EVALUATING EQUIPMENT AND SERVICES

Evaluating equipment and services is usually within the context of feasibility assessment, or project planning. Risk is minimal and limited to the amount of time and perhaps travel expense invested in this type of activity. As projects grow and commitments are made, risk grows. What we are concerned about is risking capital, and if the opportunity is real, risking the loss of not just the invested capital, but also some or all of the promised return. The worst of all possible nightmares is a scenario where the project causes a problem outside the scope of the project as envisioned, requiring an unplanned, unbudgeted expenditure.

Not only should equipment and services be evaluated, but their source of supply as well. Conducting due diligence on one or more suppliers varies by level of effort depending on several factors such as how long the prospective supplier has been in business, their size, and their capability to produce and deliver the products and services required by the project at hand. A new supplier that’s been actively supplying products or services in the marketplace for several years will require less effort than a start-up. A start-up with an innovative, new product may require more effort; certainly it’s likely the effort will be different. Well-known or start-up, any situation involving claims of significant new technology should be taken with a grain of salt until all potential material risks have been uncovered, examined, evaluated, and quantified.

Due diligence is most effective and efficient when it is conducted in a way that it becomes a benchmark for acceptance of equipment and services. Conducted properly, there should be no surprises for buyer and seller. If function, form, and performance are not as expected, then there has been a misunderstanding in the past, or something about the hardware, software, or services needs troubleshooting and fixing. Ideally, the due diligence process takes into account the requirements and specifications, and compares capabilities and performance of equipment, facilities, and services of one or more sources of supply. The process should begin with a simple paper-based evaluation. Once everything looks okay on paper, more extensive evaluation can be undertaken.

There are two basic approaches to conducting evaluations. A general evaluation can be undertaken whereby the supplier provides a set of information about the capabilities and performance characteristics of the equipment. The evaluator takes that information and proceeds to determine if the equipment or services are capable of performing as claimed in the information provided. This may or may not determine if the equipment and services meet the business requirements of the buyer. The other approach to evaluating equipment and services takes a specific requirement or set of requirements and then proceeds to determine if the equipment and services meet some or all the details in the requirements established by the buyer.

Once a direction is established, then the process can be sequenced into three or fewer logical steps. Step one can be what’s referred to as a paper-based exercise. Simple expert analysis of the information provided by potential suppliers can be analyzed to determine if it meets or exceeds the requirements established by the potential buyer. The next step after paper evaluation requires examination and testing of one or more working samples. Depending on the size and complexity of the project and the potential risks/returns at stake, scalability may be an issue. If scalability is a concern, then the structure of the initial working samples and their evaluation criteria should be staged and structured so as to be extensible to greater scale. Another way to view this issue is to structure the paper evaluation and the initial working sample evaluation so it is representative of the full scope of the network or system as known at a given time.

EXAMPLE EQUIPMENT AND SERVICE SPECIFICATIONS

The remainder contains examples of specifications that can be used to detail technical requirements for a digital transmission facility for a multiple station group. The examples cover a studio-to-transmitter (STL) network, digital television transmitter, design, erection, and installation services. The material is intended to serve as the technical content of an RFI or RFP and acceptance of deliverables.

STL Network

The STL network will provide and all transmission facilities required to transport content, monitor and control transmitters, and support voice and data communications, site security, and network management functions. The network must be designed to meet very high reliability operations with less than a 1-minute outage per month, cumulative outage of less than 10 minutes per year. Each site must have at least two physical routes between the central master control and each transmitter site. If one path experiences an outage, the network will be required to sense the outage and restore service via the alternate route without human intervention. Alternate route facilities between the central site and each transmitter site will be designated Main and Backup. Both paths will be subject to monitoring and alarm at all times. The normal mode of operation is Main path on air, and Backup path in standby. If the Main path experiences an outage, the network will be required to switch to Standby signal automatically without human intervention. If the Standby path experiences an outage, it will cause an alarm to be initiated and logged. Service restoration will be of the highest priority, and at least equal to any service restoration priority provided to other customers in the class covering public convenience and safety.

Service Provider Technical Qualifications

The service provider shall demonstrate competence through design level expertise with classical and contemporary network technology, systems, facilities, services, and network operations. The successful service provider will own more than 75% of all facilities that the network traverses. For those portions it does not own, it will be required to demonstrate satisfactory contractual business relationships with the owner.

The successful service provider will incorporate network management systems that can be accessed by the buyer for purposes of lodging requests for investigation of alarms and outages. Preference will favor those service providers capable of demonstrating current capabilities to accept requests for investigation of outages or service impairment whereby the user enters information into a terminal or other device with an Internet browser-type interface. It will be an absolute requirement that the successful service provider acknowledge a request within 1 minute of lodging by an automatically generated response, and confirm within certain time frames, depending on priority included in the request.

Responses to this request will be evaluated based on cost and technical trade-offs across performance, robustness, and reliability. Presentation of facts and figures is left to the service provider; however, greater consideration and eventual award will be given to the proposal with meaningful, detailed design characteristics that are related directly to service cost. Highly summarized, the most credible proposal containing best performance, robustness, and reliability constrained by most favorable start-up and long-term cost is most likely to be accepted. The buyer reserves full and final judgment on all matters of the selection and award process and will not under any circumstances pay for cost estimates, proposal preparation, or a similar effort, material, or services except by formal agreement to do so in advance of a formal purchase order.

Due diligence will follow initial selection. Due diligence includes physical examination of a cross-section or example of network elements making up the service provider’s core network. Terminals and central offices serving all sites will be examined closely and must include face-to-face meetings with technicians, supervisors, and managers who will be supporting the network. The successful supplier will exhibit confidence in its ability to isolate and resolve issues and concerns of all levels of severity in a competent, logical, and straightforward manner. An examination of power systems, heating, ventilation, air handling, and safety systems and procedures will be conducted.

Network Topology

Network topology will cover sites 1 through N. Service providers initial responses should be based on eight sites as depicted in Figure 1. After examination of the initial proposals and selection of two or three finalists, additional sites may be added for revised technical proposals and pricing.

 

Figure 1: STL Network Topology

Linking in the final network design will be a mix of round robin and point-to-point links between sites. Fully meshed network design is not technically prohibited; however, cost of such networks is likely not attractive. Furthermore, network management and utilization is unattractive because of operational complexity.

Service providers are requested to study the topology and capacity requirements of the STL network and propose at least two approaches. Each approach should be presented with a spreadsheet containing link numbers, site designation capacity, and pricing for each link. Specific routing details for each link are required to show active and passive network elements on each alternate route between sites. An analysis showing minimum and maximum time to repair a single failure of each active and passive element in each path or route will be included on a separate spreadsheet in the same file as linking and pricing.

Network Interface and Capacity

For the initial 3-year period, core network interface and capacity needs include diverse STS1 interface (51.8 Mbs) at each transmitter site and diverse OC12/STM4 (622 Mbs) interface at the central site. The service provider will include an estimate of the time, cost, and required notice for making additional capacity available in diverse STS1 increments.

Service interface will be DVB-ASI across a BNC connector on either side of a bulkhead or patch panel of the service provider’s choosing. In parallel with each service interface, the service provider will include an Ethernet interface to the network management system to facilitate voice and data communications required to support network management. The service provider may provide access to the public network at their option. If such is included, the service provider must demonstrate adequate and satisfactory firewall capabilities between the network interface point and the outside world.

The service between the central master control and each transmitter site will consist of a minimum of four 20 Mbs channels, net of any overhead, but not including any forward error correction. Forward error correction will be discussed in detail during proposal reviews and a determination made as to its necessity and value.

Premises Architecture and Network Interface

Architecture of the premises equipment includes capabilities to support program content transport, voice, data communications, Internet access, and similar applications such as video conferencing and visual site monitoring. Interface on the network side at SONET/SDH level STS1 or STS4 is preferred. All plesiochronous (PDH) service interfaces will be on the service side of the network interface equipment.

Service Interfaces include SMPTE 259, SMPTE 292, SMPTE 305, DVBASI, T1, DS3, and IEEE 10/100/1000BT in accordance with applicable standards. Suppliers are requested to provide a detailed list of applicable standards of official standards bodies such as SMPTE, IETF, ANSI, ITU, or other and relevance and applicability of each reference within the context of each standard’s use in their products and services. Figure 2 shows a functional block diagram of the general requirements. Potential suppliers are requested to include one or more block diagrams showing the next level of detail along with a matching spreadsheet for each item of equipment proposed.

 

Figure 2: Premises Equipment Architecture and Network Interface

The spreadsheet must include quantity, description unit price, and total price and discount applicable to each item based on total package price. Separate sheets in the file covering equipment, installation, and maintenance cost during the first and second through the fifth year of operational life are requested.

The service provider may offer network interface device equipment; however, it may not be part of an overall service contract, depending on initial and ongoing maintenance cost. Potential equipment suppliers are encouraged to quote stand-alone equipment with pricing separate from maintenance cost. Preference will be given to potential suppliers who can demonstrate successful, satisfactory business relationships with similar class customers.

Design and Installation Services

Services and material of the type required and described in this document are complex and risky. This SOW covers lifting, assembly, and installation of a passive transmission system on and at or near the top of tall tower structures. The major components of the system include a gas stop, transmission line components, hangers, an elbow complex, and an antenna. Successful completion of the work requires specialized technical knowledge and heavy lifting equipment. Preference will be given to service providers deemed in possession of these attributes:

• An established business of providing services such as contemplated
• A strong, accident-free safety record
• The continuous employment of key management and site crew personnel
• A stable financial condition with insurance adequate to cover all risks at each site
• Good relationships with tower designers and manufacturers capable of providing material and design knowledge sufficient to support modifications to existing towers, foundations, and guy cable
• An established relationship with third-party structural engineering firms, or regular employment of professional engineers licensed to do business and practice their profession in the state or states where the work will be performed

Network Architecture, Facilities, and Services

If network architecture can be thought of as analogous to a framework, then facilities and services can be thought of as the bits and pieces that give the architecture detailed substance and a useful purpose. In communications networks, as in broadcast networks, there is an input and output—the basic function. Both must be managed and their assets and cost of operation must be accounted for. Both are enabled with interfaces and protocols. Both tend to evolve and adapt to regulatory and technology forces. More importantly, those that respond favorably to market demand, survive, grow, and prosper.

This chapter is not about how to design and build a telecom network. The intent is to provide information about the nature and characteristics of networks sufficient to communicate desires and requirements to potential equipment and service providers using Internet and Telecom terms, standards, and symbols. The overall goal is to help the reader understand communications network architecture, facilities, and services. The secondary objective is to provide a framework with which to evaluate potential service provider’s ability to deliver facilities and services capable of meeting their requirements, and ultimately assessing and measuring performance against the terms in a contract.

LANGUAGE AND TERMINOLOGY OF COMMUNICATIONS NETWORKS

Communications network architecture is most often taught and thought of as being layered and linked. Layering breaks the network into a set of logically related components. Linking connects the components and makes up an end-to-end facility or service. The network becomes the link between all the equipment at all the locations making up the network. Successful use of network facilities and services always includes a set of common equipment at each location where facilities are terminated, enabling service delivery. Still, equipment, facilities, and services alone are insufficient to ensure successful business use. Man cannot live by bread alone; he must have peanut butter. The key ingredient required for success is a walking, breathing human being, qualified to be responsible and held accountable for making sure all the equipment, facilities, and services are configured, maintained, and changed as day-to-day demands of the enterprise change.

If you are a designer, manager, or senior staff responsible and/or accountable for making or approving decisions related to design, planning, and management of assets and operating expenses related to communications network asset and expense management, the material in this section is one of the more important, if not the most important, part in the book. It can be a technical foundation for a process whereby you and your organization can take firm control of communications equipment and service vendors by first defining your needs in their terms and lingo so you can establish a competitive procurement environment as the first step in building a long-term mutually beneficial relationship between your organization and the vendors. You can benefit greatly if you take the time to study and understand the technical and economic aspects of how to order and piece together end-to-end facilities and services to build the network best suited to your business.

The level of detail is structured around the common equipment at each location and its interface to network facilities and services. One side of the equipment is connected to the network facility that provides access to network services. The other side of the equipment interfaces to local area network (LAN), private branch exchange (PBX), and Moving Picture Experts Group (MPEG) compression and decompression equipment.

Figure 1 shows an example of the common equipment found at a typical operations site engaged in production, post-production, and on-air transmission operations.

Figure 1: Typical Operations Site Common Network Equipment

Figure 1: Typical Operations Site Common Network Equipment

Basic service requirements include telephone or dial-up service, data transmission, Internet access, and content transport within and outside each site. Group ownership operations may range from half a dozen operational sites to 50 or more. The geographic scope might range from purely local stations to statewide or regional or national in size.

This level of detail may seem insufficient when considered from a broadcast operations point of view; however, it is quite satisfactory for network planning and design purposes where the objective is to inform a potential equipment and/or service provider. It can be used to delineate equipment from services, and it can also be used to inform potential consultants or network designers about their responsibilities in terms of a design, project, or program management.

On the communications network side, the level of detail goes substantially deeper in the form of definition, description and use of various network elements, and several alternatives for linking them together. Figure 2 is a simple sketch showing four sites with links between each.

Figure 2: A Four-Site Network Topology Diagram

Figure 2: A Four-Site Network Topology Diagram

The link arrangement depicted in Figure 3 is only one of several possibilities. Obviously if there were only two sites, there would only be one link between the two. Traffic requirements would drive the selection, but it’s quite likely the links would be bidirectional, and of equal capacity, also called full-duplex, asymmetrical bandwidth.

The arrangement shown is called a ‘‘round-robin’’ because it connects all the sites in a series arrangement, with only one link between any two. This arrangement has operational advantages in terms of reliability and robustness; however, it may have disadvantages because the traffic may be more than it can handle in some places and more than needed in others. For now, keep in mind that there are three types of traffic: voice, data, and program content.

While not explicitly mentioned, the Internet is becoming much more important in many ways; however, it will be included as a potential resource when the traffic is segmented into content creation, distribution, and delivery. Also, don’t forget that the Internet is nothing more than just another resource built on a set of technology. The technology is the family of Internet protocols (IP) that can be used separate and apart from the public Internet to build a private network based on IP standards and techniques.

Regardless of the basic technologies and all the architectural considerations, it is the end-to-end service between any two sites that we seek. Figure 3 is simply a reminder of our reference model.

Figure 3: End-to-End Service Reference Model

Figure 3: End-to-End Service Reference Model

Any seemingly complex, multisite network can be decomposed or decoupled into single, defined point-to-point paths, which can be observed, monitored, and measured in many ways. Once end-to-end measurements are made and a profile of its characteristics recorded, it becomes a benchmark for future operations.

One last point is that the single path can be broken apart and individual component performance measured and characterized. One simple obvious characterization is connecting two sets of equipment with wire or fiber, sometimes referred to as the ‘‘perfect network,’’ and measure performance. And of course there are ways to measure and characterize the performance of the facilities and service making up the link between the sites.

Now we go to details of network architecture, facilities, and services.

Types of Services & Standard Billing Process | Introduction to Billing

The control of a billing system is usually under the finance department. Billing systems are often viewed as accounts receivable as the billing system assists in the collection (receipt) of money from customers. Billing systems are also is part of accounts payable (for inter-carrier settlements) as customers often use services from other companies such as long distance and call completion through other networks. The network operator is usually financially responsible for services provided to their customers by other networks regardless if the customer pays for the service or not.

Types of Services

There types of services that a customer may use in a network include system access (basic information transfer), information processing (such as email), and content delivery (current traffic information for example). When the communication service involves system access through different networks, the call is normally routed through a toll center and a toll charge may apply. A toll is any message telecommunications charge for services provided beyond a local calling area.

Examples of system access services include plain old telephone service (POTS), integrated services digital network (ISDN), digital subscriber line (DSL), and other data connectivity services that transfer information between points. Information processing services include phone card (Telecard), voice mail, fax store and forward, and other services that involve the processing of information that is passed between two or more points. Content delivery involves linking customers to sources of information content and transferring the content to the end customer. Examples of content delivery include weather advisory services, stock quotes, and the delivery of other sources of information that the customer requests.

Standard Billing Process

The typical billing process involves collecting usage information from network equipment (such as switches), formatting the usage information into records that a billing system can understand, transferring these records to the billing system, assigning charge fees to each record, receiving and recording payments from the customers, and creating invoices.

Figure 1 shows a standard billing process. In this diagram, the customer calls customer care or works with an activation agent to establish a new wireless account. The agent (customer care) enters the customer’s service preferences into the system, checks for credit worthiness, and provides the customer with a phone number so that the customer may make and receive calls through the telephone network. As the customer makes calls, the connections made by the network (such as switches) create records of their activities. These records include the identification of the customer and other relevant information that are passed onto the billing system. The billing system also receives records from other carriers (such as a long distance service provider, or a roaming partner). The billing system now guides and updates these call detail records (CDRs) to their correct customer and rating information. As information about the customer is discovered (e.g. rate plan), the updated billing records are placed in a billing pool so that they may be combined into a single invoice that is sent to the customer. The customer then sends his payment to the telecom service provider. Payments are recorded in the billing system. History files are then updated for the use of customer service representatives (CSRs) and auditing managers.

Figure 1: Standard Billing Process. Source: The Billing College

Wireless Data & Broadcast Television | Services

Wireless Data

There are three basic services offered by wireless data systems: circuit switched data, packet switched data and messaging.

Circuit switched data is a bearer service as it only transports the user’s data between points. When sending data through a circuit switched connection, the user regularly pays a standard per-minute charge for the amount of time that the connection is maintained regardless of how much data is sent through the channel.

It usually takes approximately 10 to 20 seconds to establish a circuit switched connection on a wireless network. This is due to the processing of dialed digits through the telephone network and the amount of time the modem requires to establish which communication language will be used (called training time). The user ordinarily pays for this setup time even if they only have a very small amount of information to send (such as an email message). Once a connection is established on a circuit switched connection, data transfer rates generally range from 9600 bps up to 28,800 bps.

Packet switched data is also a bearer type of service as it only transports the users data between points. When sending packets of data through the network, the user normally pays only for the amount of data or number of packets that they send.

Unlike circuit switched data, the connection time for packets is ordinarily under 1 second (some systems may be below 150 msec) and the user does not pay for this setup time. The typical price for packet data transmission ranges from approximately 4 cents to $1 per kilobyte. A one-time activation fee is as a rule required along with a minimum monthly fee. The usage amount is normally applied to the monthly fee.

Several wireless data service providers in the United States now offer service based on application and number of units. This results in different price plans that can vary from $15-25 per month per unit with some systems offering a flat fee for a fixed or unlimited amount data transmission. The trend is to move away from the per packet charge.

Figure 1 shows a typical wireless packet data rate plan. This table shows that there is usually a monthly recurring fee that provides the user with a monthly amount of data. If the customer uses the maximum data allocation, an additional fee per kilobyte or megabye of data is charge.

Figure 1: Wireless Data Cost

Wireless messaging is a teleservice as it processes the user data. Wireless messaging services include store, forward, and Internet connectivity. Typically wireless messaging is combined (bundled) with wireless data service (such as packet data).

Broadcast Television

Broadcast television revenues are primarily obtained from the providing of advertising. Figure 2 shows the recent growth of the broadcast television advertising industry. This diagram shows that total advertising revenue is increasing.

Figure 2: Television Advertising Revenue.
Source: Television Advertising Bureau

Mobile Voice & Paging | Services

Mobile Voice

The most well known application for wireless communications is voice communications. Voice communication can be telephony; wide area (cellular), business location (wireless office) or home cordless (residential) or voice paging, dispatch (fleet coordination) or group voice (audio broadcasting). Service rates for voice applications typically involve an initial connection charge, basic monthly minimum fee, plus an airtime usage charge. When the customer uses service in another system than their home registered system, there may be a daily fee and/or a higher per minute usage fee.

Figure 1 shows that mobile telephone charges include recurring costs and usage costs. Mobile telephone systems also offer advanced features. In many cases, the advanced features are offered for free (e.g., voice mail) as they increase usage costs.

Figure 1: Mobile Telephone Costs

Paging

Paging services include tone paging, numeric paging, alpha (text) paging, and voice paging. Tone paging service notifies a paging customer that a message has been sent via a tone. This tone usually is designated to mean a callback to a single location is requested. The original “beep, beep” tone pagers that started it all have become very popular as entry-level private communications systems, including restaurants (beeping servers when orders are ready) and in other centralized locations where a tone page necessitates a choice in response to only one.

While the popularity of these types of pagers has decreased overall, some retailers continue to offer tone pagers as “loss leaders” allowing the publication of low prices in print ads to attract attention. Still, for dispatch operators or other industries that only need a response to a central office, tone pagers offer a cost-effective solution.

Numeric paging is the sending of paging messages, typically telephone numbers that are displayed on a small paging device. After the message is received, the user calls back the displayed telephone number to talk to the sender.

Figure 2 shows that the typical cost for numeric paging service typically involves signing up for local, regional, or nationwide coverage. Rate plans start with a monthly service charge that allows pages using a local telephone number. Additional charges may be assessed for 800 toll free and 0800 freephone access numbers. Paging carriers usually offer a maximum number of pages per month and pages that additional per-page charges may apply for pages that are sent beyond the pre-defined limit.

Figure 2: Paging Cost

Alpha paging displays numerical and textual information. This can take many forms, from verbatim text messages to weather reports. Messages can be recorded into voice mail where operators type them up and send them out, or callers can dictate messages to live operators directly. Many carriers bundle free news, weather and sports feeds from other sources. While some carriers offer unlimited numeric usage, many charge for additional pages (both numeric and text message) beyond a pre-defined limit. Some carriers charge so much per character while others simply charge by the message.

Voice pagers broadcast messages through a built-in speaker in the paging unit. Message volume settings can usually be set to loud, soft or private, through an earpiece.

Two-way pagers allow fully interactive capabilities, permitting users to respond to pages by sending an original or canned alphanumeric message. Additional hardware must be purchased (or leased). Customers can lease the paging device for about $15 per month or purchase it for around $399.00.

Services:Cable Television Distribution, Pay per View, & High Speed Data

Services that are offered by cable system operators include television distribution, pay per view, and high-speed data services. Cable television networks pay distribution fees to content provides for the right to redistribute network broadcasts in their systems. In return, cable television operators charge customers for access to this content on a monthly subscription, per-event fee, or by quantity of information (data) transferred.

Cable Television Distribution
Television distribution involves the receiving and re-sending of television signals to groups of consumers that are connected to the cable television network. Cable network operators typically charge a monthly access fee for connection to cable television systems.

Figure 1 shows the typical cable television subscription fees in the United States. This diagram shows an initial connection fee of approximately $45 with a monthly connection fee of $30.00. This figure shows that the types of channels may be grouped into categories with varying fees charged for these groups of services.


Figure 1: Cable Television Subscription Fees

Pay per View (PPV)
Pay-per-view is a video signal subscription service that allows customers to pay for individual video selections they desire to view. Pay-per-view service can be limited to viewing pre-scheduled broadcasted channels or video on demand (VOD) videos. The typical charge for pay per view services is approximately $6.00.

High Speed Data (Cable Modems)
High-speed data service via cable modems provides customers with the ability to transfer data at broadband data transmission rates (1 Mbps or above). Customers usually pay a monthly fee for high-speed data connection in addition to an Internet service provider (ISP) account.

Figure 2 shows the average charges for high-speed cable modem data access. This chart shows that cable modem access cost includes an initial connection fee of $100, a monthly subscription fee of approximately $50, and an equipment leasing cost of $10 for the connection equipment.


Figure 2: Sample High Speed Data Cable Modem Access Cost

Services : Direct Marketing Broadcast Services

Services
Private telephone systems can generate revenue for companies by offering broadcast services or operating as call centers. Direct marketing broadcast services provide revenue by using an existing telephone system to broadcast a customer’s message to a list of hundreds or perhaps thousands of recipients. The customer is then charged for the usage of the telephone system to broadcast their message. Call centers provide revenue by processing customer service requests (such as placing orders) or by providing sales and marketing services (telemarketing). In either case, call centers may charge fee on a per-call or percentage of sales basis.

Direct Marketing Broadcast Services
Direct marketing broadcast services include sending fax and e-mail messages to qualified groups of people. Fax and email broadcast services are distribution service that can use CTI technology to delivery the same message or even adapt each message for a list of recipients. Clients use e-mail and fax broadcast to reach a targeted audience with a sales message. Clients may provide a list of recipients for the fax broadcast, or for an additional fee, broadcasters will supply the customer with a list of names to target. Typically, clientele are charged on a per fax basis, with discounts for high volume broadcasts. Some broadcasters charge a per-minute usage fee rather than billing for services on a per fax basis.

Figure 1 shows the typical charges for direct fax market broadcasting. This table shows that prices for this service range from a few cents to 50 cents per fax drop as quantity ordered increases to beyond 5,000 faxes. This chart also shows that there is usually a restriction on the minimum amount of information that a customer can send.


Figure 1: Direct Market Broadcast Cost

Services : Voice and Centrex

Services
The key services provided in public switched telephone networks include voice (audio bandpass), Centrex, switched data communications service, leased line, and digital subscriber line.

Voice
Voice service is the providing of audio communication circuits that can pass analog frequencies below 3.3 kHz. Voice service is commonly called plain old telephone service (POTS). Voice service remains the core of telephone service as in 2000, the amount of voice traffic transferred per month was more than 53,000 terabytes per month [5].

The newer CO switches have enhanced voice services to allow residential customers to have practically all the features normally associated with PBX’s that serve businesses such as: call waiting, distinctive ringing, voice mail (with signaling or stutter dial tone), feature telephones, and incoming WATS. Some of the newer features are packaged (bundled) together so their actual cost is not readily known.

Figure 1 shows the cost of local telephone service in the United States and that the costs are based on a recurring charge with unlimited usage. The customer may also pay additional recurring fees for advanced services. The cost elements are reasonably standard but the costs vary among LEC’s/CLEC’s. At times the variations between LEC’s in geographies are substantial.


Figure 1: Cost of Local Telephone Service in the United States. Source: Federal Communications Commission (FCC)

Outside the United States, the cost structure for local telephone service is often based on actual usage with a per minute rate ranging from 2 to 6 cents per minute.

Centrex
Centrex is a service offered by a local telephone service provider (primarily to businesses) that allows the customer to have features that are typically associated with a PBX. These features include 3 or 4 digit dialing, intercom features, distinctive line ringing for inside and outside lines, voice mail, call waiting indication, and others.

Centrex services have had many names over the years, but, whatever the name, the purpose of this offering was always the same: an alternative to customer premises PBX’s. Centrex services flourished and still have a place for many large, dispersed entities such as large universities and major medical centers.

One of the major selling points for centrex is the lack of capital expenditure up front. That coupled with the reliability associated with centrex due to its location in the telephone company CO have kept centrex as the primary telephone system in many of the businesses referenced above. PBX’s, however, have cut into what was once a quite lucrative market for the telephone companies and are now the rule rather than the exception for business telephone service. This has come about because of inventive ways of funding the initial capital outlay and the significantly lower operating cost of a PBX versus a comparable centrex offering.