The Irwin Handbook of Telecommunications, 3rd edition
Authors: James Harry Green
Venue:  (1996)

From the Book:As one who has worked in this industry for about a third of the life span of the telephone, I find the rate of technical progress fascinating. Following the invention of the telephone, a few milestones resulted in a major shift in the direction of telecommunications. In 1891, a Kansas City undertaker named Almon B. Strowger invented the first dial-controlled telephone switching machine, which ushered in the beginnings of automation. Lee DeForest's invention of the vacuum tube in 1906 led to repeaters and carrier telephony, which enabled telephone conversations to span continents and oceans. Electronic switching in 1965 near the end of telephone's first century marked a major breakthrough. For the first time, a computer program instead of electromechanical relays and switches controlled calls, and new features could be installed by upgrading a program instead of rewiring the central office. Ironically, at the time the first electronic switching system went into effect, the Bell System still had manual cord boards in operation-Strowger's invention didn't always cost justify itself in rural areas where the telephone exchange could still be operated manually. Before the breakup of the Bell System, telecommunications was in a technology-push situation rather than demand-pull. Most developments originated in the Bell Labs and were released to the field only after they were thoroughly tested. Development cycles of 4 or 5 years were not uncommon. Then in the late 1970s came a fabulous development that is invisible to most people, but which has revolutionized telecommunications: fiber optics. Bell Laboratories did most of the research on fiber and the lasers that make information transferpossible, but other companies rapidly picked up on the technology, and demand exploded. Fiber optics was probably the first real demand-pull product that hit the telecommunications market. Fiber optics is still, by far, the most dynamic and influential of all the telecommunications technologies. In a little more than two decades, strands of fiber have girdled the world and its capacity is practically unlimited. Production equipment can reach speeds of 10 gigabits per second (Gb/s) now, and that is still not the top limit. Dense wavelength division multiplexing divides the medium into 40 different "colors," each capable of carrying a 10-Gb/s signal. Undersea cables have, for all practical purposes, replaced satellites as transcontinental telephone media, but satellites are experiencing a new rebirth with low earth-orbiting vehicles that eliminate the delay inherent in geosynchronous devices. These make it possible to place a telephone call from virtually any place on the face of the earth. New technology has flourished since divestiture, but perhaps a better indicator of the wisdom of the consent decree that broke up the Bell System is the fact that all parties remained dissatisfied. The regional Bell Operating Companies chafed at the long-distance restrictions the agreement imposed upon them. The interexchange carriers (IXCs) complained about access charges, which they deemed excessive, and a host of would-be competitors complained about the local monopoly. Congress entered the picture and, responding to multiple pressures, created the Telecommunications Act of 1996. The act uses both carrots and sticks to reshape the local telephone market from government regulation to competition. At the time `this is written, the Telecommunications Act has resulted in few of its intended outcomes. Business subscribers in larger cities all have options for local dial tone provided they purchase enough lines to make it worth the while of competitive local exchange carriers (CLECs) to serve them. Few residences have a choice of telephone service, but they are still saddled with increased costs. The Telecommunications Act requires carriers to contribute to a Universal Service Fund to subsidize rural and low-income consumers. Congress decided that schools, libraries, and rural health care organizations were also entitled to subsidies. The carriers passed their increased costs through to consumers in the form of surcharges and directly allocated costs, even while they were enjoying reduced access charges. The act required that local telephone numbers be portable between carriers, the costs of which are being pushed directly onto consumers who don't even enjoy the possibility of reduced rates from competitive carriers. The impact of these regulatory fiats has been negative for most consumers even though it may prove beneficial in the long run. Mergers and acquisitions have changed the landscape in ways that we can't begin to grasp yet. The seven regional Bell Operating Companies have dwindled to four-probably three by the time you read this. GTE will merge into Bell Atlantic, which already has absorbed Nynex. Southwestern Bell has assimilated Pacific Telesis and Ameritech. US West announced its intention to join in a "union of equals" with Global Crossings, a Bermuda-based firm that has a corporate history stretching all the way back to 1997. Global Crossings has already acquired Frontier Communications and the undersea cable operations of Cable and Wireless, a British firm. Before the deal could be consummated, Qwest, another newcomer to the industry, offered a more attractive proposition. As this is written, regulatory approval is still pending. After flirting briefly with British Telecom, MCI, which was a major player in triggering the collapse of the Bell System, allowed itself to be acquired by WorldCom, another corporate newcomer. The MCI WorldCom combination, which is the second largest IXC in the United States, is attempting to get approval to aquire No. 3 Sprint. AT&T, which fought to keep its manufacturing and customer premises equipment business intact at divestiture and then launched a hostile takeover of NCR, suddenly dismantled its empire of its own volition. After setting free NCR and spinning off its manufacturing operations into Lucent Technologies, AT&T then set about to acquire Teleport Communications Group, a competitive local exchange carrier, and TCI and Media One, two of the country's largest cable providers, with the announced intention of delivering Internet and telephone services over cable. On the European continent, Deutsche Telekom and Telecom Italia have joined forces. Will all of these mergers and acquisitions work to the benefit of the users? The room for doubt is more than ample. Much has been written about the convergence of voice and data. Accompanied by loud fanfare, products are beginning to appear, but the technology is yet in its infancy. A host of other products is appearing on the horizon and potentially will further alter the shape of telecommunications, but it's too early to tell. Wireless has the potential to break some of the stranglehold that the incumbent local exchange carriers (ILECs) have by virtue of their cable plant. At the same time, the ILECs are attempting to deploy a variety of digital subscriber line techniques to relieve some of the bottlenecks users experience in accessing the Internet. Cable companies, led by AT&T's acquisition of TCI, hope to grab some of the market for both dial tone and Internet access as they upgrade their older coaxial systems to fiber optics. Another dramatic development was the cell phone, which happened about the same time as fiber optics. The development cycle of this product was astounding: the concept was born in 1947-before it was technically feasible. The Bell System demonstrated its feasibility in the 1970s, but the FCC camped on it for years, reluctant to grant the airwaves to a monopoly. Finally, they settled on a duopoly. Half of the frequency spectrum was awarded to the traditional wireline carrier in each market. The other license was granted to competitors for the asking. As cellular hit the market, demand exploded and the cost of cell phones dropped, but the legislated competition didn't do much else for the consumer. The FCC learned from its mistakes and divided the market more intelligently with personal communications services (PCS). Instead of a duopoly, the band is divided into six segments, and the FCC auctioned off the spectrum. The Internet itself is nothing short of phenomenal, and it is just getting started. It is sparking not only information and entertainment pastimes, it is also fueling a whole new way of doing business, and offering ways for companies to link themselves together by building secure tunnels through a chaotic and insecure network. All of this makes plenty of grist for a book that has the aim of helping people to make sense of the confusion. With the possible exception of health care, no other industry in the world has undergone such a radical and wrenching change in the past 20 years. And more is yet to come.