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Extracted from -:- Scientific American (May 1987, Volume 256, Number 5.),
Orginally presented on Tequila Willy's Great Subterranean Carnival (Phreak/Hack
ONLY system): -=*&@( 209/526-3194 )@&*=-
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
TELCOM '87 PREVIEW - PART 1
A Report by Andrew Hargrave
The 1983 TELECOM exhibition in Geneva signalled major advances in the
technologies and structues of world telecommunications. The initials ISDN
(Integrated Services Digital Network) made their first appearance,
foreshadowing a convergence and integration of computers and
telecommunications on a scale never before imagined. Since then there has
been rapid progress in planning -- and to a certain degree implementing --
ISDN which will eventually produce a global netowrk of voice, data, text and
vision transmission available to both business and private users.
TELCOM '87, bo be held in Geneva in October this year, will, in the words of
Mr. Richard E. Butler, Secretary General of the organizers ITU (International
Teelecommunications Union) "enable us to assess the results of all the work
carried out in connection with the ISDN concept...and also demonstrate the
benefits of telecommunications to the user."
Mr. Butler stressed the need for standardization, with special emphasis on
compatibility between products developed by the industires of the various
countries. "Provided they comply with the standards established by the ITU,
and in particular by the CCITT (International Telegraph and Telephone
Consultative Committee), these industries will be able to supply products
designed for interactive operations. This is what we hope to show at the
exhibiton."
Alongside the exhibiton, the World Telecommunicatons Forum will address some
major issues, such as "whither telecommunications?"; its economic impact;
relations between respective suppliers of computer services and of
telecommunications equipment; the effect on the user; its role in improving
production and speeding industrial research. "These are all fundamental
questions which call for discussion," said Mr. Butler.
They are also the main themes of this report -- the first of a twopart survey
on international communications.
TELECOMMUNICATIONS IN A FLUX
Until relatively recently -- the late 1960s -- global telecommunications had
presented a tidy pattern. National post/telecommunications administrations
were ordering , maintaing and renewing autonomous networks normally from their
national suppliers. They gradually provided, it is true, services additional
to the voice-telephone, mail and telegraph, such as telex and facsimile
transmission and, of course, televison and radio for news, entertainment,
sports, etc. Service was fragmented too: the transmission and exchange of
informaton -- of text, graphics and vision via the public network -- had not
yet arrived.
There were, of course, companies selling public electromechanical systems
(Strowger, cross-bar) and later electronic analog systems, beyond their
national frontiers. For L.M. Ericsson of Sweden, for instance, the national
base was too small to sustain and expand the company, ITT, of the US, sought
to bypass the AT&T monopoly in the national telecommunications service -- in
both telephony and switching equipment -- by exporting their equipment through
major subsidiaries such as CGCT in France, SEL in West Germany and others in
the UK, Italy, Belgium, Spain and elsewhere.
Among the most spectacular events of recent years has been the merging of
Alcatel (telecommunications subsidaiary of the CGE group) of France and the
telecommunications division of the US concern ITT in January this year. THe
new company, Alcatel NV, is registered in the Netherlands but is headquarted
in Brussels. The merger (in which Alcatel has a majority holding) has created
the world's largest public switching and second-largest telecommunications
company (after AT&T).
AT&T itself set up four years ago a jointly owned company -APT- with Philips,
of the Netherlands, Europe's top electrical and electronics concern alongside
Siemens, of West Germany.
North America (mainly the US) is, as Table II indicates, the largest single
market in the world for public exchanges: hence the intense intrest shown by
leading European suppliers, especially since the deregulation of local
telephony and the breakup of the AT&T monopoly.
The declining value of sales in Europe, at any rate, is largely due to the
price advantage of digital hardware compared with its analog predecessor. (In
the US, there are now virtually no analog replacements).
The greater openness and diversity of the US public switching market had
enabled Northern Telecom, of Canada, with its most up-do-date systems to
challenge successfully AT&T on its home ground.
Altogether, about a dozen major suppliers vie for the world's digital public
switching contracts -- far too many, according to most experts. In addition
to AT&T and APT, Alcatel-ITT, Siemens, Ericsson, Northern Telecom and GTE, the
UK manufactures GEC and Plessy, so far unable to obtain contracts ouside the
home country for their joint product System X, are apparently poised to enter
the export market. Plessey has bought its way into the huge US market by
acquiring Stromberg-Carlson, manufacturer of small and medium-sized public
exchanges. Italtel, telecommunications subsidiary of the Italian state-owned
information technology group STET, is also a recent entry on the global scene
with its up-rated UT series, as is Telenokia, of Finland. Nor can the
powerful Japanese trio, NEC (already active in the US), Hitachi and Fujitsu,
be expected to stay out of Europe while digitalizing the home
telecommunications network.
Views differ whether the speedy advance and turmoil in the world's
communications industry is mainly technology or user driven: a matter of
varying attitudes by individual PTTs, business and private subscribers in the
various countries -- the advanced industrial countries in the main.
There is no doubt, however, about the concept which symbolizes progress in
telecommunications technology in the remaining years of this century and
beyond. It is ISDN.
ISDN: NOW A REALITY
"The biggest machine ever built, the international telephone network, is being
revolutionized by the smallest machine ever devised, the microchip...", So
says the European Commission's Information Technologies and Telecommuincations
Task Force which claims that the new services represented by ISDN "will be
commonplace from 1988 onwards."
ISDN, as already indicated, integrates voice, data, text and vision in a
single service. It is characterized not only by the linking of these
functions in a single, terminal-assisted instrument panel, but by the speed of
transmission (the Task Force suggests, teletex will be 100 times faster than
today's telex; facsimile copiers will transmit at a rate of a page per
second); but also by improved quality of sound; by caller identification; by
extra security; by group conferencing in sound and vision; by access to new
commerical services.
Above all, ISDN promises to be cheaper, much cheaper than the present
separately operated and billed services, though this depends on the pricing
structures of PTTs as well as the prices of the ingredients: central
computers, microprocessors, optic fiber cables, instruments, components and
the most expensive single item in systems "architecture", software.
The European Commission, in addition to calling for the adoption of common
(CCITT, No 7) standards by PTTs of the 12 member countries, based first on 64
Kbits/s and possibly later on 2 Mbits/s digital switching, has also set a
timetable for the coordinated introduction of ISDN in Europe. It has hopes,
too, of those standards being adopted by Japan and the US. The timetable
envisages a three-stage development in the 1990s:
--Expapansion and digitalization of existing telephone networks
--Additional integrated services -- ISDN
--Introduction of broadband communications to add vision to sound, text and
data exchange facilities.
As to specific target dates, the Commision has urged that by 1993, 80 percent
of the subscribers in the European Community should have access to ISDN and,
by the same year, 5 percent of subscriber lines -- the "critical mass" --
should be connected to it. The whole program is estimated by the Task Force
to cost $40 billion.
BATTLE OF THE SYSTEMS:
The flagship of telecommunication vendors competing in an over-supplied
international market are the digital switching systems. The more modular
(capable of up-rating), flexible, reliable and economical they are -- or claim
to be -- the greater their chances of acceptance, at least theoretically. For
there are other criteria, perhaps more decisive: the main one is politics,
the preferences of the governments or the telecommunications administrations
concerned, fortified or pushed by local pressures. That is why all the
contenders for the purchase of CGCT, France's ailing denationalized second
digital switching supplier, have armed themselves with a French partner: APT
with SAT, Siemens with Jeumont-Schneider, Ericsson with Matra. CGCT is
manufacturing the E10-B, France's Alcatel-designed system. Whoever wins
possession of CGCT -- and it was, at the time of writing, going to be stictly
on technical merit -- would introduce a seond switch into the French network:
APT's 5ESS PRX, Siemens's EWSD, Ericsson's AXE. Or it could even be Northern
Telecom's DMS 100, as the Canadian supplier was also invited to tender.
Although CGCT provides only about 16 percent of French switching, an outside
sytem, rival to France's own in what has hitherto been a purely national
market, will give a powerful psychological and publicity boost to the
successful contender; and so has Ericsson's break-through in the UK, adding
AXE to the home-grown System X in the digital network.
Only in Italy among the major European countries have competing systems
managed to secure a substantial market share alongside the home suppliers
through subsidiaries: FACE (System 12) and FATME (AXE). Even part of Italy's
so-called "national-system" was supplied by an outsider -- GTE of the US --
though more than half the requirements were met by Italtel, which is rapidly
uprating its own UT system to provide exchanges with capacities of up to
100,000 (later 200,000) lines. Under Italy's digitalization program, however,
suppliers will eventually be limited to two: UT and System 12 (now supplied
by the Alcatel group) or AXE.
The size of the US market (About 40 percent of the world's public switching
sales), has ensured a head-start for AT&T, with 31 million lines installed or
on order (29 million in the US). Alcatel's ITT's 39 million lines (installed
or on order) are divided between E10 and System 12 while Ericsson's almost 17
million AXE lines have been sold to 66 countires -- the largest geographical
spread in the world of any single system.
Table IV gives a fair indication of how the competing major systems have fared
in terms of installed lines.
TRANSMISSION: THE FIBER OPTIC ROUTE
Although the next generation of satellites will be able to carry a great deal
more traffic, escalating demand -- especially for Europewide and later global
DBS (Direct Broadcasting Satellites) -- planned existing and emerging networks
-- foreshadows increading strain on the land and undersea cable systems. The
significance of fiber optic development in this eontext alone cannont be
underestimated.
The speed of replacing copper by optic fiber is, of course, a question of
national investment priorites and consequently varies from country to country.
All the US, Japanese and European PTTs as weel as the major public switching
suppliers are involved, some of the latter on their own, others in association
with optic fiber specialists. Siemens, for instance, has a joint operation
with Corning Glass, of the US -- Siecor -- to supply optic fiber for the West
German and other networks. Italtel, state-owned, is negotiating with
Flat-owned Telettra speciallizing in transmission for a merger which would
raise the new group's Italian market share in transmission equipemtn to well
over 50 percent.
THE SHAPE OF NEW GENERATIONS OF COME
Overcapacity in both public and private switching systems is stressed by all
the major players; but there is also the technological aspect to global
telecommunications. Several executives interviewed emphasized the point:
there are too many systems and some will, perhaps over the next decade, come
to the end of their technological cycle. For the cycles themselves are
getting shorter.
One reason may be that several of the present digital switching systems are
"hybirds" -- i.e. developed from analog predecessors. According to Dr. Hans
Baur, telecommunications chief and member of the Siemen's management board,
Northern Telcom's DMS is the only genuine digital system conceived as such --
which, says Dr. Baur, explains partly its outstanding success in the US and
increasingly elsewhere.
Mr. F.C. Kuznik, vice-president marketing of APT, talks of "three generations"
of switching systems, starting with Alcatel's E10 in the early 1970s -- now
balanced in the merged group with ITT's third-generation System 12 alongside
Siemans' EWSD and AT&T-Philips's 5ESS PRX.
In the 1990s, Dr. Baur reckons, telecommunications companies would have to
gain a market share of around 15 percent to recover their costs comforably.
Mr. Kuznik puts it even higher -- 15 to 18 percent, a share as already noted,
achieved only by three of the players -- AT&T, Northern Telecom and
Alcatel-ITT, the last-mentioned with two systems -- or even three, if
Thomson's E10-MT is counted.
Mr. Kuznik foresees in the 1990s not so much companies as "alignments" behind
five technologies, a couple from North Aerica, one from Japan, a couple from
Europe... (Dr. Baur speaks of "five or six"). They may come from mergers
along the lines of Alcatel-ITT, or firm aliances such as AT&T and Philips; or
limited partnerships such as GEC and Plessey (in respect of System X); or
partial takeovers such as Siemens-GTE; or the proposed Italtel-Telettra deal.
THe escalating cost of developing new technologies -- put at $1 billion per
switching system some years ago by the then Philips chief executive Dr. Wisse
Dekker, with ongoing development costing around $200 million a year (Mr.
Kuznik) -- is one of the main factors of limiting the number of future
participants. Its globality is stressed in the strongest terms by Mr.
Philippe Gluntz, executive vice-president and chief operation officer of
Alcatel NV: "We are one of the few manufactures able to offer the whole range
of telecommunications equipment: digital switches, all kinds of transmission
products from copper cables and fiber optics to satellite communications; all
types of business systems from digital PABXs to microcomputers or electronics
sub-sets, word processors, etc."
Resources in terms of funds and range of products are vital for the
prospective telecommunications survivors: but so is teh technology of the
21st century.
TABLES:
TABLE I
World public switching equipment sales of leading manufactures
_____________________________________
Company Sales of public
switching equip
in $ million
___________________________________
AT&T (US) 1350
Northern Telecom (Canada) 1000
NEC/Fujitsu/Hitachi (Japan) 1000
Siemens (West Germany) 950
ITT (US *1) 850
Ericsson (Sweden) 750
Alcatel/Thomson (France) 700
GTE (US) 350
Plessey (UK *2) 260
GEC (UK) 260
Italtel (Italy) 180
Philips (Netherlands *3) 130
Stromberg-Carlson (US *4) 70
Others (inc. Nokia, Finland) 120
----
7970
___________________________________
*
1) Now Alcatel NV through merging Alcatel/ITT telecommunications intrests
2) Involved in talks on merging certain System X functions
3) Set up APT to cater for world telecommunications sales outside US
4) Subsidiary of Plessey, mainly for US switching
TABLE II
Estimated public exchange sales revenue: $ million
____________________________________
1985 1986 1986-1990's
(annual avg)
____________________________________
US 2,249 2,459 2,000
Europe 2,977 2,724 2,365
(of which
digital) 931 1,070 1,626
____________________________________
TABLE III
Telephone networks desities world comparions 1984/85
______________________________________
No. of
resi-
dential
connec-
No. of tions
No. of lines per 100
lines in per 100 house-
Country serice pop. holds
_______________________________________
Sweden 5.1 61.5 111.4
US 114.3 48.3 96.7
Canada 11.2 44.6 109.3
West Germany 24.9 40.7 87.6
France 22.1 40.2 98.0
Australia 6.2 39.5 91.3
Netherlands 5.6 39.0 82.8
Japan 44.4 37.0 80.2
UK 20.8 36.9 78.4
Italy 16.5 28.9 68.5
Spain 8.7 22.5 58.0
_______________________________________
TABLE IV
Sales of major digital systems, 1985
______________________________________
Systems/Company No of market
lines share %
instld
000s
______________________________________
5ESS-PRX (AT&T - APT) 5,555 18.1
DM Series -- Northern 5,269 17.2
Telecom
E10-B/E10-MT -- 3,600 11.7
(Alcatel)
AXE -- Ericsson 2,900 9.4
System 12 -- ITT 2,883 9.4
(now Alcatel)
EWSD -- Siemens 2,479 8.1
GTD -- GTE 1,903 6.2
NEAX 61E -- NEC 1,750 5.1
(Japan)
_____________________________________
1) System X deliveries, by GEC and Plessey, began only in 1985: they were at
the time of writing only confined to the UK (1 million lines delivered by
March this year). Italtel's UT series, too, are relatively recent in their
uprated form. Stromberg-Carlson (Plessey's US subsidiary): Century series
are designed mainly for small to medium-sized exchanges. Telenokia's (Finlad)
DEX series are designed principally for rural networks.
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