new technology and expands demand on the basis of improved product and price. Ideally, revenues from increased demand are fed back into research and development to create new technology.

This chapter presents an overview of the probable evolution of the public networks to the year 2000. Separate sections are devoted to the impacts of regulation, technology, competition, and customer demand. These topics are then addressed separately in greater detail in another chapter, which supports the committee’s conclusions and presents associated recommendations.

REGULATION

By the year 2000, most of the existing legal and regulatory barriers to entry, which chiefly restrict exchange carriers, will probably have been removed. Only local exchange basic voice service for the small customer is likely to remain a monopoly service in any significant measure. Competition will reach the large-customer market for local exchange carriage, and open entry will extend into video markets as well as those of voice and data.

Thus, the fundamental regulatory principles governing the public networks through the year 2000 will remain the same as today. Regulators will permit open entry where market conditions appear capable of supporting competition. They will press for timely deployment of an Open Network Architecture (ONA) to afford all competitors equal access to the customer. Carriers will be allowed increasingly flexible tariffs to price competitive services closer to cost. Rate-of-return regulation may largely be phased out. Ultimately, there will be a merging of the regulatory treatment for voice, data, and video carriage as technology permits installation of enough network traffic capacity to accommodate multiple providers on equal terms.

TECHNOLOGY

Trends in technology can broadly be grouped into transmission modes, switching, and network technologies.

Transmission Modes

The dominant force in telecommunications transmission throughout the 1990s will be the widespread deployment of optical fiber. By the mid-1990s virtually all the trunk portions of the public networks will be fiber; but fiber will be introduced only gradually into the local



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