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Arizona Telecommunications & Information Council (ATIC)
Multitenant Building Telecommunications Access Study
Evolving Telecommunications Landscape-- Rise of the Internet and the Great Convergence

The Evolving Telecommunications Landscape

Basics of Telecommunications Connectivity:

The traditional distinctions between different media such as telephone, broadcasting and cable have already begun to break down. By 2009, they will have virtually disappeared. Instead, there will be a range of providers competing to transport users' bits along with a wide range of intelligent services. Given the fact that essentially all information is transmitted and stored in bits, all of the different media (telephone and cable, wired and wireless) will be competing with one another to see who can provide customers with the fastest, most useful, most efficient, most reliable and most affordable services. Companies will compete to handle the transport of all of a customer's bits that will carry voice, data and video. Many of the old, familiar content providers will still exist to provide information and entertainment, while new companies will emerge to provide innovative content and services.
 -- From The New Global Telecommunications Industry & Consumers, Projecting the Telecommunications Industry in 2009 by Richard Adler, National Association of Regulatory Utility Commissioners (NARUC)

The communications industry has experienced dramatic growth and change during the last five years. Deregulation driven by The Telecommunications Act of 1996 combined with continual advances in technology and market forces has started a massive convergence of telecommunications services and merging of providers. The mantra of today's telecommunications marketplace and consumers is for "more, better, faster, cheaper." While the telecommunications market remains driven by technological advances, consumer demand, massive infrastructure investments, and mega-mergers, it is further complicated and sometimes hindered by regulation, deregulation, litigation, confusion, and obfuscation. Deregulation shall continue to progress in fits and starts, but not without significant legal issues and challenges. All the time, the communications industry sector remains a significant and fast growing segment of the U.S. economy as detailed in the table that follows.

Communications Sector of the U.S. Economy (in $ Billions)
  1993 1994 1995 1996 1997 1998
Communications Equipment - 60.8 75.7 94.2 106.4 120.4
Cable 29.6 30.3 33.9 38.5 43.7 *
Radio & TV 30.3 32.9 39.2 39.2 42.8 *
Wireless 10.2 14.2 18.6 25.9 33.0 *
Wireline 160.0 169.5 180.2 196.2 198.1 *
Total Communications Services 230.1 246.9 271.9 299.8 317.6 395.0
 -- (Source: FCC Trends Report, Note: * 1998 Communications Services Estimated)

Plain Old Telephone Service (POTS):

Virtually all of us have grown up with basic phone service. You just pick up the receiver, listen for the dial tone, and call the number of the party you're seeking. The true complexity of the telephone network is largely hidden from us, but a lot of cable and facilities go into supporting what now seems like such a simple task. Except for some remote rural areas, an expansive Public Switched Telephone Network (PSTN) divided into 196 Local Access and Transport Areas (LATAs) covers the entire country with voice telephony services from Local Exchange Carriers (LECs). Reaching well over 95% of U.S. households, basic voice telephony remains the lowest common denominator for personal communications services.

Federal and state Universal Service Funds (USF) and State Public Utility Commissions (PUCs) oversight keep residential rates low by allowing them to be subsidized by higher business rates and long distance surcharges. Additionally, rural areas are subsidized by the USFs to approximately equalize their cost with urban telephone line rates. Many homes now utilize multiple voice telephone lines to support personal and business voice use as well as analog modems and fax machines. Local service remains unmetered and its usage unlimited within a defined region. However, modem use has been driving call length averages higher, leading to some circuit management issues. Long distance service allows us to connect around the country and the world at an ever-decreasing cost, now as low as pennies per minute, with further declines expected with voice carried over Internet Protocol (IP).

Fax machines and fax-enabled computers use special protocols that can send or receive copies of several facsimile document pages per minute operating over standard phone lines, though they tie up the phone line while doing so. These same phone lines can also support personal computers (PCs) and larger computer systems connecting with modems at low speed for transferring data, running remote computer applications, and accessing the Internet. Today's most capable analog modems run at a maximum of 33.6 Kbps upstream (data you send) and 56 Kbps downstream (data you receive). These internal or external interface circuits commonly meet specifications known as the International Telecommunication Union (ITU - V.34 and V.90 standards, respond to an AT command set (from the Hayes ATtention command), support fax functions, and may integrate voice streams and special telephone line functions as well. The actual data speed achieved will vary significantly (YMMV - Your Mileage May Vary) and is dependent on the quality of local phone lines, the local loop, as well as the capabilities of the systems being connecting to. Phone modems provide the most common data connection at the lowest cost for most of today's web surfers, but also provides the lowest data speed. The travelling computer or information appliance remote user can almost always find a phone line (RJ-11 jack) to utilize and "connect" to.

Integrated Services Digital Network (ISDN), Frame Relay, T1-T3, etc.:

Existing copper unshielded twisted pair (UTP) in the local phone loop may be used to carry a variety of higher-speed digital data services. Frame relay circuits provide 56 or 64 Kbps and more, but are mostly used for business locations. T-1 (Trunk Level 1 or DS-1 at 1.544 Mbps) and T-3 (Trunk Level 3 or DS-3 at 44.736 Mbps, equivalent to 28 T-1s) service offerings can also be provided over special leased circuits and are commonly used by enterprises to carry consolidated voice and data traffic, directly connect between remote facilities, and get their high-speed connection to the Internet.

Integrated Services Digital Network (ISDN) was the first attempt at a popular high data rate service that could serve businesses and residences, but its limited availability, high cost of service, and difficulty to install restricted its growth. An ISDN Basic Rate Interface (BRI) provides two data channels of 64 Kbps each for 128 Kbps data rates along with a 16 Kbps data control channel (2B+D). A Primary Rate Interface (PRI) circuit provides multiple BRI channels (23B+D in North America at 1.544 Mbps or 30B+D in Europe and elsewhere at 2.048 Mbps) for telephone switching and voice processing applications. Though it is able to achieve medium speeds and is still used for some business and residential applications such as Internet access, videoconferencing, and retail Point of Sales (POS), it is being largely superceded on the phone network by high-speed Digital Subscriber Line services.

Digital Subscriber Line (xDSL):

Digital Subscriber Line (DSL) technology allows for ever higher speed connections between a residence or workplace and the telephone company's Central Office (CO) or nearest Point of Presence (POP), perhaps a remote Digital Subscriber Line Access Multiplexer (DSLAM). From there the data traffic can be routed directly to another location across perhaps a number of carriers' backbones and networks or through an Internet Service Provider (ISP) to the Internet for worldwide net access. There are many flavors of DSL such as Asynchronous Digital Subscriber Line (ADSL), Rate Adaptive Digital Subscriber Line (RADSL), and Very high-speed or Video Digital Subscriber Line (VDSL), which is why the general abbreviation is commonly given as xDSL, with the x representing the many types available.

US WEST ( had the first commercial rollout of DSL services anywhere in the world here in the Phoenix area in October, 1997. Today they offer RADSL to over half the locations in the Valley with data rates from 256 Kbps each way all the way up to 1 Mbps upstream and 7 Mbps downstream at various price points. Since this service is not available in all areas due to distance from telephone facilities, line quality, and other factors, consumers must check with US WEST and competitive providers to determine if they are in an active service area and what packages and pricing are offered.

ILECs, like the cable companies, are deploying fiber optic cables to each neighborhood (Fiber To The Neighborhood - FTTN) to extend the capacity and reach of DSL services and to be able to deliver television programming over legacy last-mile copper wiring. Under the Telecom Act of 1996, which requires local phone companies to "unbundle" their local loop at some seven logical connection points. Competitive Local Exchange Carriers (CLECs) can also provide xDSL services by leasing lines to business and residential sites, provisioning them with DSL modems at each end often collocating equipment at the ILECs' Central Office (CO) switching centers or other Points of Presence (POPs). As ILECs further deploy DSL and gain experience with it, as unbundling lets competitors into their facilities and local loops, and as xDSL technologies standardize and mature, DSL will certain prove a strong last-mile competitor for broadband and converged telecommunications services.

A new DSL standard known as G.lite will allow simpler and cheaper DSL connections, operating up to 1 Mbps. The end user will treat it more like a phone modem of today that can be self-installed or it will come already built into modern computers. In general, DSL service shares a single phone circuit with regular POTS voice service and make quite efficient use of existing telephone lines and resources. The FCC recently ruled that ILECs must further sub-divide their networks and give CLECs access to just the high-frequency portions of local loops on an incremental cost basis, turning the sub-loop into a new Unbundled Network Element (UNE). The ability to provide voice telephony from the ILEC while leasing the high-frequency bandwidth will enable the CLECs and their customers to line-share carrying converged data services and applications. This will further accelerate the deployment and utilization of xDSL technology for last-mile solutions from an increasing diversity of Telecommunications Service Providers (TSPs).

Cable Modems and Cable System Operators:

Cable television companies have the only other relatively complete network of wire in the ground reaching residences and most business locations. Large cable companies with many urban markets are known as Multiple System Operators (MSOs) and have been trading or acquiring outright other providers' customers to build market size and number of subscribers in specific geographic regions or Cluster Markets that can be more cost effectively served. Cox Communications has created clusters serving the vast majority of the Phoenix ( and Tucson and Southern Arizona ( area markets, thus reaching the majority of Arizona cable television consumers. An assortment of over a hundred local cable system operators serve small areas of the state or even single locations, such as mobile home parks and apartment complexes. These smaller cable companies receive licensed satellite or other television feeds, but may include only limited local content and usually carry must less breadth of channels and available television content. The smallest operators are not necessarily subject to the full range of regulation and scrutiny that the more major cable operators experience.

The cable operators' local Hybrid Fiber Coax (HFC) networks increasingly integrate fiber optic cabling and equipment along with their shielded coaxial last-mile cable. MSOs traditionally delivered only entertainment television programming, but with their enormous investments in upgrading there regional networks for broader bandwidth and bi-directional transmissions, the cable companies can now deliver high-speed Internet access over cable modems, with each neighborhood sharing a 10 Mbps (and soon to be 27 Mbps) connection. Since everyone isn't accessing the Internet at once, effective performance is usually from 1 to 3 Mbps download speed for each user. Cable operators monitor data traffic and can create neighborhood sub-loops or even multiple digital communication channels to relieve any data congestion. Upload speeds may be limited by network design or managed and price-tiered based on the providers' business and market models.

Cox Communications' ( predecessor, Dimension Cable, developed and operated one of the first large-scale experiments globally of a Metropolitan Area Network (MAN) running on a HFC network here in Phoenix, AZ in the early 1990's, calling it ECnet or ValleyNet. They partnered with Arizona State University's (ASU) Goldwater Center for Manufacturing Excellence, Motorola, and Digital Equipment Corporation (DEC, now part of Compaq Computers) to upgrade portions of the regional cable distribution network and run telework and concurrent engineering trials with early, proprietary cable modems. Today, more high-speed Internet access in this country is delivered to consumers over similar cable modems and networks, than by any other means. As with DSL, you must check with your local telecommunication service provider(s) to determine if you can get high-speed data services today to your location or what the projected availability is scheduled to be.

Along with the new data services, the cable companies are also delivering enhanced digital television and competitive local and long-distance phone service. New standards will allow the next generation of cable modems meeting Data Over Cable Service Interface Specification (DOCSIS) standards (see CableLabs - to be bought "off-the-shelf" at retail stores and installed and configured by end users. This will contribute to lower installation and operating costs leading to an even broader market adoption of such services. Additionally, this next generation of set-top boxes will add convergence-driven functionality for e-mail, web surfing, teleconferencing, and other advanced applications and content streams. Most MSOs have formed exclusive alliances with companies such as Excite@Home or RoadRunner to provide Internet services to their subscribers. Over the next few years, the cable modem market will likely open up to additional competitive Internet Service Providers (ISPs), further influenced and impacted by the ongoing merger mania in the telecom industry. For more information see the earlier section of this study, The Other Open Access/Forced Access Issue - ISP over Cable.

Cable system operators face significant challenges for market share and subscribers in their core competency arena of delivering entertainment television from competitive entrants such as Satellite Master Antenna Television (SMATV) providers, Direct Broadcast Satellite (DBS), terrestrial fixed wireless broadband broadcasting (such as Peoples ChoiceTV over MMDS in Phoenix and Tucson), ILECs providing video over xDSL, and increasingly from rich content delivery on-demand or multicast over the Internet. Further, cable television providers must adapt, reengineer, and invest in ever-higher performance digital television standards, formats, and platforms, including High Definition Television (HDTV) and beyond. They must also develop and integrate new services such as Video on Demand (VoD) to constantly increase subscribers' television viewing choices and flexibility. Cable operators are also beginning to exploit their extensive metropolitan fiber rings and network to deliver volume data business services.

On top of that the FCC, acting in concert with other government entities, and in accordance with their mandates and the public interest, enforces "must carry" rules for cable concerning all local broadcast stations, mandates children and public interest programming, and maintains content rating systems. Cable television providers are then regulated by each municipality they serve under licenses or franchise agreements and renegotiate for taxes and fees, customer services, content selections, Public Education Government (PEG) channels production and distribution, and possible in-kind services in each contract cycle, usually from 5 to 15 years in duration. However, their newer voice and data services may fall outside current municipal agreements and cable companies' traditional regulatory oversight may be further fragmented across various jurisdictional entities, leading to a confusing and complex new era for cable system operators.

Fixed Wireless Access:

Local Multipoint Distribution Systems (LMDS at 27.5 - 31 GHz), Multipoint Multichannel Distribution Services (MMDS - 2.5 - 2.7 GHz), and Digital Microwave (24 GHz, 28 GHz, 38 GHz), among other licensed and unlicensed spectrum can deliver wireless cable television content as well as high-speed data and Internet services. Wireless CLECs such as ART, NextLink, Teligent, and WinStar commonly utilize terrestrial point-to-point or point-to-multipoint microwave links to deliver broadband capabilities and a variety of services to volume business customers. Usually external antennas are mounted on rooftops or walls and pointed at a wireless providers' remote facility, though line-of-site may not be required due to system design or use of multi-path. Increasingly, transmissions will be able to penetrate buildings' exterior walls to reach fixed antenna inside wiring closets, at workstations, and as part of portable devices, likely beyond the control of building owners. Also, in-building and short-haul wireless Local Area Networks (LANs) will be more commonly deployed, enabling roaming and collaborative communications across the modern enterprise, be it in multitenant business environments or across corporate, educational, and government campuses and complexes. Even residential consumers will deploy wireless home LANs to connect their various computers and smart appliances.

Peoples Choice TV's SpeedChoice MMDS service covers most of the Phoenix and Tucson markets from just a few transmission towers. Consumers can access the Internet wirelessly with download speeds of 1 Mbps using a small eight-inch dish mounted on their homes and businesses. Though the return (upload) speeds had been limited to 33.6 Kbps by the need to use a conventional phone modem, the recent introduction of bi-directional wireless capabilities can free up the phone line and raise the upload speed significantly. With this technology, all areas within line-of-sight of the antenna sites can subscribe to these services, though terrain, landscaping, and buildings can block availability. Again, consumers must check with the local providers regarding their location and have a site survey performed if necessary to confirm serviceability of their location.

Similar fixed wireless technologies known as Wireless Local Loop (WLL) can provide telephone and data services to residents, especially in rural and remote underserved areas. For example, Mountain Telecommunications Inc. (MTI) has a tower currently servicing the Salt River Pima-Maricopa Indian Community (SRP-MIC) from Scottsdale and plans to add additional facilities to serve other underserved Arizona communities before long. Additionally, an explosion of wireless investment in frequency allocations and facilities will make services such as these and others more widely available and increasingly competitive.

Mobile Wireless Access:

Today, tens of millions of Americans enjoy the mobile connectivity of a cellular and Personal Communications System (PCS) wireless handset for voice telephony. These services rely on an extensive network of cellular radio antennas placed throughout urban areas and along highway routes. Geographic service coverage may vary significantly by provider and should be considered along with rate plans and options when selecting a service. In general, these networks can only be used for low-speed data connectivity for mobile devices such as handheld and laptop computers, while requiring special data interfaces and connections. With as many as eight service providers in each major market, fees for use have steadily declined and flat-rate subscription plans now bundle popular features and hundreds of air time minutes.

Over the next few years broadband mobile wireless services will be perfected and deployed. Today's cellular and PCS wireless networks will migrate their data access to higher-speed Third Generation (3G) performance levels, reaching 384 Kbps and faster. Consumers will increasingly access their e-mail and browse the web from smart mobile devices or information appliances, integrating standard voice telephony with data access capabilities. Wireless Local Area Networks (WLANs) will cover entire buildings, complexes, and campuses to enable roaming workplace access to resources. Personal Area Networks (PANs) will connect individuals and their personal information appliances to other individuals in close proximity and to nearby computer systems and peripherals. Bluetooth protocol devices, operating at 2.4 GHz in the ISM (Industrial, Scientific & Medical) Band and supported by a widespread industry coalition, will dynamically form impromptu networks between consumers, devices on their person, and any other similarly enabled nearby devices. Home RF (radio frequency) network technology will allow PCs, peripherals, cordless telephones, and other consumer electronic devices to share voice and data via a single mobile home network. Such short haul ad-hoc wireless connections will be made over standards such as Wireless Application Protocol (WAP).

Other mobile wireless solutions include micro-cellular systems such as Metricom's Ricochet, already deployed at Sky Harbor Airport and aiming for Phoenix-wide availability. Thousands of street light mounted transmitters allow mobile data access at modest rates (up to 128 Kbps) for anytime anywhere connectivity with simple PC Cards or external wireless modems for portable access devices. In general, wireless systems are the easiest to introduce into existing markets because cables don't have to be buried everywhere. Look for an explosion of wireless options and competition in the years to come.

Satellite Access:

The modern era of communications was truly begun with the launch of Sputnik in 1959. Today, thousands of satellites orbit the earth and many thousands more will be added in the next few years. Geostationary satellites sit in a fixed location above the equator and can be used by pointing a fixed antenna with appropriate support equipment at the "bird" in the sky. Services such as Hughes DirecPC (& DirecDuo) offer high-speed Internet downlink (400 Kbps) across the country, even in rural areas, and can be combined with video entertainment services. But the return data uplink is by phone modem at their lower connect speed. Business subscribers may lease satellite transmission capacity to meet their global connectivity needs. Direct Broadcast Satellite (DBS) competes with cable system operators to provide video entertainment to subscribes but can also support paging, data multicast, digital radio broadcasts, and other applications. Due to the limited number of geostationary orbital "slots," they are an extremely valuable resource governed by countries and worldwide organizations. And satellite-based digital radio will soon be commonly transmitting multiple channels of audio content to broad regions of the world for reception by fixed and mobile receivers.

The first constellation of satellites, Motorola's Iridium project, now circles the globe in multiple polar orbits, with two or more satellites always within reach. They support mobile voice communications and low-speed data from anywhere on the planet, but at a high cost for the special phone and service costs. Additional satellite constellations and systems, such as Teledesic, Globalstar, and SkyBridge will soon launch with higher data performance capabilities and costs will begin to drop. Satellites function with equanimity, serving rural as well as urban areas, and knowing little geographic bounds. In the future, special stratospheric planes and aerial platforms working rotating airborne shifts will be developed and deployed to offer advanced wireless services with high data rates over footprints covering urban centers and surrounding areas.

More Fiber in the Diet:

Originally the Regional Bell Operating Companies (RBOCs) built regional networks to connect the Central Offices (COs) around each area and to connect city to city. These networks would interconnect at their boundaries and carry voice traffic to its destination across the Public Switched Telephone Network (PSTN). The advent of the Internet lead to government sponsored data backbones dedicated to this new kind of traffic. Long distance providers also constructed sophisticated and far-reaching communications networks to interconnect their service areas and back-haul increasing portions of their signal traffic.

Fiber optics cable and its associated amplifiers and termination equipment are being increasingly deployed throughout municipal areas, across the nation, and around the world for long-haul backbones, as a connection between facilities and networks. It may even be utilized to deliver bulk bandwidth directly to customers, to connect buildings within a complex or campus, or even within buildings. Where past fiber optic systems usually utilized a single color of light to carry information, Dense Wave Division Multiplexing (DWDM), with its multiple wavelengths of light, has much greater capacity carrying up to terabytes of digital information per second.

SONET (Synchronous Optical NETwork) is a family of fiber-optic transmission rates and protocols providing the optical interface standard that allows the internetworking of various data transmission products and transport of various high-speed data applications. It is commonly used in SONET fiber rings distributing reliable backbone data transport capabilities around metropolitan areas and for long haul carrying between urban centers. These high-speed data streams are customarily carried using Asynchronous Transfer Mode (ATM), Synchronous Digital Hierarchy (SDH) and/or Internet Protocol (IP) technologies and protocols. Volume telecommunications customers may buy direct access to providers' SONET networks at high-speed Optical Carrier (OC) rates from OC-1 (51.84 Mbps, equivalent to a T-3 or DS-3 circuit) to OC-3 (155.52 Mbps), OC-12 (622.08 Mbps), OC-48 (2.488 Gbps), OC-192 (9.953 Gbps), and beyond.

Photons have neither morals or visas.
 -- From David J. Farber, Chief Technologist at the FCC, 1996

Components of the Broadband Local Exchange Network
components diagram
 -- (Source: Association of Local Telecommunications Services - ALTS)

To have a truly competitive marketplace, we must have robust competition in each of these three components of the network. I envision a network of networks freely interconnecting to bring a wide range of services to the American public. Cable companies will compete with satellite systems, fixed wireless with telephone. It is an era when companies view their services differently, when local phone companies are not just phone companies, long-distance not just long-distance, when cable provides telephone service and wireless offers Internet access. Right now the seeds are being planted to grow this network of networks, so that one day firms will interconnect freely to bring a range of services to consumers. But we have a ways to go before that vision is fully realized, and it is our job to nurture those seeds and make sure they grow.
 -- William E. Kennard, Chairman, Federal Communications Commission before the Federal Communications Bar Association, December 9, 1999

Multitenant Building Telecommunications Access Study
Evolving Telecommunications Landscape-- Rise of the Internet and the Great Convergence