer, but more highly skilled, analyst/programmers at

the system integration and telecommunications/networking

level

o Substantially fewer COBOL and FORTRAN programmers. It is

arguable whether our current force of such programmers,

steeped in the methods of program logic, can be retrained

to use the functional capabilities of the new integrated

software

o Greater information manipulation and management skills in

the overall workforce

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o A shift in data entry personnel from the central data

processing shop to the functional units

o A significant increase in user support personnel

o An increase in administration, management, and planning

personnel

Problems of recruitment and retention (in what will, for many

years, be a "seller's market) are serious and may ultimately

prove insoluble in the absence of integrated planning — and the

implementation of the plans — by 0MB, 0PM, and the Executive

agenc ies .

3.3.2 Trn in ing

Highly focused, traditional training is valuable in selected

situations. It is particularly useful when application packages

must be selected and hands-on experience with the various options

is desirable or when changing skill-mix requirements dictate

changes in career paths and specific skills are needed in order

to follow them

Further, at least in the short term, traditional training is

vital if we are to take full advantage of the array of application software available to us. While this report has identified

sophisticated, user -f r iendly software as one of the three dominant technology trends, it is important to realize that a trend

is not a full blown actuality. The microprocessor software

industry is still in its infancy. Except for a few notable

exceptions, it is still user-hostile and difficult to learn. In

many cases, end-users must still digest a 200+ page manual before

pushing the first key. This bespeaks the necessity for training

programs to accompany the placement of most application software

packages — at whatever level they are placed. [STAFF COMMENT 1]

Traditional skill-development training, however, is not sufficient in an era in which the focus is on the applications to

which the technological tools lend themselves. Policy makers,

operations personnel, and end-users alike are apt to be ignorant

of the potential of the technologies; standard, hands-on courses

are unlikely to enlighten them. For that, non-traditional, innovative training is required. Such training is inherent in

activities like the workshops and seminars discussed earlier

under technology transfer (3.2.2). Other non-traditional training mechanisms include attendance at trade shows, industry

association meetings, and standards groups. If these non-traditional training mechanisms are to be effective, however, it is

important that they be extended to policy makers and program

personnel and not be limited to data processing staff. For the

latter group, such mechanisms are part of the job; it is only for

the former groups that they constitute training.

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Every agency has a collection of horror-anecdotes that spring

from the application of new technologies to old tasks. Even at

the risk of perpetuating a "Please Don't Eat the Daisies" syndrome, agencies should consider collecting pertinent anecdotes

and circulating them to staff members who are learning to use the

new equipment. As it happens, more misfortunes occur than can

possibly be predicted:

o In one agency, the Personnel Department was plagued by

widespread "leaks" of confidential material. Investigation showed that the staff habitually left their floppy

disks on their desks overnight after carefully locking up

the hard copies.

o In another agency, clerical personnel stapled the floppy

disks to the hard copies so that they wouldn ' t get lost

or separated.

3.3.2 Job Classification and Career Paths

As end-user terminals and "congenial" application software packages become ubiquitous, a changing combination of skills will

become necessary within certain job series. For some professionals, such as budget analysts and scientists, the ability and

willingness to use the technology may significantly enhance performance. For secretaries and clerical assistants, these

abilities will expand the scope and nature of their work and

enhance their value to the agency. As data and word processing

functions become increasingly intermeshed, clerks and secretaries

are becoming capable of providing extensive administrative and

research assistant type of support. Yet existing position classification standards build in no incentives for taking on

responsibilities for automated data input, retrieval, or manipulation. Without classification standards that recognize the

value of such expanded capabilities and responsibilities, employees in low grades and in dead-end job series will simply take

their newly acquired skills to private industry where they are

more highly valued.

In addition, the new software packages are blurring the distinctions among clerical, administrative, budget, and research

assistant personnel. Most discussions of future requirements for

skill mixes (including this one) emphasize the changing requirements for data processing personnel (for example, fewer COBOL

programmers will be required). It is likely, however, that the

most significant changes will occur in other parts of the organization. For instance, spreadsheet tools, like VisiCalc and

SuperCalc may lead to decreasing requirements for lower-GS-level

budget analysts. Concomitantly, the creation of intermediate job

classifications would create new career paths for the current

dead-ender s .

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3.4 ECONOMIC IMPACTS

The economic impacts of the trends in technology pervade the

organization. They show up in the numbers and skill mix of

employees in the budget shops, the libraries, the line organizations — in every cranny of the organization that either

processes data and words or uses the processed data and words.

Notwithstanding, traditional information technology cost/benefit

analyses usually measure the impact of the technologies on the

data processing/communications shop. This is as futile as measuring the economic impact of the telephone at the exchange.

As the technologies have exploded out of the dp shop and into the

offices, people have begun to recognize that cost/benefit analyses should relate to more than the price of equipment — that

productivity throughout the organization is the real issue. But

that realization has not solved the problem — it has simply

identified it. We still do not have any sure handle on what to

measure, where to measure, or how to measure.

For example, SRI International has estimated that one impact of

office automation on management and professional productivity is

the saving of two hours out of an eight hour workday. This

estimate was arrived at through a study of how managers and

professionals spent their time and how much of that time various

"enhancements" would save. However, there is no certainty that

the two "saved" hours would be productively used or that lower

costs would result.

There are a number of more-or-less satisfactory tools for determining productivity when the technology offers a substitute method for performing an old task. These tools are typically used

in offices that focus on keeping the cost per transaction low:

e.g., accounting, records management centers, payroll.

We know of no satisfactory methods for measuring the costs and

benefits when the new technology permits a new function, nor do

we know of any satisfactory techniques for predicting where all

of the important economic impacts will appear.

It may be worthwhile to work with functional managers engaged in

ad hoc pilot projects in order to get some clues as to "where"

Careful observation might enable us to identify unanticipated

economic impacts in the limited environment of the pilot. From

that, it may be possible to extrapolate analogous areas in the

organ i zat ion-as-a-whole . That is, we may be able to pinpoint

some areas where previously unrecognized impacts might occur.

The problem is not in recognizing what we are doing wrong, but

developing methods for doing it right. ICST has begun work on

the development of more satisfactory cost/benefit analytic techniques [8] . But the effort is expensive and progress is slow.

Like technology forecasting, this may be a fruitful area for

cooperative efforts.

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The problem of measuring the impact of the technology trends is

overriding. As we have just noted, it is difficult to measure the

costs and benefits when new functions are permitted or to predict

where impacts might occur; it is next to impossible to measure

"mushy" things such as the quality of decisions induced by an

automated decision support system. Despite that, however,

reasonable people would probably agree that the wrong decisions

vis a vis required skill mixes or the direction of organizational

growth would have more serious adverse economic impacts on the

organization than would the acquisition of the wrong piece of

equipment. Nonetheless, there is a consistent demand for quantitative justifications. For example, the workshop mentioned

earlier produced the following advice.

Senior executives, working through IRM and program

managers should demand a quantification of automated

"quality" improvements, compared to "previously acceptable quality" and its cost (one time and recurring)

anytime an overall budget request exceeds established

guidelines

There are a number of quantification techniques available, including risk analysis, decision analysis, sensitivity analysis,

modeling, and simulations that work more-or-less well depending

on what is to be quantified. But it is important to recognize

that some areas remain intractable to measurement. It is equally

important to recognize that the inability to measure it does not

imply that the cost or benefit is nonexistent.

The glass is falling hour by hour, the glass will fall

forever

But if you break the bloody glass you won't hold up the

weather [ 9 ]

3.4.1 Acquisition Costs

Within the data processing shop itself, certain steps can be taken

to reduce the costs associated with the decreasing technology

cycles. Alternatives to outright purchase such as leasing,

leasing with option to purchase, lease-to-purchase, and sale/lease

back arrangements should be explored.

Institution-wide licensing agreements for software packages

should also be explored as a method for limiting the spiralling

costs of software.

3.4.2 Use of the Budget Process

Strategic planning, to have any meaning, must be integrated with

the budget process. The issues of worker productivity, costs

and benefits of technology insertion, and quality of information

all hit the bottom line at budget time. Then, the question is

whether the predicted budget (cost) is politically acceptable as

a national priority.

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An examination of the budget process indicates that proposed

increases may be more acceptable under one line of the budget

rather than another. For example, if office automation requires

an average equipment investment of $10/000 per employee (as some

estimates assert) , that cost may be politically more acceptable

in the mission program budget than in the central data processing

budget. Allocating the cost to the mission program, however,

could result in budget expediency driving organizational form.

Should analysis show that the decentralization of budget is wrong

for the organization, politically acceptable alternatives to

mission program budgeting — such as full cost reimbursement by

the users to the data processing shop — should be sought.

4. THE TECHNOLOGY-RELATED ISSUES

So far, we've discussed the impact of the technology trends in

the context of management concerns that would exist even if the

technology had never been invented. Management structure, personnel, planning, and the economic impacts of change are generic

management issues. There are other concerns, however, which are

directly linked to the technologies. Among them are the growing

population of end-users "computniks" , the impact of computer networking, software investments, and the decreasing technology

cycles. In this section we will offer a few remarks on those

issues .

4.1 END-USER COMPUTING

End-user computing is the relationship between people and technology in which individuals, located at their own workstations,

interact directly with the computer to process their own information [10]. The concept of end-user computing has grown from one

which envisioned people working at stand-alone stations, manipulating data for their own, discrete uses, to that of many people,

working at interconnected terminals, drawing on a store of common

data, and adding to or changing that store.

This expanded concept includes not just data processing professionals, secretaries, and budget analysts, but also encompasses

managers and professionals from all over the organization. By

the 1990' s, computer literacy is likely to be indistinguishable

from basic literacy. The notion that managers and professionals

would not use a keyboard, taken for granted only a year or two

ago, is daily contradicted by hundreds of thousands of managers

(including us) who use their own workstations for everything from

simple word processing to sophisticated simulations.

This trend does not signal the end of the central data processing

shop — large "batch" runs will still be performed centrally and

the central shop will still be the keeper of the institution-wide

records that are available through networks. However, many of

the functions of the data processing shop will be distributed

through or supplemented by other units within the organization.

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The impending ubiquity of end-user computing has important corollaries for both the functional managers and the data processing

professionals. Among them are:

o Functional managers have more to lose than do data processing managers if operations get out of control due to

the use of unverified procedures or data.

o Data processing managers will find themselves dealing

with increasingly sophisticated clients who will be

- more understanding of and responsive to software development steps such as requirements analyses,

- insistent on participating in decisions regarding

hardware and software acquisitions, and

very intolerant of failures due to ineptitude and

"stonewalling" in the interests of turf protection

o Data processing professionals within the IRM office will

become increasingly concerned with data protection and

integrity since the control function becomes increasingly

difficult as computers proliferate. The central shops

will employ a variety of controls which may include

- standardization of microcomputer software packages

including the testing of packages which are candidates

for certification

- definition of documentation standards

adoption of an agency-wide data dictionary

[STAFF COMMENT 2]

4.1,1 Conpa t i h i I i ty

The term "compatibility" was initially used in microprocessing to

indicate the ability of a device or board to interconnect with a particular bus. The term had a precise meaning that was clear,

and nearly unambiguous, to practitioners of the "micro art."

However, as end-users began to acquire their respective micros,

they began to yearn for the ability to swap floppies (both data

disks and programs) , and "compatibility" became the term for

doing that. VJith the introduction of the IBM-PC and its subsequent popularity, "compatibility" was adopted by salespeople

and advertisement writers to describe the relationship of their

computers to the IBM product. The word has now taken on an

almost universal meaning. It is often preceded by a modifier of

degree (e.g., "very", "reasonably"); less frequently by a functional descriptor (e.g., "hardware compatible"). Table 1.1 lists

some of the common "compatibilities". The left-hand column contains the terms used; the right-hand column their meanings. Be

aware, however, that the creative ability of the various sales

forces outstrip our ability to keep up with the terminology. By

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TABLE 1.1 COMPATIBILITY AND COMPATIBILITY

"Degree" Modifiers

Completely compatible

Very compatible

Reasonably compatible

Usual Meaning

Will run almost every program which will

run on an IBM-PC. Almost all system

boards designed for the IBM-PC will be

plug-compatible. Most of the hardware

will be the same or equivalent to the

IBM-PC with the possible exception of

the ROM, which is copyrighted by IBM.

Will run 2/3 to 3/4 of the programs that

run on an IBM-PC but the system boards

may not work. These machines typically

use the 8088 or 8086 chip but have

either a significant cost advantage or

offer advanced features not available

on the IBM. Display characteristics

may be similar but time differences are

often encountered.

Defined by one writer to indicate that

the machine in question will run all of

the top ten business software best

sellers

Marginally compatible Will run a smaller fraction (less than

2/3) of the programs written for the

IBM-PC. Few of the system boards will

work

"Functional" Modifiers

Hardware compatible

DOS compatible

Software compatible

Accessory cards built for the IBM-PC can

be installed (bus- compatibility).

The "compatible" machine uses MS-DOS

rather than PC-DOS. In most instances,

the data disks produced on one machine

can run on the other. Complex program

packages cannot be swapped. Unless

"homegrown" programs are the issue, this

may not be a problem since software

licenses often require that separate

copies of the package be purchased for

each machine in any event.

VJill run at least half of the programs

that run on the IBM-PC.

Disk compatible Can read data disks but not programs.

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the time this report is published, yet more terms will have been

coined. The relevant point is to know what kinds of "compatibility" your users need and to make sure that they get it.

The reasons for incompatibility arise mainly from the ROMBIOS

(read-only memory, basic input-output system), interfaces, and

timing. The IBM-PC ROMBIOS is copyrighted and complete emulation

of the BIOS has been difficult to achieve, although there are

some recent claims of success. Recently IBM has been reported as

advising software vendors to avoid calls to the BIOS. This

implies an intent to change it. Timing and interfaces are hardware design choices which were deliberately selected differently

from the IBM choices in order to improve the performance of the

"compatible" over the IBM-PC or to reduce the cost. The tradeoff, of course, is loss of complete compatibility.

Another aspect of compatibility is "future compatibility". IBM

has, in effect, promised that new machines will be "upward

compatible"; that is, programs, data, and text produced on an

IBM-PC will be usable on newer IBM models. For the "compatibles", this represents another hurdle. It is an important

consideration to large users of PC's who must be concerned with

configuration management.

4.2 NETWORKS AND ARCHITECTURE

The new technologies have given us the ability to compose large

systems out of multiple hardware components linked with manyk ilobyte-per-second communications and distributed operating system software. The "backbone" of these systems is composed of the

physical networks, their architectures, and their operating

systems. Included in the "backbone" are the distribution mechanism of the network (e.g., media such as "twisted pair" or

coaxial cable) , the set of rules, or "protocols" that govern the

exchange of messages, the operating system software that makes

the whole thing run, and the "link" technology (usually software)

that ties remote systems to the mainframe databases.

Key to understanding the importance of this "backbone" to future

use of the networks is the realization that (1) "backbone" components are the targets of standardization efforts, (2) "backbone"

modules such as the internet protocols determine how much diversity the system will allow, and (3) the "backbone" determines the

reliability of end-to-end message transfer.

As aspects of the networks become standardized, those aspects become "relatively" stable — "relatively" because changes will

continue to occur; these changes are likely to be evolutionary

rather than explosive. However, the individual components of the

system will continue to experience explosive innovation and their

technology cycles (discussed below) will become increasingly

shor ter

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As in the case of end-user computing/ the increasing use of

networks has implications for both the data processing managers

and functional managers. Among them are:

o Data processing managers must distinguish between the

"backbone" of the system and its individual components

In developing a system, it is essential to choose the

"backbone" carefully: mistakes will be costly and

will limit future uses of the system.

It is important to examine individual components for

their potential impact on network selection and upgrade — expensive components could result in the

implicit selection of a "backbone" with consequences

well beyond the immediate decision.

Ithe organization makes the right decision concerning the network "backbone" , it may be possible to

go through multiple replacements of nearly all the

individual hardware components while preserving the

basic architecture of the system and still taking

advantage of technological improvements. (In the

appendix to this section of the technology forecast,

we will include some samples of GSA contract clauses

which can be useful in implementing this strategy)

o System design should have the following characteristics:

[11] — Compatibility with

- existing agency communications systems

- agency databases

- agency office systems

-- Open architecture

- avoid being locked to a single vendor, manufacturer-specific standards, or a single line of

peripherals — Provisions for growth

- horizontally, by adding additional devices in a modular fashion

- vertically, by increasing functionality as new

office systems become available

o Managers must realize that their end-user "computniks"

will develop ad hoc networks which may extend beyond

their own organization. To the non-data processing professional, "networking" is the term used for extensive

interaction, for the purpose of information exchange,

among people — wherever they are — with the same

professional interests. It is inevitable that these non266
electronic networks will discover and utilize the

telecommunications networks. This development will have

drastic implications for institutional databases.

4.2.1 Local Area Networks

Local Area Networks allow the integration of systems which are

physically located in a small area, i.e. a single building or

campus. As such, they may support a large number of users and

applications (e.g., the Main Commerce Building) or a small office

(e.g., ICST's Information Processing Group). Typically, there

will be a requirement for several integrated LAN's of varying

sizes. The different sizes usually bespeak different requirements, and while the complete system will almost certainly be

designed incrementally, each increment should allow for the requirements of future integration [12].

At the individual office level, the LAN should permit peripheral

sharing and multitasking. When more stations and applications

are involved, the LAN should support both peripheral and information sharing (two or more people use the same files on the hard

disk), permit multitasking, have security controls, and have an

organization capability. When more than six computers are

involved, multitasking becomes awkward and communications

capabilities should be present as well as gateways to wide area

networks (WANs) . In the larger systems, integration becomes a very important factor — the LAN must be compatible with existing

systems. The system design must consider integration with

various terminal and PABX networks, security systems, and other

LANs .

At all levels, a LAN should: [13]

o support any microcomputer already in place

o be expandable and reconf igurable without incurring downtime and major expense

o not come to a dead stop because of a single failure

All LANs normally include:

o A distribution medium

-- Coax

- Broadband: Multiple channels supported on same

cable; most economical if installation requires

video, voice, and data channels; cost is high per

linear foot, low per channel-foot in multichannel

installat ion

- Baseband: Single signal; easier to install than

broadband; requires little maintenance

267
— Twisted pair: Single channel supporting relatively

slow data rates, shorter distances; sensitive to interference; cheap; adequate for most small LANs — Fiber optics: Data LANs currently support only single

channel (greater capabilities coming soon) ; impervious

to interference; emits no interfering signals;

enormous bandwidth; nearly impossible for intruder to

tap; difficult to tap for authorized modifications;

limits possible topologies; expensive

o A switching mechanism

o A network management capability

o Gateways to other networks

o Interfaces to allow host processors, personal computers,

terminals, workstations, voice switching systems, and

shared peripherals to connect to the network

There are three basic topologies normally employed for LAN

distribution: bus, star, and ring. Their characteristics, advantages, and disadvantages are shown in table 1.2. As LANs have

become easier to use and install, retailers (as distinct from

manufacturers' representatives) have become an important source.

LAN documentation is therefore an important consideration. Most

LANs offer a wide choice of configuration and user options. The

documentation should explain the ramifications of the various

opt ions

4.2.2 Micro-to-Maimfrorre Lh>.kh

Particular attention should be given to the "link" technology

the micro-to-mainframe connection. It is this software that allows data to be passed from the mainframe database to the micro

(downloading) and permits the micro user to alter the mainframe

database (uploading). Commercial developers of communications

software for mainframes recognize, and are beginning to produce,

"generic" micro-to-mainframe links. (An indication of the size of

that potential market is the fact that 86 percent of the Fortune

1000 companies plan to provide end-user access to the institution's mainframe).

Contrary to some expectations, this technology is not likely to

come from vendors specializing in micro software. It is part of

the mainframe software and its selection is part of the responsibility of the operations manager [14].

One obvious difference between a mainframe and a micro is that

the mainframe's storage and retrieval capacities are bigger and

faster. There is no feasible way that the entire memory of a mainframe can be downloaded to a 256K micro nor is there any

compelling reason to want to do so. The institution needs all

268
TABLE 1.2 LOCAL AREA NETWORK TOPOLOGIES

Type Character istics

Bus Nodes connected to

same transmission

med ium

All stations hear

all messages

Usually baseband

or broadband coax

Speeds to 50 mbps

Medium priced —

between ring and

star

Single or dualcable with "headend" remodulator

Advantages

Reliable —

failure of one

device will no

affect the rest

of the network

Easy to expand • devices can be

tapped into the

cable

Disadvantages

Variable delay -

throughput decreases as usage

increases. Best

with low volume,

bursty traffic

Ring Continuous loop

with cable lines

connecting each

pair of devices

All

all

Stat ions

messages

hear

Speeds to 10 mbps

Usually twisted

pair or baseband

coax

Predictable fixed

delay directly

affected by the

number of

nodules/dev ices

Cost per station

lower than other

topolog ies

Lower reliability — if one

station fails,

whole network

may go out

Expansion may

require changes

to communication

Recovery may be

difficult

Star Central node with

other stations

linked via pointto-point

connection

Messages sent to

specific locations

Used by PABX and

h ier arch ical

computer systems

Usually twisted

pair or coax

Network dependent

on central node -- not affected by

device failures

Cable may be in

place

Low incremental

costs for additions

Expansion requires cable to

central node

High initial cost

if new cable is

required

May experience

blocking or contention delays

Source: AT&T Information Systems

269
of the records. The end-user, however, only needs a small percentage of them at any given time. It is therefore essential

that the link technology permits end-users to select that portion

of the database immediately required.

In addition, the end-user should be able to get the needed information through simple queries — a capability that requires

sophisticated mainframe software.

Table 1.3 provides a download/upload checklist for the selection

of link technologies.

With all of the moving to-and-fro of data, system security is an

obvious concern. Table 1.4 provides a security checklist.

The acquisition of appropriate link technology is very nearly an

art form. Currently, there is no product standard, no consistency in packaging, and no norm for pricing. Mainframe software

prices range from $1,000 to $80,000; the micro portion ranges

from $2,000 to $8,000. Additionally, there are usually minimum

costs. That is, you will be charged for a specified minimum

number of micro links whether or not you use them. These "minimums" are among the "hidden" costs that can seriously affect the

price of entry. Some other hidden costs are:

o The boards — are they included in the price?

o Productivity software (e.g., spreadsheets)

- Are they included in the price?

- If you already have it, do you have to buy it again?

[STAFF COMMENT 3]

4.3 SOFTWARE INVESTMENTS

The investment in existing software is a powerful counterforce to

the acquisition of new technology. The costs of converting the

software from one system to another can be prohibitive. However,

studies of the cost of conversion often omit the offsetting costs

of maintaining the old software — costs which may be significantly lowered when converting to a new system for which tested

software packages are available.

To get an idea of the costs associated with software maintenance,

consider the GAO finding that 70 percent of total software costs

are related to maintenance. In 1980, total software costs were

estimated to be $2 billion; there are projected to be $8.1 billion in 1985 and $23.4 billion in 1990. Those numbers argue that

conversion — particularly conversion to tested software packages

-- may be less costly than commonly estimated. Maintenance costs

should be reviewed during the annual budget process to determine

when maintenance of an obsolete application system has crossed

the cost threshold which justifies redesign.

270
TABLE 1.3 Selection of Link Technology

Download

Does the link technology allow record selectivity?

Can individual fields within records be extracted?

Can the user access production databases?

Is the selection process real time?

Can the user specify selection criteria at the micro — or does

the data processing shop do it at the mainframe?

Can the user summarize amount fields?

Can summar izat ions be used as criteria for the final selection

process?

Can the user select data from multiple databases?

Must the data accessed be single-vendor?

Is the data presented in micro format, with extraneous characters

removed?

Upload ; Updating Mainframe Databases

Does the software have an upload capability?

Can the user upload micro-generated transactions?

Can the user manipulate and summarize data before the upload?

Can the user upload without re-formatting?

Can the user update production databases in real time?

TABLE 1.4 Link Technology Security

Is the system secure at the: — database level?

-- terminal or PC level?

-- user ID level?

-- password level?

-- record level? — field level?

-- partial field level?

Can each PC be secured by:

-- location?

-- time of day?

-- days of the week?

-- period of time?

Is there a security log?*

* A set of records displaying attempts to violate security

includes database, functions, personnel and terminal ID's, date

and time.

271
Software investments may be divided into two categories: existing application systems and proposed systems. These will be

discussed separately.

4 3.1 Existing Software Application Systems

The strategies for existing software may also be divided into two

categories: "stranded" software, which operates in a dead-end

hardware architecture with no available compatible upgrade and

that which has "upgradable" software. Both types will face obsolescence of the application system software design, but the

solution begins at different departure points.

Stranded software

The issue in moving stranded software to a new hardware architecture is whether the conversion should be

accomplished in one step or two. The software will have to be

rewritten in either event. The question is whether the rewrite

will be a "literal translation" to the new architecture, with

later, evolutionary redesign of the system or whether the redesign and conversion will be done in one big lump. In the first

case, the converted system will have added capacities which will

gradually be turned into real capabilities. In the second case,

the capabilities will be realized immediately.

The two-step approach is favored — in part because it permits

elements of redesign to be tested individually and phased in as

they are proven and partly because of the trauma involved when

users are presented with a totally new system. Retraining, in

that case, is a major, costly consideration.

The Air Force, with its Phase IV base level logistics systems and

the FAA with its flight control system have both opted for the

two-step approach.

Software with compatible upgradesWhen a compatible upgrade is

available, the software need not be rewritten. However, the

evolutionary vs. one-step issue still remains and the argument

still favors evolution. GSA and ICST both recommend the evolution of major applications, arguing that first priority should be

given to retaining the integrity of current systems. That is,

agencies should engineer incremental improvements as stepping

stones to reach any desired software application enhancement.

The Social Security Administration is following this approach.

4.3.2 Proposed Software Application Systems

As implied earlier, the preferred strategy for proposed software

application systems is to use existing Government or commercial

software application packages that meet the requirements with

little or no modifications. Indeed, this is more than a "preferred" strategy: 0MB Bulletin 83-18 requires that a search for

such packages be made when independent administrative applications costing more than $2.5 million are being considered.

However , such a search should be made even when that threshold

272
has not been reached. Time-tested packages are worthwhile for

all but the most trivial applications.

There are commercial application packages for almost every conceivable purpose, from inventory control to hardware performance

analysis. The International Data Corporation (IDC) estimates

that there are about 300 commercial packages for payroll/personnel alone. Table 1.5, developed by IDC provides a list of

sources of information for locating packaged software.

It should be emphasized that upward- compatibility is as important vis a vis proposed software applications as it is in the

case of hardware. This is equally true for large computers and

personal computers. In all cases, it is prudent to investigate

the upgrade plans of competing vendors.

4.4 DECREASING TECHNOLOGY CYCLES

During the 1990' s, at a time when it seems that the project

development cycle is lengthening, the technology change cycle is

decreasing — to the point that the rate of change has resulted

in a 2 to 3 year replacement cycle. To protect against the very

real possibility of "instant obsolescence", the organization

should

o Select a system "backbone" before deciding on individual

components

o Insert contract provisions that allow for multiple replacements, and

o Engage in continuing technology and market forecasting

activities

Appendix B to this Part contains three clauses from GSA's Model

RFP which provide planning flexibility over the system's life.

273
TABLE 1.5

SOURCES OF INFORMATION FOR LOCATING PACKAGED SOFTWARE

Directories for Software

DataPro Applications Directories

DataSources

Data Decisions

I. CP. Software directories (International Computer Program

Company)

ADAPSO Membership Directory (Association of Data Processing

Service Organizations)

Auerbach Applications Software Reports

Minicomputer Software Quarterly

RSI Catalog of Minicomputer Software

Hardware Manufacturers

Product literature

Software vendor lists

User group libraries

National Association of Office Products

National Accounting Firms

Publ icat ions (Advertisements therein)

Professional accounting journals

Data processing journals

Trade journals (User's industry)

Government Suppor ted Agenc ies

University of Georgia

Federal Software Exchange

National Association of State Information Systems

Other Users

Encyclopedia of Associations (User's industry)

DataPro Directory of User Groups and Trade/Professional

Associations

Search Publ icat ions/ Serv ices

Computer hotline user groups

Sofsearch

274
FOOTNOTES

1. Nolan, Richard L. "Managing Information Systems by Committee", Harvard Business Review, JulyAugust 1982, pp. 7279.

2. I hid

3. Wood, Charles Cresson. Information Resource Management , SRI

International, Report 672, November 1982, p.l.

4 . Ibid, p .

5. See Fiorello, M. , Eirich, P. L. and Kay, P. Toward an Improved FI PS Cost-Benefit Methodology, Phase 1: Descriptive

Models Data Processing Operations, NBS Special Publication

500-10, National Bureau of Standards, January 1983 and Nay,

J. and Kay, P. Government Oversight and Evaluahility .Assessment, Lexington Books, D.C. Heath and Company, Lexington,

MA, 1982.

6. op. cit., Nay, J. and Kay, P., footnote 5.

7. Stanford Research Institute. Handbook of Forecast ing Techniques, 3 volumes, U.S. Army Engineer Institute for Water

Resources, 1975 and 1977.

8. op. cit., Fiorello, M. , Eirich, P.L., and Kay, P., footnote

5 and Fiorello, M., Chipman, M. L, Kay, P., and Powell, P.

Toward an Improved Fl PS Cost-Benefit Methodology, Phase 2:

Descript ive Models General Purpose Appl i cn t ions Software

Development and Maintenance , NBS Special Publication 500-16,

National Bureau of Standards, June 1984.

9. Macneice, Louis. Bagpipe Music, 1937.

10. Kay, P. and Powell, P., eds. Future Information Processing

Technology 1983, NBS Special Publication 500103, National

Bureau of Standards, August 1983.

11. AT&T Information Services, Communications Management Institute, 1984.

12. Durr, Michael. "Negotiating the Network Maze," Micro Communications, June 1984, pp. 32-36.

13. Op. cit., footnote 11.

14. This discussion of "link" technology is based on material

contained in a talk given by Frank Dodge, President, McCormack & Dodge Corporation, to the IDC Executive Conference,

Phoenix, Arizona, May 5, 1984.

275
APPENDIX A

STAFF COMMENTS

2.3.1.1

STAFF COMMENT 1

The high return on investment in the area of training in the use

of end user computing tools is quite often ov,'rlooked.

Computer literacy has now become essential for most knowledge

workers. The training task is monumental. If the dp organization is to be responsible for providing the training, it must be

provided adequate resources.

2.4.1

STAFF COMMENT 2

Two clear recommendations follow from the "corollaries" cited:

1. Policies need to be developed which clearly define the responsibilities (and associated authorities) regarding the

acquisition and management of hardware and software, and

2. Interdisciplinary skills should be cultivated — functional

managers need to know more about data processing so that they

can apply the appropriate controls internationally; data

processing professionals need to know more about the end

users' business to fully understand their needs and provide

the appropriate support.

2.4.2.2

STAFF COMMENT 3

There are a number of difficult problems that stem from

implementing the LAN technology. Those problems include:

1. Lack of standardization yet in the marketplace

2. Increasing complexity of the application, making end user

compilers less accessible to non-computer professionals

3. The necessity for technical support from traditional ADP

shops which put a low priority on the microcomputer technology and which have not yet gained technical expertise

4. The necessity for the traditional mainframe shops to do

conversions of mainframe databases before the data can be

accessible to the microcomputer end user

5. The cost implications of using microcomputers to access mainframe databases — if it is primarily a computer terminal

application, terminals are cheaper than microcomputers

276
APPENDIX B

CLAUSES FROM GSA»S MODEL RFP

GSA'S Policy and Regulation Division maintains three nonregulatory guidance documents for the acquisition of ADP equipment

systems by agencies. The three documents are:

o General Instructions to Offerors Governing Proposal

Preparation

o Guidance to Federal Agencies on the Preparation of

Specification, Selection, and Acquisition of Automatic

Data Processing Equipment Systems; and

o Solicitation Document for ADP Equipment Systems (the

Model RFP)

These GSA procurement documents have been developed jointly with

industry; therefore, they represent acceptable Brooks' Act policy

and industry considerations.

Outlined below are clauses from the Model RFP (Revised through

change) which provide planning flexibility over the system's

life . SECTION H - SPECIAL CONTRACT REQUIREMENTS

H.l. FIRMR 201-4.1110-1 WARRANTY EXCLUSION AND LIMITATION OF

DAMAGES

Except as expressly set forth in writing in this agreement, or

except as provided in the clause entitled, "Commitments, Warranties and Representations," if applicable, and except for the

implied warranty of merchantability, there are no warranties

expressed or implied. In no event will the Contractor be liable

to the Government for consequential damages as defined in the

Uniform Commercial Code, Section 2-715, in effect in the District

of Columbia as of January 1, 1973; i.e..

Consequential damages resulting from the seller's breach include:

(a) Any loss resulting from general or particular requirements and needs of which the seller at the time of

contracting had reason to know and which could not

reasonably be prevented by cover or otherwise; and

(b) Injury to person or property proximately resulting from

any breach of warranty.

H.2 REPLACEMENT PARTS AVAILABILITY

The Contractor guarantees that replacement parts for each machine

in this contract will be available for the systems (items) life

stated in 1.2. The Contractor shall notify the Government 180

days before the end of the systems (items) life as to the con277
APPENDIX B

tinuing availability of parts subsequent to this period. If

parts will not be available from the Contractor, then the Government may require the Contractor to furnish data that is available

to assist the Government to obtain such parts from another

source

H.3 ENGINEERING CHANGES

(a) After contract award, the Government may solicit, and

the Contractor is encouraged to propose independently,

engineering changes to the equipment, software specifications, or other requirements of this contract. These

changes may be proposed to save money, to improve

performance, to save energy, or to satisfy increased

data processing requirements. However, if proposed

changes relating to improved performance are necessary

to meet increased data processing requirements of the

user, those requirements shall not exceed the contract

requirements by more than 25 percent. If the proposed

changes are acceptable to both parties, the Contractor

shall submit a price change proposal to the Government

for evaluation. Those proposed engineering changes

that are acceptable to the Government will be processed

as modifications to the contract.

(b) This H.3. applies only to those proposed changes identified by the Contractor, as a proposal submitted

pursuant to the provisions of this clause. As a minimum, the following information shall be submitted by

the Contractor with each proposal:

1. A description of the difference between the existing contract requirement and the proposed change,

and the comparative advantages and disadvantages of

each ;

2. Itemized requirements of the contract which must be

changed if the proposal is adopted, and the proposed revision to the contract for each such

change;

3. An estimate of the changes in performance and cost,

if any, that will result from adoption of the

proposal;

4. An evaluation of the effects the proposed change

would have on collateral costs to the Government,

such as Government-furnished property costs, costs

of related items, and costs of maintenance and

operation; and

5. A statement of the time by which the change order

adopting the proposal must be issued so as to

obtain the maximum benefits of the changes during

the remainder of this contract. Also, any effect

278
APPENDIX B

on the contract completion time or delivery schedule shall be identified.

(c) Engineering change proposals submitted to the Contracting Officer shall be processed expeditiously. The

Government shall not be liable for proposal preparation

costs or any delay in acting upon any proposal submitted pursuant to this clause. The Contractor has the

right to withdraw, in whole or in part, any engineering

change proposal not accepted by the Government within

the period specified in the engineering change proposal. The decision of the Contracting Officer as to

the acceptance of any such proposal under this contract

shall be final and shall not be subject to the

"Disputes" clause of this contract.

(d) The Contracting Officer may accept any engineering

change proposal submitted pursuant to this clause by

giving the Contractor written notice thereof. This

written notice may be given by issuance of a modification to this contract. Unless and until a modification

is executed to incorporate an engineering change proposal under this contract, the Contractor shall remain

obligated to perform in accordance with the terms of

the existing contract.

(e) If an engineering change proposal submitted pursuant to

this clause is accepted and applied to this contract,

an equitable adjustment in the contract price and in

any other affected provisions of this contract shall be

made in accordance with this clause and other applicable clauses of this contract. When the cost of

performance of this contract is increased or decreased

as a result of the change, the equitable adjustment

increasing or decreasing the contract price shall be in

accordance with the "Changes" clause rather than under

this clause, but the resulting contract modification

shall state that it is made pursuant to this clause.

(f) The Contractor is requested to identify specifically

any information contained in the engineering change

proposal which the Contractor considers confidential

and/or proprietary and which the Contractor prefers not

be disclosed to the public. The identification of

information as confidential and/or proprietary is for

information purposes only and shall not be binding on

the Government to prevent disclosure of such information. Offerors are advised that such information may

be subject to release upon request pursuant to the

Freedom of Information Act. (5 U.S.C. 552).

If the Government is liable for loss or damage of a machine, the

Contractor shall have the option to restore the machine to its

previous condition, in which event the Government shall pay the

Contractor to perform such restoration at the Contractor's then279
APPENDIX B

current prices, terms, and conditions. If the Contractor elects

not to restore the machine, the Government may, at its own

expense, restore the machine to its previous condition. If,

however, the machine is lost or damaged beyond repair, the

Government shall pay the Contractor the same price for the

machine as the Government would have paid if it had purchased the

machine on the day prior to the loss or damage under the

provisions of this contract. This clause shall govern risk of

loss or damage, notwithstanding any other provisions of this

contract relating to title, payment, or ownership.

1.2 TERM OF CONTRACT

Although the Government contemplates use of the system(s)

(Hardware and Software) for the sytems life of months from

date of award, the term of this contract is from date of award

through September 30, 19 .

1.3 CONTRACT OPTIONS TO EXTEND OR INCREASE QUANTITY

1.3»l Option to Extend the Term of Contract

This contract is renewable at the prices stated in Section of

the contractor's proposal, at the option of the Government, by

the Contracting Officer giving written notice of renewal to the

Contractor by the first day of each fiscal year of the Government

or within 30 days after funds for that fiscal year become available, whichever date is the later; provided that the Contracting

Officer shall have given preliminary notice of the Government's

intention to renew at least days (30 days unless a longer

period specified) before this contract is to expire. Such a preliminary notice of intent to renew shall not be deemed to

commit the Government to renewals. If the Government exercises

this option for renewal, the contract as renewed shall be deemed

to include this option provision. However, the total duration of

this contract, including the exercise of any options under this

clause, shall not exceed months.

1.3.2 Option for Increased Quantity

The Government may increase the items called for herein by the

quantities stated elsewhere in this contract and at the unit

prices specified in Section of the contractor's proposal. The

Contracting Officer may exercise this option at any time within

the period specified in the contract by giving written notice to

the Contractor. Delivery of items added by exercise of this

option shall be in accordance with the delivery schedule set

forth in Section . 1.3.3 Option for Acquisition of Evaluated Optional Features Not

Procured at Time of Award of Contract

The Government may exercise the option to acquire the evaluated

optional features stated in the contract at unit prices specified

therein. The Contracting Officer may exercise this option by

280
APPENDIX B

giving written notice to the Contractor at any time prior to the

expiration dates set forth in Section of the Contractor's

proposal. Delivery of the evaluated optional features added by

exercise of the option shall be in accordance with the delivery

schedule set forth in Section

281

PART V: TECHNOLOGY FORECAST WORKSHOP SUMMARY

283

PREFACE

in Sept ember of this year, a group of experts from ADP/telecommunications supplying and using companies met at ICST to

review and comment on two Parts of this document , i.e., the

telecommunications technology forecast (Part 1) and the "management impl icot ions" m.aterial (Part IV). To that end, the group

split into two workshops. This Part summarizes the results.

Chapter I contains the summary of the technology workshop. The

major portion of the summary was prepared by the workshop leader,

Robert Conley, Acting Ass istant Secretary for Electrical Systems

and Information Technology, Department of the Treasury. We hove

augmented his summary slightly in order to reflect the discussion

which took place at the plenary session following the workshops.

The results of the "management impl i ca t ions" workshop, summarized

by Mark Samblanet of Aurora Associates and Peg Kay of ICST, are

contnined in Chapter 2. Regret tably , there was not enough time

to address all aspects of the monagement implications document.

The sunrnnry is keyed to the sect ions of Part IV which were

addressed.

As noted in the preface to Part I of this document , the industry

participants felt that they should be involved earlier in the

formulation of subsequent forecast s , It is a generous and

appreciated offer. We look forward to an early and continuing

rel a t i onshi p.

1. PARTICIPANTS

The following people participated in the conference:

Mr . Don Brown

E.I. Dupont DeNemours Company,

Inc .

Mr. Harry Klancer

Bell Communications Research

Mr. Doyne Carson

Micro Industries

Mr . Edward Matthews

Northern Telecom, Inc.

Mr. Robert Decker

SOHIO

Mr. Robert Medvedeff

POSP, Inc.

Mr . Plato Demos

Union Carbide Corporation

Mr. Paul Milbury

Northwest Pipeline

Mr. Jerry Fogel

Grumman Data Systems

Mr. John North

AT&T Technologies

Mr. Armin Gumerman

Northwestern Mutual Life

Insurance Co.

Ms. Shirley Prutch

Martin-Marietta Data Systems

285
Mr. Richard Hill

Honeywell

Mr. Harold Jones

Tenneco, Inc.

Mr. Patrick Jordan

GTE Data Service

Mr . Thomas

Honeywell

Mr. Robert Atkins

Institute for Computer

Sciences and Technology

Mr. Ross Bainbridge

Institute for Computer

Sciences and Technology

Mr. James Burrows

Institute for Computer

Sciences and Technology

Dr. Robert Conley

Department of the Treasury

Ms. Carol Edgar

Institute for Computer

Sciences and Technology

Mr. Frederic

Arthur D. Li

Mr. Marvin Rahm

Dow Chemical

Mr. Russell Robb

Atlantic Richfield Company

Mr. LeRoy Rodgers

Digital Equipment Corporation

Vande Hei

Ms . Peg Kay

Institute for Computer

Sciences and Technology

Mr. Ted Manakas

Institute for Computer

Sciences and Technology

Ms. Patricia Powell

Institute for Computer

Sciences and Technology

Mr. Mark Samblanet

Aurora Associates

Dr. Stanley Winkler

Institute for Computer

Sciences and Technology

Wi th ing ton

tie, Inc.

2. SUMMARY OF THE WORKSHOP ON

THE TELECOMMUNICATIONS TECHNOLOGY FORECAST

The consensus of the group is that the forecast is a good summary

of the technology today. However, its treatment was considered

too elementary given the complexity of the subject and the external influences which are already evident.

Phrased another way, the technology cannot be linearly extrapolated to the future given influences of user involvement and

systems applications which do not allow telecommunications to be

addressed in isolation. Further, the treatment does not prioritize the importance of the various technologies and is useful to

only a limited and technically sophisticated audience. [Ed.

note: Part I of this document is indeed addressed to such an

aud ience ] . The working group concluded that the next decade was one of

conflict. That is:

286
o standards versus technology change

- The development of these standards will necessarily

have user involvement and user benefits: technologists

cannot develop them in isolation.

o security of information versus access to information

- VJith trends of rapid asset transfer/control and increased user acceptance of technology and therefore

more influence by users. We will have to develop mechanisms to reduce the conflicts. There will certainly be compromises as we go along.

The three major areas driving technology advancement as seen by

the working group are:

o continued development of a digital communications plant

The technologies to support the plant will grow.

Transparent to the user, it will become more inexpensive and more integrated into our day-to-day

oper a t ions

o expanded applications of the Private Automated Branch

Exchange (PABX) switch (perhaps being the workhorse of

the local area networks)

Perhaps as much as 90 percent of our current telecommunication is voice: we now have the technology to

add data.

This is the most economic way to go over the next

generation as, for example, we integrate our buildings .

o developments in digital mobile communications

Important in industries such as trucking and crisis

control, the mobile communications systems will dovetail with the digital plant.

As a consequence of these factors, the technology of devices

supporting digital communications will continue to evolve.

The promise of the great future supported by digital technology

can only be achieved if the user becomes an intelligent user and

demands standards and greater control than in the past era when

the technology drove the user. This will be, in the working

group's opinion, the largest non-linear impact on technology

development and applications over the next decade.

The group also contributed valuable staff comments which we

included in Part I, Future Telecommunication Technology 1984.

287
3. SUMMARY OF THE WORKSHOP ON THE

MANAGEMENT IMPLICATIONS OF THE TRENDS IN INFORMATION TECHNOLOGY

MANAGEMENT STRUCTURE (Section 2.3.1, Part IV)

The workshop participants concluded that organizational structures will flatten in response to the introduction of the new

technology at the individual workers' desks. An important result

of this organizational evolution will be a shortening of the

links between top management and operating level management.

There was a consensus, however, that — contrary to popular

wisdom — middle management will not be the first layer affected

by the technology. The "shrinkage" will probably be seen first

at the secretarial and clerical levels.

The reason for this will be the model provided by the new high

tech companies. The workshop's "small, high tech" representative

noted that his company (about 70 people) has no secretaries at

all. The professionals do their own typing, keep their own

calendars, and so on.

The workshop participants noted that there are many such small

companies which are (1) experiencing explosive growth and will

soon become big companies, (2) are being acquired by large

companies, or (3) have personnel who migrate to large companies.

As the small companies get larger, they will sooner or later

realize that it is cheaper to use clerical help for many of the

clerical-type functions. Professionals are very expensive data

entry clerks. However, the greater impact will be on the large

companies which will find that they can do without much of the

support help they currently have. Ultimately, they will adopt

the ethic of the small companies or small company personnel that

they acquire.

Eventually, middle management will also shrink, enabling the

shorter links between top and operational management referred to

above

The technology will also affect the functions of the planners.

We will discover that we can either gather a great deal more

information of the same type that we now gather, and analyze it

much more drastically than we now do; or we can take the time we

are now spending on that function and use it in other ways.

Different companies will go in different directions and the

directions taken will be evolutionary; initially, they will not

be the results of conscious decisions on the part of the

companies. Eventually, some "precipitating event" will occur (a

recession, a new CEO, etc.) and the d£ facto decision will be

analyzed and either accepted, rejected, or (more likely) amended

somewhat.

Again, contrary to conventional wisdom, the distribution of

resources will not cause more information to flow up in the

organization. The major effect will be that the technology will

288
help to better the information at the operating level where it is

needed. By and large, top management planning is done on the

basis of external rather than internal information. That will

continue

The workshop participants rejected the suggestion that there will

be a lot of people who will be able to tinker with the "core"

data. That will not happen unless and until that information can

be monitored and controlled. The information systems shops

(wherever they are located within the company) will change from

being data processing shops to ones which are responsible for

policy, for rules and regulations, and for the handling of

utilities such as the telephone.

PLANNING (Section 2.3.2, Section IV)

The participants agreed that there will be a lot more people

involved in planning. We will see a central information systems

shop (like the one described above) but much of the data will be

processed in a sub-unit — department or division. That will

have the effect of returning accountability to the place where it

has always belonged. Because of economic considerations, the

processing of data (and accountability) migrated to the central

processing shop. The new technologies will permit their return.

The problem of interfacing the MIS plan with the business plan

will continue to exist. The group — not altogether facetiously — surmised that this was because the MIS people never know what

the business plan is and suspect that it exists only as a myth.

The most significant impact on planning at the strategic level

will not be on how we do our planning but, rather, on what we

plan. When we decide, for instance, things like "Are we going

into a new business?" , the decisions will be greatly affected by

the technologies available to help get us into that business.

The insurance and banking industries provide prime examples of

that impact. The technology has afforded them new market opportunities. [Ed. note: This has obvious parallels for government

agencies which are afforded significantly different options for

performing their missions]

PERSONNEL (Section 2.3.3, Part IV)

We will find that the technology allows us to do things in a new

way. As a consequence, there will be new responsibilities and

those responsibilities will be distributed through the organization. That suggests that we will need new skill mixes, which

will have to be defined.

Jobs will shift. For example, users are beginning to do the

accounting; the accountants are becoming the financial officers.

Shifts like that will occur often, with users taking on functions

that they hadn't had before and the people responsible for those

functions moving to different levels in the organization.

289
Insofar as retraining is concerned, the participants agreed that

the retraining was most needed in the personnel offices. Classification problems have arisen in all of the companies large

enough to have hard and fast rules. As jobs or functions get

rolled together, the ossified personnel departments have no way

of handling the situation — the technologies are simply moving

faster than the classifiers.

As the jobs shift, particularly in the data processing shops, we

are faced with some apparent decisions; namely. Fire or Something Else. We can retrain some of the people to perform the new

functions (communications, in particular) or we can replace them

or we can decide not to change. These decisions are more apparent than real. Replace with whom? Where are the replacements

going to come from? "Don't change" is not really an option

because the companies that stand still will not be able to survive in a competitive environment.

A mid- to long-term solution to the "replace" dilemma is to

pressure the universities to train their students for the jobs

available. Right now, the participants find that the schools are

not turning out the graduates they need — the telecommunications

experts and managers. Nor are they producing the business

analysts (rather than programmers) that the information systems

shops are going to require.

While "don't change" is not a feasible option, "change at a slower pace" may be mandated by our inability to replace.

ECONOMIC IMPACTS (Section 2.3.4, Part IV)

The participants did not feel that the acquisition of "gear" was

going to have significant economic impact. The personal computers are coming down in price so quickly that nobody is really

going to try to control those acquisitions. One of the supplying

company participants remarked that they try to keep their prices

just below the threshhold where controls begin. [Ed. note: the

potential for counter-strategies and counter-counter-strategies

is mind boggling]

The acquisition of software will have more impact but even that

is not the major concern.

There will be considerable impact at the point of total communications costs — at the network level. That is where the

significant controls will be instituted. One of the participants

quoted the dp manager of a large brokerage firm as saying, "Go

out and buy your microcomputer. I don't care what you do with

it. But the minute you hook it up to my computer, you will

follow my instructions, my groundrules, and my overall control."

The most significant economic impact, however, relates to the

earlier discussion about what we plan. The greatest impacts will

result from other people's business decisions. If somebody

290
decides to use the technology to go into a new business, our

businesses are going to have to decide whether to take advantage

of their technology. And that is where the largest economic

impacts will be felt.

291

PART VI: FUTURE INFORMATION PROCESSING

TECHNOLOGY 1983 REVISITED

293

1. THE 1983 TECHNOLOGY FORECAST REVISITED

The 1983 forecast was a consortium effort by a number of Federal

agencies. It was funded by ICST and the Defence Intelligence

Agency (DIA) with assistance and contributions from the Department of Energy, United States Department of Agriculture, United

States Environmental Protection Agency.

Part I of the 1983 forecast, prepared by Arthur D. Little, Inc.,

contains three primary sections with forecasts through 1997. The

first addresses the underlying technologies for information processing and includes a discussion of processor modules, logic and

storage components, input/output technologies, and software. The

second addresses the changes in the information industry and

market and discusses the forcing factors, recent acquisitions and

joint ventures, and the emerging structure of the information

industry which are causing the changes. The third primary section integrates the underlying technologies and industry change

into forecasts of the overall nature of future information processing products and systems.

Federal agencies and ICST personnel were asked to review and

comment on Part I. Fourteen agencies and technical specialists

from ICST responded. The comments were discussed with Frederic

T. Withington of Arthur D. Little, Inc. who prepared Part I.

Many comments were incorporated into Part I. Others were felt to

be beyond the scope of the forecast or there was a difference of

opinion on the subject, comments in these two categories are

included in Part II.

ICST sponsored a teleconference to have private industry representatives review Part I of the 1983 forecast. The participants

were divided into four topic areas: distributed processing,

general-purpose computer systems, office systems, and compatibility and transferability of software. Each group gave a summary

of their discussions; Part III of the 1983 forecast is a transcript of the summaries.

Part IV, funded by DIA, and prepared by Arthur D. Little, Inc.

gives estimates of future system costs through 1997. The cost

estimates were derived by applying assumptions to the forecasts

in Part I and are, therefore, necessarily uncertain but are

useful for long-range system planning.

Part V, prepared by International Data Corporation (IDC),

discusses the current and potential rules and regulations in the

Federal environment and how they may affect the Federal inventory

of ADP equipment.

Part VI, prepared by Aurora Associates, Inc., discusses management aspects of end-user computing with particular emphasis on

the mangement of change. It builds on work done at the Environmental Protection Agency.

295
Ted Withington of A. D. Little, Inc. was contacted to find out if

there were any changes to Parts I and IV of the 1983 Technology

Forecast. The major directions are still on target, however,

there are a few areas which have not progressed as expected. The

cryogenic (Josephson Junction) technology which was forecast to

have considerable but distant promise (section 2.2.3.2, p. 43) is

still being pursued by some but, since IBM stopped work in this

area, the outlook is not optimistic. Magnetic bubble technology

(section 2.2.3.3, p. 44) falls in the same category in that

expectations have not been met.

Figures 2.10 (p. 41) and 2.11 (p. 42) and table 2.1 (p. 51) show

costs of semi-conductor memory. Since the prices of semiconductor memory are dropping faster than was thought when the

1983 Forecast was prepared, this needs to be taken into account

when referring to this information.

In the 1983 Forecast, the availability of optical storage (section 2.2.4.3, p. 48), in volume, was projected to be available

in three to five years. It is now expected later than this time

frame

Affecting the hardware (sections 2.1.2.1, p. 14; 2.1.3.1, p. 17;

and 2.1.4.1. p. 20) and the estimates of systems cost (section 1,

p. 151, and tables 3.1, p. 155, and 6.1, p. 159) is the current

opinion that although the evolution is still toward modular

systems, this evolution is slower than believed when the 1983

forecast was prepared.

A summary of information system product forecasts which appeared

in the 1983 forecast as figure 5.1 remains valid and is included

for reference, as figure 1-1 in this section. The table of

contents from the 1983 forecast is also included.

296
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TABLt OP CUNTtNTS

List of Figures viii

List of Tables ix

Abstract and Acknowledgements x Foreword xi

PAKT I: Future Information Processing Technology i

OVERVIEW 3

PREFACE 3

INTRODUCTION 3

MANAGEMENT SUMMARY 3

ACKNOWLEDGEMENT 11

1. INTRODUCTION 13

2. FORECASTS OF UNDERLYING TECHNOLOGIES 14

2.1 processor MODULES 14

2.1.1 Introduction 14

2.1.2 State-of-the-Art 14

2.1.3 1982-1987 17

2.1.4 1987-1992 20

2.1.5 1992-1997 22

2.2 LOGIC AND STORAGE COMPONENTS 27

2.2.1 Introduction 27

2.2.2 Semiconductor Technology 27

2.2.3 Other Logic and Memory Technologies 43

2.2.4 Mass Storage Technologies 46

2.2.5 Summary of Storage Component Performance

and Cost 51

- 2.3 INPUT/OUTPUT TECHNOLOGIES 53

2.3.1 Status and Trends 53

2.3.2 Display Technology 54

2.3.3 Hard-copy Output Technology 55

2.3.4 Image Recognition 57

2.3.5 Voice Recognition 58

2.3.6 Voice Synthesis 60

2.4 SOFTWARE 61

2.4.1 Operating Systems 63

2.4.2 Support Software 67

2.4.3 Application Level Software 73

1

298
3. CHANGES IN THE INFORMATION INDUSTRY AND MARKET 80

3.1 INTRODUCTION 80

3.2 FORCING FACTORS 81

3.2.1 Improving Technologies 81

3.2.2 Improving Communications Services 83

3.2.3 Economic and Demographic Pressures 84

3.2.4 Cost and Profit Pressures 85

3.2.5 Evolving Interconnect Standards 87

3.2.6 Regulation and Litigation 88

3.3 RECENT ACQUISITIONS AND JOINT VENTURES 90

3.4 THE EMERGING STRUCTURE OF THE INFORMATION INDUSTRY 92

4. FORECASTS OF FUTURE PRODUCTS AND SYSTEMS 97

4.1 GENERAL-PURPOSE COMPUTER SYSTEMS 97

4.2 DISTRIBUTED PROCESSING SYSTEMS 100

4.3 OFFICE SYSTEMS 104

4.4 SYSTEM COSTS 110

4.5 COMPATIBILITY AND TRANSPORTABILITY OF SOFTWARE 112

4.6 INFORMATION CONTROL AND SECURITY 114

4.7 PERSONNEL AND MAINTENANCE IMPLICATIONS 115

5. SUMMARY 119

5.1 INTRODUCTION 119

5.2 FORECASTS BY PRODUCT CATEGORY 119

5.3 IMPLICATIONS FOR USERS 124

PART 11: Federal Staff Comments 127

PREFACE 129

STAFF COMMENTS 129

PART 111: Teleconference Summary 141

PREFACE 143

1. PARTICIPANTS 143

2. SUMMARIES OF THE DISCUSSION GROUPS 144

299
PART IV: tsTiMATEs OF Future System Costs 149

PREFACE 151

1. INTRODUCTION 151

2. METHOD OF DEVELOPING COST ESTIMATES 152

3. GENERAL-PURPOSE PROCESSORS 154

4. SPECIAL-PURPOSE PROCESSORS 156

5. MASS STORAGE SYSTEMS 156

6. SUPERVISORY AND INPUT/OUTPUT SYSTEM 158

7. NETWORK FRONT END 158

8. BATCH INPUT/OUTPUT CLUSTER 160

9. TERMINALS AND DESKTOP COMPUTERS 160

10. SEPARATELY-PRICED SOFTWARE 162

11. SYSTEM INTEGRATION COST 162

12. HARDWARE AND SOFTWARE MAINTENANCE PAYMENTS TO VENDORS 163

PART V: The Impact of Law and Regulation Un Federal

Automatic Data Processing 165

PREFACE 167

1. LEGAL AND REGULATORY BACKGROUND 167

2. LEGISLATIVE PROGRAMS 169

3. ROLE OF THE CENTRAL MANAGEMENT AGENCIES 171

3.1 OFFICE OF MANAGEMENT AND BUDGET (OMB) 171

3.2 OFFICE OF FEDERAL PROCUREMENT POLICY (OFPP) 171

3.3 THE GENERAL SERVICES ADMINISTRATION (GSA) 172

3.4 DEPARTMENT OF COMMERCE, INSTITUTE FOR COMPUTER

SCIENCES AND TECHNOLOGY/NATIONAL BUREAU OF

STANDARDS (ICST/NBS) 173

3.5 OFFICE OF PERSONNEL MANAGEMENT (OPM) 175

4. MAJOR INFORMATION RESOURCE MANAGEMENT ISSUES 177

4.1 COMPETITION/COMPATIBILITY/CONVERSION 177

300
4.2 OBSOLESCENCE 177

4.3 SECURITY/PRIVACY 179

4.4 0MB CIRCULAR A-121, "COST ACCOUNTING, COST

RECOVERY AND INTERAGENCY SHARING OF DATA

PROCESSING FACILITIES" 179

4.5 LOW-COST COMPUTING (MICROCOMPUTERS) 180

4.6 STANDARDS 181

4.7 AGENCY IRM ORGANIZATIONS 182

5. CONCLUSIONS AND RECOMMENDATIONS 184

APPENDIX A: Investigations from Activities of the

House Committee on Government Operations 185

APPENDIX B: International Data Corporation's

Computer Class Size Definitions and

CPU Totals by Class Size 187

PART VI: Managing Lnd-User Computing i95

PREFACE 197

1. INTRODUCTION 197

2. THE NATURE OF THE PROBLEM 199

2.1 END-USER COMPUTING WITHIN THE CONTEXT OF INFORMATION RESOURCE MANAGEMENT 199

2.2 MANAGING CHANGE: THE BASIC PROBLEM CONCERNING

END-USER COMPUTING 200

3. MANAGEMENT ISSUES 201

3.1 ECONOMIC IMPACT OF END-USER COMPUTING 201

3.2 THE FEDERAL GOVERNMENT CONTEXT 203

3.2.1 The Paperwork Reduction Act 203

3.2.2 Federal Management Roles 204

3.3 MICROPROCESSING ISSUES 204

3.3.1 Control of Acquisition and Use 204

3.3.2 The Role of Microcomputers in Relation to

Mainframes and Minicomputers 207

3.3.3 Application Areas and Sequence for

Introduction 207

3.3.4 Pace for Introduction and Integration 207

3.3.5 Roles and Responsibilities of Users, ADP,

and Word Processing Professionals 207

3.3.6 Support Structure 207

301
4. END-USER COMPUTING IN THE PRIVATE SECTOR

4.1 CORPORATE SURVEY

209

209

4.2 CENTRAL INFORMATION SYSTEMS SUPPORT 209

4.3 SUMMARY 214

5. END-USER COMPUTING IN THE FEDERAL GOVERNMENT 215

5.1 THE CENTRAL MANAGEMENT AGENCIES 215

5.1.1 The Office of Management and Budget (0MB) 215

5.1.2 The General Services Administration (GSA) 216

5.1.3 The Institute for Computer Sciences and

Technology (ICST) 217

5.1.4 The Office of Personnel Management (0PM) 217

5.1.5 General Accounting Office (GAO) 218

5.1.6 Summary 218

5.2 EXECUTIVE BRANCH AGENCIES 219

5.2.1 Overview 219

5.2.2 How User Agencies Are Addressing Small

Computer Issues 219

5.2.3 Examples of Agency Approaches 220

6. MANAGING CHANGE 224

6.1 OVERVIEW 224

6.2 EXAMINING THE ORGANIZATIONAL CONTEXT 224

6.2.1 Planning Styles 224

6.2.2 Power and Leadership 224

6.2.3 Interpersonal Relationships 225

6.2.4 Pace of Work 225

6.2.5 Resources and Cost 225

6.2.6 Relationships with Contractors and Consultants 226

6.2.7 Nature of Performance Criteria 226

6.3 FACILITATING CHANGE 227

7. CONCLUSIONS AND RECOMMENDATIONS 229

7.1 OVERVIEW 229

7.2 CENTRAL MANAGEMENT AGENCIES 229

7.3 EXECUTIVE BRANCH AGENCIES 233

7.4 CONCLUSION 235

REFERENCES 236

302
GLOSSARY

Prepared by

Institute for Computer Sciences and Technology

U.S. Department of Agriculture

303

GLOSSARY

Following publication of the 1983 Technology Forecast, it was

suggested that a glossary of terms would be valuable for readers.

Being too late for 1983, terms from the 1983 companion forecast

and terms in this forecast are included here. The Department of

Agriculture provided a starting point; it was expanded by ICST.

The material for most of the following terms was extracted from

the following sources:

, Arnericnn Nationcl Dictionary for Information

Processina, FIPS 11-2, National Bureau of Standards,

1982.

, Glossary of Micrographics , TR2-1980, National

Micrographics Association , Silver Spring, MD.

Ralston, Anthony, Ed., Encyclopedia of Computer

Science and Engineer ing , Von Nostrand Reinbold Co.,

1983 . Schmittroth, John, Jr., and Martin Connors, eds.,

Telecommun ic at ions Systems and Serv ices Directory , Gale

Research Co., Detroit, MI, 1984.

Sippl, Charles J. and Roger J. Sippl, Computer

Dictionary, Howard W. Sams and Co., 1982.

Stone, Harold S., Introduction to Computer

Architecture, Science Research Assoc., Inc., 1975.

305
acoustic coupler

An acoustic coupler is a modem designed to connect directly to

the handset of a voice telephone. It enables digital terminals to communicate with remote devices using the analog

lines of the public telephone network. It does this by converting digital signals to analog before transmission, and

analog signals to digital upon reception. Acoustic couplers

are typically used for relatively low-speed transmission (1200

bps or slower )

analog signal

An analog representation of an information signal is a representation by means of a continuum of physical variables; for

example, through translation or rotation, voltage or resistance. Analog signals are represented by continuously

oscillating waves, unlike digital signals, which are represented by discrete, discontinuous coded signals.

array processor

An array processor consists of many separate processing elements, each capable of carrying out basic arithmetic

calculations under the control of a master program, parallel.

associative processor

An associative processor a type of parallel processor with an

associative (content addressable) memory. See parallel processor . asynchronous processor

An asynchronous starts each operation as a result of a signal

that the previous operation has been completed or that parts

of the computer required for the next operation are now available. Contrast with synchronous computer.

asynchronous transmission

Asynchronous transmission refers to the transmission of data

character by character, with no fixed interval between characters. The transmitting terminal supplies a "start" bit

preceding each character and a "stop" bit following each

character. Sometimes called start/stop transmission, asynchronous transmission is generally slower and less efficient

than synchronous transmission.

audio frequencies

Audio frequencies are message transmission frequencies which

can be heard by the human ear, generally between 15Hz and

20,000Hz.

automatic data processing (ADP)

ADP is the branch of science and technology concerned with

methods and techniques relating to data processing largely

performed by automatic means.

306
bandwidth

Bandwidth is the difference between the highest and lower frequencies of a telecommunications carrier. It describes the

information-carrying capability of a channel or line.

baseband network

A baseband network link carries a single data stream over the

linkage medium, though the single stream may represent multiple messages through the use of time-division multiplexing

(TDM) . A baseband network typically has a bandwidth of 10-100

megahertz (mHz)

baud

Baud is a measure of transmission speed in telecommunications,

equal to the number of signal changes per second. When a signal change represents one bit, the baud rate's equivalent

to bps (bits per second). However, since a signal change can

in some modems represent groups of more than one bit, baud and

bps are not always identical.

bit slicing

Bit slicing is a technique which interconnects identical components to construct an arithmetic logic unit (ALU), e.g. two

4-bit chips interconnected form an 8-bit ALU.

bit stream

A bit stream is a stream of bits, continuously transmitted at

a constant rate, for which separation into the characters represented is done in the terminal devices.

bps (bits per second)

Bps (bits per second) is a measurement of data transmission

speed. It is equivalent to baud when one bit is depicted by

one signal change. When bps is measured by the thousand, the

abbreviation kbps is often used; when it is measured by the

million, the abbreviation mbps is used; and when it is measured by the billion, gbps is used. A transmission rate of

two million bits per second can thus be variously transcribed

as 2,000,000 bps; 2,000 kbps; 2 mbps; and .002 gbps.

broadband network

A broadband network link permits the transmission of multiple

simultaneous signals over a single medium through the use of

frequency-division multiplexing (FDM). Broadband network

techniques take advantage of the large bandwidth of such media

as fiber optics and community antenna television (CATV) links.

A broadband link might simultaneously carry voice, data, and

video signals. Broadband transmission is contrasted with

baseband transmission.

307
bus

A bus is a path over which information is transferred from any

of several sources to any of several destinations. A bus

family is a group of signals considered together, e.g. an address bus consists of all the signals needed to define any of

the possible memory or I/O locations in the system.

bus network

A bus is a network topology in which all nodes are linked

through the same length of cable, with two open ends. The

protocol requires that, while each node broadcasts to the

entire network, individual nodes recognize their own address

code and intercept only those messages so addressed.

C-band

The C-band comprises the frequency bands in the 4 to 6 gigahertz (GHz) range that are used by most communications satellites to receive and transmit signals.

Carterfone Decision

In 1968, the United States Supreme Court ruled in favor of the

Carterfone Company, whose founder, Thomas Carter, had brought

suit against the public telephone companies. Carterfone

sought to be allowed to provide direct connection of their

. acoustically coupled telephone instruments to the public telephone network —without the interface of the data access

arrangement (DAA) device then required by the telephone companies. The Carterfone Decision is generally considered to

mark the birth of the interconnect industry.

CCITT facsimile classifications

The CCITT (International Telegraph and Telephone Consultative

Committee) , a permanent body of the International Telecommunication Union which deals with telephone, telegraph, and

related services, has defined the following four classifications of facsimile transmission devices: 1) Group I devices

are analog facsimile devices which operate at six minutes per

page using frequency modulation (FM) techniques. CCITT has

also provided in Group 1 for a four-minute speed as a manufacturer's option. 2) Group 2 devices are analog facsimile

devices which operate at three minutes per page using amplitude modulation (AM) . CCITT has also provided in Group II

for a two-minute speed as a manufacturer's option. 3) Group

III devices are digital facsimile devices which operate at

one minute per page utilizing techniques of redundancy reduction, such as rapid skipping of white space. 4) Group IV

devices and high-speed (56 kbps or more) digital facsimile

devices are designed to use public packet-switched networks.

cellular radio

Cellular radio is an advanced mobile telephone system which

provides communications by dividing a metropolitan area into

smaller geographic units, or cells, each served by a small

transmitter and a controller. Each cell can reuse channels

assigned to mobile communications, greatly increasing system

308
capacity and service quality. When a portable telephone user

crosses from one cell to another while talking, a central

computer in the cellular system automatically reroutes the

conversation from one transmitter to another, eliminating

interference between callers and allowing each channel to be

used several times simultaneously. Traditionally, radiotelephone service in cities has depended on a single large

transmitter capable of handling only a few dozen calls at a time. The U.S. Federal Communications Commission has established a phased application process from wireline and nonwireline companies.

central office (CO)

Central office (CO) refers to a common carrier location where

customer lines terminate into a switching capability which can

connect the local lines to one another or into the long distance network.

central processing unit (CPU)

A CPU consists of the control, arithmetic, and logic unit and

the main storage.

Centrex

Centrex is a service which allows business subscribers to

directly dial extensions from outside the company and to

directly dial outside numbers from the extensions. The

switching system is a type of PBX system and is usually

located in the telephone company's central office, though it

can be located on the customer's premises.

channel

A channel is a route for electrical transmission between two

or more points. A channel is not necessarily a wire; it may

be a radio carrier or a light wave. A channel may also be

called a circuit, line, link, or path.

channel capacity

Channel capacity is the maximum number of bits per second

which can be accommodated by a channel at a specified error

rate, determined by the bandwidth modulation scheme and certain types of noise.

circuit switching network

A circuit switching network is a communications network in

which stations are provided with a direct link (through a system of switches) for the duration of their interchange of

information. An example of this is the public voice telephone

network. Other types of switching networks include the message switching network and the packet switching network.

309
class of service

PBX telephone systems may provide a class of service capability that enables each station to have preprogrammed access

to all or only some of the system features; e.g., depending on

the class of service, the station may be limited in longdistance calling capabilities.

coaxial cable

Coaxial cable is a telecommunications conducting link consisting of a central conductor with a shielding cover, around

which is another conducting braid and a protective coating

cover. Coaxial cable can provide high bandwidth, permitting

high speed, wideband communication capabilities.

CODEC (coder-decoder)

A CODEC (coder-decoder) is a device or circuit which converts

(or codes) an analog wave form into digital code and, conversely, decodes the signal back into analog wave form. An

example of the usage of CODECS is in the voice telephone

receivers of PBX systems that carry and process all traffic in

digital form.

common carrier

A common carrier is a company which provides telecommunications facilities to the public. American common carriers are

regulated by the Federal Communications Commission (FCC) if

interstate and by the state public service or public utility

commission (PSC or PUC) if intrastate.

communication

Communication is the process of transferring information from

one person, point, or device to another.

Communications Act of 1934

The Communications Act of 1934 established the U.S. Federal

Communications Commission (FCC) and gave it responsibility for

regulating national and international communications. The Act

was adopted by Congress to ensure that U.S. citizens had

adequate access to nationwide and worldwide telecommunications

services at reasonable rates. Under this authority, the FCC

has the authority to require common carriers to establish

interconnections with other carriers, provide through routes

and charges deemed necessary or in the public interest, and

prescribe the allocation of such charges. The FCC was granted

power over consolidations and could periodically evaluate

common carrier' property. Although the Communications Act of

1934 gave the FCC authority over interstate and foreign communications, it reserved the regulation of intrastate

communications and exchange services to the states.

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contention

Contention is the condition on a multipoint communication link

when two or more terminals seek to transmit simultaneously.

An important part of network protocol is the resolution of

contention. Some methods of line contention resolution include polling, CSMA/CD, and token passing.

CSMA/CD (carrier sense multiple access with collision detection)

CSMA/CD (carrier sense multiple access with collision detection) is a contention-arbitration protocol used in some data

communications networks, including the Xerox Ethernet network.

The CSMA/CD protocol consists of two rules for terminals

seeking to transmit on a network: 1) if the network channel

is in use, defer the start of transmission; 2; if the channel

is clear, begin to transmit. If two or more stations begin to

transmit at the same time, both or all "back off" and attempt

transmission again after different waiting intervals.

customer provided equipment (CPE)

Customer provided equipment (CPE) describes telecommunications

equipment purchased or leased by the user from vendors other

than the operating telephone companies.

DAA (data access arrangement)

Until the Carterfone Decision by the FCC in 1968, AT&T did not

allow the connection of non-Bell equipment to the switched

network. From 1969 to 1976, AT&T required that a data access

arrangement (DAA) device be acquired from them for placement

between the non-Bell equipment and the telephone lines. In

1976, the FCC implemented a certification program allowing

telecommunications equipment vendors to build the equivalent

of the DAAs into their own equipment. As of June 1, 1977, all

new devices, including those from Bell, are required to be

registered with the FCC, so that the need for DAAs has been

eliminated . database

A database is a collection of data fundamental to a system or

enterpr i se . data link control (DLC)

A data link control (DLC), also called a line discipline, is a protocol or set of rules governing the orderly transfer of

information on a data network. Functions of a DLC include:

establishing and terminating a connection between two stations; error detection and connection routines, including

retransmission when necessary; and providing control functions

such as status requests.

decision support system (DBS)

Applications in a MIS that directly support the making of

specific decisions is called a DSS . See management information system (MIS)

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demodulation

Demodulation is the reconversion of received analog sine waves

of various frequencies^ which can be transmitted over analog

communications lines, back into their original digital form.

digital service unit (DSU)

A digital service unit (DSU) is a signal converting device,

analogous to but different from a modem. The DSU is used to

interface data communications devices to fully digital lines.

The DSU does digital code translation and/or supplies communications coding to meet the needs of the digital network at

both the sending and receiving devices. Unlike modem devices,

the DSU encoding and decoding is completely in digital form

for transmission over fully digital lines.

digital signal

A digital signal is the representation and transmission of

information coded as discrete discontinuous bits.

digital termination service (DTS)

Digital termination service (DTS) basically consists of a centrally located, omnidirectional microwave transceiver that

communicates with remote user stations via shared 1.5 mbps

full-duplex channels. DTS systems will basically be used as

local loop bypass facilities.

direct broadcast satellite (DBS)

Direct broadcast satellite (DBS) is a satellite stationed in

geosynchronous orbit that broadcasts television signals received by small dish antennas atop homes or buildings. Video

programming is distributed by the satellite directly to the

rooftop antennas; up to 40 channels of broadcast satellite

service could be made available to the public. Proposed

services are generally aimed at rural or urban areas not presently served by cable companies.

direct inward dialing (DID)

Direct inward dialing (DID) is a feature available on some PBX

systems which enables outside callers to dial directly to an

internal extension without going through the console attendant. The DID capability requires the use of special DID

trunks which are provided by the local telephone company. DID

trunks are generally available only in large blocks.

distributed processing

Distributed processing (also known as distributed intelligence) involves the use of computers or intelligent terminals

at a number of sites that share the control, storage, and/or

computing functions of the central computer system, thus

giving the end user data processing capabilities. The various

stations, or networks nodes, are connected by telecommunications lines. A related term, distributed network, refers to a network architecture in which nodes, or communications processors, are connected directly or indirectly to each other

and share the communications processing functions.

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earth station

An earth station is the physical equipment used to send data

communications to a satellite (called the uplink) and/or

receive data communications from a satellite (called the downlink) . electronic mail

Electronic mail is a generic term describing the use of digital computer and other technologies (e.g., facsimile) in the

generation and transmission or distribution of messages. It

includes store-and-forward capabilities which can effect

economies through off-peak time transmission. There is a growing number of electronic mail network capabilities for

limited user groups and through the public networks.

emulator

An emulator imitates one system with another, primarily by

hardware, so that the imitating system accepts the same data,

executes the same computer programs, and achieves the same

results as the imitated system.

end-to-end

An end-to-end protocol governs the interaction from the source

computer to the destination device and vice versa; i.e., a program in the source machine exchanges messages with a similar program in the destination machine. The transport

layer (fourth layer) of the ISO reference model of Open

Systems Interconnection (OSI) is an end-to-end process, as are

layers five to seven. In contrast, layers one to three of the

ISO model specify intermediate, or subnetwork interactions

between a device and its immediate neighbor. Layers one to

three are referred to as chained, while layers four to seven

are end-to-end.

ESS (electronic switching system)

ESS (electronic switching system) is one of a growing number

of telephone company central office switches utilizing solid

state devices and microprocessors. Capable of operating in

millionths of a second, ESS makes possible new user services.

end-user

End-users are the ultimate customers or recipients of computer

services. With the advent of software specifically designed

for non-computer professionals, the number of end-users using

computers has enlarged.

facsimile transmission

Facsimile transmission is a technique of transmitting and

receiving document pages (text, diagrams, and pictures) over

telecommunications links. Historically, facsimile has been an

analog technique through which the facsimile device electromechanically scans the page to convert the variations in black

and white, or tone, to electronic signals. Newer facsimile

devices use digital technologies with improved scanning and

transmission speeds and higher resolution. The CCITT has

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established standards for analog and digital facsimile transmission . fiber optics

Fiber optics is the science and technology dealing with the

transmission of light through extremely thin fibers of glass,

plastic, or other transparent material. Fiber optics is increasingly being used for telecommunications links because the

medium can provide large bandwidth, freedom from electrical

interference or noise, and low attenuation over long

d is tances

f ootpr int

A footprint is the area of the earth's surface to which a satellite can transmit. Some parts of the footprint need more

powerful or larger earth station facilities to achieve satisfactory signal strength. The footprint is a satellite in

geostationary orbit cover about one-third of the earths' surface.

frequency

The frequency of a wave or oscillation is stated as the number

of cycles or completed alternations per second.

frequency division multiple access (FDMA)

In satellite communications, frequency division multiple

access (FDMA) refers to the use of frequency division to

provide multiple transmissions to a satellite transponder

simultaneously. To utilize FDMA technology, a special frequency, specific to the station concerned, is allocated to

each earth station. These frequencies are spread over the

total bandwidth of a particular satellite transponder. Each

station occupies only a part of the transponder capacity, but

does so permanently. One transponder can therefore handle

transmissions from a number of earth stations at the same

time. Compare with time division multiple access.

frequency division multiplexing (EDM)

Frequency division multiplexing (FDM) is a multiplexing system

- which divides the available transmission frequency band into

narrower bands, each used as a separate channel. Some of the

band must be reserved for guard bands between the channels.

Frequency modulation (FM)

Frequency modulaltion is a mode of analog transmission in

which the frequency (rate of change) of the carrier wave is

changed to correspond to changes in the signal's wave.

front-end processor (FEP)

A front-end processor (FEP) is a dedicated computer or system

of computers that has the task of controlling and scheduling

message traffic to and from multiple communications lines and

terminals. The FEP can relieve the micro processor from

input/output interruptions, and typically performs such tasks

as error detection and user validating checking.

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full duplex (FDX)

Full-duplex (FDX) transmission, sometimes referred to as

duplex, provides for telecommunications transmission in two

directions simultaneously. Voice telephone communications

over the switched network is full duplex. Full-duplex transmission is analogous to a two-way street.

gateway

A gateway is a capability for crossing the boundary from one

network into one or more other networks, e.g., from the local

area network into a public network.

gbps (gigabits per second)

Gbps (gigabits per second) is a rate of data transmission

equal to 1,000,000,000 bps (bits per second).

general-purpose processor

A general-purpose processor is capable of doing any job that

its programmer can break down into suitable basic operations.

geosynchronous orbit

An object in geosynchonous (sometimes called geostationary)

orbit circles the earth once in a 24-hour period. Thus the

object appears stationary with respect to a particular location on the earth. Most communications satellites are in

geosynchonous orbit, so that the earth antennas can be fixed

rather than tracking. The altitude of a geosynchronous orbit

is approximately 22,300 statue miles or 35,900 kilometers.

half duplex (HDX)

Half-duplex (HDX) transmission is "either-way" telecommunications transmission. Transmission is possible in both

directions, but only one way at a time. When the communications device at one end has completed its transmission, it

must advise the device at the other end that it has finished

transmitting and is ready to receive. Citizens Band (CB)

radio is an example of half-duplex transmission. Only one

station can communicate at a time; the transmitting party

signals "Over" to the receiving party, indicating that the

transmission direction is to be received. Half-duplex transmission is analogous to a single-lane bridge on a two-way

road . handshak ing

Handshaking is the general term describing the exchange of

predetermined signals between two communicating devices.

Handshaking permits one device to determine whether another is

ready to receive or transmit data.

HDLC (High-Level Data-Link Control)

HDLC (High-Level Data-Link Control) is an International Standards Organization protocol that defines how information

packets should be passed over a communications facility. The

SDLC protocol of IBM's Systems Network Architecture (SNA) is a subset of and conforms to the HDLC requirements.

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high definition television (HDTV)

High definition television (HDTV) is a new television technology that uses nearly double the amount of scanning lines of

conventional television (1125 lines compared to 515 lines),

a larger channel bandwidth, and a wider screen to significantly improve picture quality.

integrated services digital network (ISDN)

Integrated services digital network (ISDN) is a concept in

which an end-to-end digital network carries both data and

voice in the same channel. Based on the telephony integrated

digital network ( IDN) , ISDN progressively incorporates additional functions and network features, including those of any

other dedicated networks, so as to provide for existing and

new services. ISDN services are expected to include digitized

voice, facsimile and graphics, video, telemetry, videotex,

software and data transfer, electronic mail, and data base

access . intelligent terminal

An intelligent computer and/or communications terminal (also

known as a smart terminal) is a terminal which includes storage and programming capabilities. A dumb teminal, on the

other hand, is a communications terminal with no inherent

storage and programming capabilities.

interconnect industry

The interconnect industry describes the large and growing

community of vendors of telephone data telecommunications

equipment (other than operating telephone companies), designed

to be interfaced with (interconnected to) the public switched

telephone network. Such interconnection has been permitted

only since the Carterfone Decision.

interface

The interface is the common boundary between two physical

devices or two distinct communications systems. The interface

may be mechanical, such as the RS232 standard defining the

physical plug connection between devices; or it may be a software program, as, for example, the interface allowing

messages to be passed between systems operating with different

protocols and/or speeds.

internetwork ing

Internetworking (also called internetting) is the connection

of two or more distinct networks.

interpreter

An interpreter is a computer program used to translate and to

execute each source language statement of a computer program

before translating and executing the next statement. The

source language is the language in which the program is

wr i tten

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ISO reference model

The International Standards Organization (ISO) has promulgated

a reference model of Open Systems Interconnection (OSI) to

support international standardization of network terminology

and protocols. The OSI model has seven levels or layers, each

of which performs a well-defined function. From the lowest

level to the highest, the OSI levels are: OSI Layer 1 (physical layer) ; OSI Layer 2 (data link layer) ; OSI Layer 3 (network layer) ; OSI Layer 4 (transport layer) ; OSI Layer 5

(session layer) ; OSI Layer 6 (presentation layer) ; and OSI

Layer 7 (application layer) . The individual layers are described in separate entries in this glossary.

kbps (kilobits per second)

Kilobits per second (kbps) is a rate of data transmission

equal to 1000 bps (bits per second)

knowledge-based system

A knowledge-based system stores and utilizes effectively large

amounts of knowledge in progr ammat ically-or iented applications

and is an intelligent assistant for scientists and technologists, e.g. a system which aids medical doctors in

diagnosis. Also called an expert system.

Ku-band

The Ku-band is the frequency band of 11-14 gigahertz (GHz)

reserved for direct broadcast satellite (DBS) transmission and

other next-generation satellite services.

large scale integration (LSI)

LSI is characterized by the technology incorporating up to a thousand gates per chip. Very large scale integration (VLSI)

is characterized by having over a thousand gates per chip.

laser

A laser (Light Amplification by Stimulation of Emission of

Radiation) is a device which uses an active material to convert energy to light, a source of energy and optics to direct

the light through the active material repeatedly to amplify

it, and optics to direct and focus the light into a fine,

hairline coherent beam. Laser beams have narrow bandwidth,

high directional capability, and can travel long distances

with very little divergence or loss. They are increasingly

being used through fiber-optics links in telecommunications.

An example of the usage of laser beams is for very high speed

transmission of voice and data information.

local area network (LAN)

A local area network (LAN) is generally understood to describe

a network, within a single building or a single campus of

buildings, which connect data processing devices and terminals —especially networks which support the interconnection

of devices from more than one vendor. Increasingly, voice and

video capabilities are being incorporated into local area

offerings.

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magnetic bubble storage

Magnetic bubble storage consists of a thin layer of garnet

material containing magnetic domains. When an external

magnetic field is applied, the domains look and behave like

bubbles which are manipulated to represent information bits.

mainframe

Mainframe is a term used to designate a medium and large

scale CPU.

management information system (MIS)

A computer based information system having applications in

support of management activities.

mbps (megabits per second)

Megabits per second (mbps) is a data transmission speed equal

to one million bps (bits per second)

message switching network

A message switching network is a communications network in

which a message from one station to another is forwarded and

stored at intermediate switching points, en route from the

sending station to the receiving station (e.g., the telegram

and teletype networks) . Contrasts with a circuit switching

network and packet switching network.

MICR (magnetic ink character recognition)

MICR (magnetic ink character recognition) is a system developed for the automatic handling of checks through the banking

system, which is supported by increasingly large and sophisticated data communications systems. Checks are imprinted,

using special ink which contains particles of magnetic

substances, with characters of a typeface and dimensions

specified in a standard developed by the American Banking

Association. The fourteen specified characters (ten digits

and four special symbols) are used to provide amount, bank

identification, and control information. The inked letters

are charged with small amounts of electricity and then read

and sorted by devices which transmit the MICR data as input to

bank computers for processing. A related process is OCR

(optical character recognition)

microcode

Microcode directly controls the sequencing of computer circuits at the detailed level of a single instruction. The code

is stored in dedicated high speed memory. It can be used for

emulation. See emulator.

microcomputer

A microcomputer is one of a large variety of general purpose

computers manufactured utilizing one or more microprocessors. Microcomputers can range from computers with

relatively small amounts of memory to computers with large

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amounts of random - access memory and several peripheral

devices. Typically an end-user microcomputer is of desk-top

size and requires no special environmental site preparation.

micrographics

Micrographics is that branch of science and technology concerned with methods and techniques for converting any medium

that contains images too small to read without magnification.

The medium is generally useful for long-term storage of data.

microprocessor

A microprocessor is the portion of a microcomputer that

provides the arithmetic, logic, and control capability and

sometimes, main memory manufactured on a single, large or

very large scale integrated circuit chip.

microwave

Microwave communication is a form of radio transmission constituting a narrow beam which can be separated in space by

frequency-division multiplexing (FDM) to form several

channels. Microwave transmission is limited in the distance

signals can travel before requiring retransmission through a repeater station. Thus repeater stations are typically placed

approximately thirty miles apart on towers, the tops of tall

buildings, or hilltops to provide line-of -sight paths. The

microwave radio beams usually have a width of five degrees and

operate with low-power levels (about 12 watts) to prevent

interference on the beams.

minicomputer

A minicomputer is a computer somewhere in size between a microcomputer and a mainframe. These units are characterized by higher performance than microcomputers, richer

instruction sets, higher price and a proliferation of highlevel languages, operating systems, and networking methodolog ies . MIPS/MFLOPS

This is a convenient measure of the speed of computers

speed is usually defined in terms of MIPS - millions of instructions per second or MFLOPS - millions of floating

operations per second.

modem

A modem is a device that accepts a stream of digital bits as

input and produces a modulated analog carrier as output (and

vice versa) . The term modem is a contraction of modulatordemodulator. The modem is inserted between the digital

computer and the analog telephone system.

modular

Modular defines a design feature and capability of computer/communications systems in which components can be added

and deleted in a relatively easy manner to permit a variety of

conf igurat ions

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modulation

Modulation is the process of changing some parameters of a carrier wave in relation to the value of information to be

transmitted. Types of modulation include amplitude, frequency, phase, phase-adaptable, pulse code, and others.

multiple instruction - multiple data processor (MIMD)

A MIMD is a parallel processor which obtains concurrency by

executing asynchronously with different processes utilizing

the problem data simultaneously. See asynchronous processor.

multiplexer

A multiplexer is a device that accepts input from a collection

of lines and inputs the data onto a single line. This may be

accomplished by time division multiplexing, frequency division

multiplexing, or statistical multiplexing.

narrowband

In data communications, narrowband refers to a bandwidth or

circuit capable of handling digital signals up to 2400 bps. A

narrowband circuit in telephone communications refers to a channel capable of transmitting an analog signal with a bandwidth of 3 KHz or less. Ordinary telephone lines generally

utilize narrowband circuits over twisted pair copper wire.

network

A telecommunications network is an interconnected set of locations or devices linked by communications facilities,

including telephone lines and microwave and satellite connect ions

network architecture

To reduce complexity in both discussion and design of data

communications networks, it is valuable to consider LAYERS or

LEVELS of a network, where each level has a distinct function.

In general, the purpose of each level is to offer certain

services to the higher levels. Between each pair of adjacent

levels there is an interface. The set of levels or layers and

; the set of protocols (rules governing their intention) is

- collectively called the network architecture.

node

A node of data communications networks is a device at a physical location which performs a control function and influences the flow of data in the network. Node can also refer

to the points of connection in the links of a network.

non-volatile memory

Non-volatile memory is memory whose contents is retained when

power is removed.

OCC (other common carrier)

Other common carriers (OCCs) , also referred to as specialized

common carriers (SCCs) , are common carriers providing transmission capabilities beyond point-to-point transmission of

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unaltered data streams. A specialized common carrier may

provide value-added network services or basic transmission

facilities for voice and data services at rates competitive

with the telephone companies.

OCR (optical character recognition)

OCR (optical character recognition) describes the process of

machine recognition (i.e., direct interpretation) of printed

or written characters through scanning and sensing by photoelectric transducers. OCR machines recognize the pattern of

the characters. OCR techniques are increasingly being used to

support the input of information to data communications systems because they have the potential to eliminate expensive

and error-prone manual input. A related process is MICR

(magnetic ink character recognition)

office automation

Office automation is the technology of automating the office

functions such as text processing, electronic mail, information storage and retrieval, personal assistance features and

task management.

operating system

An operating system is software that controls the execution

of computer programs. An operating system may provide services such as resource allocation scheduling, input/output

control, and data management. Although operating systems are

predominantly software, partial or complete hardware implementations are possible.

OSI Layer 1 (physical layer)

In the ISO reference model of Open Systems Interconnection

(OSI), the physical layer is the lowest of the seven defined

layers of the generalized network architecture. The physical

layer defines the transmission of bits over a communication

channel, ensuring that Is and Os are recognized as such.

Physical layer protocols specify the time in micro seconds a bit occupies, the number and definition of individual pins in

a connector, and so on. The physical layer merely accepts and

transmits a stream of bits without recognizing or defining any

structure or meaning.

OSI Layer 2 (data link layer)

In the ISO reference model of Open Systems Interconnection

(OSI) , the data link layer is the second (working from the

lowest) of the seven defined layers. The data link layer

provides methodologies for transforming the new physical layer

link into a channel that appears free of errors to the network

layer (the next higher layer). The data link layer accomplishes this by splitting the input or data stream provided in

the physical layer into data frames which are transmitted

sequentially as messages and by processing the acknowledgement

(ACK) frames sent back over the channel by the receiver.

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OSI Layer 3 (network layer)

In the ISO reference model of Open Systems Interconnection

(OSI) , the network layer is the third (working from the lowest

level) of seven defined layers. The network layer accepts

messages of data frames from the transmitting host, converts

the messages to packets, and routes the packets to their

des t ina t ion . OSI Layer 4 (transport layer)

w In the ISO reference model of Open Systems Interconnection

(OSI) , the transport layer is the fourth layer (working from

the lowest) of seven defined layers. The transport layer

accepts data from the session layer (the next layer up, which

is the human user's interface to the network) , splits this

data into smaller units, passes these units down to the network layer, and ensures that all the pieces arrive at the

destination in the correct order. The transport layer is a true end-to-end process; i.e., a program on the source transmitter carries on a conversation with a similar program at the

end receiver. This end-to-end consideration in layers 4 to 7

is different from the protocols in layers 1 to 3, which regulates subnetworks at intermediate stages of a true end-to-end

transmission. While the principles of data flow are the same

in the network layer 3 and the transport layer 4, the transport layer protocols are communicated from the host to the

ultimate receiver while the network layer protocols are

communicated within the intermediate subnetworks and not "endto-end."

OSI Layer 5 (session layer)

In the ISO reference model of Open Systems Interconnection

(OSI), the session layer is the fifth (working from the lowest) of seven defined layers. The session layer is the human

user's interface into the network through which the user

establishes a connection with a process on another distant

machine. Once the connection is established, the session

layer manages the end-to-end dialog in an orderly manner,

supplementing the application-oriented user functions to the

data units provided by the transport layer. Establishing the

session layer connection is typically a multistep operation,

involving addressing the host, authenticating password access,

stating communications options to be used (such as communications speeds and full or half duplex transmission) , and billing arrangements. Once the session is underway, the session

layer manages the interaction.

OSI Layer 6 (presentation level)

In the ISO reference model of Open Systems Interconnection

(OSI) , the presentation layer is the sixth (working from the

lowest) of seven defined layers. The presentation layer

protocols format the data to meet the needs of different

computers, terminals, or presentation media in the user's endto-end communications. The protocols at this layer may also

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provide data encryption for security purposes in transmission

over public networks or data compression for efficiency and

economy

OSI Layer 7 (application layer)

In the ISO reference model of Open Systems Interconnection

(OSI) , the applications layer is the seventh (working from the

lowest) of seven defined layers. The application layer specifies the protocols for the human user's intended interaction

with the distant computer, including such applications as data

base access, document interchange, or financial transactions.

Certain industry-specific end-to-end application protocols,

such as in banking or airline reservations, enable computers

and terminals of different manufacturers to provide essentially the same user application interfaces.

packet assembler/disassembler (PAD)

The CCITT X.25 standard defines a specific format for packets

in a packet switching network. So that ordinary asynchronous

terminals can communicate on the network, a device is needed

to collect individual characters from a group of terminals and

to output properly formatted packets. Similarly at the receiving end, the inverse operation is required to split up the

packet into individual characters. The device performing

character-to-packet and packet- to-character transformations is

called packet assembler/disassembler (PAD)

packet switching network

A packet switching network is a communication network which,

in order to transmit a message from one station to another

station, breaks the message into small units called packets.

Each packet contains destination (header) information and a part of the message. The packets are routed from the sending

station to the receiving station through switching points,

where each of the switches is itself a computer capable of

recognizing the address information and of routing the packet

to its destination. The packet switching nodes can dynamically select the best route for each packet, so that later

packets may in fact arrive prior to earlier packets. The

switch at the receiving end reassembles the packets in the

proper order. Packet switching networks do not establish a real connection between transmitter and receiver, but instead

create a virtual circuit that emulates the connection created

by a physical link. Packet-installed networks are highly

efficient and can improve real-time transmission.

pag ing

Paging is a procedure for transmitting pages of information between main storage and auxiliary storage, especially

when done for the purpose of assisting the allocation of a limited amount of main storage among a number of concurrently

executing programs.

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parallel processor

Parallel processors obtain concurrency in one of two ways:

they perform identical operations in lock step on different

portions of the data or execute asynchronously with different

processes utilizing the problem data simultaneously. See

asynchronous processor

parallel transmission

Parallel transmission of data describes simultaneous transfer

of bits containing a single character, so that each bit has a unique channel dedicated to it. Because of the multichannel

requirement, parallel transmission is generally more expensive

than serial transmission. Parallel transmission is typically

used for short links, such as between a computer and its

peripheral devices. In parallel transmission, the bits of a character are transmitted in parallel, but the characters

themselves are transmitted serially.

PBX/PABX

A private branch exchange (PBX) , or private automatic branch

exchange (PABX) , is a telecommunications switching mechanism

now generally based on a stored program digital computer

located on the site of a particular organization. The PBX and

associated network of telephones and other devices may be

obtained from the operating telephone company, or may be

purchased or leased from an interconnect company.

personal computers

A personal computer is often defined as being low cost,

based on microcomputer technology, movable, personally controllable, and easily used. Examples of personal computer

usage are: home, hobbyist, professional, small business. See

microcomputer

pixel

In computer graphics, a pixel is the smallest element of a display surface that can be independently assigned color or

intensity (picture element)

polling

Polling is a centrally directed technique of enforcing line

discipline and eliminating contention among transmitting

terminals. All terminals remain quiet until the central controller requests each to transmit.

processor

The word is used in several contexts, these include: 1. the

arithmetic, logic, and control units; 2. the arithmetic unit;

3. the arithmetic, logic, and control units and the main

storage.

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protocol

A protocol is a set of agreed upon rules and conventions

governing the formats and processes used in data communications. Protocol functions include establishing procedures for

beginning and terminating connections, identifying stations,

and ensuring compatibility between devices. Examples of protocols include the CCITT-recommended X.25, and the IBM SDLC

and BISYNCH.

radio frequency (RF)

A radio frequency (RF) is a message transmission frequency in

the range from approximately 10k Mz to 300g Mz (i.e., 10,000

Hz to 300,000,000,000 Hz).

resale carriers

Resale carriers are companies that offer reduced-rate voice

communications, data communications, and/or video services.

In 1981, under order of the Federal Communications Commission

(FCC) , the AT&T System allowed its WATS and MTS (message

telephone service) to be resold. This allowed a new group of

firms, known as resale carriers, to offer discount private

line and switched voice-grade services to their customers on a nationwide basis. (The FCC had previously permitted resale of

private line services.) Resellers purchased leased lines from

AT&T or other carriers, switched voice services from the

specialized carriers, or WATS from AT&T. Customers reach a reseller in the same manner as they would a specialized

carrier such as MCI, using a local number and an identification code. The reseller's switching equipment then selects

the most economical routing. Although resellers offer nationwide coverage at significant discounts from AT&T, subscribers

generally are limited to accessing them in the cities where

they operate switches. The FCC has determined that resellers

do not have to be regulated because of their number and because their underlying carriers are subject to regulation.

ring topology

Ring topology describes the configuration of a data network

which is a continually connect chain of links, generally

implemented with repeaters to relay messages around the ring

from source to destination. There can be different kinds of

arbitration schemes to control data transmission.

RS449 interface

The RS449 interface identifies a specification defined by the

Electronic Industries Association (EIA) , detailing the physical configuration of the connector to interface between data

terminal equipment (DTEs) and data communication equipment

(DCEs) . RS449 was defined subsequently to RS232C, and specifies a 37-pin connector (and for devices using a second

channel, an additional 9-pin connector). The RS449 interface

also provides additional control and signaling capabilities

beyond the RS232C.

325
RS232C interface

The RS232C interface identifies a specification defined by the

Electronic Industries Association (EIA) detailing the physical

configuration of the connector to interface between data terminal equipment (DTEs) and data communication equipment

(DCEs) . RS232C specifies the use of a 25-pin connector and

the signal assigned to the end of the 25 pins.

SDLC (Synchronous Data Link Control)

SDLC (Synchronous Data Link Control) is an IBM transmission

protocol similar to the binary synchronous (BISYNC) . In both

data are gathered into blocks; however, SDLC uses data bits

to signal control functions instead of the full characters

used by BISYNC. SDLC is the protocol used in IBM's Systems

Network Architecture (SNA) , which is close to the HDLC (Highlevel Data-Link Control) in the OSI (Open Systems Interconnection) protocol-level model promulgated by the International

Standards Organization (ISO). More information on the OSI

standard can be found in the entry for ISO reference model.

semiconductor technology

Sem.iconductor technology uses two types of silicon, one a good

insulator and the other a good conductor, hence semiconductor,

in conjunction with photolithography to manufacture an integrated circuit.

serial transmission

Serial transmission of data describes the sequential transfer

of the bits constituting a character, one bit at a time.

Serial transmission is contrasted with a parallel transmiss ion . signaling

Signaling in a telephone syistem refers to any of a number of

methods used to alert users or operators.

simplex

Simplex describes a telecommunications transmission mode which

is one way only with no capability of responding. Home reception of a television signal broadcast by the station is an

example of simplex communication (analogous to a one-way

street). Contrasted with half duplex and full duplex.

software

Software is computer programs, procedures, rules, and possibly associated documentation concerned with the operation of

the system.

star topology

Star topology is a network configuration offering point-topoint communications through a centralized network controller

(or node) to which all other devices are connected. The

central node may also provide gateways to other networks. All

communications between the various devices, such as computers

and terminals, takes place through the central controller.

326
supercomputer s Supercomputers have high-powered processors with numerical

processing throughput significantly greater than that of the

largest general-purpose computer.

switched network

The switched network generally refers to the publicly available network of lines and switching equipment used for dialed

telephone calls or dial-up data transmission. The term can

also apply to private or otherwise limited networks of lines

and switching equipment.

synchronous processor

A synchronous processor is one in which the performance of

all operations is controlled by equally spaced signals from a master clock as opposed to a signal that the previous operation has been completed. Contrast with asynchronous

processor

synchronous transmission (synch)

Synchronous transmission (synch) transmits blocks of data

characters together without any pause between the characters.

Synchronization between source and receiver terminals is

established at the beginning of each block of data. The

synchronization is generally accomplished by having the source

terminal send, preceding each block of data, at least two

synchronizing characters (SYN characters). The receiver is

designed to recognize the SYN characters, and when two SYN

characters appear in a row, then by definition, the next group

of bits will be a data character (if not another SYN

character). Synchronous transmission is generally done with

buffers in which the blocks are held until sent, and is more

efficient than asynchronous transmission.

T-1 carrier

T-1 carrier identifies the all-digital communications links

now becoming available from telephone companies and other

common carriers capable of supporting 1.5 mbps communications.

tariff

A tariff is a schedule published by a communication carrier;

in the United States it must be filed with a state public

service commission for intrastate services or the Federal

Communications Commission (FCC) if interstate. A tariff describes the particular services provided, the charging rates,

and the conditions under which the services are available.

telecommun icat ions

Telecommunications refers to the transmission and/or reception

of information by telephone, telegraph, radio or other methods

of communication over a distance. The information may be in

the form of voice, pictures, text, and/or encoded data.

327
teleconferencing

Teleconferencing describes the use of telecommunications links

to support interaction by a number of conference participants

at two or more physical locations. The telecom.municat ions

links may include one or more of the following: multiple

connection voice telephone (audio teleconferencing); audio

teleconferencing with audio-graphic capabilities; or one-way

or multilocat ional video communication in addition to the

audio, through which text and images may be read and augmented

by authorized participants at their convenience. (Computer

conferencing, in which participants converse with each other

from remote locations via intelligent terminals or microcomputers, is also frequently referred to as teleconferencing) . Video teleconferencing includes full-motion

video, equivalent to the quality of a standard television

broadcast; slow-scan, which involves transmitting a video

image, via telephone lines, that slowly but constantly changes

when displayed; and freeze-frame or still video, in which a still picture is held on the screen for approximately a half

minute and then disolved.

telex

Telex is a teletypewriter (TTY) service introduced by VJestern

Union in the 1950s. Telex teletypewriters have a printout

speed of 66 words per minute and use Baudot five-level code.

Telex messages can be sent worldwide through the facilities of

international record carriers (IRCs). New telex-oriented

message transmission and reception capabilities are being

introduced which allow such devices as personal computers,

electronic memory typewriters, and communicating word processors to communicate with each other.

tie line

A tie line is a leased communication channel linking two PBX

systems

time division multiple access (TDMA)

Time division multiple access (TDMA) is a multiple satellite

access system. In TDMA, each ground station transmits to the

satellite on a common frequency, occupying the totality of a transponder's capacity. In practice, each station transmits a burst of digital data in turn and for a given time, permitting

blocks of data from the different stations to reach the satellite in sequence. The TDMA frame defines the transmission

order for the stations. Transmission by each station is

therefore repetitive and not continuous. Compare to frequency

division multiple access.

time-division multiplexing (TDM)

Time-division multiplexing (TDM) is a multiplexing or channelsharing technique in which each station has access to transmit

at certain times, under rules enforced by a network controller

or the interface protocols. TDM methodologies include polling, CSMA/CD, and token passing.

328
token passing

Token passing is a form of line discipline or contention

resolution which operates without a central control. Each

terminal on a network is permitted to transmit when, and only

when, it possess the single "token." When it is finished, or

after a given period of time, or if it has no transmission,

the terminal passes the token to the next terminal in order

(not necessarily the adjoining terminal)

topology

The topology of a communication network describes the physical

or logical interconnection of terminal nodes on the network.

The topology can be described as a bus, ring, star, tree, or a combination of these.

transaction processing

In transaction processing, a transaction triggers a full processing cycle such as a record retrieval, a record update, a record creation or record deletion.

transponder

A transponder is a device on a satellite that receives and

amplifies radio frequency (RF) uplink signals from an earth

station, and then redirects the signal back toward its

destination earth station within the particular satellite's

footprint. Modern satellites generally have 24 transponders.

trunk

A trunk is a telephone line or channel between two telephone

company central offices or between two switching devices,

which is used to provide voice or data connections between two

locations . TWX

TWX is a teletypewriter (TTY) service introduced by AT&T in

1963 and acquired by Western Union in 1971. TWX teletypewriters have a printout speed of 100 words per minute and use

the ASCII eight-level code. TWX terminals and telex terminals, incompatible when first introduced, can communicate

through code- translat ion via Western Union computers. Western

Union's TWX service is now known at Telex II, reflecting the

compatibility between the services. New message transmission

and reception capabilities are being introduced that enable

users to utilize their personal computers, communicating word

processors, and electronic memory typewriters to send and

receive telex-based messages.

user terminal

A user terminal is an input/output unit by which a user

communicates with an automatic data processing system.

329
value-added network (VAN)

A value-added network (VAN) is a common carrier which provides

services in addition to transmitting unaltered data streams.

These services could include error detection and correction,

temporary data storage, and speed or protocol conversion.

vector type architecture

In a vector type architecture, the instruction set is designed to operate on both vector e.g., a 1-d imens ional array,

and scalar operands.

videotex

Videotex is used to describe various electronic information

and communications systems and services that are usually aimed

at a general audience and that have two-way capabilities

enabling the user to interact with the system. Typically, a videotex service makes available a data base of textual and

graphic "pages" of information which can be accessed over

telephone lines or cable television. Using small keypads,

users retrieve information for display on television receivers

equipped with an adapter. Some services are designed to be

accessed by personal computers. In addition to information

retrieval from a remotely held data base, videotex activities

often offer transactional services through which consumers can

purchase goods and services; messaging capabilities permitting

users to contact each other; automatic alarm and meter reading; games; and other features. Videotex is also known as

"viewdata," particularly in connection with the British

Prestel system. One-way broadcast of information to television receivers is called teletext. While the above is the

generally accepted terminology, there is considerable variation in the use of videotex, viewdata, and teletext.

video disk

A video disk is a device that contains data (audio/video)

recorded on spiral or circular tracks with a lowpower laser.

virtual address space

The virtual address space is the form in which memory is

presented to the software as opposed to the actual location

addresses required by the hardware. With virtual addressing,

programs can be assigned to noncontiguous areas of memory in

relatively small blocks.

VLSI (very large scale integrated) circuits

VLSI (very large scale integrated) circuits are circuits,

equivalent to former large electrical circuits, compressed on

a single small silicon chip.

voice grade channel

A voice grade channel is a channel suitable for the transmission of speech, generally with a frequency range of about 300

to 3000Hz. Such a channel may also be used to transmit

digital data, other analog signals, or facsimile.

330
voice mail

Voice mail involves the electronic storing and forwarding of

voice messages. Messages are sent using a tone push-button

telephone, digitized, and stored in a computerized message

exchange system. To receive a message, a user accesses a private mailbox via a push-button telephone. The computer

then relays an exact recording of the message. Voice mail

systems are generally add-on devices for PABXs and are also

available on a time-sharing basis.

volatile memory

Volatile memory is memory whose contents are lost when power

is removed.

von Neumann type processor

A von Neumann type processor has a CPU which performs operations serially.

wideband

Wideband transmission facilities is a term generally referring

to transmission facilities which are capable of handling

frequency bands greater than those required for voice communications; that is, greater than 3 to 4 KHz.

X.21

X.21 is a bit-oriented data communications protocol, promulgated by CCITT in 1976. X.21 defines a physical "plug"

configuration for the physical connection of data communications devices, and also specifies the procedural (data link)

interface (layers 1 and 2 of the IDS Reference Model for

Networks) . X.21 is a subset of protocol X.25.

X.25

X.25 is an international, three-level protocol for interfacing computers and terminals to public packet-switching

networks worldwide. Developed by the CCITT with the participation of the United States, Canada, Great Britain, France,

and Japan, X.25 includes electrical, link control, and network

interface protocol layers. The physical/electrical interface

follows the X.21 recommendation. The link control level is

compatible with HDLC and can accommodate the BISYNC (binary

synchronous) protocol developed by IBM. The network interface

protocol defines the origination, termination, and use of

virtual circuits which connect host computers and terminals

across the network.

331
*

1^
NBS-n4A I REV. 2-8C)

l^.S. DEPT. OF COMM. BIBLIOGRAPHIC DATA

SHEET (See instructions;

1. PUBLICATION OR

REPORT NO. NBS/SP-500/119

2. Performing Organ. Report No, 3. Publ ication Date

December 1984

4. TITLE AND SUBTITLE Computer Science and Technology

Future Information Technology-1984

Tel ecommuni cati ons

5. AUTHOR(S)

Peg Kay and Patricia Powell, Editors

S. PERFORMING ORGANIZATION (If joint or other than NBS. see in struct/on sj

NATIONAL BUREAU OF STANDARDS

DEPARTMENT OF COMMERCE et al

GAITHERSBURG, MD ?.0899

7. Contract/Grant No. NB80SBCA-0405

8. Type of Report & Period Covered

Final

9, SPONSORING ORGANIZATION NAME AND COMPLETE ADDRESS (Street. City. State, ZIP)

Same as in item 6 above.

10. SUPPLEMENTARY NOTES

Library of Congress Catalog Card Number : 84-601149

I

! Document describes a computer program; SF-185, FlPS Software Summary, is attached.

11. ABSTRACT (A 200-word or less factual summary of most significant information. If document includes a significant

bi bliography or literature survey, mention it here) This document, the second in a series, focuses on telecommunications technology

and related areas in computer oraanizati ons . It contains four orimary parts: the

telecommunications forecast through 1999, three perspectives on the divestiture of

AT&T, a discussion of the General imoacts of technology on comouter security,

and the management implications of the trends in information technology. Additionally, it contains the summary of an industry workshop on this forecast, a brief update of the 1983 forecast, and a glossary of terms. This forecast is a companion to "Future Information Processing Technology - 1983" which contains

fifteen year nrojections of computer hardware and software.

12. KEY WORDS fSix to twelve entries; o/phobetico/ order; capitalize only proper names; and separate key words by semicolons)

computer security: computers; divestiture; management implications of technology;

networks; security of distributed systems; technology forecasting; telecommunications

trends in information technology.

13. AVAILABILITY

|_Xj Unlimited

I

• For Official Distribution. Do Not Release to NTIS

[)^] Order From Superintendent of Documents, U.S. Government Printing Office, Washington, D.C

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Order From National Technical Information Service (NTIS), Springfield, VA. 22161

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