6
Competition

The opening of most major telecommunications markets to competition increases concerns about network vulnerability. Competition has stimulated product and service diversity, but it has also led to proliferation of discrete network architectures (Huber, 1987). Further, because competition is more mature in some markets than in others and because the economics of market segments differ, compe-tition’s impact on national security emergency preparedness (NSEP) varies from market to market.

For purposes of the committee’s analysis of the impact of competition on public network NSEP, it is useful to distinguish between seven categories of telecommunications and information services. This chapter discusses providers of exchange service (local and inter exchange), cellular mobile radio, customer-premises equipment (CPE), value-added networks (VANs), electronic databases, cable television, and innovative services.

EXCHANGE TELEPHONE SERVICES

Background

Divestiture segmented the local and long-distance exchange service markets. Competition is an established fact in interexchange markets. Local-loop competition already exists in private local exchange



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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness 6 Competition The opening of most major telecommunications markets to competition increases concerns about network vulnerability. Competition has stimulated product and service diversity, but it has also led to proliferation of discrete network architectures (Huber, 1987). Further, because competition is more mature in some markets than in others and because the economics of market segments differ, compe-tition’s impact on national security emergency preparedness (NSEP) varies from market to market. For purposes of the committee’s analysis of the impact of competition on public network NSEP, it is useful to distinguish between seven categories of telecommunications and information services. This chapter discusses providers of exchange service (local and inter exchange), cellular mobile radio, customer-premises equipment (CPE), value-added networks (VANs), electronic databases, cable television, and innovative services. EXCHANGE TELEPHONE SERVICES Background Divestiture segmented the local and long-distance exchange service markets. Competition is an established fact in interexchange markets. Local-loop competition already exists in private local exchange

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness bypass services; metropolitan area networks (MANs), wide area networks (WANs), and premises-based local area networks (LANs) are becoming ubiquitous features of business telecommunications. Teleports use satellites to establish long distance links connecting to public and private local landline networks via optical fiber links. Business data traffic can bypass local gateways to interexchange networks. Fiber MANs and WANs link business firms within the same urban area and can also bypass public network facilities. Already, according to documents filed with the Federal Communications Commission (FCC), bypass is siphoning billions of dollars in revenues from the local exchange carriers (although carriers are eligible to compete for bypass business). National Security Emergency Preparedness Implications Bypass stimulates duplication of network facilities, and can lead to deployment of substantial excess network transmission capacity. Intense competition for limited customer demand can drive providers to offer prestandard or nonstandard offerings in an effort to get the jump on competitors. Manual or automatic network reconstitution mechanisms can ameliorate somewhat the NSEP problems posed by networks not configured to prevailing general standards. When telecommunications is opened to competition by many carriers, some initial incompatibilities will arise. Work in the Exchange Carriers Standards Association Telecommunications Committee (T-1) indicates that user demands for open system access in the marketplace are motivating vendors to standardize interfaces. CELLULAR MOBILE RADIO Background Since its commercial introduction in 1983, cellular mobile radio has greatly increased mobile channel capacity in major urban markets and brought high-capacity mobile service to many smaller areas. Cellular is a mature technology initially tested in 1970: Vehicles with cellular phones communicate with a centrally located fixed transceiver site, which is linked via terrestrial lines to a computerized mobile telephone switching office (MTSO) which, in turn, interconnects the landline telephone networks to the cellular system. Cellular systems are subdivided into “cells”; as a user passes from one cell to the next the call is “handed off” to the next cell. This

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness “frequency re-use” allows system capacities fax greater than offered by fixed mobile radio systems. The FCC has divided each cellular market into two blocks: one “wireline” block allocated to telephone companies, and a nonwireline block reserved for mobile radio providers. The FCC’s bidding process for cellular licenses and the large capital investment required to construct a cellular system, particularly in prime metropolitan areas, has led to ownership by consortia. As of the fall of 1988, in 12 of the 30 top cellular markets, wireline carriers have purchased the nonwireline franchise, creating competition between two wireline providers. Cellular expansion has reached into hundreds of smaller markets. In many of these, smaller markets are linked as satellites to hub metropolitan systems, with remote switching in these “super systems” directed by the hub MTSO. Such arrangements make cellular economical for many rural markets that could not support stand-alone cellular systems. Eventually, analog cellular systems will be replaced by digital cellular in the 1990s, which will increase system capacity, thus obviating the need to allocate additional scarce radio spectrum for cellular use. The economics of cellular systems makes conversion of analog facilities cheaper than constructing digital facilities from the ground up. By the year 2000 advanced signal processing will augment the sophistication of cellular systems. Spread spectrum transmission might also be employed. National Security Emergency Preparedness Implications From an NSEP standpoint the redundancy that cellular radio may provide to other systems is generally limited in two ways. First, cellular will not replicate in full—or even nearly in full—the capacity of the landline telephone networks. Second, cellular “super systems” are, in the context of NSEP, pseudoredundant: The remote switches serving the satellite areas depend on the capabilities of the hub metropolitan MTSOs, and thus if the hub MTSO goes down, the remotes will follow suit. This point is not intended to denigrate the value of super systems; they do provide valuable service to small areas that would otherwise lack cellular service. Despite these limitations, cellular radio can significantly augment public network NSEP capabilities by offering some level of redundancy in the local loop. Cellular and other mobile systems

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness were used effectively by businesses affected by the Hinsdale switching facility fire. Business losses were prevented and, in some cases, alternative routing facilities were made available to serve their customers. Also, conversion from analog to digital cellular will improve cellular transmission security—digital systems are more difficult to intercept, as they are more easily encrypted. CUSTOMER-PREMISES EQUIPMENT Background The most visible evidence of the impact of competition on the telecommunications industry is the proliferation of hundreds of types of CPE: Handsets, key sets, and private branch exchanges (PBXs) have brought distributed intelligence capabilities to the premises of many individual users—especially to business users (Handler, 1988). Premises-based intelligence gives users network management and control capabilities, a strategic asset in an information-based economy. The introduction of myriad types of CPE stimulated regulatory relocation of network interfaces to facilitate customer control of network functions and ease interconnection (Sugrue and Cimko, 1988). As basic transport of the integrated services digital network (ISDN) is made available, independent protocols are likely to be developed in order to link diverse CPE to the public and private networks. Premises-based switching intelligence will drive new forms of switching before they appear in the public, centrally switched networks: Wideband packet and voice/data LANs will likely appear first in premises-based applications. Already, several generations of CPE have been produced and deployed in the domestic networks. This equipment diversification coupled with growth in variety of internal protocols should, by the year 2000, lead to almost completely heterogenous configurations on the customer’s premises. Competitive pressures will spur customizing of individual CPE network packages. National Security Emergency Preparedness Implications The bewildering diversity of available CPE can seriously complicate NSEP management. When Western Electric was the sole CPE manufacturer for the integrated Bell System, Bell System managers were fully acquainted with the characteristics of the CPE connected by

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness wire to the network. By contrast, today, and even more so tomorrow, no network-based company is likely to have knowledge of more than a few major CPE systems. Customers are free to interconnect the equipment of their choice to the network, without even notifying the telephone companies. Further, the proliferation of interfaces between the customer’s premises and the public and private networks will complicate loop testing and billing verification. Other future uncertainties could include CPE configured to be voice activated by specific users only. Thus, although deployment of highly diverse CPE has enhanced customer choice, it has hindered development of ubiquitous network-premises interface standards that would guarantee universal interoperability. Again, as with other areas open to competition, there are clear benefits to users in having greater freedom of choice, but the resulting product diversity has compounded the problems NSEP planners must face. VALUE-ADDED NETWORKS Background A class of networks known as VANs, first deployed in the 1970s, is becoming widely available for commercial use. These networks are packet switched rather than circuit switched. That is, they do not tie up a circuit end-to-end, but only occupy space when data are actually being transmitted. The past decade has seen establishment of numerous VANs, primarily to supply business data services, but also to provide information services to residences. Businesses have an overriding incentive to migrate data traffic to private VANs: the desire for absolute control over the management and operation of their telecommunications and information networks. Customer control affords business users with strategic assets to manage system costs and match them to system capabilities. VANs are also leading to another form of network “overbuild”: buying or leasing fiber routes operated by entrepreneurs, separate from the public networks. These “transmission condominiums” use pipeline, rail, and highway rights-of-way. Also, some entrepreneurs are entering joint ventures with established carriers, forming “owner associations.” Interexchange carriers have constructed large VANs, priced via special tariffs, to provide users with bypass alternatives to local exchange access to interexchange gateways. But as with other competitive markets, value-added services competition is stimulating

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness deployment of nonstandard architectures in the public and private networks. National Security Emergency Preparedness Implications VANs provide valuable signaling capabilities that may be used to supplement centrally located network signaling; packet networks were designed to enable rapid reconstitution of damaged networks. But if a proliferation of nonstandard architectures prevails, for want of interoperability their overall value may be minimal for NSEP redundancy, and thus private operators of VANs may will only be able to provide limited backup to public users in emergencies. DATABASES Background Electronic software databases now represent a voluminous repository of information service database access. Among the principal market applications are call answering (800) service, financial services (such as electronic funds transfer and credit card verification), specialty news services, home shopping, and network management. Business use predominates, with residential applications limited by the penetration of intelligent CPE or personal computers needed to access databases and maintain interactive data dialogues with them. National Security Emergency Preparedness Implications Electronic databases offer significant potential NSEP benefits. As one example, medical assistance might be augmented by database information. Operating instructions for vital equipment could be stored for access by inexperienced personnel. But databases also have major vulnerabilities. Being software driven, and given that they are oriented toward ease of customer access to facilitate marketing database services, they are vulnerable to hostile penetration. Protecting databases while ensuring adequate public access is difficult. Recently, the Lawrence Livermore National Laboratory— a vital national research facility—experienced multiple penetrations by a hostile user. Unable to locate the user, the laboratory posted a public query on its damaged data network, asking the intruder to disclose his grievance and discuss ways of resolving it. Many

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness public research databases depend critically on open public access— certainly, any electronic database intended to supplement NSEP capabilities must be readily accessible to the public networks, yet such accessibility contains the seeds of their potential destruction. CABLE TELEVISION Background In the video marketplace of the 1980s cable television has become a widely available alternative to traditional network (broadcast) television. According to the National Telecommunications and Information Administration, in 1975 cable served 13 percent of the nation’s households; it now serves more than 53 percent. Cable has now “passed” over 80 percent of the nation’s households, that is, cable service can be provided to these households without installation of additional distribution plant. Whereas in the late 1970s the three major television networks could count on reaching 90 percent of the prime-time audience, today that figure stands at 70 percent. During the daytime, cable has earned the allegiance of as much as 50 percent of the viewing audience. Cable television today uses a tree and branch distribution architecture, in which homes are tapped off long feeder cables. Its systems architecture is optimized for one-way transmission of 30 to 50 channels at a minimum cost. (Minimal two-way cable carriage provision was imposed on cable carriers by the FCC in 1972, but the requirement was abolished by Congress in 1984.) Signals are delivered in analog form via coaxial cable. In the future the distribution medium of choice for cable television may become fiber optics, if fiber is deployed in the local exchange loop, that is, to the customer’s home. Fiber provides enormous bandwidth and high signal quality and could become a formidable competitor for coaxial cable transmission. How quickly and ubiquitously fiber is deployed depends on both regulation and economics. One regulatory issue is whether telephone companies will be allowed to provide video service to their exchange subscribers, and whether if allowed to do so they will be permitted to offer video programming as well as dial tone. Today, there is only a little fiber in the cable television plant, and that is used for long trunk routes using analog modulation. At present, given the underlying economics of fiber, the desirability of fiber in the future, and the large and growing differences

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness in the price of a cable subscriber over the capital investment in the physical connection, it appears that overbuilding bypass will eventually occur, that the content control prohibition on the telephone operating companies may well be relaxed, and that the new video transmission medium of choice will most likely be fiber. It is unlikely that all this will occur in large scale by the year 2000. Ultimately, if broadband switching is deployed by exchange carriers, they will be able to offer switched video services that cable television companies cannot offer with their tree and branch architecture. National Security Emergency Preparedness Implications Cable television, if delivered via optical fiber, could eventually largely supplant traditional methods of television transmission, though probably not until some point in the twenty-first century. Accelerating the migration of television signal transmission to fiber could conceivably free up limited spectrum for re-allocation to other radio applications, for example, public safety channels. INNOVATIVE SERVICES Background Future service applications will undoubtedly emerge via the deployment of customizing service packages of individual customers. As digital architectures become the norm in the public networks, and as fiber makes “arbitrarily large bandwidth” available, potentially valuable NSEP applications could be developed, provided that standardized interoperable equipment and architecture are employed. National Security Emergency Preparedness Implications At this time, the potential benefits of innovative services are highly problematical, as specific new services are only now beginning to be deployed and many possibilities have yet to be explored. RECOMMENDATIONS While competition brings to the public networks its handmaiden, greater diversity for individual users, it does so in part at the expense of collective user needs like NSEP, the satisfaction of which

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness is not typically the object of commercial marketing efforts. Network disaster planners focus on adding redundancy to ward off the effects of contingencies whose severity may be extreme, but whose occurrence may be improbable. By contrast, competition induces competing companies to trim costs, especially in businesses with the narrow profit margins typical of many competitive telecommunications markets. In some regards, the multiple competitive networks that have come into existence will provide backup for one another. This is true for isolated damage situations in which damage in one area or geographic region is totally unrelated to damage in another. However, destruction of only a few signal transfer points (STPs) in each of the major carrier networks can disable the associated network. Since some number of carrier transmission routes follow the same rights-of-way, certain damage situations could cause simultaneous failures in the facilities of several network providers. The competitive environment will provide backup for some threats, but not for correlated events in which damage is inflicted at several points by an intelligent adversary or widespread natural disaster. The committee believes that, unless corrective actions are taken, the cost of network failures caused by natural disasters or covert activities (terrorists) could create an unacceptable burden to society. A small group of individuals could create economic damage and social disruption by attack or sabotage at critical switching and transmission facilities (Center for Strategic and International Studies, 1984). The immediate damage could potentially be in the many millions of dollars with the longer range consequences impossible to quantify. It may be difficult to reconstitute communications services, including ordinary telephone service, if significant damage is done to the communications infrastructure. The difficulty of reconstitution results from the need to find and re-establish complex centralized databases, to reinstitute centralized control through damaged STPs, and to manufacture and install massive switches. It is further complicated by the higher skill levels needed among personnel who operate advanced networks: Fewer people will be available to assist in reconstitution. Also many remote switches that depend on core central complexes will, as indicated earlier, fail if the host node fails. This report recommends that the National Communications System explore how the capabilities of private institution voice and data

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness networks can be used to provide NSEP redundancy. Particular attention should be given to how private network interoperability can be increased via deployment of gateway architecture. The committee recognizes that, while this approach may provide additional resources, it also presents some nontrivial problems with implementation and readiness. For the government to have high confidence that such gateway arrangements will operate as anticipated would require extensive network tests, regular exercising, and long-term coordination of network planning. Both the public networks and most private networks are in constant states of change, with database updates constantly occurring. Unless live traffic is routinely being sent over such gateways, the confidence factor that a standby capability is available will not be high. From an NSEP standpoint some measure of standardized system interfaces and universal access via gateways are desirable network enhancements. However, while from a simple availability of facilities standpoint this is certainly true, from a security standpoint there is a potential increase in risk if this move toward standardization and interconnection occurs before the trusted software to support it evolves. Were all private and public networks to be fully interconnected and employ common software, the entire network could be at risk if a hostile user were to find an exploitable flaw in the system software (a “back door” for example). This again amplifies the importance and need for trusted software in applications such as network management and Open Network Architectures. This problem reveals a potential, albeit unintended, benefit of the current separation of networks: Today more than one software system would have to be successfully penetrated to cause a system-wide outage. On balance, the committee feels that separation of networks does not best serve the NSEP community; emergency response may fail because officials cannot readily access surviving facilities. While proliferating networks are a current fact of life, some form of preplanned interoperability cutover mechanisms should be designed and put in place. The other critical point to note is that the pace of standardization and interconnection will have to be tied to the pace at which trusted software can be developed in order to maintain network security through the transition. It would be an exaggeration to assert that the NSEP capabilities of the public networks are near collapse. It would, however, be reasonable to state that competition has made NSEP planning more

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness difficult and that, if no remedial action is taken, the integrity of U.S. information highways will be put at unacceptable risk. The committee therefore makes the following recommendations. Recommendation: Exploit Value-Added Networks Because packet switching techniques are well suited for adaptive routing, the National Communications System should devise ways to exploit the capabilities of the commercial packet-switched, value-added data networks for national security emergency preparedness purposes, including message transmission, electronic mail boxes, and more robust signaling. A potentially valuable source of public network redundancy is private networks. Whereas today’s networks were designed almost exclusively to carry voice transmission, the network of the future will be increasingly driven by data transmission needs. VANs are often driven by premises-based network control intelligence, and thus offer valuable network routing capabilities if interconnected with the public switched networks. Such signaling capability is superbly suited to alternate routing schemes: Packet switching was originally designed to enable adaptive routing through damaged networks. The committee also notes, however, that making use of VANs to strengthen survivability will only succeed if the other recommendations concerning attention to greater redundancy are followed. Recommendation: Promote Internetwork Gateways Because interconnection of the proliferating public networks is essential for national security emergency preparedness, the National Communications System should explore how the capabilities of public and private institutional voice and data networks can be used to provide redundancy; particular attention should be given to how network interoperability can be increased through deployment of gateway architectures. Many large government and commercial private networks are not currently fully interoperable with the public switched networks: They operate according to a different set of protocols and standards. These

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness networks, if fully interconnected with the public networks, could augment NSEP resources. Another impediment to end-to-end interconnectivity is that more terminal devices are not entirely compatible with network interface standards. All parties, for example, customers, service providers, and manufacturers, have been inconvenienced by this trend. There is a growing understanding that signaling and transmission standards are needed to recognize the convergence of “customer” and “service-provider” networks. With the adoption of adequate standards, private network nodes can have stature similar to public network nodes. The national resource will then become communications network standards, rather than any particular set of facilities. For national security purposes, the rapid development of these standards is paramount. In recognition of this change in the perception of the national telecommunications resource, several communications intensive standards bodies are working to create the necessary recommendations. Efforts have concentrated on access and interoperability standards in association with the next wave of technology implementations— the Open System Interconnection of the International Organization for Standardization for data networking access and interconnections, ISDN for digital network access, Synchronous Optical Network (SONET) for internodal transmission, Signaling System 7 for internodal signaling, and Institute of Electrical and Electronics Engineers metropolitan area networks for broadband network access and interoperability. Standards, properly enough, take time to develop. The exigencies of the marketplace force other, interim steps from competitors. Gateways, offering limited conversion from one network to another, are means by which prestandard technology implementations can provide a degree of near-term interoperability. Today’s network interconnections are predominantly characterized by this technology. Premises-network interconnections, private network to public network connection, and private network interconnection all have gateway offerings that provide limited conversion capabilities. This appears to be an acceptable migratory step in the standards development process. REFERENCES Center for Strategic and International Studies. 1984. America’s Hidden Vulnerabilities: Crisis Management in a Society of Networks. R.H.Wilcox and P.J. Garrity, eds. Washington, D.C.: Georgetown University.

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Growing Vulnerability of the Public Switched Networks: Implications for the National Security Emergency Preparedness Handler, G. 1988. The emerging intelligent network. Presentation to the Committee on Review of Switching, Synchronization and Network Control in National Security Telecommunications, Washington, D.C., May 18. Huber, P.W. 1987. The Geodesic Network: 1987 Report on Competition in the Telephone Industry. Washington, D.C.: U.S. Government Printing Office. Sugrue, T., and J. Cimko. 1988. Open network architecture and the price cap vs. the rate of return. Presentation to the Committee on Review of Switching, Synchronization and Network Control in National Security Telecommunications, Washington, D.C., March 15.