Telco Engineering vs Network Engineering

For many years I had the uneasy feeling that the Telco Engineers I worked with/for over most of a decade at O.T.C. did not actually understand Computer Data Networks.

Here I attempt to formalise and explain that thought.
The implications/ramifications won't be examined in this piece.

History

Telephone/Telco Engineering dates back to between ~1880 with the formation of the first phone companies and 1915 with the first US transcontinental (long-distance) calls. Dial phones were introduced in the US circa 1919, but automatic exchanges had been invented well before. The profession of Telco Enginering has around 125 years of tradition and practice.

As a profession, they have been very good at doing what they do - creating reliable point-to-point voice communication. They have extended into high-availability point-to-point digital services.

Modern Computer Data Network Engineering dates from around 1982 with cheap mini-computers and the IEEE 802.3 standard for Ethernet. Cheap PC's, affordable Interface cards and UTP (10Base-T), standardised in 1990, set the stage for current LAN's - desktop and server. This gives the modern discipline around a 25-year history.

The Universal Network Glue, IP (Internet Protocol(s)), dates from 1969 with the interconnection of the first two systems. Early Telco Data Networks go back to Telegraph (morse code) and Telex and ended with X.25.

For completeness, the World Wide Web, created by Tim Berners-Lee and Robert Cailliau at CERN, and now popularly referred to as 'The Internet', leveraged in 1989 PC's, ethernet and TCP/IP.

1996, the birth of the Modern widespread Internet, was marked by Microsoft abandoning it's proprietory MSN network & protocols and adopting Internet Everywhere.

Differences in Networks and Approach.

Telco networks started with patent wars, bleeding-edge technology and on-going & increasing requirements for large capital investments. That 'sunk cost' became huge as phone access was rolled out almost universally, at least in the 'First' and 'Second' world, providing a considerable barrier-to-entry for new players. After some decades, incumbents could easily kill new competitors by under-pricing them - they had paid for their networks and with great Free Cash Flow, could upgrade & extend their cable plant out solely from operating revenues.

To compete in the Telco world required huge investments in cable plant and switching equipment, and extensive, preferably full, network coverage. "Metcalfe's Law" states the value of a network increases with the square of the number of connections. A provider with a slightly better coverage in an area, all else being equal, quickly gained an economic advantage. Achieving better cash flow & profits either through higher charges or more subscribers. This could pay for faster expansion of the network, increasing their advantage. A virtuous circle.

Subscribers could not, even if they wanted, install & run their own cable plant & subscriber equipment. Initially, it was too expensive and patent-protected, then precluded by technical compliance requirements, then by legislation and regulation.

Telco operating principles became:

• effective monopolies per region
• hub-and-spoke design
• extensive overbuild to cater for projected demand
• high-availability, high-cost central equipment and interconnects
• simple subscriber equipment and complex exchanges and transmission systems
• 'Premium Pricing' model ("what the market will bear", vs "cost plus")

Telco networks are a classic Cost Accounting study: almost all costs are Fixed and Indirect, often dominated by Financing costs. There are almost no Direct or Variable costs.

E.g. the only marginal cost for any phone call is the cost of electricity: ~1 watt per phone. Around 20 milli-cents per hour. Capturing & processing billing data is 100-1000 times more expensive.

Telephony and Data Networks differ in almost all details, "Let me count the ways":

Factor	Telco	Data
connection	Circuit	Packets
speed	fixed	variable
Noise	ignored	error-correction
echoes	cancellation	n/a
multiplexing	external systems	inherent
Model	Central Switching	Distributed switching
Topology	Hub-and-Spoke	Buses, self-healing loops distributed equipment
High-Availability	component redundancy	whole switch duplication
congestion	no circuit, call fails	slower transfers
lost data	noise & dropouts	retransmit
switch design	non-blocking, continuous connection	queues, dropped packets, retransmit
lost data	noise & dropouts	retransmit
variable delay, jitter	highly sensitive	tolerant, retransmit
multiple connections	more links	increase link speed
Encryption	External, expensive	Embedded, Extensible
Intelligiblity and 'Quality of Service'	good, guaranteed	variable, no general QoS
Local loop Scalability	Rebuild, reinstall	In-place link upgrade
Upgrade	Long-range forecasting, Initial overbuild	In-place upgrade, incorp Technology advances
Equipment source	Specialised, expensive	generic, commodity
Financing	Large CapEx hidden in monthly rental	Prepaid install and Customer owned
Billing	Post-paid, unlimited Credit, Itemised bills	Prepaid with limits
Capacity	megabit range	HD video capable, tens of gigabits
Multicast	Only single-cast	multicast capable

What must be made clear:
there are some services that IP Data Networks do not currently deliver as well as the Telco networks. Those requiring low-latency, low-jitter, and low-noise. I.e. a guaranteed (high) Quality of Service. Even the traditional consumers of these services, radio and TV, are changed their work practices and moving to in-house IP networks or general Internet delivery.

Until 1999/2000 overseas telephony dominated those trunks. Since then, direct internet traffic has kept growing (exponentially - what doubling period?) and now swamps all other service demands.

As an example of the capacity differences: the ~10M landline services (at 32kbps) and 21M mobile services (at 9.6kpbs) represent a maximum of ~500Gbps demand, possible in a single, albeit large, router. The usual demand is around 2-5% of the maximum (10Gbps) - now well within the capability of low-cost routers.

Telco Engineering applied to Public Data Networks.

Large modern corporate Data Networks are "Pure Internet" networks. Networks such as the Department of Defence, cover most parts of Australia and extends overseas. It provides for 100,000+ desktops, a larger telephone networks, audio & video broadcast and secure services. They compete in size, service range and complexity with normal "common carrier" (Telco) networks.

If 'traditional' Telco Engineering approaches were more cost-effective or provided better availability & reliability, then they would be in use. The usual arguments for not delivering "Pure Internet" (commodity links/equipment, symmetrical upload/download) to households is population density. Defence faces the same distribution problems across its many, large campuses - and still run "Pure Internet". When cabling/trenching costs dominate, it still makes sense to run small copper or optical fibre cables with switching systems distributed through the network.

The costs of running individual copper or optical fibre from a central exchange to households increase dramatically over a commodity Ethernet/Internet solution:

• total physical copper or fibre required is 10-100 fold more.
• large cables (eg 200-pair) are expensive to buy, install, join and repair/maintain
• many joints, each a failure point, are required to each customer premises, versus a single clear run to a local access point
• duct sizes near the centre get very large, compounding the costs, complexity and maintenance/upgrade problems
• with copper, cross-talk & interference problems compound with increasing circuits
• generic, commodity equipment cannot be used in either the Central Office or subscriber
• link speeds are fixed unless a major equipment upgrade is performed.

The Transact and the HFC Cable TV networks utilised this 'network embedded switching equipment' approach, resulting in per-house-passed costs of under $2,000 vs the $5,500 of the proposed NBN.

Perhaps the most convincing argument is what the Telcos now use for their backbone networks: Pure Internet. Many of their new services offerings are managed services derived from this internal IP network.

Or ask what companies are best positioned to offer "Triple Play" (TV, Data/Internet, Phone).
People with high-bandwidth backbones and upgradeable local-loops.