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OCR for page 57
SECTION 7
INNOVATION
INTRODUCT;rON
For the purpose of .this section, the term "innovation" will be
taken to mean the introduction and use of new equipment, new uses of
equipment,or new services. We are not concerned here with inventions
or ideas per se, but rather with· the ability to put inventions or ideas
to practical use by the telephone companies or those who wish to
interconnect.
The principal consideration here is interconnection with the
Direct Distance Dial (DDD) network, although some of what is discussed is
obviously applicable to the question of interconnection with private lines
as well.
. The impact of innovation has not been presented as a maj or issue
before the Panel, but some concerns have been expressed. It is clear that
many of those concerns are the result of interconnection itself and the
fact that interconnecting parties and the c;rriers will have to cooperate
in some way to reach solutions to problems when their interests do not
coincide. The amount and .kind of protection required for the network
and the method of providing it tend to change the nature and degree of
the problems, but do not solve them. Few, if any, of the problems are
entirely technical in nature, although technical factors should be
considered in any policy decision.
Although the discussions before the Panel have been addressed
primarily to problems that might limit innovation, it seems clear that
interconnection will have a positive influence on innovation in some cases.
The Panel has made no systematic attempt to survey new technology and
potential new developments. For our purposes, the material presented to
the Panel in response to our inquiries seems adequate. For this reason, the
references to new technology and new developments cited below should be
considered only as examples of things that are reasonably well understood
and which may have some impact in the not too distant future.
The incentive to innovate is usually economic, either directly
or indirectly, whether it be to provide an existing service at lower cost
or to provide a new service. The increasing dependence of the business
community on communications in a variety of forms will provide ample
incentive for continuing innovation in an era in which technology is
likely to advance rapidly. .
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It seems likely that business will want fast response to its
communication needs and will want customized services to optimize its own
operation, To the extent possib1e,"no technical barriers in the
interconnection policy should prevent such" innovation so long as new
things are not allowed to interfere with other uses, Neither should
technical barriers prevent." telecOmmunication carriers from innovation
in the network, where it is in the public interest.
BACKGROUND
New Techno16gy
The development of integrated circuits to the
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I t will also likely include tone ringing using tones in the voice band.
When that telephone is used, customer equipment that is acoustically
coupled to the telephone will have to be modified, and inductively
coupled devices probably won't work at all. The new telephone is not
expected to be in production for several years and will not be in wide-
spread use for quite some time. It does, however, illustrate how new
system tradeoffs by the carrier could impact on customer-owned equipment.
New Data Terminals
Very little has been said before the Panel about the character of
future data terminal development. This is not surprising, considering the
competition in this field. It seems safe to assume, however, that with the
ability to interconnect, this will be an attractive field and new ideas
may spring from a variety of sources. It also seems safe to assume
that terminals will become increasingly sophisticated. In fact, future
terminals will most likely be small "computers;' in that logic will be
programmable by the user. In such cases, the terminal might be able
to match changes in central offices by changes in terminal "software,"
if a standard interface has been established.
The rate of innovation of data users will likely exceed that of
the switched network with the largest and fastest-growing segment in
the low and medium data rate areas.
Digital TransmiSsion
The telephone companies are now using large quantities of PCM
carriers in their exchange trunking plant. The Bell System version is
called Tl. A second system, T2, with more capacity and usable for short-
and medium-length toll circuits is under development by Bell. This trend
toward systems that carry signals in digital form seems likely to continue
through larger long-haul systems. In particular, as noted earlier, the
system using waveguide as the transmission medium will be a digital system.
The prospect then is toward an increasing percentage of the DDD transmission
plant being digital, leading eventually perhaps to a predominantly digital
plant. Special digital, networks will likely appear much sooner.
In an all-digital DDD long-distance plant, the loading and
interference characteristics will be somewhat different from those in the
present frequency division analog carrier systems. While one would expect
that some of the details of the signal criteria might change, the changes are
not likely to be large and, in any event, Will not occur for Some years to
come. The availability .of a substantial amount of digital transmission will
very likely result in new tariff offerings for digital data services. The
Panel believes that protectivecfiteria for: those services should be
consistent with the need to protect the specific fa~ilities used.
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New Switching,' Systems
Themoye toward all~digital transmission in the'long-distance
plant will lead also tothe'switching of signals in digital 'form. Such
switching already exists in special networks like that of Western Union.
Since such a switch looks essentially like another digital-transmission
link, it would have no additional effect on the criteria for interconnection.
In the local or exchange switching plant, the desire to go to solid-
state electronic crosspoints'in the switching network has been thwarted
somewhat because of the need'to pass the high voltages required for ringing
the telephone. This is one example 6f a situation in which the system balance
may change with integrated electronics. It may be that by putting a tone
ringer and perhaps tone transmission of off;..hook/on-hook signals in the
telephone, even at added expense, the resulting impact on the local office,
which might then make extensive use of electronics in the switching path,
would more than offSet the additional costs, if any, in the telephone.
Such tradeoffs could, of course, have a significant impact on inter-
connection and the interface between user-owned and carrier-owned' facilities.
New Signaling Systems
Currently, signaling in the DDD toll plant includes the use of
a 2,600 Hz tone to indicate the busy or idle status of trunks. The tariff
criteria are set up'to protect this 2,600 Hz signaling system. The future
direction of signaling appears to be toward systems that are separate from
the voice-band path. Hence, with such systems, the protection 'of 2,,600 Hz
will no longer be necessary, but because of the very widespread use of the
present system, it will be a significant factor for years to come.
NEW SERVICES
PICTUREPHONE
The Bell System has conducted trials of a switched see-while~you
talk service called PICTUREPHONE and has announced that a commercial service
offering will be made in 1970. It has also advised'the Panel that inter-
connection arrangements will be available at, or soon after, the introduc-
tion of the service.
This service will have, in addition to the normal audio pair in
the loop, two pairs of wire for the video (one for each direction), with a
transmission capability approaching 1 MHz. In the digital toll transmission
plant, the voice and video will be multiplexed On a 6.4 MB/s bit stream.
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The system clearly has capability for high-speed data.
Since the interconnection arrangements have not been-announced,
the Panel has no basis on which to make detailed comments. One observation,
however, can be made. The-:audio pair _is used for network-control signaling.
The question of interconnection to the-two video pairs should then be
1imited~ in the technical sense, to-transmission and physical-protection
criteria.
DATA-PHONE 50
The Bell System has recently begun a 50 kilobit service called
DATA-PHONE 50. N0 provisions have been made for interconnection and a
few parties have suggested that interconnection be allowed. Although the
Panel has not studied the characteristics of this service, it sees no
technical reason why interconnection should not be permitted, consistent
with the final decisions regarding interconnection for voice-band circuits.
The use of this service will likely be primarily for computer-to-computer
data transmission in load-leveling, national data banks, national network
access for remote access users, etc. It will be desired to incorporate into
computer communication hardware all automatic functions as opposed to
manual functions most used today in voice-band data transmission.
OTHER NEW SERVICES
Other new services are likely to be offered in a way and form that
can only be estimated at this time and which will depend not only on
technical factors but also on actions by regulatory agencies. The
offerings of the types recently proposed by MCI and the DATRAN service are
examples. We have grouped such services under the general heading of
customized common carriers. They will, in general, we believe, aim their
offerings at the business community and perhaps especially at users of data
services,where the rate of innovation will be high. In this connection, we
observe that, from a technical point of view, many of them will depend on
interconnection with the common carrier.
POTENTIAL RESTRICTIONS TO lNNOVATION
The need for more information to be exchanged between suppliers
and users on the one hand and the carriers on the other was evident in the
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presentations before the Panel. Users suggested arrangements to the Panel
that the Bell System had already provided for, but about which the user
i:
was unaware. Other cases came up in which the Bell System stated its intent i'
to the Panel to provide for connecting arrangements, but that intent was
unknown to suppliers and potential userS. Regardless of the procedures
finally adopted for providing protection to the network,whether by
interface boxes, by standards, or some other arrangement, some method
should be worked out to allow for better interchange of information. Some
of this will come naturally with time as all parties gain experience with
interconnection, but the problem will remain to some degree. Further, it is
evident to the Panel that many customer systems have or will have terminal
points in independent companies, as well as Bell System territory, and
better communication with the Bell System is not sufficient. This issue
will be addressed further in Section 9.
Questions of Timing
Perhaps the most significant question of timing is that of the
response time of carriers to new user requirements. Users have found that
arrangements ,that are nominally available are not actually readily available
in all Bell System companies when they want them and not available at all in
some independent companies. This is inevitable in the initial stages of a
change as significant as interconnection. Nevertheless, many people feel
that the carriers will not be able to respond rapidly enough with new
protective arrangements and that they could innovate faster if they
included the protection in their terminals. They could then make it
available on their equipment regardless of the location or company.
A second question of timing has to do with the changes in the
carriers' system that might make user equipment obsolete. The Bell System
has expressed concern that if a user has just purchased new equipment, he
will be reluctant to accept a change in the telephone system that would
require substantial change in his equipment.
Several users, especially those in fast-moving fields like
computer communications and those who have historically interconnected
with the carriers' private lines, suggest that the rate of innovation in
the DDD network will pose no problem to them •
•
Questions of Cost
An important cost question from the suppliers point of view is the
cost of a new connection arrangement for some new service or use he may want
to offer. If he included the protection in his own design, he would be able
to determine the total cost himself. If he must wait for a carrier tariff,
the total cost of his serVice will be 1lncertain until the tariff is filed.
•
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Another criticis~·ofthe·presentarrangement is that suppliers
fear that the carriers can co~peteunfairly because,in.their opinion,
the added protective box makes cusnomer-owned systems ~ore expensive and
less reliable than co~parable carrier;"'ownedsystems. The Panel.
recognizes that the question of actUal overall cost is a comp Lex one and
has made no.evaluation of costs, including those of administration, etc.,
as they relate to different·approaehes~ Section 6 discusses s~e of the
general cost tradeoff areas in greater detail.
Restriction of Use
Present connection arrangements are on a per line basis·and are
tailored to a specific te~inating arrangement. Some users may want to use
a line for one purpose at one time (e.g., during the day) and something else
at another time (e.g., during the night). This argues, in their opinion,
for an arrangement that is physically a part of the te~inal rather than
the line. The Bell System has agreed that· this may be possible using
carrier-owned protective devices integrated into the customer
equipment.
In a different vein, the carriers point to a potential use of
characteristics of specific designs in the network that are incidental to
its normal use and that may be different in subsequent generations of
equipment. An in·terconnecting arzangeaent that takes advarrtage bf such
arrangements may unknowingly be made obsolete by new designs. An example
brought before the Panel involved the use of single tones produced by
pressing two touch-tone buttons simultaneously. The new integrated
circuit version of the touch~tone generator does not produce the single
tone since that feature was only incidental to the original design.
SUMMARY OF ISSUES AND CONCLUSIONS
The carriers have said that widespread interconnection will tend
to impede innovation in the network, because, among other things, users will
tend to op,pose changes by the carriers that make the users' equipment
obsolete or require it to be modified. They have also said that direct
interconnection without carrier-owned interconnecting arrangement will
further impede their innovation because it removes the carrier-controlled
buffer with known characteristics between the network and the interconnected
equipment.
So~e users, especially the large ones·and those in fast=oving
fields such as computer time-sharing, have expressed the opinion that, with
the necessarily deliberate rate of innovation expected in the·network, there
will be no major problems in keeping up with network innovation. They do
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not agree with the carriers' concerns regarding the need for a carrier-
controlled' buffer.
Some suppliers of equipment and services have ' expressed the
op~n~on that the presence of.the carrier-owned interconnecting arrangement
will impede innovation onthe'user side of the interface,.wh.are the goal
is to optimize.theusers'.systemor use of equipment. Further, and perhaps
more importantly, they question the ability of the carrier to respond rapidly
enough to new situations in which new interconnection arrangements are
required.
While data on which to base tonclusions are limited, it is
the opinion of the ~anel' that:
1. The advent of widespread interconnection itself,
regardless of how it !s implemented and controlled,
may indeed have some effect· on the rate of innova-
tion by carriers, suppliers, and users. In.some
cases, it may impede innovation in the network and,
in other. cases, it could conceivably promote innovation
because of the pressures of demand from users. It
will certainly tend to increase the rate of
innovation by suppliers and users.
2. The introduction of a certification program for
direct interconnection will not significantly
restrict carrier innovation if there is effective
information exchange between-C;arriers, suppliers,
and users. On the other hand, the suppliers and
users will have more freedom to innovate.
3. balance, under the certification program,
On
innovation in the overall system by carriers and
users of interconnected equipment is likely to
increase.
