Telecom: Technology Student Papers: Mellon - California Western
Telecom: Technology Student Papers: Mellon

Telephone Services

by Craig Mellon

History of the Telephone

In 1877 while working on a device to enable hearing impaired individuals to hear sound, Alexander Bell developed a communications device that was to eventually be introduced into almost every American home and become available to nearly everyone worldwide. The voice transducer (transmitter and receiver) technology developed by Bell paved the way for electronic recording of sounds, music, and voice. Before that, long distance communications were carried out by means of the telegraph, an invention of Samuel F. B. Morse and two British engineers Sir William Cook and Sir Charles Wheatstone developed a method of sending electronic messages over a distance of several miles almost instantaneously. The implications of this development were enormous. For the first time in history, human beings had the means to overcome obstacles imposed upon communication by great distances. America's telegraph network grew up with and was often found alongside the rapidly developing network of railroad lines that began to tie the various corners of our nation together.

The Public Switched Telephone Network (PSTN) consists of a nationwide network of analog connectivity. This connectivity integrates Local Exchange Carriers (LEC) and Interexchange Carriers (IXC). Both LECís and IXC have hubs centralizing their operations and equipment. LECís hubs are called Central Offices (CO) and IXCís hubs are called Points of Presence (POP). All telephone communications have traditionally traveled through this network. Geographical coverage among LECís is arranged in LATAís (Local Access Transport Areas) within a state and state by state for IXC on a nationwide scale. A LATA is a geographical unit within a state not confined to county or municipalities. A LATA can be comprised of several counties and/or area codes.

The PSTN has been regulated by the US government since 1877 with the signing of the Post Roads Act which gave control of telecommunications to the Postmaster General. Control was transferred to the Federal Communications Commission with the signing of the Communications Act of 1934.

In 1913 AT&T was forced to divest itself from Western Union and to allow independent carriers to use its long distance network. In 1975 the Justice Department sued AT&T for further divestiture. Finally, in August of 1983, AT&T agreed to a consent decree or modification of final judgment approved in U.S. v. AT&T, 552 F. Supp. 131 (1982) which became effective on Jan. 1, 1984. Justice Department broke up AT&T to form the 22 Bell Operating Companies (BOC) which are organized as seven regional Bell holding companies (RBHCS).

How the Telephone Works

The analog telephone network is comprised of coaxial cable lines, which consist of two copper wire cables. These cables transmit electronic pulses one way at a time. The telephone has two main parts: the transmitter and the receiver. The transmitter of a telephone functions as an ear: when a person speaks into the mouthpiece, the sound hits a piece of equipment called diaphragm and makes it vibrate. The sound waves are copied from the intensity they apply to the tiny carbon-granules that exist in a little cup within the transmitter, and carry them to the receiver of a different telephone. The receiver of the second telephone consists of two magnets. One magnet is permanent and sits close to the diaphragm of the receiver at all times. The other one is composed of a metal coil that moves with each electrical current received from the transmitter. Depending on the intensity of the electrical current, the magnet pushes or contracts the diaphragm. As the diaphragm pushes in or out, it pulls and pushes air in front of it. The pressure of the air makes sounds like the ones sent into the transmitter. The sound waves hit the ear of the listener as the words of the speaker.

Telecommunications Act of 1996

The telephone served as the basic communication link during the twentieth century. Telephone service minimized geographical distances and barriers and linked people in developed and underdeveloped countries. In the United States AT&T was the only carrier for both local and long distance until 1984. Since that time, several carriers like MCI and Sprint have come into the scene for long distance services. The telecommunications environment has undergone tremendous change in the last decade. The Telecommunications Act of 1996 was supposed to pave the way for LECís to participate in the long distance traffic trade and for the IXC to participate in the local telephone service market. Four years after its enactment, the FCC reports that this act will boost US economy as a whole. Chairman William Kennard of the FCC states that this act bolted the US into the "broadband internet age".

Evolution of Voice over IP

The statistics surrounding the evolution of the Internet technology and how itís revolutionizing the voice industry as we know it are shocking:

  • More than 230,000 jobs were created in the communication services and the equipment industry since 1996
  • The number of schools with Internet connections in low-income areas quadrupled from 19% in 1994 to 80% in 1996
  • The miles of fiber systems used to transport information have nearly doubled since 1996
  • About 1.7 million users connect to the Web at speeds at least 25 faster than a 28.8-kbps modem
  • Internet usage has grown about threefold since 1996 to almost 80 million users in 1999

How does all this affect traditional telephone voice service as we know it? The Internet offers the capability of transmitting voice over any regular Internet connection. There is hardware and software to enable any user connected to a land-line internet connection to establish a two-way voice conversation with another user that has the necessary hardware and software. This means that a user in San Diego can connect to their local Internet Service Provider (ISP) at its monthly cost of nine dollars for unlimited usage, and surf the web. Through modem-based software located in their browser, a person can call up their friend in Sydney at his Australian telephone number. The friend in Sydney who is browsing the Internet at the same time, hears a message through his own modem-based software located in his browser and picks up the call. Microphones on either end allow the users to utter words that will be heard by the other party. This activity will be carried out through an Internet connection, at a flat monthly cost for Internet usage, eliminating all long-distance costs and taxes. This scenario is already taking place in many computers throughout the world, is a real threat to the established voice industry as we know it. Carriers are aware of this and are shifting their strategic focus from a voice-based business to a data/Internet-based business where voice works as an add-on to a bundled or pre-packaged service offering. Long distance carriers in the US have consistently lowered their prices for domestic service in the past 10 years. Domestic calls within the US can be completed for only pennies per minute so the traditional revenue stream for the IXC has consistently declined. This means that a PSTN spanning thousands of miles nationwide, constructed by mostly outdated analog telephone lines no longer represents the cash-cow that so many long distance carriers depended on. This is a tremendous challenge since new upstart companies have the ability to follow the technological demands of the consumer and donít have to bear the great cost of maintaining a huge telephone network, can more easily adapt to industry demands and position themselves better. Upstarts that offer newly developed technological breakthroughs like Digital Subscriber Line (DSL) connectivity are at a much better position to offer required services to the consumers. DSL, makes use of the existing copper pairs in the telephone access network to deliver more bandwidth than a regular telephone line. DSL provides data connectivity to the Internet, bypassing local telephone switches and offering always-on access to Internet users. This can be an advantage to existing long distance carriers since they can use their existing telephone line network available for the myriad of users that are trying to take advantage of this technology. The switch of application from voice to data services like DSL can make use of a network that otherwise would be obsolete.

The implications of DSL stretch beyond solving the Internet access problem. DSL changes the face of network access. Until the advent of DSL, the local loop connectivity (the end user connection from his home or business to the CO) provided connection only from the user to the local telephone switch. With DSL, the local loop becomes the access to a whole telecommunications network, enabling a range of services like Internet access, video on demand and multiple telephone lines to be delivered over a single copper pair wire.

Trends for the Future

The movement of traditional telecommunication business from voice-based networks, to data-based networks is evident. Technologies like DSL are only making the move much swifter and the demands on existing providers that much faster. The availability of the Internet for research and business purposes and the ability to transmit voice and data over these type of connections, make the pressure for existing and aspiring telecommunications companies greater. The advent of new technologies, the desire from consumers to take advantage of them is so evident that companies are scrambling to deliver what customers are asking for. AT&T for example, has devised a plan called AT&T OneNet Service‚ which is geared to their largest business consumers. This bundled service combines voice, data, advanced features, access, local, long distance, audio teleconferencing and wireless services into one package. Voice services used to be traditionally the most important part of contracts with long distance carriers, but plans like the OneNet Service‚ place voice as an add-on to other more important and luring services to customers like voice and dedicated access. Indeed the margins of profitability voice service offer have decreased consistently in the past decade and this trend will continue in the future. Companies that capture the greatest market share and that are able to offer more of the services available and that customers want will remain competitive. Smaller companies that can offer these services will attract niche markets, but the overall trend is to bundle services to make it attractive and easy to stay with one market, hence, the emergence of buy-outs and mergers in the telecommunications industry.


In conclusion, we can gather that telecommunications have evolved tremendously in the last century from the invention of the telephone to the advent of the Internet. The telephone enabled long distance communication and for a long time served as the primary means of communication for both consumers and businesses alike. In recent years, however, the advent of the Internet and the widespread usage of computer applications and their penetration into day to day activities have made the emergence of advanced data solutions like DSL, and other technologies that give access to the rapid transfer of data, both in voice and data format alike, more and more prevalent and a necessity in todayís marketplace. The world of telecommunications is being re-shaped at tremendous speed and government acts like the Telecommunications Act of 1996 are being attributed much of the ability to change. Governmentís belief that legislation like this boosts economic welfare has spurred support for research. These last ten years have seen more change in the telecommunications industry than we have ever seen and the prediction is that the future is not shaped to any extent. The possibilities of change and advancement are tremendous and exciting. It will be years before we can predict the way these changes will continue to evolve, but for this moment it is only predictable that change will continue to exist with lightning speed.




PSTN Regulatory Structure

Telephone History Website, <>.

Allison B. Cbel, February 8, 2000

Mastering Voice Over DSL, November 4, 1999 <>.

AT&T Business Markets Division

Federal Legislation

1877 Post Roads Act, ch. 103, 19 Stat. 319

Communications Act of 1934, ch. 652, 48 Stat. 1064

Telecommunications Act of 1996. Pub. L. No. 104 Ė 104, 110 Stat. 56



U.S. v. AT&T, 552 F. Supp. 131