SATELLITE SYSTEMS AND TECHNOLOGY

A background summary on communications wouldn’t be complete without including satellite systems and technology, another unique segment of the field. The global satellite system today has evolved over more than 40 years. Satellite services are grouped into fixed satellite service (FSS) and broadcast satellite service (BSS) by the ITU. The more common informal reference for the BSS is DBS, meaning direct broadcast service. In addition to communications, satellite systems and technology provide vital weather information, mapping, location information through the global positioning system, plus many valuable services to the military.

The current DBS system is conceptually very similar to one ArthurC. Clarke described in an article written in the fall of 1945 for Wireless World. In this article, he foresaw 24-hour manned satellites being used to distribute television programs. Despite a repeated version of the concept in another publication, The Exploration of Space written in the early 1950s, the idea never gained much interest or attention.

John Pierce of AT&T Bell Labs is credited with being the first to take serious technical and financial interest in the idea. Pierce elaborated on the basic idea to the extent that the space-based platforms would perform much like a mirror and be located in medium and 24-hour orbits. He estimated the capacity of the satellite to be equivalent to 1000 simultaneous telephone calls and comparing it to the first trans-Atlantic telephone cable with a capacity of 36 simultaneous calls, arrived at a conclusion that it would cost 36 million dollars and be worth a billion.

AT&T caught the FCC by surprise in 1960 when it requested permission to launch an experimental satellite. At the time, the commission and other parts of the government simply weren’t equipped with policy and rules covering satellite communications. RCA was awarded a contract to build a medium-orbit satellite in mid-1961. Around the same time, Hughes was awarded a contract to build a high orbit, 24-hour satellite. By 1964, four medium-orbit and two high-orbit satellites had operated successfully. The Communications Satellite Act of 1962 formed the basis for Communications Satellite Corporation with an initial capitalization of 200 million dollars to build a system of several dozen medium-orbit satellites. Ultimately, COMSAT decided to build satellites for the higher geosynchronous orbit, the first of which was launched from Cape Canaveral in April 1965.

A key early broadcast event was televising part of the 1964 Tokyo Olympics. At the same time the United States was gaining this initial expertise and capability, other countries had been involved from the beginning. American companies built COMSAT’s initial satellites and launch vehicles. AT&T negotiated with Foreign PTT organizations to build earth stations and began tests and experiments aimed at providing telephone service. By the time COMSAT’s first satellite was launched and ready for service, France, the United Kingdom, Germany, Italy, Brazil, and Japan had operational earth stations. In August 1964, agreements were signed to create the International Telecommunications Satellite Organization (Intelsat).

By 1969, when Apollo 11 landed on the moon, half a billion people watched the event all over the globe through Intelsat transmission facilities. The last facilities making up the first global network were placed in service over the Indian Ocean just days before the moon landing occurred on July 20, 1969.

ABC proposed a domestic satellite system to distribute television signals in 1965, but it never gained traction. In 1972, ANIK was placed in service by Telesat Canada to serve the vast regions of the country. RCA and Western Union both launched the first domestic satellites in 1974 and 1975. AT&T launched its first domestic satellite in 1976. Satellites were intended to provide voice and data service; however, television quickly became a major user. By the end of 1976, 120 transponders were in service, each capable of 1500 telephone conversations or one TV program. Movie channels and super stations were made available to cable head ends, driving the growth in cable TV demand. During this same period, the major radio and television networks began using satellites to distribute programming to their affiliates. Satellite distribution would prove far more reliable and less expensive than terrestrial networks.

Arthur Clark’s vision of watching television from a satellite would be realized in the fall of 1994 when Hughes, RCA, and Hubbard Broadcasting launched the DirecTV transmission system. The first serious competition for cable got off the ground. A few years later, Echostar would launch its Dish Network.

A key component of satellite technology, the traveling-wave tube (TWT) was invented in England and perfected at Bell Labs. It is used to generate the signal transmitted from the ground to the satellite and back from the satellite-to-ground station receivers. Achieving adequate power level for the signal to be received by the satellite and re-transmitted back to earth required very large (100-foot diameter) dish antennas in the early uplink transmission systems. Early TWT power output levels were only approximately 1 W, but they have grown to more than 300 W. Uplink antennas approaching one tenth the size of early versions now cost around 30,000. Receiving antennas that are the size of a large pizza now enable reception of several hundred TV programs and data links to millions of businesses requiring credit card authorizations and accurate inventory tracking.

When COMSAT launched its first satellite in 1965, it provided almost 10 times the capacity of the submarine telephone cables for almost one tenth the price. Telephone service on a satellite facility suffers from the long path it must travel. In the early days, the availability of the service was its key selling point. Satellite telephone service is still the service to and between many countries today. The first fiber cable, TAT-8, was laid in the Atlantic Ocean in the mid-1980s and provided competition. Satellites are still competitive in many applications, especially point-to-multipoint service such as DBS and network distribution to affiliates.

CONSOLIDATION REDUX

From approximately 1999 through the end of 2002, telecom employees and executives saw option packages worth tens of millions of dollars, and their jobs, evaporate. Some of the most prestigious companies in the business were thrown into turmoil. Lucent Technologies, parent of Bell Labs, shrunk its global workforce from 153,000 to 35,000.

The nation’s top telecom clusters in New Jersey, San Francisco, Boston, Dallas, Atlanta, and Washington suffered as well. High-flying startups initially flush with venture capital ran out of money and simply ceased operations or declared bankruptcy.

In early 2003, a deeply divided Federal Communications Commission considered and left in place rules passed in the wake of the 1996 Telecom Legislation that were intended to foster local telephone competition. Seven original RBOCs had consolidated into four. Ameritech and Pacific Telesis became children of SBC. Bell Atlantic merged with Nynex. GTE, once independent, that is, not part of the original AT&T, or a Regional Bell, merged with Bell Atlantic to form Verizon. Ostensibly, this action was to free the Bells so they could foster growth in broadband services. Freeing the Bells ideally would have allowed them to stop making their network elements available to resellers, allow them to compete in the long distance market as well as offer Internet services, the new name for the old ‘‘data’’ services. Part of the rationalization for allowing the Bells to compete in broadband services, allows them to compete with cable companies’ Internet service offerings. However, this ideal was not to be.

The structure of the new rules removes restrictions on broadband, also known as high-speed Internet access, but not traditional telephone service, part victory and part setback because the Bells’ traditional telephone service will remain subject to regulation of state PUCs, and thereby likely to continue to require the Bells to make their network elements available for resale by competitive carriers. So it seems like the world, at least in the United States, the communications landscape will continue to include the courts, various regulatory bodies, and to quote FCC Chairman Michael Powell, ‘‘Picassoesque,’’ predicting it will lead to ‘‘legal and regulatory chaos.’’

Where is all this turmoil leading? It’s difficult as always to predict, but it’s not difficult to get an indication from a simple look at the status of the local exchange business from the perspective of the dominant and not so dominant players.

First, the dominant players are generally considered to be the ILECs. The former RBOCs have for many years prospered from voice services sold to enterprise and residential customers. For the most part, these services are delivered via single-pair copper wire. Even where the services are delivered via fiber, the nature, character, and performance of the facilities delivering the service is bound by the constraints inherent in channelized, 64-Kbs T-carrier or PDH access, switching and transport hierarchy. Unchannelized facilities are available, but are simple point-to-point private lines. Digital interface to, and transport through, ILEC network facilities is limited to T1 and DS3.

A financial glance will show suffering from declining revenue and high debt. Declining revenue from wired voice services—their bread-and-butter—is being made up by mobile or wireless voice services. Overall, opportunities for growth are constrained geographically and technically. Relief from the geographic restraint provides opportunity in the form of incremental revenue from long distance services, but it is in exchange for unbundling network elements for sale to competitive local exchange carriers (CLECs), who turn right around and bundle and sell these same network elements in the same market, depriving them of pieces of their most profitable revenue streams.

Many of the ILECs profess to be interested in broadband equipment and facilities. Establishing significant levels of service requires significant investment in new equipment. There’s been an initial ‘‘toe in the water’’ in the form of digital subscriber line (DSL) equipment acquisition and service offerings. But for anything significant such as would allow them to take market share from broadcasting, cable television, or satellite operators, the investment would have to be fiber replacement of copper wire, with IP access, switching and transport, in essence a wholesale replacement of existing infrastructure over time and that wouldn’t necessarily relieve them of their regulatory requirement to continue selling unbundled network elements (UNE).

On the less than major player side of the market, there are the CLECs mentioned previously. CLEC business strategy comes in two forms: one sells Internet access and the other buys and sells unbundled network elements mentioned previously. Others, there are a few who have invested in their own facilities in large markets where the investment level is potentially rewarding because of short transmission distance and access to the more lucrative enterprise customer. One or two of the cable television operators have installed SONET/SDH equipment on common fiber with TV service and offer voice service in the residential market. They have been moderately successful, but real returns are only incremental mostly because of the limitations imposed by voice service pricing in a monopoly market dominated by incumbents.

Many are betting voice-over IP (VOIP) will be at the roots of the next major wave of change in the industry. Some maintain that this could be the next utopian storm. And it may come at faster speed than the classical telephone world is used to enjoying. Remember the game you learned as a child whereby a series of dots were placed on paper in a matrix form and then you and another player started connecting two dots at a time with a single mark? The objective of the game was to reach a point where the last line drawn created a box into which the player could put their initial and claim ownership. The end of the game came when all boxes had been claimed, and the winner was the player who had acquired the most boxes. In the VOIP game, there’s a lot of dots out there now, including laptop personal computers (PCs) with a microphone and speaker, to say nothing of the number of desktops with circuitry and plugs, even microphones and speakers thrown away or languishing in a desk drawer. Microsoft started shipping operating system (OS) software with QOS capabilities in 2000. The next generation OS includes what they called a real-time communications client.

PC technology is pervasive or becoming that way in enterprise and consumer market places. Just connecting these dots alone could make a devastating impact on ILEC voice service business. Sooner or later, the owner of a PC will discover that many or most of the other people they talk to on the telephone can be reached by an alternate route through their PC and Internet access and wonder what else they could buy with the $30 or $40 they spend for local and long distance telephone service.

Local area network (LAN) technology and products have been as much a business necessity as telephone products and services for many years. Their utility started out as a way to share printers and later files. Somewhere along the path, the MIS department figured out they were a cheap replacement for the coaxial cable used to connect expensive terminals to mainframe computers. When the Internet came along, what did the business connect it to? For sure they didn’t connect it to the telephone system.

Cable television operators discovered cable modems could provide Internet access. This immediately made a significantly positive impact on revenue from an incremental investment, far less than the incremental investment required to offer telephone service using SONET/SDH equipment. These devices connect to a PC, not a telephone.

THE INTERNET

It’s hard to view the Internet as having been in an experimental stage. Technologically, what’s now known as the Internet is a collection of myriad techniques from other communications methods and networks. Some might contend Internet experimentation started in the 1970s and continued into the 1980s. Initially the Internet was a US Department of Defense (DOD) research project aimed at developing survivable networks. Over time, participation in the research was expanded to include academic and private research institutions. By the mid-1990s, the DOD had its survivable network. Responsibility for various administrative and technical functions previously held by the military was turned over to non-government entities.

Historically, and by example, telegrams—maybe even smoke signals or pounding on drums to send and receive coded messages—could be considered ‘‘data’’ communications. Telex service remains in use in some parts of the world. It had a counterpart in the United States called TWX. Telex service is an international service, whereas TWX is or was restricted to domestic US locations. Both services are enabled with a teletype, a machine created by combining telegraph key and typewriter technology. Telegrams are a service offering used when a teletype machine is used to create, transmit, and print a message for a third party. Telegrams ceased to be used in the early 1990s.

Telegrams, Telex, and TWX effectively died out in the 1990s. AT&T is said to have transmitted its last telegram in 1991. So the cannibalization of the telegraph by the telephone took almost a century.

It’s almost too complicated to go into, but along the way, AT&T and the RBOCs had, and continue to have, great challenges with anything outside telephone or voice services. The combined entities had deep and credible resources and capabilities without equal, except perhaps IBM. However, getting these resources to market was impossible because restrictions on AT&T equipment manufacture prohibited sale of their products to any other than the former BOCs. One result of divestiture and deregulation freed AT&T to sell computer equipment in competition with IBM and others. But coincidentally with the historic event in the telecom industry, Intel and Microsoft blindsided and blew away the dreams of the white-coat, MIS department mainframe computer industry, and those who would see AT&T as a possible competitor to IBM.

Setting all the issues of selling computer or computer-like equipment aside, the former AT&T and new entities had been and would continue to be dominant in a small and growing market for what started out as computer communications or data services. After all, AT&T long lines were first to install digital transmission and switching equipment in their network. Earlier FCC decisions had clearly and cleanly marked a dividing line between equipment and services. On the communications side a piece of equipment specifically defined as a customer services unit (CSU) faced another piece of equipment called a data services unit (DSU). The CSU was part of the computer system. The telephone company installed the DSU and included an amount in the monthly service charge. These functions are now built into equipment the customer buys and the telephone company installs at the customer’s location or nearby equipment cabinet.

Data communications has become a matter of buying compatible equipment and services. In a few short years, the Internet has taken hold across business and consumer or residential services like nothing in the past. Along with that change has come tough times for investors and employees, and opportunities for users to avail themselves of new capabilities. Now, and for the foreseeable future it’s ‘‘voice, data, and video.’’

LOCAL SERVICES DEREGULATION AND CHANGE AFTER 1996

With the breakup of the Bell System, long distance services were deregulated and began a path to a competitive marketplace. AT&T remained under greater restrictions than other common carriers. Regulations prohibited them from providing local service of any kind and they continued to be subject to tariff processes administered by state PUCs and the FCC.

The RBOCs were restricted as well. They were prohibited from offering any kind of inter-LATA service with three exceptions, the North Jersey LATA, an area on the border between Newark and New York; the South Jersey LATA between Philadelphia and Camden; and the DC LATA covering DC, and immediate surrounding areas in Maryland and Virginia.

With passage of the 1996 Telecom Legislation, the RBOCs were given a path to compete in the long distance market in return for opening up their networks to re-sale by third parties. This legislation defined and named entities in the local exchange business. The RBOCs were branded incumbent local exchange carrier (ILEC), and all others were named competitive local exchange carrier (CLEC).

Internet and Telecom: A Brief History

Alexander Graham Bell is credited with inventing the telephone sometime after Samuel B. Morse came up with the telegraph key and code, making smoke signals obsolete technology. Somewhere along the way, in the more recent past, computers learned to talk to one another over telephone lines. And then along came the Internet.

That’s almost enough history for practitioners. However, a perspective on the past is well worth a quick read because understanding some of the history, especially since 1982, provides insight into the changes the Telecom industry has undergone and how that has, or will impact media and entertainment industry operations in the future.

Keeping our focus on practical considerations it makes sense to start somewhere in the early part of the past century. After all, radio and telephones came from similar inventive roots and had electrical or ‘‘electronics’’ in common. It’s also instructive to observe that the two parted ways when digital electronics went solid state. With digital electronics—initially the switching transistor—devices could count and keep track of items or service transactions, calculate, or measure interesting, valuable operational and accounting characteristics of the business.

Someone figured out how to convert an analog signal into digital form, and the telephone world went for it with a vengeance. On the other hand, radio and television receivers didn’t warm to digital techniques until well after integrated circuits with divide and multiply capability became cost effective for use in tuners. Other similar events along the way could be mentioned, but suffice it to say that broadcasting and consumer electronics lagged the telephone industry in adoption of digital technology by many years and did so, one painful step at a time.

The telephone industry was digital in nature from the start. For example, the basic business transaction unit, or service function, was and still is, a phone call. The line was in use or it was free. It could be used or one had to wait. One person could talk to one person at a time (until party lines were figured out). One operator could connect two parties to make conversation, later capitalized by the industry in the form of a telephone call.

Almon B. Strowger, a Kansas City undertaker, invented the stepping switch to allow customers to decide between his establishment and a competitor without undue influence of the wife of his competitor who just happened to be the local telephone operator. The stepping switch enabled the industry to continue in a mechanized and automated fashion, without operators, one telephone call at a time, the staple of long distance telephone bills.

Audio—the staple of radio—was analog and stayed that way. In 2003, radio broadcasters began upgrading transmission facilities to digital transmission.

Video might be characterized as digital in nature—at the very least it’s highly structured. Pioneer inventors Philo Farnsworth and Vladimir Zworykin both conceived a fixed, repetitive scan structure. Farnsworth reportedly conceived his version while plowing successive rows in a field.

Historically, telephony, radio, and television share a common business life-cycle behavior. Still in relative infancy, the Internet seems to be evolving in similar fashion. The life-cycle includes three distinct phases starting with experimentation, moving into growth and consolidation, and finally into a mature state where the technology continues to evolve and the business segment makes a continuing contribution to the economy over a long time.