Telephone Industry, Technology of

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The public switched telephone network (PSTN) in the United States operated as a virtual monopoly from 1877 until the government-sanctioned breakup of American Telephone & Telegraph (AT&T) in 1984. Since that time, deregulation and technological advances have given rise to an array of competing wired and wireless telephone technologies. The most significant factor driving these changes has been the shift from analog to digital technologies.

On a March evening in 1876, Alexander Graham Bell learned in his Boston laboratory that his idea for conveying sounds through a wire worked. Bell's crude system harnessed the acoustical energy of speech by using sound waves to vibrate a thin diaphragm attached to an electrically charged wire that was dipped into an acidic solution. As the vibrations caused the depth of the wire to vary, the electrical resistance of the wire varied in proportion to the wire's depth. At the other end of the wire, the process was reversed. The changing electrical current caused a diaphragm to vibrate, enabling the telephone receiver to replicate the sounds of human speech. Bell's words, "Mr. Watson, come here, I want you," were heard in another room by his assistant. In July 1877, the first Bell Telephone Company was formed, launching a new industry and a new communication technology. By the turn of the century (only twenty-three years later), the company had been renamed American Telephone & Telegraph (AT&T), and almost every element that would be important during the first one hundred years of telephone technology had already been developed by AT&T's Bell System.

The Telephone Network

The basic telephone technology of the United States, despite many refinements, is still known by the acronym POTS (plain old telephone service). The telephone instrument combines a microphone, a speaker or earphone, a ringer, and a touch-tone keypad or rotary dial (on older devices). A call is initiated when the handset (combining the microphone and earphone) is lifted, thereby activating the circuit. The destination telephone number is "dialed" by pressing a sequence of numbers on the keypad, thereby generating distinct tones for each number pressed. The older rotary-dial device generated a series of electrical pulses that corresponded to each number that was dialed.

At the local level, telephone subscribers (residential and business) are served by a local-exchange carrier (LEC). Each telephone in "the local loop" is served by a separate line that is connected to the central office of the LEC, giving the local telephone network a star configuration. When a subscriber "dials" the number of another local customer, the signal travels from the originating location to the central office, where it is switched (connected) to the line that is serving the second customer. An electrical signal is sent through the line to activate the ringer at that location. The talking path is created when the called party answers. In the early days of telephone service, switching was done manually by plugging and unplugging wire connectors. By the 1920s, mechanical switches were in use, and by the 1950s, electromechanical switches were standard. Modern switching uses computer technology. Local exchanges are arranged by sets of telephone numbers that are designated by three-digit prefixes. Each exchange includes up to ten thousand separate lines, and a central office can handle the calls of several exchanges.

Calls to another community are routed from the local central office through a series of higher-order central offices. Technically, the central office that serves individual subscribers is known as a class 5 "end office." Class 5 offices are connected by high-capacity trunk lines to class 4 offices, and most of the telephone traffic above the local class 5 end-office level is carried by long distance, or interexchange carriers (IXCs). Long-distance calls (initiated by dialing 0 or 1) are routed by the central office switch to the trunk line that is connected to the chosen IXC's point-of-presence (POP), from which the call is further routed to the central office that serves the receiving customer. The territory of each LEC is divided into local access and transport areas (LATAs) and includes a number of local-exchange central offices. Long-distance calls within the LATA (intra-LATA calls) may be carried by the LEC. However, an increasing percentage of intra-LATA traffic, and all inter-LATA calls, are carried by interexchange carriers.

The same computer technology that routes telephone calls also handles the complicated process of measuring the length (in time) of calls and determining both the charges to the customer and the amount of payment to the local and interexchange carriers that were involved in completing the call.

Transmission Technologies

According to the Federal Communications Commission (1999), 82 percent of telephone subscribers are still linked to the PSTN by a twisted-pair copper wire, the oldest form of wireline telephone interconnection. At one time, almost all telephone lines consisted of bundles of copper pairs, and the capacity of a circuit was limited to the number of pairs. As the telephone network and the amount of long-distance telephone traffic grew, Bell Labs perfected improved signal-carrying technologies. Coaxial cable, developed in the 1940s, is composed of a single strand of copper wire (which carries the signals) surrounded by foam insulation with a conductive outer shield that prevents signal leakage. The three concentric layers of the cable are wrapped in an insulating material. "Coax" enabled tremendous increases in the capacity of terrestrial and undersea cables. In 1947, AT&T began using microwave radio transmission technology to connect distant points in its network and operated a coast-to-coast microwave link by 1951.

By the 1960s, digital compression technologies enabled telephone engineers to multiplex (i.e., send) increasing numbers of calls over a single wired or wireless circuit. By 1970, geostationary satellites had become important elements of the telephone network infrastructure. The first generation of communications satellites could carry 240 separate telephone calls, but by 1998, capacity was 22,500 voice circuits that digital compression boosted to the equivalent of 112,500 circuits. Yet, as important as coaxial cable and satellites have been, the most significant transmission technology for the future appears to be optical fiber.

Optical fiber cable is composed of bundles of flexible hair-thin strands of glass. The signals in an optical fiber are light waves generated by laser light, which provides a transmission medium with incredible speed (the speed of light) and signal-carrying capacity. In addition, fiber is immune to electrical interference. The telephone network has been undergoing a steady conversion to optical fiber since the early 1980s. Debate continues with regard to the extension of optical fiber from trunk lines into the local loop. The cost of providing fiber to every home is considered to be prohibitive, and alternative approaches such as fiber-to-the-neighborhood or fiber-to-the-curb (with subscribers being connected by copper wire) are more likely.

The Digital Revolution

A shift from analog to digital technologies has been the strongest force behind changes in electronic communications. Analog audio signals vary continuously in frequency (pitch) and amplitude (loudness). For example, in Bell's first telephone, the electrical signal varied continuously in response to the movement of a wire attached to a diaphragm that was vibrated by sound waves. The sounds heard through the receiver were analogous to Bell's original speech. A digital signal processes sound discontinuously by sampling or measuring the source thousands of times per second. Each discrete measurement is in the form of binary code that can have only two values, 0 or 1, corresponding to the presence or absence of some quantity. Digital signals retain greater fidelity to the original sound because they are less subject to interference and other forms of signal degradation that are common to analog technologies. Starting with the development of electronic computers in the 1940s, all forms of information have become digital. Furthermore, since all digital signals are alike, computer data, digital audio, and digital video signals exist in the same binary code. The superiority of digital technology over analog technology provided a strong incentive to convert the telephone network to digital. However, competitive forces unleashed by the breakup of the Bell System in 1984 and the Telecommunications Act of 1996 greatly accelerated the process.

By the 1970s, computer technology had diffused from large institutions to small businesses and even households, generating increasing volumes of computer data. With its vast network, the telephone industry was positioned to play a key role in the movement of data and began offering separate leased lines optimized to carry digital data at high speeds. As Wilson Dizard (1989) explains, telephone companies first provided integrated services digital network (ISDN) lines that combined voice, data, and other services within one circuit at 64 kbs. (A bit, or binary digit, is the smallest unit of digital data. A kilobit is 1,000 bits, and 64 kbs is a data rate of 64,000 bits per second.) Even faster and more expensive, leased T-1 lines could speed data at 1.5 Mbs (million bits per second).

The growth of the Internet after 1994 expanded the volume of data as small businesses and individuals went online in increasing numbers. By the late 1990s, data traffic was increasing faster than voice, and it began to exceed the volume of voice traffic on telecommunication networks. This trend posed both competitive and technological challenges to the PSTN that was built and optimized to carry a limited range of the frequencies of human speech, not data.

The most significant network technology to emerge in the digital era has been packet switching. The PSTN largely uses circuit switching, a technology that causes each call to use the full capacity of a telephone circuit for the entire duration of the call. Even during pauses, the full circuit is in use, although no information is being transferred. With packet switching, digital data is packaged into packets of data that also contain information identifying their destination, source, order, and size. At their intended destination, computer software extracts the data from the packets and reconverts it into the original form (sound, text, graphics, or even video). Packet switching uses networks more efficiently because data packets from many different sources can be sent through the same circuit at the same time, using the entire bandwidth (data capacity) of that circuit.

In the competitive environment of the 1990s, a new type of telephone company emerged. Competitive local-exchange carriers (CLECs) began to offer services to businesses using a combination of technologies. Initially, CLECs leased telephone lines from older telephone companies, now called incumbent local-exchange carriers (ILECs). According to Thomas Baldwin, D. Stevens McVoy, and Charles Steinfeld (1996), the ISDN service offered by ILECs was too slow for large businesses, and T-1 lines were too expensive for all but the biggest firms. CLECs were able to capitalize on the explosive growth in data traffic and build both new high-speed, high-capacity, packet-switched networks to meet the data needs of businesses and broadband data backbone services capable of speeds of 155 Mbs to 2.4 Gbs (billion bits per second).

Competition and technology, then, have added a public switched data network (PSDN) that now operates alongside the traditional public switched telephone network (PSTN). Data networks typically use packet-switching technology, but the technologies of the PSTN and PSDN do overlap. For example, asynchronous transfer mode (ATM), a high-performance switching and multiplexing technology, is used by both. ATM employs data packets of fixed length so that time-critical data (such as voice or video) is not delayed as large data packets are processed. The ILECs are attempting to retain a share of the data market by offering digital subscriber line (DSL) service. DSL technologies use copper wire, providing high-speed data services to residences and small businesses. However, the technology is limited to a three and one-half mile radius of the telephone company's central office.

The cable television industry is also developing CLEC status. Although cable technology was designed to carry one-way signals from a central location to a customer's residence, cable systems use coaxial cable, a connection with substantial signal-carrying capacity. Similar to telephone companies, cable franchises are rebuilding their networks with optical fiber in addition to coax, as they reengineer their systems to carry two-way signals in order to provide telephone service and Internet access in addition to traditional cable television.

Wireless Telephony

Wireless telephony uses low-power ultrahigh-frequency (UHF) radio signals within small areas (cells) that may be as small as a few city blocks or as large as a twenty-mile radius in rural areas. At the center of each cell is a base-station tower, which transmits/receives the signals of up to four hundred separate voice channels. As users of wireless telephones move from one cell to another, a central switching computer "hands off" the calls of roaming subscribers to the tower in the next cell. A key device in wireless telephony is the mobile telephone switching office (MTSO), which detects calls placed by subscribers, assigns each call to a voice channel, and facilitates the hand-off of calls between cells. In addition, the MTSO interconnects all of the towers in the service area and links the wireless system to the terrestrial PSTN.

Modern wireless telephone service began with analog cellular telephony in the early 1980s and experienced explosive growth in the 1990s, when digital PCS (personal communication services) emerged. Cellular services operate at 800 MHz, while digital PCS technology uses a frequency of 1.9 GHz. In the United States, policymakers mandated that each market would be served by two cellular franchises (with one awarded to the local wireline service) and up to six PCS franchises. Competition quickly reduced the prices of both telephones and service, and in many markets, the price of wireless service is comparable to that of wireline service

As Susan O'Keefe (1998) notes, after the introduction of digital PCS, most analog cellular systems converted to digital technology, enabling cellular firms to offer most of the services provided by PCS. Increasingly, all wireless services integrate voice and data (including Internet) services, in addition to providing voice mail, fax, encryption, and advanced paging and telephony services. A remaining technical issue for wireless telephony is to resolve the presence of four different technical standards in use by wireless firms around the world.

The desire to provide a global "anywhere, anytime" telecommunications service has led several entrepreneurs to offer mobile satellite services (MSS) using low Earth orbit (LEO), medium Earth orbit (MEO), and geostationary (GEO) communications satellites. LEOs and MEOs orbit faster than Earth rotates, necessitating a network of as many as 288 satellites distributed around the globe. The technology is somewhat like that of cellular telephony, except that for MSS services, the network grid moves instead of the subscriber. As the satellite handling a call begins to move out of range of the user's satellite telephone, the circuit is passed to another, closer satellite.

The Future

There will be continuing competition among telecommunication technologies in the twenty-first century. Sam Masud (1999) reports that telephone industry seers predict the eventual shift of most voice traffic to the newer data networks, as networks continue to develop increased bandwidth and speed. Future telecommunications networks will be broadband in nature, and they will carry voice, data, and video. Wireless services are also expected to develop broadband capabilities and become increasingly competitive in the full range of services that are offered by their terrestrial competitors.

See also:Bell, Alexander Graham; Cable Television; Digital Communication; Federal Communications Commission; Internet and the World Wide Web; Satellites, Communication; Telecommunications, Wireless; Telecommunications Act of 1996; Telephone Industry; Telephone Industry, History of; Telephone Industry, Regulation of.


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David H. Goff