20

Telephony

William R. Davie, Ph.D.*

**BORSF Regents Chair of Communication, University of Louisiana, Lafayette

Telephony conveys voice and data between distant places by wired or wireless channels. Today that means smartphones encased in handsets of “Gorilla Glass” and aluminum with hoops of electromagnetic energy that meet almost any need in communications and commerce: from texting friends to banking online; from securing health care to calling for a Uber or Lyft; from earning a diploma to finding a job. We live in a global-mobile age, where the services for voice, messaging, and broadband technology drive innovation and investment. The mobile telephone’s preeminence has ushered in new ways of thinking, not just about telephony but about how our lives have been reshaped by the mobile phone, that even the very idea of living without one seems, well, unthinkable. Just how we got to this point in the technical evolution of telephony is worthy of reflection on over a century and a half of invention and re-invention.

Background

The telephone, whether wired or wireless, was not always the essential link in telecommunications. The evolution of this 19th century invention rooted in Alexander Graham Bell’s vision owes much to his associates, his rivals, and competing ideas like an acoustic telephone that relied on the vibrations of a taut wire between two receptacles, maybe a can or a cup. Yet it was the elements of competitive innovation, corporate hubris, government control, and cultural heritage that produced the first viable telephone. It seems apt that a Scottish inventor, who migrated to Canada, then moved to the United States in order to make Boston his home, became the telephone’s patron saint for inventing the “talking telegraph,” a machine that brought friends and families together over distances. Bell’s dramatic race to the U.S. patent office to beat his rival inventor Elisha Gray in 1876 offers good evidence of his enduring legacy (AT&T, 2010a).

The company, American Telephone and Telegraph, was born on March 3, 1885 (AT&T, 2010b). Theodore Vail actually served twice as its president—during its formation until 1888, and again from 1907-1919. His desire was to build AT&T into a centralized monopoly, which he accomplished by buying out smaller phone companies, and then creating in 1915 a transcontinental phone line (John, 1999). By the time Vail retired in 1919, AT&T was said to own every telephone pole, switch, and instrument in the country. Its status as a protected monopoly was secured under the Federal Communications Commission in 1934 (Thierer, 1994). AT&T achieved end-to-end ownership of the entire network including in most cases, the actual telephone inside the home.

As technology advanced, traditional telephony became known as POTS for Plain Old Telephone Service. POTS would circulate human voices via copper wires that connected to an analog exchange center where multiple calls were rapidly switched to trunk and branch lines to reach their chosen destination. (See Figure 20.1.) This switching took place over the Public-Switched Telephone Network (PSTN) (Livengood, Lin, & Vaishnav, 2006).

Over the next hundred years, telephony evolved through digital processing and the switching of telephone numbers converted to computer memory, known as the Storage Program Control (SPC). This innovation made switching easier by means of a centralized and distributed control system where digital microprocessors routed vast numbers of phone calls through a block or series of exchanges (Viswanathan, 1992). In the late twentieth century, telephone engineers modified the system, adapting digital transmission to offer data and video services along with the voice telephone circuitry common to PSTN. New fiber optic glass strands replaced copper wires, and computer modems translated telephone calls into binary signals.

Figure 20.1

Traditional Telephone Local Loop Network Star Architecture (POTS Network)

Source: Technology Futures, Inc.

Birth of Mobile Phones

Wired telephones were too restrictive for people who needed to be mobile in their work lives. Thomas Carter of Dallas introduced his two-way radiophone attachment in 1955, so that Texas ranchers and oil field workers could talk over distances using AT&T phones and lines. The homemade Carterfone sold about 3,500 units between 1955-66, but AT&T demanded that the FCC put a stop to this competition. The Supreme Court decision that followed handed a win to the Carterfone, and the case precedent established the right to allow “any lawful device” to connect with phone company equipment (Lasar, 2008). This early mobile phone service, dubbed “land mobile telephone,” was a precursor for the cellular revolution that followed.

The mobile phone owes much to the genius of an electrical engineer working on automobile phones for Motorola’s research and development lab. Martin Cooper liked the “communicator” he viewed on the TV series Star Trek (Time, 2007), and adopted that vision to create a completely portable phone independent of car wires or cable. In 1973, he demonstrated his mobile phone on the streets of Manhattan by calling rival engineer, Joel S. Engel, head of research at Bell Labs. It was clearly bulkier than Captain Kirk’s communicator and was dubbed “the brick” because it weighed almost two pounds (Economist, 2009). Inventing the handheld mobile phone was one major accomplishment, but building a transmitting network for relaying those calls while in transit raised an even higher hurdle.

Figure 20.2

Cellular Telephone Network Architecture

Source: Technology Futures, Inc.

Early land-mobile telephone used a group of frequencies broadcast over a broad area, but lack of capacity limited its usefulness and kept prices too high. For more conventional mobile phones, AT&T needed a network of carefully spaced transmission centers, and Bell Telephone Labs began working toward that goal. Joseph Engel and Richard Frenkiel designed a cellular map that afforded growth in mobility links (Lemels, 2000). The map caught the attention of the FCC’s early mobile communications engineers, but it would take another generation before mobile phones and transmission networks were widely available. Telecom engineers instead turned toward the next needed innovation (Oehmk, 2000). In place of using broad coverage antennas, cellular telephone service relied on small transmission reception areas that allowed the reuse of frequencies over a large area. See Figure 20.2.

Smartphone Evolution

Cellular transition to smartphone technology began in 1993 with the introduction of the IBM Simon, and continued to evolve over the next two decades with additional devices based on digital technology. BellSouth customers who purchased a Simon used a touch screen to open an address book, a calculator, and a sketchpad. It was not a market success, but a fleet harbinger that signaled a decade of experimentation.

In 1996 Nokia advanced forward in this race with its 9000 model that merged mobile phone features with those of Hewlett-Packard’s Personal Digital Assistant (PDA). Motorola’s engineers further advanced the smartphone competition in 2003 when they introduced the MPx200. This joint venture with Microsoft had a Windows-based operating system with a full package of AT&T wireless services including email and instant messaging along with other applications to be simply called apps.

The smartphone actually is a “stack” of four technical layers (Grimmelmann, 2011). At the first level there is the app itself, which might be a social media site, a video game for amusement, a calendar for appointments, an online newspaper for current events, a music store for favorite tunes, or any other app easily pressed into service by touching an icon on a glass surface. At the second tier, mobile apps rely on an operating system such as Android, Apple’s iOS, or Windows, which are the leading systems. The third tier is the smartphone itself, which could be a Galaxy by Samsung, an iPhone by Apple, or a Nokia Lumia. Finally, the fourth tier is the cellular network that connects mobile devices to the rest of the world through networks identified by acronyms like CDMA, GSM, EDGE, EVDO, and LTE, numbered according to generational technology (1G, 2G, 3G, and 4G).

BlackBerry to iPhone

The Blackberry grew out of Research in Motion’s (RIM) line of two-way pagers. Its initial success was credited to its compact features for wireless email, mobile faxing, and the tiny raised keyboard (Connors, 2012). On city streets, groups of business professionals known as “Blackberry Jam” were fixated on their handsets nicknamed “Crackberry” indicating their addictive quality. Competition grew fierce within the market, and by 2014, Blackberry’s fortunes had fallen fast with quarterly losses approaching a billion dollars (Austen, 2013). Despite the Canadian firm’s efforts to regain viability with new models like the Z10, the company faced a daunting uphill fight to regain its market share and profitability.

Apple’s iPhone went on sale in 2007 at the spectacular price of $499. Rather than focus on sticker shock, Apple capitalized on its customers’ loyalty and affection for the popular music device, the iPod, which made iPhone’s price tag seem more palatable in view of its vast improvements (Vogelstein, 2008). Its download capacity and the apps encased in its multi-touch screen that users could press, pinch, tap, or flick without hardware buttons or styluses convinced them it would be worth it. The iPhone’s reliance on what was a revolutionary operating system (iOS) with a responsive Web browser sold customers on the idea of placing this new rectangle compact of aluminum and ceramic glass in their pocket or purse, and dispose of whatever cellphone they had been using before.

Recent Developments

The most important developments since 2014 have been in the explosion of new apps, digital wearables, and m-commerce. After the mobile commerce market failed to attract much attention for years, Apple introduced its Apple Pay service in September 2014, which activated one million credit cards within the first three days of its launch (Rubin, 2015). The following month, Whole Foods processed 150,000 Apple Pay transactions, while McDonald’s estimated that half of its “tap-to-pay” became Apple Pay transactions. It was not long before Apple’s rivals had their own pay services ready to roll. Samsung Pay was introduced for the Galaxy S6 and S6 Edge smartphones, and Google unveiled its plans to roll out Android Pay, using Softcard technology, a joint venture of AT&T, Verizon, and T-Mobile (Rubin, 2015). One of the challenges for m-commerce is the e-commerce desktop tradition; encoding shipping details on a smartphone can be more time-consuming and clumsy than the tried and trusted workstation transactions. Apple Pay and Android Pay have answered that objection by devising mobile means for automatically filling in all the necessary purchase details with partnering apps and mobile websites to make the m-commerce experience more competitive.

Mobile Watches

The introduction of the smartwatch rivalry featuring competition between Apple Watch and Samsung’s Gear was the most interesting development in wearable technology since Google Glass indicated it would not live long and prosper. In the case of these smartwatch rivals, the obstacles to success were substantial. Both Apple and Samsung watches could tell time, make phone calls with touch screens responding to voice commands, but they both also required companion smartphones (Shanklin, 2014). In theory, an older technology can be replaced by a newer solution once it has proven to be more versatile, efficient, and marketable. If the smartwatch’s practical necessity outlasts its novelty, then it will escape the Google Glass fate.

Popular Apps

When it comes to pressing icons into service, the plethora of new apps is positively soaring. Two app stores stand atop the U.S. market—Google Play and Apple App Store offer between 1.4 and 1.5 million apps (FCC, 2015). The most popular apps are Facebook and Facebook Messenger followed by Youtube, and Google apps: Google Play, Google Maps, Google Search, and Gmail in that order (Miller, 2016). Two music services, Pandora and Apple Music, also top the list, along with Instagram, Amazon, Yahoo Stocks, and Twitter.

National statistics (Pew, 2015) show the “smartphone bubble” formed most often for texting friends and family, next browsing the Internet, and then making phone calls. Pew Center data show 97% of smartphone users send or read text messages, 89% access the Internet, and 88% receive or send email. When measured by monthly data usage (MOUs = minutes of usage), voice calls are decreasing, while online activity is rising, up 18% in from 2013 to 2016. Another statistic shows 64% of young people pressing their music apps into service, but 91% of those between 18-29 years of age access social media on the smartphone compared to 55% of those 50 years-and-older (Pew, 2015).

Two-thirds of consumers (68%) follow the news on occasion via mobile, while 33% frequently check headlines. About two thirds (67%) occasionally use GPS maps on their smartphones, and are more likely to share photos, videos, and commentary. More than half (57%) said they did online banking by mobile, while 62% look up health-care information. The crowd that goes mobile shopping for homes and real estate is 44%, about the same as those seeking job opportunities (43%). Do all these newfound uses represent a form of mobile dependency? A small majority, 54%, said they could live without their mobile phone, but 46% did not even want to try (Pew, 2015)

Current Status

In the United States, consumers who have purchased mobile phones to fit personal tastes and budgets form an impressive curve of adoption. The penetration rate was a mere blip at 13% of the U.S. population in 1995, but by 2015 wireless broadband subscriptions topped 110%, with many Americans subscribing to multiple mobile phones per household (CTIA, 2015). In sheer numbers, 33 million had a subscription in 1995, but that figure topped 355 million in 2015. Another way to view the mobile phone adoption rate is to compare it with landline phones. It took about 90 years for landlines to reach 100 million households and to become integral to American life (CTIA, 2011). In less than three decades, the mobile phone tripled that rate of adoption (CTIA, 2015).

Emerging Markets

The smartphone is no longer an object of fancy in the developed world since the frenzy of first-time buying has shifted to the developing world, where analysts predict two billion smartphone connections by

2020 (GSMA, 2015). Supporting that forecast is targeted data showing the developing nations in the Asian Pacific region fueling growth. Huawei, the mobile giant of China enjoyed more than a 30% surge in sales in 2015 due to the booming market (Gartner, 2016). More than half of the mobile subscribers in the world live in Asia, where two of the most populous countries, India and China, add millions of mobile subscribers each year. Based on both connections and sales, the top two cellular network providers in the world are China Mobile and the Vodafone group (UK) (World’s Largest, 2013). Mobile subscriptions worldwide have surpassed the 7 billion mark up from just around 738 million at the turn of the century, according to the International Telecommunications Union (ITU, 2015).

Worldwide consumers are scaling up to higher speed mobile broadband networks projected to serve 70% of the global base by 2020, an increase of 30% from 2014 (GSMA, 2015). Now that half of the world’s population has a subscription, a marked increase of 20% from 2004, it is possible to chart peak growth regions. Fourteen countries account for more than 61% of the world’s total mobile base with 100 million consumers or more per country:

•  Bangladesh

•  Mexico

•  Brazil

•  Nigeria

•  China

•  Pakistan

•  Germany

•  Philippines

•  India

•  Russia

•  Indonesia

•  United States

•  Japan

•  Vietnam

(MobiThinking, 2013)

Smartphone Rivalry

Measured by global handset sales, Samsung led the race in 2015 by taking 22.5% of the market, followed by Apple with 15.9% (Gartner, 2016). Huawei is third with 7.3%, then Lenovo at 5.1%, and Xiaomi fifth with 4.6%. It must have been startling news for Apple to see its sales dip by 4.4%. Looking at smartphone sales by individual models gave it some consolation since the iPhone 6 topped at least one list as the best-selling smartphone model in both China and the United States (Lorenzetti, 2015). Counterpoint Research reported the iPhone 6 and 6S were the mostsold handsets for 2015, but following close behind were two Samsung models, the Galaxy S6 and the Galaxy S6 Edge. Chinese manufacturer Xiaomi reached its top 10 place in sales with Mi Note and Redmi 2 models, and rounding out the list was LG’s G4 model.

Americans tend to lump together the separate functions that the smartphone offers in terms of making phone calls, sending text messages, and browsing the Internet. Yet its users have particular reasons why they buy the model that is best for them. According to a study by J.D. Power (2015), consumer satisfaction varies according to the particular carrier’s subscription. In other words, Apple iPhones were more satisfying to Verizon and T-Mobile customers, while Samsung Galaxy models were first among AT&T subscribers. Taiwan’s HTC smartphone found favor among Sprint subscribers. Regardless of which model they connected to their carrier’s network, four factors determined what was needed from their mobile units: great performance, advanced features, attractive design, and ease of operation. Among traditional mobile phones, LG, Motorola, and Pantech ranked highest in terms of customer satisfaction, according to J.D. Power’s research (2015).

One of the reasons the federal government seeks to maintain at least four competing companies in the cellular industry of the United States (AT&T, Verizon, T-Mobile, and Sprint) is to constrain consumer costs. By 2014, the average data, texting and call plan for a smartphone contract was approximately $1,050 per year, but the average contract is for two years. On a monthly basis, the figures showed T-Mobile to be the best buy at around $120 per month and Verizon the most expensive at $148 (Sutritch, 2014). As for how long Americans keep their mobile phone before replacing it, one study showed that period of time was about the same as their phone contract, two years but that it varied considerably around the world with the mobile phone owners in Finland keeping their handsets for up to six years, but the most common term is 18-to-24 months (Pegoraro, 2013).

Landline Retirement

A national survey showed the trend toward mobile-only users represented a third of American households who opted to cut the landline phone cord during 2013, and 44% managed on cellular phone service only (Blumberg & Luke, 2014). American households maintaining landline phone service in some areas had to rely on a wired infrastructure that was aging and decaying, and telephone executives wanted to replace those copper wires by putting in place “retirement plans.” AT&T petitioned the FCC for permission to abandon its traditional switched-circuit phone systems, and complete the transition to all-Internet and wireless phone service that it recommended for all but one percent (1%) of its customers.

The FCC responded in August 2015 with a rule regarding notification of the landline telephone’s network transition from copper to fiber noting how 37 million residential lines relied on some “legacy wireline technology” (twisted copper wires). If a telephone customer has no broadband computer connections at home, and is living on a fixed income, then it is not likely to invest in Internet access. If they lose their legacy landline on copper wires and cannot make the transition to IP broadband, the carrier of last resort principle requires that the telephone company notify these customers and offer some phone service at prevailing rates.

Lifeline Controversy

The U.S. government’s “Lifeline” program was mislabeled the “Obamaphone” program since it echoed the president’s concern for Americans living in poverty without phone service, but it was actually created during the Reagan Administration. The Universal Service Lifeline program was designed to ensure that Americans would not be left out of the essentials that telephone service brings, including emergency call services, job information, and access to friends and family. Once qualified as low-income consumers, Lifeline would offer a discount on phone service. Then reports surfaced of ineligible recipients signing up in substantial numbers to the profit of businesses like Miami-based Tracfone collecting $9.25 per customer each month. Mexican billionaire Carlos Slim oversees Tracfone, and his company pocketed $451.7 million in federal payments from the program.

Once evidence revealed how the Lifeline program had been corrupted by unscrupulous dealers, the FCC issued a notice of apparent liability recommending a forfeiture of $14.4 million be levied against suspect phone merchants. As of 2016, no fines have been collected for the alleged abuses, and the FCC says it has incorporated reforms to “prevent waste, fraud, and abuse” and ensure that consumers applying for the discount really had an income at or below 135% of the federal poverty line (See http://www.fcc.gov/lifeline).

Factors to Watch

More people are fascinated by their smartphone than ever before—regularly texting friends, downloading apps, and sharing photos, but the demand for the airwaves to network those personal activities has turned toward legacy radio and TV stations and their use of spectrum bandwidth. The FCC identified broadcasters as “inefficient” spectrum users and asked them to give up their channels in exchange for a share of the proceeds from an incentive auction of frequency bandwidth. Congress approved a 600 MHz spectrum auction, and on March 29, 2016, the Federal Communications Commission found out how many were willing to give up their “unwanted spectrum” in order to make room for the customers of Sprint, T-Mobile US, Verizon, AT&T, and other ISPs, such as Comcast, DISH, and Liberty Global (FCC Opens, 2016). The FCC revealed that the Incentive Auction had received applications from 104 companies, but promised it would take months before the auction’s outcome could be reported. Once the TV spectrum is sold it will allow wireless operators to expand their 4G LTE (Long-Term Evolution) networks and plan for the upcoming 5G wireless standard (FCC Opens, 2016).

Generational Networks

Every decade or so, another evolutionary step occurs in the development of cellular networks. For example, first generation (1G) systems were introduced in the early 1980s, and the following decade brought forth 2G. The first 3G networks were announced in 1998, which included Verizon and Sprint’s EVDO (Evolution Data Optimized) and HSPA (High Speed Packet Access), the format used by AT&T and T-Mobile. Even though Verizon and Sprint opted for EVDO mobile broadband, HSPA proponents preferred its network efficiency and capacity for handling peak data loads (Goldstein, 2013). What these next generations have in common is new frequency channels, higher data rates, and “no-turning-back” technologies.

In 2008, 4G technology standards set by the International Telecommunications Union (ITU) listed peak speed requirements of 100 megabits per second for high-mobility communication and 1 gigabit per second for relatively stationary users (ITU, 2008). In the United States, Verizon Wireless promoted its LTE (Long-Term Evolution) network that was launched in 2010 as the leader in 4G technology with 700 MHz bandwidth. AT&T began its rollout of LTE almost a year after Verizon but offered multiple networks to reach its customers. Sprint’s goal was to give customers “better signal strength, faster data speeds, expanded coverage, and better in-building performance” as part of the LTE experience (Sprint, 2012). T-Mobile made a smaller footprint than either Verizon or AT&T, but impressive 4G speeds (Fitchard, 2014). As these 4G technologies became more widely available, attention turned toward the next generation of wireless networking.

Fifth Generation (5G)

The 5^th Generation mobile network and wireless systems are not expected until the year 2020, but when it arrives, there will be faster data speeds for moving consumers closer to connected living in a networked world. There will be digital access to the Internet of Things through the use of telematics and M2M (Machine-to-Machine) technology. A self-driving car, for example, will be able to monitor other traffic based on its M2M capacities, and it will be helping mobile users access health monitors and fitness trackers. There is a challenge though; new generations are assigned higher frequencies and wider bandwidth (1G up to 30 kHz, 2G up to 200 kHz, 3G up to 5MHz and 4G up to 20 MHz). The task now is finding necessary bandwidth at a suitable frequency for 5G.

Privacy Concerns

Mobile phone privacy moved to the top of the headlines in 2016 after the FBI found it needed help to recover data from an iPhone that belonged to a San Bernardino killer with known ties to Islamic extremists (Benner, Markoff & Perlroth, 2016). Apple refused a federal order to build a so-called backdoor to its iPhone so that the investigators could get past its privacy locks. In a remarkable show of unity among technology giants, AT&T, Google, Facebook, Yahoo, Amazon, Twitter, Intel, and Cisco Systems filed amicus briefs supporting Apple’s position, and argued that the U.S. Justice Dept. was overreaching its legal authority. The point became moot after an FBI-friendly hacker built a backdoor in order to unseal the suspect iPhone’s memory.

Early in March 2016, FCC Chair Tom Wheeler proposed new consumer privacy rules that would ensure U.S. telephone carriers acting as Internet Service Providers gain permission from customers before sharing their personal data with certain advertisers (Goovaerts, 2016a). The new privacy rule demanded an “opt-in” consent move from the customer before sharing personal online data with advertisers beyond typical broadband marketing. It was proposed after the U.S. government reached a $1.35 million “super-cookie” settlement with Verizon that had the U.S. mobile phone carrier agree to notify its customers and gain consent before sharing data for use by targeted advertisers. Consumer advocates applauded the FCC’s action, but AT&T and Verizon representatives felt it created an uneven playing field since online firms like Google and Facebook did not fall under the regulation but the Federal Trade Commission’s oversight instead (Goovaerts, 2016b).

Getting the Job

The telephone industry offers a variety of careers from creative positions in content and entertainment to technical positions in electronic telecommunications and computer science. There are even unskilled positions available in sales and customer service or at calling centers. Major firms such as AT&T, Verizon, T-Mobile and Sprint welcome job inquiries and applications online. Experience and education are important though for technical and creative carriers with these companies, although they do offer training for positions in retail outlets and call centers. College degrees are often specified but not always required, and internships are available in many of their offices. Some technical positions must meet federal regulations and professional standards, but study guides are available for preparation and certification. AT&T in particular, offers study guides online for positions in retail sales, customer service, and technical engineering.

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