Transcript Network service providers

Lecture 5
Network Service Providers
Telecommunication Industry
• In a state of flux due to:
– increased competition
– growth of the Internet
– globalization of the worldwide economy
Globalization
• More competition in long distance services
in the US
• Growth of multinational corporations eager
to purchase services from a single source
• Growing demand for network capacity
• Liberalization of overseas TC markets
• Opportunity developing countries very large
Developing Countries
• Long waiting lists for telephone lines
• Eastern Europe has fewer than 20 phones
per 100 people
• US has 64 phones per 100 people
Long Distance Market
• Still some growth potential in US
• Interstate margins slim, growth decreasing
• Investment in overseas ventures possible
with overseas deregulation
• Results in higher profit margins
• RBOC’s also expanding overseas, SBC
owns 10% of Telkom South Africa
TC Service 1984-1990
• Local carriers:
– Sell mainly local and toll services
– Yellow page advertising
– Cellular services
• Long distance carriers:
– Interstate voice
– Data telecommunication services
After TC Act 1996
• Local providers and cable operators:
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interstate long-distance inside their territories
high-speed data networking
Internet access and services
cellular services outside their territories
local calling outside their territories
interstate long-distance outside their territories
Examples of Expansion
• RBOC’s, Cable TV operators, and
independents:
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interstate long distance from within their region
high-speed data networking
Internet access and services
cellular services outside their region
local calling outside their region
interstate long distance outside their region
Examples of Expansion
• Cable TV operators emerging as major
competitors for Internet access and local
phone service
• Independent carriers (Level 2, Quest
Comm., Global Crossings) building highspeed fiber optic networks
• Many resellers in long distance, Internet and
data services
Services sold by resellers:
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Debit cards
Dial-around calling
International call back services
Internet access
Local telephone service
Long distance to consumers and small business
Local and long distance to hospitals and college
dorms
New Class of Resellers
• Emerged in mid 1990’s
• CLEC: competitive local exchange carriers
• Sell local, data services, Internet access and
local toll calling to business and residential
customers
• Urban business customers bulk of business
• Use their own facilities, and buy from local
exchange carriers
The Bell System Prior to 1984
• 22 local Bells, all owned by ATT
• Bells sold local, domestic, and international
services
• Manufactured and sold central office
switches, customer premise telephone
systems, electronics and consumer phones
• yellow pages and white page directories
Monopoly System
• ATT had a total monopoly on all telephone
traffic
• MCI and Sprint wanted to compete with
ATT in metropolitan areas
• by 1974 many complaints filed against ATT
for not supplying connections to local
phone companies, antitrust suite filed
• anti-trust suit resolved in 1984
Modified Final Judgement
• ATT settles with the Justice Department
• ATT must divest 22 local companies
• Ownership transferred to 7 Regional Bell
Operating Companies
RBOC’ s
• Retained:
– the “Bell” logo and the right to sell local and
toll calling within local area’s
– the lucrative yellow pages and white directories
• Denied:
– the right to manufacture equipment
Bellcore
• Centralized organization
• Jointly owned by the RBOC’s
– central point for National Security and
Emergency Preparedness
– technical resource for the RBOC’s
– administered the North American Numbering
Plan
Bells 1984 -1996
• Sold basic services
• 1988: allowed to offer enhanced services
– computer processing to act on subscriber
transmitted information
• voice mail
• audio text
• electronic mail services
• Bell’s opened 100 service features to
competitors
Bell’s Core Business
• Local telephone service
• Experienced enormous growth in data and
wireless services
Telecommunication Act 1996
• Bell territories were opened further to
competition
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long distance vendors
cable companies
local access providers
utility companies
• Many mergers followed between the Bells,
now only 4 RBOC’s remain
Independents
• 1,270 independent telephone companies
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Alltel Corporation
Cincinnati Bell
Sprint Corporation
in many rural area’s
• Supply dial tone to 15% of the telephones in
US and cover >50% of US geographically
• May manufacture their own phones and sell
long distance within their regions
Impact TC Act 1996
• Objective to open up $193 billion p/y local
telephone market to deeper competition
• Provided guidelines for opening interstate
long distance market
Impact TC Act 1996
• 14-point checklist for RBOC’s
• Opened local service to: interexchange
carrier’s, CAPs, cable companies, wireless
operators, broadcasters, and utility co’s
• Required interconnection for the above
• Local could: sell cable and TV services,
equipment, and out-of-state long distance
Impact TC Act 1996
• Raised limit on the number of TV stations
networks could own
• Phased out cable rate regulation
• Promised carrier discounts to schools,
health care institutions and libraries
• Allowed RBOC’s to manufacture once they
receive permission to sell in-region long
distance services
Interexchange Carriers
• ATT, MCI, Sprint
• Before Act, primarily sold long distance and
international service
• Own most of the switching and
transmission equipment routing their calls
• Connect to provider to complete the call
New Interexchange Carriers
• Level 3 and Qwest Communications
– route traffic over a mix of of their own fiber
and facilities owned by other carriers
• Williams Communications
– sells mainly at the wholesale level to other
carriers and Internet service providers
New Interexchange Carriers
• Services include:
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toll-free 800, 877, 888 services
outgoing long distance, private lines
local calling services
data transmission services
900 services
Internet access
cellular wireless services
VPN’s, webhosting
Transporting Calls
Markets Opened by TC Act 1996
• Telephone system manufacturing
• Sales of interstate long distance depending
on meeting conditions of interconnection
Merger and Partner Mania
• Amritech invests $6 million in Europe
• BellSouth $2 million in Latin America
• ATT and Teleport Communications Group
and TCI
• WorldCom with MCI
Impact of TC Act 1996
• Permitted RBOC’s to sell in-region long
distance after 14-point checklist
• Freed interexchange carriers, CAP’s, cable
companies, wireless service operators,
broadcasters and gas and electric utilities to
sell local telephone service
• Required local telephone providers to offer
resale and interconnection
Impact of TC Act 1996
• Authorized local telephone companies to
sell cable and TV services, equipment and
out-of-state long distnace form outside their
regions, voice messaging and cellular
• Raised the limit of TV stations networks
could own and phased out cable rate
regultion
Impact of TC Act 1996
• Promised carrier reimbursable discount to
schools, health care institutions, and
libraries in rural areas
• Allowed RBOC’s to manufacture goods
through separate subsidiaries, after they
receive permission to sell in-region long
distance services
Interexchange Carriers
• Prior to 1996 Act: ATTm MCI, Sprint
• After 1996 Act:
– Frontier, Qwest, and Level 3 Communications:
• own most of their own switching and transmission
equipment, microwave, fiber, multiplexers, etc.
• route their customers traffic over a mix of their own
network and leased fiber or cabling from others
• sell capacity at wholesale to other carriers and
Internet service providers
Interexchange Carriers
• Services include:
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toll-free 800, 877, 888 services
outgoing long-distance
dedicated private lines
local calling services
data transmission services
PCS cellular services
900 services: VPN, web hosting
Internet access
cellular wireless services
LATA
• Local access and transport area
• 161 local geographical area’s in the US
• area in which local telephone area’s may
offer phone services, local or long distance
• regulated locally state-by-state
Local and Interexchange Carriers
• Post divestiture conditions:
– IXC carriers were barred from carrying traffic
within LATA’s
– Local phone companies were to carry traffic
within LATA’s
IXC carriers forced to hand-off interstate calls
to local provider which are then carried to their
final destinations
Point of Presence
• The point in the network where the IXC
carrier passes off the call to the local phone
company is called the point-of-presence or
POP (see figure 3.3, page 97)
• It is the location of the IXC’s telephone
switch that connects to the local telephone
company
Point of Presence
• A long distance carrier’s office in your local
community
• Place where long distance carrier lines
terminate, just before those lines are
connected to the local telephone company’s
lines
• IXC may have several POPs within a LATA
POP
• Each major interexchange carrier has a POP
in each metropolitan area
• EX: ATT has two in Boston
Competitive Access Providers
• An alternative, competitive local exchange
carrier, such as MCI metro
• Largest CAP’s are:
– ATT
– MCI Worldcom
CAP’s and CLEC’s
• The CAP provider evolved into CLEC’s in
the 80’s and 90’s
• IXC paid access charges to the local carrier
for access and egress to the local loop
• This cost passed on to their customers
• Amounted to 1/3 of Bell’s revenue, 4.5
cents per minute
CAP’s and CLEC’s
• Business customers found these access
charges to be costing them a lot of money
• Circumventing these charges a priority
• Learned how to circumvent by building
their own capacity and connections
• Beginning of CAP industry
• Supply alternative for local phone service
and access to IXC carriers from local areas