What makes up telecommunications

As a result, both technology suppliers and service providers are increasingly in the business of providing telecommunications in all media simultaneously rather than specializing in a particular type such as voice, video, or data.

Second, the networks are built in layers, from the physical layer, which is concerned with the mechanical, electrical and optical, and functional and procedural means for managing network connections to the data, network, and transport layers, which are concerned with transferring data, routing data across networks between addresses, and ensuring end-to-end.

Both technology equipment and software suppliers and service providers tend to specialize in one or two of these layers, each of which seeks to serve all applications and all media. As a consequence, creating a new application may require the participation and cooperation of a set of complementary layered capabilities.

This structure results in a horizontal industry structure, quite distinct from the vertically integrated industry structure of the Bell System era. All these changes suggest a new definition of telecommunications: Telecommunications is the suite of technologies, devices, equipment, facilities, networks, and applications that support communication at a distance. The range of telecommunications applications is broad and includes telephony and video conferencing, facsimile, broadcast and interactive television, instant messaging, e-mail, distributed collaboration, a host of Web- and Internet-based communication, and data transmission.

Deciding what is and is not telecommunications is always a judgment call. Applications of information technology range from those involving almost no communication at all word processing to simple voice communications telephony in its purest and simplest form , with many gradations in between. As supported by the horizontally homogeneous layered infrastructure, applications of various sorts increasingly incorporate telecommunications as only one capability among many. For example telephony, as it evolves into the Internet world, is beginning to offer a host of new data-based features and integrates other elements of collaboration e.

Another important trend is machine-to-machine communication at a distance, and so it cannot be assumed that telecommunications applications exclusively involve people. Like telecommunications itself, the telecommunications industry is broader than it was in the past. It encompasses multiple service providers, including telephone companies, cable system operators, Internet service providers, wireless carriers, and satellite operators.

The industry today includes software-based applications with a communications emphasis and intermediate layers of software incorporated into end-to-end communication services. It also includes suppliers of telecommunications equipment and software products sold directly to consumers and also to service providers, as well as the telecommunications service providers.

The broad definition adopted here is intended solely to capture the scope of relevant research, not to make any statement about what technologies and services should or should not be considered telecommunications for regulatory purposes. It includes companies selling components or intellectual property predominately of a communication flavor, including integrated circuit chip sets for cell phones and cable and digital subscriber line DSL modems.

No longer a vertically integrated business, the telecommunications industry is enabled by a complex value chain that includes vendors, service providers, and users. The telecommunications value chain begins with building blocks such as semiconductor chips and software.

These components are, in turn, incorporated into equipment and facilities that are purchased by service providers and users. The service providers then, in turn, build networks in order to sell telecommunications services to end users.

The end users include individuals subscribing to services like telephony landline and cellular and broadband Internet access, companies and organizations that contract for internal communications networks, and companies and organizations that operate their own networks. Some major end-user organizations also bypass service providers and buy, provision, and operate their own equipment and software, like a corporate local area network LAN or a U.

Software suppliers participate at multiple points in the value chain, selling directly not only to equipment vendors but also to service providers e. An implication of defining telecommunications broadly is that every layer involved in communication at a distance becomes, at least partially, part of the telecommunications industry.

The broad range and large number of companies that contribute to the telecommunications industry are evident in the following list of examples:. Networking service providers across the Internet and the PSTN, wireless carriers, and cable operators.

Communications equipment suppliers that are the primary suppliers to service providers. Examples include Cisco, Lucent, and Motorola. Networking equipment suppliers selling products to end-user organizations and individuals.

Semiconductor manufacturers , especially those supplying system-on-a-chip solutions for the telecommunications industry. Suppliers of operating systems that include a networking stack. Microsoft is an example.

Software suppliers , especially those selling infrastructure and applications incorporating or based on real-time media. Utility or on-demand service providers selling real-time communications-oriented applications. Consumer electronics suppliers with communications-oriented customer-premises equipment and handheld appliances. Examples include Motorola and Nokia cell phones , Research in Motion handheld e-mail appliances , Polycom videoconferencing terminals , Microsoft and Sony networked video games , and Panasonic televisions.

What is striking about this list is how broad and inclusive it is. Even though many of these firms do not specialize solely in telecommunications, it is now quite common for firms in the. The societal importance of telecommunications is well accepted and broadly understood, reflected in its near-ubiquitous penetration and use.

Noted below are some of the key areas of impact:. Telecommunications provides a technological foundation for societal communications.

Communication plays a central role in the fundamental operations of a society—from business to government to families. In fact, communication among people is the essence of what distinguishes an organization, community, or society from a collection of individuals. Communication—from Web browsing to cell phone calling to instant messaging—has become increasingly integrated into how we work, play, and live. Telecommunications enables participation and development.

Telecommunications plays an increasingly vital role in enabling the participation and development of people in communities and nations disadvantaged by geography, whether in rural areas in the United States or in developing nations in the global society and economy. Telecommunications provides vital infrastructure for national security. From natural disaster recovery, to homeland security, to communication of vital intelligence, to continued military superiority, telecommunications plays a pivotal role.

When the issue is countering an adversary, it is essential not only to preserve telecommunications capability, but also to have a superior capability. There are potential risks associated with a reliance on overseas sources for innovation, technologies, applications, and services.

It is difficult to predict the future impact of telecommunications technologies, services, and applications that have not yet been invented. The telecommunications industry is a major direct contributor to U. The U. Census Bureau estimates that just over 3 percent of the U. At 3 percent, telecommunications thus represented more than a third of the total fraction of GDI spent on information technology IT; 7. In fact, the fraction attributable to telecommunications is probably larger relative to that of IT than these figures suggest, given that much of the GDI from IT hardware particularly semiconductors could apply to any of several industries computing, telecommunications, media, and electronics, for example.

If one assumes IT to be the sum of computers calculating , computers wholesale , computers retail , and software and services, the total GDI for IT is.

The continuing advances in high-speed mobile services and Internet connectivity between devices keep driving innovation and competition within the sector. Much of the industry focus is on providing faster data services, especially in the area of high-resolution video. Essentially, the driving forces are toward quicker and clearer services, increased connectivity, and multi-application usage. Emerging market economies continue to be a boon for the industry, with the growth rate of the cell phone industry in countries such as China and India pushing the abilities of hardware producers to keep up with the level of demand.

In the U. There is still a strong demand for wireless spectrum rights, not to mention an increasing trend toward consolidation through mergers and acquisitions.

Telecommunication companies, like other forms of utilities, often operate with stable customer bases that are protected from competition by government mandate. These pseudo- monopolies allow for consistent dividends. However, the dynamic nature of communications has led to mobile and Internet-based phone systems, undermining the demand for traditional landlines.

When this happens, telecommunication companies either suffer or adapt, incorporate the new technology and grow rapidly as consumers buy the latest equipment. Federal Communications Commission. Y Charts. Telecommunications ETF. State Street Global Advisors. Federal Communications Committee. Tech Stocks. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.

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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. Evolution of the Telecom Sector. How Telecom Companies Make Money. Key Telecom Sectors. Investing in Telecommunications.

Evaluating Telecom Companies. Big Players in Telecommunications. Telecommunications ETFs. Outlook for the Telecom Sector. The Bottom Line. Key Takeaways The telecommunications sector consists of companies that transmit data in words, voice, audio, or video across the globe. Telecom equipment, telecom services, and wireless communication are the three basic sub-sectors of telecommunications.

Telecom has become increasingly focused on video, text, and data, as opposed to voice. Telecommunications companies can appeal to both growth- and income-oriented investors.

Although individual stocks can be quite volatile, the telecom sector overall has exhibited stable long-term growth, as telecommunications has become an increasingly important basic industry, impervious to business cycles. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.

You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Server manages the accesses to the database. Clients send remote procedure calls to activate specific applications logic on a server. Characteristics of Three-Tier Architecture: [Figure 7.

An application server runs most of the application logic, with the user workstation responsible for the display at the front end and the database server providing database servers at the back end.

Objective is to distribute application so as to reduce the overall hardware costs while minimizing the network traffic. Is attractive in terms of their acquisition price as related to their performance.

Is moving computing control out of the data centers and into the end-user areas. Software is complex, and is expensive to maintain.

Generate significant traffic on the firm's backbone network that connects clients and servers. Wide area networks are the fundamental infrastructure of organizational computing. These long-distance telecommunications networks employ a variety of equipment so that the expensive links may be used effectively. The offerings of common carriers and of providers of value-added services may be combined with private networks to create an overall organizational network.

WANs include equipment that controls message transfer and makes it possible to share the links among a number of transfers. A WAN has a powerful host computer. The host runs a system program, called a telecommunications monitor, which processes incoming messages, passing them to the appropriate application programs, and accepts outgoing messages from the applications in order to transmit them into the network.

Front-End Processor. Relieves the host computer of most of the tasks involved in network control. Under the control of its own software, the front-end processor accepts messages coming from the network and routes outgoing messages to their destinations.

It performs the necessary code conversions, encrypts and decrypts secure messages, and performs error checking so that the host deals with Aclean messages. Cluster Controller. Manages several terminals, connecting them to a single telecommunications link, and performs communication tasks for them, such as screen formatting, code conversion, and error checking.

A cluster controller may also allow the terminals to share a high-speed printer and may handle electronic mail among the cluster terminals. Combines the data that terminals send to it over local low-speed links into a single stream. This stream is then transmitted over a high-speed telecommunications channel and is split by another multiplexor on the opposite end of the channel.

Combines transmission from several slower terminals that operate in a burst mode into a single transmission stream that requires a link of lower speed than the sum of the speeds of all the terminals combined.

A concentrator stores messages from terminals and forwards them when warranted. Establishes connections between nodes that need to communicate. Include a variety of dumb terminals, with no processing capacity and intelligent terminals with processing capacity, such as personal computers.

Some network facilities are owned by user organizations, others can be leased by them, or simply used on a pay-as-you-go basis. Among the typical facilities owned by user firms are workstations, host computers, and front-end processors. The essential providers of telecommunications links and services are common carriers and the vendors of enhanced services on value-added networks.

These include:. Providers of value-added networks. Private lines and private networks. Are companies licensed by a country's government to provide telecommunications services to the public.

The vast majority of common carriers provide telephone service. These carriers offer the use of a wide-area telecommunications infrastructure, that is, facilities for the transmission of voice and data messages. Common carriers offer a service called virtual private network where a user firm can purchase guaranteed access to facilities with specified capabilities, such as transmission speed and access points. Providers of Value-Added Networks. Value-added vendors lease facilities from the common carriers and provide telecommunications services to their own customers.

These vendors add value to the basic infrastructure furnished by the common carrier. The value-added networks VAN provided by the vendors furnish services over and above those provided by common carriers.

Private Lines and Private Networks. Instead of using a service that has to be shared with others, a firm may lease its own private lines or entire networks from carriers. This can have economic advantages as compared with VAN use, as well as provide faster and more secure communications. The Internet has changed the face of individual and organizational computing.

Driven by the possibilities offered by the Internet and the Web, electronic commerce is expanding its reach. Present and Future of the Internet. The Internet is the global network of computer networks without a centralized control that has become the contemporary Ainformation highway.

Characteristics of the Internet:. It is run in a decentralized fashion by a number of voluntary organizations, the principal of which is the Internet Society. It is a medium of communication, a source of information, and a developing means of electronic commerce.

A major obstacle to its development has become the limited capacity of the links interconnecting the networks. Facilities for Communication and Information Access. The Internet provides several essential facilities that organizations can use for internal as well as interorganizational information sharing and communication.

The principal categories of Internet use include:. Electronic mail E-mail facilitates quick exchange of information and ideas, and is the Internet facility in widest use. E-mail can be used for one-to-one communications or to participate in larger communications forums newsgroups. Information Access:. The Internet provides access to the largest organized loosely repository of information on earth: the collection of electronic documents stored on sites all over the world.

The main problem is finding the information. To help with this problem Web search engines have been developed. The World Wide Web or simply, the Web is an information service available over the Internet, providing access to distributed electronic documents via hyper links. Characteristics of the Web:. Grew out of the need of scientists who wanted to share information and to collaborate from geographically dispersed locations.

The Web is a collection of electronic sites stored on many thousands of servers all over the world. Each site consists of a home page and often other pages stored with it. Pages contain hyperlinks to related pages, usually stored on other sites. Access to the Web is through a client program, known as a browser.

The browser sends out for the needed page into the Internet, interprets the formatting directions on the retrieved page, and displays the page accordingly on the screen. A search engine is a Web facility that maintains its own information about the documents available on the Web. Electronic commerce is sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks.

In simple words, electronic commerce is doing business electronically, replacing most of the paper and telephone work with computer-mediated information and transaction exchange. The Internet, and the Web in particular, are emerging as the principal means for this new way of doing business.

Some potential uses include:. Establishing an electronic site on the Web to promote your business. On-line marketplaces. Advertising at frequented Web sites. Establishing newsgroups. One of the biggest drawbacks for the use of the Internet for conducting electronic commerce is the lack of financial security. The framework of electronic commerce is summarized in three levels:.

Products and structures. Using the Internet, many firms have implemented internal networks of Web sites, known as intranets. An Intranet is separated from the public Internet by a facility called firewall. The firewall program runs on the server computer, preventing access to the Intranet from the public Internet, but allowing access to the Internet.

Intranet is, in effect, the owner company's private Internet. Intranets have become important business tools for:. Sharing information and knowledge among a company's employees. Accessing databases and data warehouses. Organizing the corporate workflow around electronic documents. Enabling collaboration. The high-level design of a blueprint for the organizational information system is known as the information system architecture.

This plan must support the present and future computing and communications needs of a business. Today, the architectural blueprint of many organizations rests on internetworking: interconnecting a number of local area networks with a corporate wide area network, or using the Internet connectivity. Fundamental components of an architectural plan must address the following concerns:.

How will the processing power be distributed. Where will the databases be located. Network interconnections. Telecommunications give an organization the capability to move information rapidly between distant locations and to provide the ability for the employees, customers, and suppliers to collaborate from anywhere, combined with the capability to bring processing power to the point of the application. All of this offers a firm important opportunities to restructure its business processes and to capture high competitive ground in the marketplace.

Through telecommunications, this value may be:. An increase in the efficiency of operations. Improvements in the effectiveness of management. Innovations in the marketplace.