Ba401 Case2 4 Bt2 C

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The U.S. Telecommunications Industry : 1996-1999 Case 2-4 BT2C

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Transcript of Ba401 Case2 4 Bt2 C

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The U.S. Telecommunications Industry : 1996-1999

Case 2-4 BT2C

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Outline

•The Telecommunications Act 1996

•RBOCs

•Long-Distance Carriers

•Technological Developments

•Satelite-Based Communications

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History Telecommunications has traditionally been a regulated sector of

the US economy. Regulation was imposed in the early part of this century and remains until today in various parts of the sector.

The main idea behind regulation was that it was necessary because the market for telecommunications services was 1. natural monopoly, and2. a second competitor would not survive.

Regulation was imposed to protect consumers from monopolistic abuses.

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The Telecommunications Act of 1996

Enacted by the U.S. Congress on February 1, 1996, and signed into law by President Bill Clinton on February 8, 1996, provided major changes in laws affecting

cable TV

telecommunications

Internet

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The Telecommunications Act of 1996

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The Telecommunications Act of 1996 The law's main purpose was to stimulate competition in telecommunication services.

The law specifies:

The Telecom

mu-nications Act of

1996

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The 1996 Act aims to "preserve and advance universal service [254(b)]. This means:

preserve and advance universal service

High quality at low rates

Access to advanced services

in all States.

Access in rural and high cost areas at comparable prices

to other areas.

Supported by "equitable and

nondiscrimi-natory contributions"

Access to advanced

telecommunications services for

schools, health care, and libraries.

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Who are the Regional Bell Operating Companies (RBOCs)?

The original 7 RBOCs were formed from the 1984. Originally consisted of 22 Bell Operating Companies (BOCs).  The 1984 Divestiture merged the 22 BOCs into 7 RBOCs:

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RBOCs

Ameritech

Bell Atlantic

Bell South Nynex

Pacific Telesis Southwestern Bell

Communica-tions (SBC)

US West

Who are the Regional Bell Operating Companies (RBOCs)?

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Who are the Regional Bell Operating Companies (RBOCs)? (1997)

SBC (a $16 billion deal)

SBC

Pacific Telesi

s

Bell Atlantic ( a $25.6 billion deal)

Nynex

Bell Atlanti

c

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Who are the Regional Bell Operating Companies (RBOCs)? (Plans)

SBC

Bell Atlantic

Ameritech

GTE

SBC($62

billion)

Bell Atlantic($ 53

billion)

+

+

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13%

11%

16%

18%

12%

8%

12%

10%

Revenues

AmeritechBell AtlanticBell SouthGTENynexPacific TelesisSBCUS West

Financial Data For RBOCs 1996

In million dollarsAmeritech =14,917 Bell Atlantic= 13,081Bell South =19,040 GTE = 21,339Nynex =13,454 Pacific Telesis = 9,588SBC =13,898 US West = 11,168

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12%

24%

16%18%

21%

9%

Revenues

AmeritechBell AtlanticBell SouthGTENynexPacific TelesisSBCUS West

Financial Data For RBOCs 1997

In million dollarsAmeritech =15,998 Bell Atlantic= 30,368Bell South =20,633 GTE = 23,260Nynex* = 0 Pacific Telesis* = 0SBC = 26,681 US West = 11,479

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13%

23%

17%18%

21%

8%

Revenues

AmeritechBell AtlanticBell SouthGTENynexPacific TelesisSBCUS West

Financial Data For RBOCs 1998

In million dollarsAmeritech =17,514 Bell Atlantic= 31,566Bell South =23,123 GTE = 25,473Nynex* = 0 Pacific Telesis* = 0SBC = 28,777 US West = 12,378

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Who are the Long-Distance Carriers?

at&t

MCI

Sprint

Qwest

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The largest provider of local, long distance telephone services in the United States, and also serves digital subscriber line Internet access and digital television. AT&T is the second largest provider of wireless service in the United States, with over 81.6 million wireless customers, and more than 150 million total customers

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at&t TimelinesJune 27, 2008 move its corporate headquarters from San Antonio to Dallas

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MCI Communications Corp. was an American telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T monopoly of American telephony and ushered in the competitive long distance telephone industry. It was headquartered in Washington, DC.Founded in 1963, it grew to be the second largest long-distance provider in the U.S. It was purchased by WorldCom in 1998 and became MCI WorldCom, and afterwards being shortened to WorldCom in 2000. WorldCom's financial scandals and bankruptcy led that company to change its name in 2003 to MCI. The MCI name disappeared in January 2006 after the company was bought by Verizon.

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MCI Timelines

In 1989, The company went public through a merger with Advantage Companies Inc

November 10, 1997, WorldCom and MCI Communications announced merger to form MCI WorldCom, making it the largest merger in US history.

September 15, 1998 the new company, MCI WorldCom, opened for business

In 2003,WorldCom's financial scandals and bankruptcy led that company to change its name to MCI

January 2006 the company was bought by Verizon.

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Sprint Nextel Corporation is a telecommunications company based in Kansas.The company owns and operates the third-largest wireless telecommunications network in United States, with 49.3 million customers. Sprint is a global Internet carrier and makes up a portion of the Internet backbone. In the United States, the company also operates the largest wireless broadband network and is the third-largest long distance provider.

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Sprint Timelines

In September 1996, Sprint announced a deal with RadioShack

On October 5, 1999, Sprint and MCI WorldCom announced a $129 billion merger agreement between the two companies.

In 2005,Sprint Corporation purchase Nextel Communications with $35 billion.

In 2006, the company spun off its local landline telephone business, naming it Embarq

In 2009, Sprint announced that the day-to-day operations management of its entire wireless network will be turned over to the Sweden-based Ericsson.

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Qwest Communications International, Inc. is a large telecommunications carrier. Qwest provides local service in 14 western U.S. states.

Qwest provides voice, backbone data services, and digital television in some areas. It operates in three segments: Wireline Services, Wireless Services, and Other Services. Qwest Communications also provides long-distance services and broadband data, as well as voice and video communications globally.

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Qwest Timelines

In 1997,Qwest Communications acquiring internet service provider SuperNet.

In 1998, and followed again by the acquisition of Icon CMT,a web hosting provider

In 1998, Qwest is provide of high speed data to the niche market of corporate customers and quick-growing residential and business long distance customer

June 30 2000,Qwest merged with “Baby Bell" US West

In 2004, Qwest became the first Regional Bell operating company (RBOC) in the United States to offer Standalone DSL

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58%21%

0% 5%

16%

Revenues

at&tMCIQwestWorldcomSprint

Financial Data For major long-distance carrier 1996

In million dollarsat&t = 52,184MCI = 18,494Qwest = 231Worldcom = 4,485Sprint = 14,045

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55%

21%

1%

8%

16%

Revenues

at&tMCIQwestWorldcomSprint

Financial Data For major long-distance carrier 1997

In million dollarsat&t = 51,319MCI = 19,653Qwest = 697Worldcom = 7,351Sprint = 14,874

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59%

2%

20%

19%

Revenues

at&tMCIQwestWorldcomSprint

Financial Data For major long-distance carrier 1998

In million dollarsat&t = 53,223MCI* = 0Qwest = 2,243Worldcom = 20,282Sprint = 17,134

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TECHNOLOGY AND INNOVATION

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Technology and Innovation

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Technology and Innovation

DSL

Cable modem

Dense Wavelength-division multiplexing

Internet Telephony

Broadband

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DSLDSL or xDSL is a family of technologies that provides

digital data transmission over the wires of a local telephone network. DSL originally stood for digital subscriber loop, but as of 2009 the term digital subscriber line has been widely adopted as a more marketing-friendly term for Asymmetric Digital Subscriber line (ADSL), The download speed of consumer DSL services typically ranges from 384 kilobits per second (kbps) to 20 megabits per second (Mbps), depending on DSL technology, line conditions and service-level implementation. Typically, upload speed is lower than download speed for ADSL and equal to download speed for the rarer Symmetric Digital Subscriber line (SDSL),

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DSL technology expands

DSL

• had achieved its original goal to bring high-speed information to homes and businesses over ordinary copper telephone lines. Now, as technology advanced, other forms of DSL became available. XDSL became the common term for the whole DSL family, with variations like ADSL, RADSL and VDSL following.

ADSL

• provides greater bandwidth for so-called downstream (from provider to consumer) traffic at the expense of lesser upstream (from consumer to provider) bandwidth. ADSL takes advantage of the typical pattern of Internet access by home users who frequently download large amounts of Web site data but upload relatively small amounts of data.

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DSL technology expands

RADSL (Rate-adaptive DSL)

• is an ADSL technology utilizing software to determine the rate at which signals can be transmitted on a given customer phone line and adjust the delivery rate accordingly.

VDSL (Very-high-data-rate DSL)

• is a developing technology that promises much higher data rates over relatively short distances. It was developed to support exceptionally high-bandwidth applications such as High-Definition Television (HDTV). To perform at this speed, VDSL relies on fiber optic cabling. It’s designed to work more as a business service than as a consumer service.

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Look at just a few ways people can use the Internet to add value to their lives:

on-line shopping

education

travel planning

real-time gaming

on-line chats

accessing streaming media

home-based businesses

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Cable modem

cable modem is a type of network bridge and modem that provides bi-directional data communication via radio frequency channels on a cable television(CATV) infrastructure. Cable modems are primarily used to deliver broadband Internet access in the form of cable Internet, taking advantage of the high bandwidth of a cable television network. They are commonly deployed in Australia, Europe, and North and South America. In the USA alone there were 22.5 million cable modem users during the first quarter of 2005, up from 17.4 million in the first quarter of 2004

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Future of Cable modemIn 2007 Comcast Corp shows off for the first time in public

new technology that enabled a data download speed of 150 megabits per second, or roughly 25 times faster than today's standard cable modems.

The new cable technology is crucial because the industry is competing with a speedy new offering called FiOS, The top speed currently available through FiOS is 50 megabits per second, but the network is already capable of providing 100 Mbps and the fiber lines offer nearly unlimited potential.

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Future of Cable modem

"If you look at what just happened, 55 million words, 100,000 articles, more than 22,000 pictures, maps and more than 400 video clips,". "The same download on dial-up would have taken two weeks."

50 Mb100M

b150M

b

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Dense Wavelength-division multiplexing

In fiber-optic communications, Dense wavelength-division multiplexing (DWDM) is a technology which multiplexes multiple optical carrier signals on a single optical fiber by using different wavelengths (colors) of laser light to carry different signals. This allows for a multiplication in capacity, in addition to enabling bidirectional communications over one strand of fiber. This is a form of frequency division multiplexing (FDM) but is commonly called wavelength division multiplexing.

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How to WDM work?WDM systems are popular with telecommunications

companies because they allow them to expand the capacity of the network without laying more fiber. By using WDM and optical amplifiers, they can accommodate several generations of technology development in their optical infrastructure without having to overhaul the backbone network. Capacity of a given link can be expanded by simply upgrading the multiplexers and demultiplexers at each end.

This is often done by using optical-to-electrical-to-optical (O/E/O) translation at the very edge of the transport network, thus permitting interoperation with existing equipment with optical interfaces.

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How to WDM work?

Most WDM systems operate on single mode fiber optical cables, which have a core diameter of 9 µm. Certain forms of WDM can also be used in multi-mode fiber cables(also known as premises cables) which have core diameters of 50 or 62.5 µm.Early WDM systems were expensive and complicated to run. However, recent standardization and better understanding of the dynamics of WDM systems have made WDM less expensive to deploy.

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Internet Telephony

Internet telephony also transmits using data packets. Analog voice signals are digitized, sent in discreet packets to the destination, reassembled and reverted back to analog signals. By using Internet telephony, one can place long-distance calls free of telephone charges. The catch is that both parties must have Internet telephony software. If Internet telephony is used to call a land-line or cell phone, charges apply, though they are usually minimal.

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History of Internet Telephony

VoIP

POTS

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Broadband

Broadband in telecommunications refers to a signaling method that includes or handles a relatively wide range (or band) of frequencies, which may be divided into channels or frequency bins. In data communications an analog modem will transmit a bandwidth of 56 kilobits per seconds (kbit/s) over a telephone line; over the same telephone line a bandwidth of several megabits per second can be handled by ADSL, which is described as broadband

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History of Broadband

100 M

3.0 M

56k

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Infrastructure Bandwidth Requirements

Media transmitted Required bandwidth

Styled text 2-10 Kbps

Speech graded audio 32-64 Kbps

Still images 10-128 Kbps

Low quality compressed video

100 Kbps to 1.5 Mbps

High fidelity audio 176 Kbps to 1.5 Mbps

Medium quality compressed video

1.5 – 6 Mbps

High quality compressed video

6-24 Mbps

Visualization 50-100 Mbps

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SATELITE-BASEDCOMMUNICATIONS

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Iridium SSC, Iridium communications service was launched on November 1, 1998. The first Iridium call was made by then-Vice President of the United States Al Gore. Motorola provided the technology and major financial backing. The logo of the company was designed by Landor Associates, and represents the Big Dipper.

Iridium Satellite LLC has approximately 320,000 subscribers as of the end of December 2008 (compared to 203,000 in July 2007). Revenue for the fourth quarter of 2008 was US$76.8 million with EBITDA of US$25.0 million.

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Subscriber equipment

Handsets

Pagers

Other satellite phones

Standalone transceiver units

SIM card

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Technical details Handsets

Air interface

Handoff

Earth base-stations

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Teledesic was a company founded in the 1990s to build a commercial broadband satellite constellation for Internet services. Using low-earth orbiting satellites small antennas could be used to provide uplinks of as much as 100 Mbit/second and downlinks of up to 720 Mbit/second. The original 1995 proposal was extremely ambitious, costing over US$9 billion originally planning 840 active satellites with in-orbit spares at an altitude of 700 km.[1] In 1997 the scheme was scaled back to 288 active satellites at 1400 km[2] and was later scaled back further in complexity and number of satellites as the projected market demand continued to decrease.

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Teledesic was notable for gaining early funding from Microsoft (investing US$30 million for an 8.5% stake), Craig McCaw, Bill Gates, Paul Allen and Saudi prince Alwaleed bin Talal, and for achieving allocation on the Ka-band frequency spectrum for non-geostationary services. Teledesic's merger with ICO Global Communications led to McCaw's companies taking control of ICO, which has successfully launched one test satellite.

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Intersection of Telecom and IT Industries

one of the most IT companies moving into the telecom arena is

“Microsoft”

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Intersection of Telecom and IT Industries

Timelines

1997 – Microsoft put up $1 billion for 11.5 % of cable operator Comcast

1998 – Microsoft invested $20 million for a 1.3% in Qwest

1998 – Microsoft invested $600 million for a 4.25% in Nextel

1999 – Microsoft bought $5 billion of at&t for a 3.4 %

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Trends for the future

More Consolid

ation

Non-telecom

companies related telecom

technology in

business

The growth of wireless services

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Q&A

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Reference•http://searchcio-midmarket.techtarget.com/sDefinition/0,,sid183_gci213085,00.html•http://www.stern.nyu.edu/networks/telco96.html •http://www.nebs-faq.com/who_are_the_regional_bell_operating.htm•http://en.wikipedia.org/wiki/AT%26T•http://en.wikipedia.org/wiki/MCI_WorldCom•http://en.wikipedia.org/wiki/Qwest•http://en.wikipedia.org/wiki/Wavelength-division_multiplexing •http://www.wisegeek.com/what-is-internet-telephony.htm •http://en.wikipedia.org/wiki/Broadband •http://www.speedguide.net/read_articles.php?id=1414•http://en.wikipedia.org/wiki/Sprint • http://www.msnbc.msn.com/id/18569662/•http://www.consumersunion.org/telecom/ex5.jpg•http://www.consumersunion.org/telecom/ex6.jpg