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Data networks for the most part are digital, and have been so for years. Data networks certainly are being upgraded to provide higher-speed services over fiber optic backbones. Additionally, new switching technology is being put in place to support Frame Relay, SMDS, and ATM networking.

CATV networks, also, are experiencing significant upgrade. The old one-way coaxial cable distribution systems are being converted to two-way. The larger CATV providers in many cases are replacing the old analog coaxial cable distribution systems with analog fiber, upgradeable to digital fiber. While the coax premise connection remains in place, the effect of a hybrid fiber/coax system is significant in terms of bandwidth and, therefore, deliverable applications.

Terminal Technologies

Terminal devices are evolving at a rapid pace, as well. Multimedia PCs are widely available to support synchronized data, video, image, and audio applications. While multimedia is useful for games, education, and WWW access, it largely remains a standalone application for PCs. True multimedia over the WAN awaits the deployment of broadband network technologies and cost-effective service offerings.

Driving Forces on the Superhighway

The evolution of the network moved at a relatively slow pace for the first hundred years. With the exception of Step-by-Step (SxS) electromechanical switches and rotary dial telephones, little in the way of technology was introduced for the first fifty years. Crossbar (Xbar) switching (1937), Direct Distance Dialing (DDD) (1950s) and tone-dialing (1960s) were considered to be absolutely revolutionary. The pace accelerated (relatively speaking) with DDS, Switched 56 Kbps, and T-carrier in the 1970s and 1980s. Toward the mid-1980s, the pace picked up considerably, and ISDN deployment began to make an impact in the early 1990s. There exists a number of forces that are driving the development of the Information Superhighway. Those forces include deregulation, privatization and competition, any applications, as well as technology.

Deregulation and Competition

Deregulation, perhaps, was the primary driving force. Beginning with the FCC’s Carterphone decision in 1968, end users were presented with a wide variety of options for terminal equipment. The Modified Final Judgement (MFJ), which took full effect on January 1,1984, was the next step, dictating the breakup of the AT&T Bell System and ending what had constituted a virtual monopoly over communications in the United States, from R&D to network equipment manufacturing to service delivery. Competition developed as a result of the actions of the FCC and the federal courts. The level of competition will intensify by orders of magnitude once the Telecommunications Act of 1996 (Chapter 16) takes full effect.

CPE (Customer Premise Equipment) and long distance competition developed quickly after the MFJ took effect. CPE competition is widespread, with literally hundreds or even thousands of manufacturers competing for the voice, data, video and image systems markets. Competition for the long distance market is intense in the United States, with well over 400 facilities-based carriers vying for the InterLATA market. Some level of IntraLATA competition exists in several states, including California, which has opened (January 1996) the LATA to full competition. The Telecommunications Act of 1996 (Chapter 16) will increase that level of competition, nationwide.

Local service competition exists, at some level, in a number of U.S. states. Alternative Access Vendors (AAVs) provide high-speed fiber optic facilities in major industrial and commercial areas, largely for the purpose of providing direct access to the IXCs, bypassing the Local Exchange Carriers (LECs). The same AAVs also provide local dialtone in a number of states, although on a limited basis. Such service generally is Centrex-like, using DID numbers rented in blocks from the serving telephone company. As there is no portability of local numbers, the user organization must change telephone numbers in order to exercise this option. Again, the Telecommunications Act of 1996 has opened the floodgates to local competition, virtually without restriction.

Local loop competition, as such, has not existed to any great extent in the United States or other developed nations. The primary exception, of course, has been that of the AAVs. CATV providers are providing data communications services, including Internet access in a few areas. These limited trials likely will expand rapidly as the CATV networks are upgraded to provide two-way service. Ultimately, both CATV providers and electric utilities are likely to offer local loops and local service in competition with the incumbent telecommunications carriers. Wireless Local Loop (WLL) technology will introduce competition from the providers of Personal Communications Service (PCS). AT&T/McCaw, AirTouch, Bell Atlantic Mobile Services, and other cellular carriers are in a strong position in this regard. The Telecommunications Act of 1996, once again, removes most restrictions to competition in the local loop.

Applications

Applications, clearly, are the primary force driving the concept of the Information Superhighway. Users have developed a real appetite for bandwidth-intensive applications, lacking only the network infrastructure to support them. The capability of a single provider to deliver a full range of voice, data, video, and image services across the full spectrum of meaningful applications is a compelling feature of a converged network. Basic telecommunications applications certainly must be supported, including voice and data communications, and Internet access. A convergence scenario also adds TV to the basic service mix, resulting in the blending of voice, data, and entertainment applications. The more exciting applications include videoconferencing, distance-delivered learning, music- and video-on-demand, home shopping, publishing, and integrated messaging.

Voice Communications

Voice communications, including both the provisioning of local loops and the delivery of local service, certainly is part and parcel of convergence. While local service is not stunningly profitable at this point, competition and relaxation of regulation over local service rates are likely to go hand-in-hand. Additionally, the successful local service provider will have a competitive edge in the highly profitable long distance market. Bundled with other voice services (e.g., enhanced custom calling features), such a package could be made to be most attractive and highly profitable.


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