Switched Services—Local and Long Distance Calling

Although revenues for switched services are flat, they still account for large amounts of sales. According to Federal Communications Commission (FCC) statistics, 1999 long distance revenues were $108 billion in the United States. In June 2000, there were 192 million local telephone lines in service in the United States. Cellular switched service generated another $50 billion in revenue. Clearly, switched services are significant. They are necessary for emergency and safety alerts. For example, people reporting a fire don't use email. However, email is definitely a factor in the lack of growth in revenues from switched services.

The public switched telephone network is analogous to a network of major highways originally built by a single organization but added to and expanded by multiple organizations. Traffic enters and exits these highways (backbone networks) from multiple “ramps” built by still more carriers [e.g., the incumbent local telephone companies, cable TV providers and competitive local exchange carriers (CLECs)].

AT&T constructed the “highway” system that is the basis of the public switched network in the United States. Prior to the 1984 divestiture, AT&T set standards via its research arm, Bell Laboratories (now part of Lucent Technologies), such that all central office switches and all lines that carried calls met prescribed standards. As a result of these standards, anyone with a telephone can talk to anyone else. Dialing, ringing, routing and telephone numbering are uniform.

The International Telecommunications Union (ITU) defines switching as “the establishment on demand, of an individual connection from a desired inlet to a desired outlet within a set of inlets and outlets for as long as is required for the transfer of information.” The inlets are the lines from customers to telephone company equipment. The outlet is the party called, the connection from the central office switch to the customer. A circuit or connection is established for as long as desired within the network until one party hangs up. Switched calls carry voice, data, video and graphics. They operate on landline and cellular networks.

The mobile or landline central office, which performs the switching function, routes calls based on the telephone number dialed. Carriers and resellers put their own brand names on their switched services. For example, AT&T sells OneRate, and Sprint offers Sprint 500 AnyTime.

Attributes of Real-Time Switching Services

The public switched telephone network (PSTN) provides real-time dial-up connections. Cellular, Internet dial-up and landline voice traffic is routed in real time based on digits dialed.

Addressing—The Ability to Reach Anyone on the Public Network

Telephone calls are routed to destinations based on the number dialed. This is the addressing function. Telephones on landline connections send dual tone multi-frequency (DTMF) tones over the network. At the central office, these tones or frequencies are decoded to address signals. In cellular networks, users first dial the number they wish to reach, and then press Send. The telephone number is sent as digital bits within packets to the mobile switching office.

In the North American Numbering Plan (NANP), which covers the United States, Canada and the Caribbean, three-digit area codes are assigned to metropolitan areas. Exchanges, the next three digits of a phone number, are assigned to a rate center, and the last four digits, the line number, are assigned to a specific business or residential customer. In the rest of the world, each country has country codes, city codes and user numbers. The digits of each vary in length: Country codes and city codes are one to three digits long and numbers assigned to users generally are five to ten digits long. There is no uniform worldwide numbering pattern.

Most residential customers and many small business customers worldwide use dialup access to reach the Internet. If customers change their dialup Internet service provider (ISP) from AOL Time Warner to MSN, they don't need to change their telephone service or modem. They just program their modem to dial into a different ISP. However, if customers change from cable modem to digital subscriber line (DSL) Internet access or vice versa, they need a new modem as well as a new physical line to their provider. DSL and cable modem service are examples of dedicated—as opposed to switched—access.

Pay-as-You-Talk

Charges for switched calls often are based on the length of the call. For example, a 10-minute toll call costs less than a call lasting an hour. Time-of-day rates also can vary. Calls during peak business hours often cost more than at off-peak hours. In this way, carriers hope to even out traffic so that they aren't required to build additional facilities to accommodate peak calling patterns. In most of the world, local as well as toll calls are charged on per minute or package of minutes basis.

Because of the large amount of capacity on network providers' fiber optic networks and in response to competition, some carriers now offer flat-rate calling plans in which customers can make an unlimited number of calls for a set amount of money. Some long distance carriers have plans that charge customers a minimum fee whether or not they make any calls.

Postalized Rates

In the past, calls to distant locations cost more than calls to, for example, nearby states. The cost of long distance service is no longer consistently distance-sensitive. Most carriers have flat 5¢ to 8¢ per minute rate plans. This is known as postalized pricing. Just as a first class letter costs the same to mail next door or 2000 miles away, calls often cost the same whether to a friend across the state or to a relative across the country. Once a carrier's high-speed network is in place, it costs the carrier no more to send a call 2000 miles than 400 miles. Capacity is available and carriers want to fill their “pipes.”

Ten-Digit Local Calls—Overlay Area Codes and the Absence of a Uniform Dialing Plan Prior to 1984, one central organization managed dialing plans for the North American numbering plan area (the United States, Canada and the Caribbean). Seven digits, xxx-xxxx were used for local calls, 1-xxx-xxxx for toll calls to the same area code and 1-xxx-xxx-xxxx for toll calls to other area codes. The “1” preceding calls was a toll indicator—it indicated to subscribers that their call would incur toll charges. After the divestiture of 1984 when the Bell companies were broken off from AT&T into seven companies, a division of Lockheed (now called Neustar, Inc.) managed area code assignments and state utility commissions set dialing plans within FCC parameters. The “1” is no longer consistently used as a toll indicator. In some states, local calls to the same area code require only seven digits and other states require 10 digits (area code plus number). In still others, a “1” is required before the 10 digits even for all local calls. Much of this confusion can be blamed on what are called overlay area codes. States adding new area codes have the choice of adding them as overlays or splits. With splits, the geographic area in which the old area code exists is “split.” One part of the area keeps its existing code and in the other part are assigned the new area code with all of the expense of changing stationery and marketing communication material. To avoid this hassle, some state public utility commissions use overlays to add new area codes. With overlays, everyone keeps their existing telephone number and only people getting new service are assigned the new area code. However, the FCC has mandated that with overlays, all local calls must be dialed using 10 digits. This rule was enacted to prevent incumbent telephone companies, which have the greatest number of telephone numbers, from having an advantage. It was felt that without the 10-digit rule, competitors' customers would get more new numbers and would have the burden of using 10-digit numbers more frequently. To illustrate some of the differences (as of October 2000): Virginia: Local calls to another area code require dialing “1” plus 10 digits. Colorado: Local calls in area codes 719 and 970 require only 10 digits without the “1.” Alaska: Local calls still can be made dialing only seven digits. Alabama and Mississippi: Local calls between two different area codes can be made using seven digits.

On Demand

Voice and data calls are initiated by picking up the handset or by instructing a modem to dial a call. The service is available “on demand.” However, callers might find that on peak traffic days, such as Mother's Day, callers receive a “fast busy” signal. Extreme weather conditions such as blizzards often result in a high number of people working from home and using modems for long stretches of time. This can result in a strain on carriers' network capacity and “fast busies” on call attempts.

Immediate

If capacity is available, service is instantaneous. When someone dials a telephone number, he or she expects the call to be completed immediately. As previously noted, extreme conditions can eliminate the immediate capacity expected by users. Natural disasters, unusual demand and human error all impact availability.

Carriers build in redundant power sources, remote alarm monitoring, backup systems, multiple fiber paths to central offices in case of a fiber cut and hurricane proofing in central offices to ensure continuous telephone service. Customers take for granted immediate telephone service, which carriers take great efforts to provide.

Incoming, Outgoing, and Two-Way

Telephone companies sell trunks that are one-way incoming, one-way outgoing or two-way combination. (Trunks are the connections between commercial organizations' on-site telephone systems and the telephone company's switching equipment.) Incoming-only 800, 877, 866, 855 and 888 toll-free numbers are important marketing tools. Companies spend millions of dollars promoting their toll-free, incoming-only numbers. 900 numbers that callers pay to use are another example of one-way incoming service.

Telemarketing departments use outbound trunks for bill collections and to generate sales. Specialized computers and predictive dialers place calls to potential customers for items such as magazine and newspaper subscriptions. These dialers are programmed to rapidly dial successive calls. The dialers recognize and hang up when they encounter busy signals, ring-no-answers or answering machines. A live agent's time is not used for dialing, busy signals, answering machines and ring-no-answers. When a live person answers calls, the dialer transfers the call to an agent. Agents can thus speak with a higher number of prospects each hour.

Predictive dialers have brought central offices to their knees because of their high volume of calls. For every agent on a call, the predictive dialer ties up central office facilities with busy signals, ring-no-answers and answering machine responses. Some phone companies will add capacity to their switches when they have these types of customers.

The Public Network and National Security

Governments consider telecommunications a necessary service. It's a vital national security and business resource and is regulated accordingly. The Federal Communications Commission (FCC) and the Federal Aviation Administration (FAA) monitor reliability of major carriers' networks but not the Internet. Earthquakes, software glitches and power disturbances have all interrupted telephone service. Consider the software glitch in AT&T central offices on January 15, 1990, which caused a nine-hour outage. Backup, redundancy and power failure are major factors in planning for telecommunications.

Switched Services for Data—Capacity Issues

The public switched telephone network was designed for voice traffic. Voice traffic has different usage patterns than data traffic. For example, voice calls are shorter—an average of three minutes in length. Data calls, on the other hand, tend to be longer. Callers accessing the Internet from homes and businesses often stay online for long stretches at a time.

Use of the public switched network for dialup Internet access, paging and cellular service has resulted in an enormous demand for longer calls, more frequent calls and additional telephone numbers. Incumbent local telephone companies are eager to move data calls off the public network onto digital subscriber lines (DSL) service so they will not need to add capacity to central office switches for Internet access traffic. (DSL service is reviewed in Chapter 6.)

Switching Light—Optical Cross Connects

Optical switches, also called optical cross connects, are another example of switching. Network service providers are starting to use optical cross connects to switch streams of light across high-speed backbone networks. They transmit light across long distances, for example, between Denver and New York City. Switching light, also called photonic switching, adds enormous capacity to fiber optic networks. Optical cross connects can transmit thousands of light streams simultaneously.

End-to-End Telephone Service

Callers take for granted the ability to reach people on different long distance networks. For instance, WorldCom subscribers assume they can reach AT&T subscribers. This was not always the case. During the early years of the telecommunications industry, 1893 to 1907, people frequently needed two telephones: one phone for people served by The Bell Telephone Company, for example, and another telephone to reach people in a town served by an independent telephone company.

Independent and Bell telephone company networks were not connected to each other at this time. AT&T articulated the strategy of end-to-end telephone service in its 1910 annual report. The public switched telephone network grew out of this concept. The federal government granted AT&T a monopoly on telephone service in return for AT&T's providing end-to-end telephone service.

Circuit Switching—Network Inefficiencies and Convergence

The public switched network uses circuit switching to transmit calls. A circuit is a physical path for the transmission of voice, image or data. The ITU (International Telecommunications Union) defines circuit switching as:

“The switching of circuits for the exclusive use of the connection for the duration of a call.”

When a person or a modem dials a call, the network sets up a path between the caller and the dialed party. Importantly, the path is available exclusively for the duration of the call. The path is not shared. Natural pauses in conversation and data transmission cannot be used for other voice or data calls. Capacity is saved in the network for the entire duration of the transmission. When the call is ended, the path is released and becomes available for another phone call. This exclusivity causes wasteful utilization of network capacity.

Newer telecommunications services do not have this limitation. For example, with the Internet Protocol (IP) used in the Internet and in converged networks, transmissions from multiple voice and data sources share the same path. Pauses in one conversation are filled by data from other sources. Network capacity is not saved for the exclusive use of devices when they are idle. This is the basis for convergence, which is covered later in this chapter.

DTMF: Access to Voice Mail and Computers

Touch-tone, or dual tone multifrequency (DTMF), was introduced by AT&T in 1963 to speed call setup in the central office. Prior to 1963, pulse signals (rotary) were used to place calls. A 10-digit call takes approximately 11.3 seconds to dial using rotary pulses. In contrast, a touch-tone, 10-digit DTMF call can be dialed in 1 second. Thus, DTMF or touch-tone calling adds efficiency to the public network because it ties up the central office switches for a shorter period of time than rotary dialing during call set up.

Dual tone multifrequency tones also are used to access voice mail and information in bank accounts. DTMF is used in voice mail and voice response technology in which people send signals to computers via the touch-tone pads of their telephones. Once a telephone connection has been established, the network passes any additional DTMF tones entered to the voice mail or voice response system.

DTMF signals are an example of a standard established by the AT&T Bell system so that all callers in the public switched network in the United States have a consistent format for addressing calls. DTMF tones in other parts of the world vary from American standards.

Store-and-Forward Switching—Nonsimultaneous Sending and Receiving

The storage and transfer of messages such as voice mail, recorded announcements, data and facsimile in a non–real-time fashion is known as store-and-forward switching. Store-and-forward switching does not require both sender and receiver to be available at the time of transmission. Moreover, the network can hold the message and retry multiple times until the receiving equipment is available. Stored messages can be transferred at off-peak times to minimize network idle time, which also avoids network overload during busy times. For example, political organizations record “get-out-the vote” announcements and send them to lists of voters at preprogrammed times. Pharmacies send “Your prescription is ready” announcements to customers.

Store-and-forward switches also are used in local area networks to connect LANs together. The switch accepts packets on input ports, buffers them briefly and sends them out. When switches buffer packets they hold them briefly to ensure a smooth flow of data. Some LAN switches have cut-through capability. They begin repeating the message as soon as it is received. Cut-through switches are faster than store-and-forward switches.