THE UK TELECOMMUNICATIONS INDUSTRY 2001

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1 INDUSTRY BRIEF THE UK TELECOMMUNICATIONS INDUSTRY 2001 Constantina Bichta

2 THE UK TELECOMMUNICATIONS INDUSTRY 2001 Constantina Bichta Desktop published by Jan Marchant The University of Bath All rights reserved ISBN

3 Preface The CRI is pleased to publish The UK Telecommunications Industry 2001 in its Industry Brief Series. The author is Constantina Bichta, a Research Officer at the CRI. The brief is the first we have published on the telecommunications sector and, importantly, completes a set of CRI industry briefs for utilities and network industries, covering water, energy, transport and communications. It is also timely because we have reached a point of change in the economic regulation of the industry, which to date has been overseen by the Director General of Telecommunications and Oftel, from when BT was privatised in The future will be the new telecommunications commission, or authority, and its associated office, Ofcom. The CRI would welcome comments on the Brief, which can be taken into account as CRI Industry Briefs have to be updated from time to time in line with developments in the Industry, and will be published as a revised or subsequent edition. Comments should be addressed to: Peter Vass Director CRI School of Management University of Bath Bath, BA2 7AY The CRI publishes work on regulation by a wide variety of authors, covering a range of regulatory topics and disciplines, in its International, Occasional and Technical Paper series. The purpose is to promote debate and better understanding about the regulatory framework and the processes of decision making and accountability. Enquiries or manuscripts to be considered for publication should be addressed as above. The views of authors are their own, and do not necessarily represent those of the CRI. Peter Vass Director, CRI November 2001 iii

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5 CONTENTS Preface 1 Introduction [Including the details of the brief s subsection headings] 2 Telecommunications Telecommunication services Telecommunications systems Types of networks 3 Regulatory objectives and structure - overview Why regulation? Who are the key regulators? Key legislative milestones The UK licensing regime 4 Regulatory policy - development and current status Introduction Social policy issues Economic regulation iii Convergence - future policy and strategies 77 References 85 Appendix General statistics on the telecoms industry Basic provisions of the duopoly review 92 v

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7 CONSTANTINA BICHTA 1 INTRODUCTION The objective of this brief is to describe the telecommunications sector. The sector is one of the most dynamic sectors of the world economy since it engages a large number of operators involved in the supply of various products and services. Technology has been at the heart of the development of the sector and its services. Fixed traditional telephony has been challenged by wireless mobile telephony. The traditional cable television can be used to serve telephony and entertainment needs of a household. The launch of Information Technology (IT) has brought an extra dimension in the sector. It promises improved communications world-wide at high speeds and low costs. It promises electronic communications in which people can interact with their machines, whether these are home or office computer, mobile telephones or televisions. Information technology promises to provide people with the ability to talk, do their business, shop and play on line. In communications terms, this is called the convergence of telephony, broadcasting and IT that will allow operators to offer enhanced services to customers, and society to move towards the Information Age. 1 At the political level, since the mid eighties a high level of activity can be observed at both the European Union (EU) and the UK level regarding the regulation of the sector. While the European telecommunications sector has historically been characterised by a strong public service monopoly tradition together with an industrial policy of creating national champions, the UK government and the EU have adopted policies over the years towards ending this monopoly tradition and introducing competition in the telecoms market. Competition policy at the UK and the EU level has favoured market entry of new operators, deregulation in certain areas of the market and economic regulation. The telecommunications sector is about to enter a new era with the convergence of telephony, broadcasting and IT. Both the UK and the EU are designing new policies to serve the interests of the newly created sector and the consumers. In the UK, the government has announced its positions in the white paper A New Future for Communications. This paper favours the creation of a communications environment and proposes a new regulator, Office of Communications (Ofcom), responsible for regulating the convergence of telecommunications, broadcasting and IT. In a similar vein, the EU has drafted six new directives to regulate the new sector. These directives will come in effect anytime within the next two years. This brief aims to provide a description of the UK telecommunications sector in terms of key technological and regulatory milestones. The structure of this brief is as follows: 1 Enhanced services are services that include interactive applications as well as audio and video. The USA definition of enhanced services refers to any telecommunications service that involves, as an integral part of the service, the provision of features or capabilities that are additional to the conveyance (including switching) of the information transmitted. Information Age is used to describe the conveyance of technologies in the delivering of information and new services. Constantina Bichta is a Research Officer, Centre for the study of Regulated Industries (CRI), University of Bath School of Management 1

8 THE UK TELECOMMUNICATIONS INDUSTRY Chapter 2 describes the telecommunications systems and services and the types of telecommunications networks under the influence of vast technological change. The chapter includes the following sub-sections: Communication medium Service providers Types of services Supply chain of a telecommunication system Characteristics of fixed and wireless systems Overview of fixed and wireless systems Fixed network Wireless network Integrated services digital network (ISDN) Digital subscriber loop (DSL) Cable television Chapter 3 explains the key regulators of the telecoms sector at the UK and European level. The reader can find in the chapter the following sub-sections: The UK regulators The EU International groups and organisations The transition from state ownership to state corporation The duopoly review and the liberalisation of the telecoms market The current structure of the industry and policy affairs The EU policy development Chapter 4 describes in detail the development and current status of UK regulatory policy, refers to specific policy provisions, and includes the following subsections: Quality control Other social and environmental policy issues Consumer and interests groups Price controls Supply of telecoms apparatus Interconnection of networks The service provider regime Indirect access and carrier pre selection (CPS) Number portability Local loop unbundling (LLU) Chapter 5 concludes with an overview of the future UK and EU government strategies for the communications sector. The chapter contains the following subsections: Oftel strategy EU strategy UK government Final remarks 2

9 2 TELECOMMUNICATIONS CONSTANTINA BICHTA The term telecommunications describes the communication of voice, data, and images over long distance. In scientific terms, telecommunications is the transmission of information from one point to another (by electrical or radio means). 2 The communication process allows information to pass between a sender (transmitter) and a receiver over some medium. Telegraphy, telephony, television, broadcast radio, and recently electronic mediums are all basic methods of telecommunications. But before we consider the details of these methods, a definition of what is a telecommunications system and service is important. In the Telecommunications Act 1984, telecommunications system is defined as a system for the conveyance, through the agency of electric, magnetic, electromagnetic, electro-chemical or electro-mechanical energy of: speech, music and other sounds; visual images; signals serving for the impartation (whether as between persons and persons, things and things or persons and things) of any matter otherwise than in the form of sounds or visual images; signals serving for the actuation or control of machinery or apparatus (Section 4(1)). In turn, telecommunications service means any of the following: a service consisting in the conveyance by means of a telecommunication system of anything falling within paragraphs a to d of subsection above; a directory information service [..]; a service consisting in the installation, maintenance, adjustment, repair, alteration, moving, removal, or replacement of apparatus which is or is to be connected to a telecommunications system (Section 4 (3)). The discussion now turns to telecommunications services exclusively (part of the family of communications services). The type of communication medium, the types of service providers, and specific services, which are currently available are discussed. Telecommunication services Communications medium What is it that a sender wants to send out and a receiver to receive in a communications process? Traditionally, the sender will originate a message such as human voice (speech, music), picture, or data. The world, however, has become so diverse that we no longer have one common medium of communications. 2 Brown J and Glazier E V D (1966), Telecommunications, Chapman and Hall Ltd, Great Britain. 3

10 THE UK TELECOMMUNICATIONS INDUSTRY Person to person communication is the traditional way of communication. It can take place verbally or by telephone. Alexander Graham Bell invented the telephone in In a telephone communications, a pair of wires is used to connect two telephones to each other, and one device is used for both the transmitter and receiver. Radio is another medium of communications. It is a mass medium, because it provides communications from the few (the programmers) to the many (the listeners). Visual communications through television are also very common. In scientific terms, a television is a system for reproducing on screen visual images transmitted by radio signals. Broadcast television reaches almost every home bringing through networks and satellites programs from all parts in the world. Cable television began as an alternative way for getting local television into areas where the broadcast signal could not be received satisfactory. It is also known as community antenna television and it is likely to become a popular way to interact with new forms of entertainment services. In recent years, the impact of electronic technology on traditional forms of communications is great and growing. To begin with, the internet is a worldwide system of computer networks (a network of networks) in which users at any one computer, can, if they have permission, get information from any other computer. Electronic mail is the most widely used application on the internet. Users can also carry on live conversations with other computer users, using internet relay chat (IRC). The most widely used part of the internet is the world wide web, which allows users through the feature of hypertext to be transferred to sites or pages of interest. Using the web, users have access to millions of pages of information. Other new forms of electronic communications are the interactive and web television. In interactive television, a special set top unit can be added to the existing television set, allowing the viewer to interact with the television by playing games, selecting movies, voting or providing immediate feedback through the television connection (banking, shopping from home) other than simply controlling the channel and the volume. Web television is one of the first examples of the convergence of the world wide web with the television. The users buy a set-top box similar to a cable television box, and they sign up with the web television access service and browse web pages using a web television s browser and a hand-held control. 3 Service providers There are three types of operators currently providing communications services to customers: the telecommunications operators, the cable operators and the internet service providers. 3 4

11 CONSTANTINA BICHTA - Telecommunications operators or Public Telecommunications Operators (PTOs) Telecommunications operators control the physical network of telecommunication lines and run them to customer s premises. Major telecommunications operators may control two types of networks: the public switched telephone network (PSTN) on which calls can be made to all customers of all PSTNs; private circuits, which are point-to-point circuits for customers exclusive use covering speech, data and image communications. Telecommunications operators provide services to the public under licences granted to them either by the government or independent regulatory bodies. Conditions on their licences allow telecommunications operators to install their systems on public and private land. - Cable operators Cable operators are companies licenced to provide telephony and broadcast television services. Cable operators are now able to offer cable internet access via cable TV through a cable modem or an enhanced cable box. Similarly to the PTOs, the government or an independent regulatory body licences the use of telecommunications systems for delivering television services to viewers homes. 4 - Internet service providers Internet service providers (ISPs) is an organisation that provides access to the internet and internet services. We can distinguish between two types of ISPs: the small and the large. Large service providers offer internet access to smaller providers, and services like proprietary databases, forums, etc. Small internet service providers tend to provide services via modem and ISDN. Business and residential customers all require access to the internet services. Customers are generally billed a fixed rate per month, but other charges may also apply. Types of services Having described the communications medium, and the main providers of communications, the following sub sections present some typical examples of telecommunications services, which have been available over the years. Amongst 4 The systems used may include broadband or narrowband cable networks, broadband fixed wireless access (such as microwave video delivery services in the 28GHz or 40GHz bands) or the use of digital subscriber loop (DSL) technology over upgraded telephone networks. 5

12 THE UK TELECOMMUNICATIONS INDUSTRY these, traditional, mobile telephony and enhanced services are the focus of the discussion. - Traditional telephony The telephone is perhaps the most well known and popular technological product we use to communicate in our lives. Graham Bell invented the telephone to transmit speech. Initially the telephone was complimentary to the telegraph. Technological advances, however, established telephone as a competitor to the telegraph. The commercialisation of the telephone started when the Bell Group leased telephone instruments to customers who would be responsible for laying their own wires to those with whom they wished to communicate. This progression represented the foundation of telephone network and service. 5 In traditional telephony, a pair of wires is used to connect two telephones to each other, and one device is used for both the transmitter and receiver. The device can convert sound waves into low current electrical waves. It can also covert the electrical energy received from the distant phone back into sound waves at the receiving phone. Copper wires have been originally used as the medium of transmitting signals, whereas radio is also used for signal transmission. 6 Local telephone companies use two wires to connect one telephone directly to another telephone, and each telephone to their switching office or central wire centre. Each set of two wires is referred to as a pair. The telephone company refers to wires serving a local telephone as the local loop. The interconnection of three or more communication entities form a network, which is known as the public switched telephone network (PSTN). Telephone calls through the PSTN use circuit switching which establishes a call path and keeps it open for the duration of the call. Over the years, advances in technology allowed the shift from traditional types of telephony to mobile telephony and electronic communications, like the internet. These are discussed below. - Mobile telephony Whilst traditional telephony uses copper wires as a medium for signal transmission, mobile telephony uses radio. Mobile telephony is characterised by four different types of mobile generations: the analogue (1G); the digital - the Global System for Mobile (GSM) (2G); 5 Turnbull P and Hug F (1984), The Telecommunications Industry: Technology, Supply and Market Structures, Occasional Paper No. 8408, UMIST. 6 For more information about the technology of traditional telephone see Cole M (1999), Telecommunications, Prentice Hall, USA. 6

13 CONSTANTINA BICHTA the General Packet Radio Service (GPRS) and Wireless Application Protocol (WAP) (2 1 / 2 G); the Universal Mobile Telephone Service (UMTS) (3G). 7 Each generation relies on different technology to deliver calls and relevant mobile services. The first generation of mobile cellular systems was introduced for commercial use in the 1980s. During that time analogue cellular telephone systems grew rapidly in Europe, particularly in Scandinavia and the UK. This mobile generation offered a limited number of services like radiopaging, videotext, and electronic mail services. The second mobile generation was developed in 1982 by the Group Special Mobile (GSM) in order to provide a pan-european cellular network. The GSM system used solely digital technology in order to deliver: spectrum efficiency; international roaming; low mobile and base stations costs; good subjective voice quality; compatibility with other systems such as integrated services digital network (ISDN); the ability to support new services. 8 Since its launch, the GSM technology has enlarged the provision of mobile services, including international roaming, data transmission (SMS), fax capabilities, calling line identification and calling line display, etc. Customers can also benefit from tariff charges. The range of tariffs on digital has been far greater than on analogue, notable group saver and other volume tariffs (Borthwick, 2000). 9 The launch of the third generation mobiles, UMTS (3G) is expected within the next two years. 3G is a combination of the internet with the mobile phone. 3G combines high-speed mobile access with internet protocol (IP) based services. The existing digital networks have been evolved to carry 3G services. Currently, operators in the UK are building new digital networks developed from second generation technology, adding to it an IP core. 3G relies on GPRS and wireless application protocol WAP technologies. GPRS is a means of making efficient use of the available radio spectrum assigned to GSM networks to enable the transmission of data pockets. It is ideal for type services. WAP allows users to access online services as they would do from a laptop. WAP devices are beginning to be offered for accessing web-based services such as news, entertainment and sports results, information services as well as e-banking and e-shopping services. 7 1G, 2G, 2 ½G, 3G translates to 1 Generation, 2 Generation of mobiles etc Borthwick R (2000), Farewell to analogue, Infocus, Autumn 2000, Issue 22, p.3. 7

14 THE UK TELECOMMUNICATIONS INDUSTRY Another technology that will play a key role in 3G is Bluetooth. This is an initiative between telecoms equipment, computer and chip manufacturers to develop a two way digital radio standard for short range connections between devices, in office or homes. For example, a photograph taken on a Bluetooth enabled camera could be transmitted to any nearby Bluetooth enabled mobile phone, from which it could be send anywhere in the world over the mobile network (Bergendahl, 2000). 10 In terms of tariff charges, the user will be charged only for the amount of information sent and received not, as it is today, for the duration of a connected call. 3G is all about converging all types of services such as communications, information, media and entertainment. At present, the General Packet Radio Service (GPRS) and Wireless Application Protocol (WAP) technologies (2½G) have been rolled out and used by telecommunications operators. It is believed that 2.5G will deliver some of the same services as 3G but at lower speed than the 3G. - Enhanced services This final category of telecommunications services, is called enhanced because they involve as an integral part of the service the provision of features or capabilities that are additional to the conveyance (including switching) of the information transmitted. 11 A typical example would be enhanced television services, which include interactive applications as well as audio and video. Basic and value added services cover a wide range of enhanced telecommunications services developed during the 1980 s. Among these, the value-added network services (VANs) and value added data services (VADs) are the most popular. Basic and value added services developed mostly due to the need for computer systems to communicate with each other via telecommunications networks. These services include voic , personal numbering, messaging services (ie, , voic ), videoconferencing and information services. Private circuits are point to point circuits for customers exclusive use. They can be analogue, voiceband, digital, satellite and switched private services circuits. Depending on the type of circuit, different services might be made available to customers. Analogue circuits are suitable for telegraphy and data transmission. The voiceband circuits are mostly suitable for speech transmission, voice and data transmission, and for communications traffic between private branch exchanges (PBXs). Generally speaking private circuits cover speech, data or image communications. Premium rate services: chatlines, recorded messages and message services represent premium rate services. Chatlines allow a number of telephone users to be linked together on the phone and chat to each other. Recorded message services provide information on weather, sports, travel, and medical inquires. Other recorded messages offer jokes and stories. Message services can now offer 10 Bergendahl L (2000), Moving towards multimedia third generation communications, Infocus, Spring, Issue 20, pp See Oftel glossary at 8

15 CONSTANTINA BICHTA live commentaries and interactive games. A number of problems have been associated over the years with the above services, especially parent complaints receiving large telephone bills from excessive use by young family members. The industry uses codes of practice and committees to assess both the content and the advertising of these services, and to inform customers about the size of the bills Telex and videotext: telex is a communication service involving teletypewriters connected through automatic exchanges. By the early nineties most telex networks were digitised. Telex allows for the storage and forwarding of incoming calls, store and forward messaging and simultaneous multiple broadcast. Telex services are available for inland, long distance and international calls. Videotext services allow tele-shopping activities, ie, on-line insurance packages etc. Telepoint is based upon second generation cordless telephone technology (CT2). The service consists of a pocket sized cordless handset which can connect via a radio link to publicly sited base stations. Through these stations, calls are connected to the main trunk network. Calls on telepoint handsets are usually made within approximately 200 metres of a base station. Although originally telepoint did not have the capacity to receive incoming calls, attempts have been made since to allow for two-way communication. 14 Interactive multimedia service: the term interactive multimedia services is used to describe two forms of interactivity: The first is where viewers use the remote control to click applications, which are included in the broadcast stream. The second form of interactivity is where the modem is used to communicate with a remote server. 15 Some of the basic interactive multimedia services currently available are summarised in Table 1. Interactive television, which links a telephone line with a special set-top box on the television, allows customers to buy goods and services, carry out banking transactions and access information from their own homes. Video on demand refers to a point to point service where a customer requests an item from a menu which is then transmitted over the telecommunications network to the customer s home and which will start when the customer chooses and can 12 For instance, in the UK, the Independent Committee for the Supervision of Standards of Telephone Information Services (ICSTIS) operates since 1986 to access both the content and the advertising of the recorded message services. 13 Since 1988, Mercury, Kingston Communications, Cellnet and Racal Vodafone have agreed a code of practice for chatlines which allows them to introduce call-barring, itemised bills, and warning procedures to customers when bills reach a certain pre-determined size. 14 In the UK, four consortia were licensed in 1989 to provide the service but the service was finally withdrawn due to the low numbers of subscribers attracted. 15 Multimedia also refers to the use of computers to present text, graphics, video, animation, and sound in an integrated way. 9

16 THE UK TELECOMMUNICATIONS INDUSTRY be controlled by the customer (eg, paused rewound) in the same way as with a video tape played on a video recorder (Oftel, 1993). 16 Interactive services offer home shopping, home banking, travel, holidays services, games, and movies on demand. Table 1: Interactive multimedia services APPLICATION Movies-on-Demand Interactive video games Interactive news television Catalogue browsing Distance learning Interactive advertising Video conferencing DESCRIPTION Customers can select and play movies with full VCR capabilities Customers can play downloadable computer games without having to buy a physical copy of the game. Newscasts tailored to customer tastes with the ability to see more detail on selected stories. Interactive selection and retrieval. Customer examines and purchases commercial products. Customers subscribe to courses being taught at remote sites. Students tailor courses to individual preferences and time constraints. Customers respond to advertiser surveys and are rewarded with free services and samples. Customers can negotiate with each other. This service can integrate audio, video, text, and graphics. The internet is a worldwide system of computer networks. It was originally developed by the US Advanced Research Projects Agency (ARPA) to create a network that would allow users of a research computer at one university to talk to research computers at other universities. While physically the internet uses a portion of the total resources of the currently existing public telecommunication networks, technically it is different. What distinguishes the internet from the PSTN is its use of a set of protocols called TCP/IP (for Transmission Control Protocol/Internet Protocol). As mentioned earlier, traditional voice calls over the PSTN are circuit switched. This implies that a dedicated end-to-end transmission path (or circuit) is opened through the network for each call. The internet however is a packet switched network. No dedicated circuit is created for the transmission of each data message. Long messages are divided into short packets, each containing the destination address. The packets are transmitted through intermediate nodes (routers), where they are stored briefly before being transmitted to the next node. Upon arrival, the packets are reassembled into the original message. As the most efficient route 16 Video-one demand services require a multimedia server to operate. End users request for a service over a network and receive the service through three processes: the data is retrieved from a multimedia server; then data is transmitted over a communication network to the end users system; and, finally data is received on the end users system at a constant rate. 10

17 CONSTANTINA BICHTA over the internet may vary from second to second, each packet may take a different route to get to the destination address. 17 The structure of the packets is defined using the internet protocol (IP). The routing and transmission of the packets is controlled by the transmission control protocol (TCP). The TCP/IP protocol allows the internet to run over almost any type of facility which can transmit data, including the PSTN. Electronic mail, live conversations, access to and browsing of on-line information, shopping, entertainment and commercial exchanges are a few of the internet applications. Telecommunications systems Having outlined so far, the communications medium, the service providers and the services that are available to facilitate communication between people, this section focuses on the telecommunications systems themselves. The section begins with an overview of the components of a telecommunications system, and it proceeds with a description of the main characteristics of telecommunications systems, ie, transmission medium, signal conveyance, nature of signal, bandwidth. The final part of the discussion is around the main types of telecommunications networks. Supply chain of a telecommunications system Figure 1 represents the supply chain of a typical telecommunications system. The system assumes communications by electrical signals. If an electromagnetic signal is produced by the motion of electric charges, for example, electrons oscillating in a wire, then this signal will propagate from its origin. In order to communicate, electromagnetic signals containing information must be transmitted, which may then be detected. 18 Thus, the supply chain of a telecommunications system is as follows. The source originates the message, ie, human voice, a television picture, message, data. If the data is non-electrical, it must be converted into an electrical wave form, known as the baseband signal or the message signal through an input transducer. The transmitter modifies the baseband signal for efficient transmission. The channel is the medium, like a wire, coaxial cable, optical fibre, radio link, through which the transmitter output is sent. The communication channel acts a filter, to attenuate the signal and distort its waveform. The length of the channel increases 17 Gilbert and Tobin (1997), Internet Telephony: The Sharp Edge of Convergence, available on line at 18 Turnbull P and Hug F (1984), The Telecommunications Industry: Technology, Supply and Market Structures, Occasional Paper No. 8408, UMIST. 11

18 THE UK TELECOMMUNICATIONS INDUSTRY attenuation, varying from a few percent for short distances to orders of magnitude for interplanetary communication. The receiver reprocesses the signal from the channel by undoing the signal modifications made at the transmitter and the channel. The receiver output is then fed to the output transducer, which converts the electrical signal to its original form, the message. The destination is the unit to which the message is finally communicated. 19 Figure 1: Supply chain of a telecommunications system Input message Input Transducer Input signal Transmitted signal Received signal Output signal Transmitter Channel Receiver Output Transducer Output message Distortion and noise Source: Lathi B P (1989), p.3. Telecommunications networks have been constructed to transfer information between a number of information sources. In the assembly of a network, three types of equipment are required to link information sources with receivers. The transmission equipment, which carry the signal between emitting and receiving centres; the switching equipment that link the terminals in the network and connect them as required; and, the terminal equipment into which the original signal is introduced and through which the final signal is received. There are two types of networks to make connections for the duration of a telephone call, the fixed and the wireless network. Each network has different physical structure and uses different systems to transport traffic originated from communication sources. Depending on the type of the system, fixed or wireless, which is used to transport traffic, the network will be either fixed or wireless. Characteristics of fixed and wireless systems This section discusses the main characteristics of fixed and wireless telecommunications systems. The distinction between the two systems is important, as their individual characteristics affect the way signals are transmitted and conveyed through the communications channel. The characteristics of a telecommunications system also determine the speed of signal delivery, and the type of the final product, the telecommunications service, ie, fixed versus mobile telephony etc. 19 Lathi B P (1989), Modern Digital and Analog Communication Systems, (2 nd edn), Holt, Rinehart and Winston, Inc, USA. 12

19 CONSTANTINA BICHTA - Transmission medium and signal conveyance The term signal is often used loosely to cover various types of information sent over a communications channel. In this brief, the term message is used to describe information before it has been modified and subjected to errors and distortion of the channel; subsequently, the term signal refers to the message after it has been modified for transmission (Brown, Glazier, 1966). Thus, the signal, has to be conveyed to a remote point. The most usual methods are by cables and radio. The invention of laser however has attracted considerable interest in the possibility of using a beam of light for this purpose. Nowadays, the telecommunications systems use copper wire, optical fibre, coaxial cables, masts, antennas, and laser technology for signal transmission. Initially, the principle upon which (telephone) transmission operated was by oscillating electrons in copper wire. The first telecommunications systems were therefore developed as electro-acoustic (analogue) networks and were designed to carry speech only. Copper wires convert sound into electrical waves, so that the current continuously varies in proportion to the human voice. With advances in technology, coaxial and fibre optic cables have been introduced leading to a more sophisticated transmission medium, ie, the capability of handling the increasing telecommunications load. The coaxial cable operates on the same basis as the copper wire but its physical assembly has undergone refinement. Coaxial cable consists of a small copper tube or wire surrounded by an insulating material and another conductor with a larger diameter, usually in the form of a tube or copper braid. In an optical fibre glass cable, signal information is transmitted over the hair thin glass threads in the form of light pulses. This allows for the delivery of the signal at higher speed and the delivery of higher volumes of signals than the traditional copper wire cable. There are systems today that combine both optical-fibre and coaxial cables to optimise the fibre s reliability and speed of information delivery at lower costs than the use of a pure fibre network. The use of a coaxial cable and optical fibre cable allow for the transmission of electrical and optical signals. A telecommunication system can also use radio links to transfer information between information sources. Radio signals are transmitted through antennas and satellites. An antenna is a specialised transducer that converts radio-frequency fields into alternating current and vice versa. There are two basic types: the receiving antenna, which intercepts radio-frequency energy and delivers alternating current to electronic equipment, and the transmitting antenna, which is fed with alternating current from electronic equipment and generates a radio-frequency field. 20 In computer and internet wireless applications, the most common type of antenna is the dish. Dish antennas are generally satellite communications, practical, only at microwave frequencies (above approximately 3 GHz). The dish consists of a spherical reflector with an active element at its focus. When used for receiving, the dish collects radio-frequency from a distant source and focuses it at the active element. When used

20 THE UK TELECOMMUNICATIONS INDUSTRY for transmitting, the active element radiates radio-frequency that is collimated by the reflector for delivery in a specific direction. Systems using free space (laser) optics (airfibre) are also under development. The acronym laser stands for light amplification by stimulated emission of radiation. Lasers work as a result of resonant effects. In a basic laser, a chamber called a cavity is designed to internally reflect infrared (IR), visible-light, or ultraviolet (UV) waves so they reinforce each other. At each end of the cavity, there is a mirror. One mirror is totally reflective, allowing none of the energy to pass through; the other mirror is partially reflective, allowing approximately 5 percent of the energy to pass through. Energy is introduced into the cavity from an external source; this is called pumping. The output of a laser is a coherent electromagnetic field. In a coherent beam of electromagnetic energy, all the waves have the same frequency and phase. The advantage of free space optical systems at the moment is that there is no licensing of the spectrum Nature of signal The signals that transmission mediums convey are classified into two broad classes: analogue and digital. The name analogue arises because the transmitted electrical waveform is an analogue of the acoustic or light waveform, which forms the message. An analogue signal is a continuous function of time. At any instant, it may have any value between limits set by the maximum power that can be transmitted. Speech is an analogue signal. A digital signal can only have discrete values. The most common digital signal is a binary signal, which has only two values 1 and 0. Thus, a telegraph signal is a digital signal. A television waveform is a mixture of analogue and digital signals, since it transmits both the picture contents and synchronises pulses. 22 In recent years, digital signals have been getting more common, while analogue have been used less and less. There are still plenty of analog signals around, however, and they will probably never become totally extinct. One of the reasons digital signals are more widely used is because they are less susceptible to electro-magnetic disturbance. To transmit an analogue signal without error the transmission channel must be a linear system. Any departure from linearity causes non-linear distortion of the analogue signal, ie, cable systems and radio systems equipped with linear amplifiers are examples of analogue channels. A digital channel does not require to be linear, since its outputs provide a number of discrete conditions corresponding to the input signal, ie, a telegraph circuit, whose output signal is provided by the operation of a relay. It is wrong to believe that analogue signals are always transmitted over analogue channels and digital signals over digital channels. Data communications and voice telegraphy (digital signals) can be transmitted over telephone lines (analogue channels). Analogue signals may be coded for transmission over digital channels by means of analogue-to-digital converters, ie, a modem is used to convert the digital Flood J E (1975), Telecommunication Networks, Peter Peregrinus Ltd, Birmingham. 14

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