Introduction To Data Communications

The Three Faces of Networking

                                                                                            Network Management

                                                                                      The Three Faces of Networking

This topic introduces the basic concepts of data communications and shows how we have progressed from paper-based systems to modern computer networks. It begins by describing why it is important to study data communications and how the invention of the telephone, the computer, and the Internet has transformed the way we communicate. Next, the basic types and components of a data communication network are discussed. The importance of a network model based on layers and the importance of network standards are examined. The topic concludes with an overview of three key trends in the future of networking.


■ Be aware of the history of communications, information systems, and the Internet

■ Be aware of the applications of data communication networks

■ Be familiar with the major components of and types of networks

■ Understand the role of network layers

■ Be familiar with the role of network standards

■ Be aware of three key trends in communications and networking

What Internet connection should you use? Cable modem or DSL (formally called Digital Subscriber line)? Cable modems are supposedly six times faster than DSL, providing data speeds of 10mbps to DSL’s 1-5mbps. As we write this, one cable company is using a tortoise to represent DSL in advertisements. So which is faster? We’ll give you a hint. Which won the race in the fable, the tortoise or the hare? By the time you finish this topic, you’ll understand which is faster and why, as well as why choosing the right company as your Internet service provider (ISP) is probably more important than choosing the right technology.

Over the past few years, it has become clear that the world has changed forever. We are now in the Information Age—the second Industrial Revolution, according to Chambers, CEO (chief executive officer) of Cisco Systems, Inc., one of the world’s leading networking technology companies. The first Industrial Revolution revolutionized the way people worked by introducing machines and new organizational forms. New companies and industries emerged and old ones died off.

The second Industrial Revolution is revolutionizing the way people work through networking and data communications. The value of a high-speed data communication network is that it brings people together in a way never before possible. In the 1800s, it took several weeks for a message to reach North America by ship from England. By the 1900s, it could be transmitted within the hour. Today, it can be transmitted in seconds. Collapsing the information lag to Internet speeds means that people can communicate and access information anywhere in the world regardless of their physical location. In fact, today’s problem is that we cannot handle the quantities of information we receive.

Data communications and networking is a truly global area of study, both because the technology enables global communication and because new technologies and applications often emerge from a variety of countries and spread rapidly around the world. The World Wide Web, for example, was born in a Swiss research lab, was nurtured through its first years primarily by European universities, and exploded into mainstream popular culture because of a development at an American research lab.

One of the problems in studying a global phenomenon lies in explaining the different political and regulatory issues that have evolved and currently exist in different parts of the world. Rather than attempt to explain the different paths taken by different countries, we have chosen simplicity instead. Historically, the majority of readers of previous editions of this topic have come from North America. Therefore, although we retain a global focus on technology and its business implications, we focus exclusively on North America in describing the political and regulatory issues surrounding communications and networking. We do, however, take care to discuss technological or business issues where fundamental differences exist between North America and the rest of the world (e.g., ISDN [integrated services digital network]).

One of the challenges in studying data communications and networking is that there are many perspectives that can be used. We begin by examining the fundamental concepts of data communications and networking. These concepts explain how data is moved from one computer to another over a network, and represent the fundamental "theory" of how networks operate. The second perspective is from the viewpoint of the technologies in use today—how these theories are put into practice in specific products. From this perspective, we examine how these different technologies work, and when to use which type of technology. The third perspective examines the management of networking technologies, including security, network design, and managing the network on a day-to-day and long-term basis.

In our experience, many people would rather skip over the fundamental concepts, and jump immediately into the network technologies. After all, an understanding of today’s technologies is perhaps the most practical aspect of this topic. However, network technologies change, and an understanding of the fundamental concepts enables you to better understand new technologies, even though you have not studied them directly.

A Brief History of Communications in North America

Today we take data communications for granted, but it was pioneers like Samuel Morse, Alexander Graham Bell, and Thomas Edison who developed the basic electrical and electronic systems that ultimately evolved into voice and data communication networks.

In 1837, Samuel Morse exhibited a working telegraph system; today we might consider it the first electronic data communication system. In 1841, a Scot named Alexander Bain used electromagnets to synchronize school clocks. Two years later, he patented a printing telegraph—the predecessor of today’s fax machines. In 1874, Alexander Graham Bell developed the concept for the telephone at his father’s home in Brantford, Ontario, Canada, but it would take him and his assistant, Tom Watson, another two years of work in Boston to develop the first telephone capable of transmitting understandable conversation in 1876. Later that year, Bell made the first long-distance call (about ten miles) from Paris, Ontario, to his father in Brantford.

Career Opportunities


It’s a great time to be in information technology even after the technology bust. The technology-fueled new economy has dramatically increased the demand for skilled information technology (IT) professionals. The U.S. Bureau of Labor estimates that the number of IT-related jobs will increase by 60 percent between now and 2015. IT employers have responded: Salaries have risen rapidly. Annual starting salaries for our undergraduates at Indiana University range from $50,000 to $65,000. Although all areas of IT have shown rapid growth, the fastest salary growth has been for those with skills in Internet development, networking, and telecommunications. People with a few years of experience in these areas can make $65,000 to $80,000-not counting bonuses.

The demand for networking expertise is growing for two reasons. First, Internet and communication deregulation has significantly changed how businesses operate and has spawned thousands of small start-up companies. Second, a host of new hardware and software innovations have significantly changed the way networking is done.

These trends and the shortage of qualified network experts have also led to the rise in certification. Most large vendors of network technologies, such as Microsoft Corporation and Cisco Systems, Inc., provide certification processes (usually a series of courses and formal exams) so that individuals can document their knowledge. Certified network professionals often earn $10,000 to $15,000 more than similarly skilled uncertified professionals-provided they continue to learn and maintain their certification as new technologies emerge.

When the telephone arrived, it was greeted by both skepticism and adoration, but within five years, it was clear to all that the world had changed. To meet the demand, Bell started a company in the United States, and his father started a company in Canada. In 1879, the first private manual telephone switchboard (private branch exchange, or PBX) was installed. By 1880, the first pay telephone was in use. The telephone became a way of life, because anyone could call from public telephones. The certificate of incorporation for the American Telephone and Telegraph Company (AT&T) was registered in 1885. By 1889, AT&T had a recognized logo in the shape of the Liberty Bell with the words Long-Distance Telephone written on it.

In 1892, the Canadian government began regulating telephone rates. By 1910, the Interstate Commerce Commission (ICC) had the authority to regulate interstate telephone businesses in the United States. In 1934, this was transferred to the Federal Communications Commission (FCC).

The first transcontinental telephone service and the first transatlantic voice connections were both established in 1915. The telephone system grew so rapidly that by the early 1920s, there were serious concerns that even with the introduction of dial telephones (that eliminated the need for operators to make simple calls) there would not be enough trained operators to work the manual switchboards. Experts predicted that by 1980, every single woman in North America would have to work as a telephone operator if growth in telephone usage continued at the current rate. (At the time, all telephone operators were women.)

The first commercial microwave link for telephone transmission was established in Canada in 1948. In 1951, the first direct long-distance dialing without an operator began. The first international satellite telephone call was sent over the Telstar I satellite in 1962. By 1965, there was widespread use of commercial international telephone service via satellite. Fax services were introduced in 1962. Touch-tone telephones were first marketed in 1963. Picturefone service, which allows users to see as well as talk with one another, began operating in 1969. The first commercial packet-switched network for computer data was introduced in 1976.

Until 1968, Bell Telephone/AT&T controlled the U.S. telephone system. No telephones or computer equipment other than those made by Bell Telephone could be connected to the phone system and only AT&T could provide telephone services. In 1968, after a series of lawsuits, the Carterfone court decision allowed non-Bell equipment to be connected to the Bell System network. This important milestone permitted independent telephone and modern manufacturers to connect their equipment to U.S. telephone networks for the first time.

Another key decision in 1970 permitted MCI to provide limited long-distance service in the United States in competition with AT&T. Throughout the 1970s, there were many arguments and court cases over the monopolistic position that AT&T held over U.S. communication services. On January 1, 1984, AT&T was divided in two parts under a consent decree devised by a federal judge. The first part, AT&T, provided long-distance telephone services in competition with other interexchange carriers (IXCs) such as MCI and Sprint. The second part, a series of seven regional Bell operating companies (RBOCs) or local exchange carriers (LECs), provided local telephone services to homes and businesses. AT&T was prohibited from providing local telephone services, and the RBOCs were prohibited from providing long-distance services. Intense competition began in the long-distance market as MCI, Sprint, and a host of other companies began to offer services and dramatically cut prices under the watchful eye of the FCC. Competition was prohibited in the local telephone market, so the RBOCs remained a regulated monopoly under the control of a multitude of state laws. The Canadian long-distance market was opened to competition in 1992.

During 1983 and 1984, traditional radio telephone calls were supplanted by the newer cellular telephone networks. In the 1990s, cellular telephones became commonplace and shrank to pocket size. Demand grew so much that in some cities (e.g., New York and Atlanta), it became difficult to get a dial tone at certain times of the day.

In February 1996, the U.S. Congress enacted the Telecommunications Competition and Deregulation Act of 1996. The act replaced all current laws, FCC regulations, and the 1984 consent decree and subsequent court rulings under which AT&T was broken up. It also overruled all existing state laws and prohibited states from introducing new laws. Practically overnight, the local telephone industry in the United States went from a highly regulated and legally restricted monopoly to multiple companies engaged in open competition.

Local and long-distance service in the United States is open for competition. The common carriers (RBOCs, IXCs, cable TV companies, and other LECs) are permitted to build their own local telephone facilities and offer services to customers. To increase competition, the RBOCs must sell their telephone services to their competitors at wholesale prices, who can then resell them to consumers at retail prices. Most analysts expected the big IXCs (e.g., AT&T) to quickly charge into the local telephone market, but they were slow to move. Meanwhile, the RBOCs have been aggressively fighting court battles to keep competitors out of their local telephone markets and merging with each other and with the IXCs.

Virtually all RBOCs, LECs, and IXCs have aggressively entered the Internet market. Today, there are thousands of ISPs who provide dial-in and broadband access to the Internet to millions of small business and home users. Most of these are small companies that lease telecommunications circuits from the RBOCs, LECs, and IXCs and use them to provide Internet access to their customers. As the RBOCs, LECs, and IXCs move into the Internet market and provide the same services directly to consumers, the smaller ISPs are facing heavy competition.

International competition should also be heightened by an international agreement signed in 1997 by 68 countries to deregulate (or at least lessen regulation in) their telecommunications markets. The countries agreed to permit foreign firms to compete in their internal telephone markets. Major U.S. firms (e.g., AT&T, BellSouth Corporation) now offer telephone service in many of the industrialized and emerging countries in North America, South America, Europe, and Asia. Likewise, overseas telecommunications giants (e.g., British Telecom) are beginning to enter the U.S. market. This should increase competition in the United States, but the greatest effect is likely to be felt in emerging countries. For example, it costs almost 30 times more to use a telephone in India than it does in the United States.

A Brief History of Information Systems

The natural evolution of information systems in business, government, and home use has forced the widespread use of data communication networks to interconnect various computer systems. However, data communications has not always been considered important.

In the 1950s, computer systems used batch processing, and users carried their punched cards to the computer for processing. By the 1960s, data communication across telephone lines became more common. Users could type their own batches of data for processing using online terminals. Data communications involved the transmission of messages from these terminals to a large central mainframe computer and back to the user.

During the 1970s, online real-time systems were developed that moved the users from batch processing to single transaction-oriented processing. Database management systems replaced the older file systems, and integrated systems were developed in which the entry of an online transaction in one business system (e.g., order entry) might automatically trigger transactions in other business systems (e.g., accounting, purchasing). Computers entered the mainstream of business, and data communications networks became a necessity.

The 1980s witnessed the microcomputer revolution. At first, microcomputers were isolated from the major information systems applications, serving the needs of individual users (e.g., spreadsheets). As more people began to rely on microcomputers for essential applications, the need for networks to exchange data among microcomputers and between microcomputers and central mainframe computers became clear. By the early 1990s, more than 60 percent of all microcomputers in American corporations were networked—connected to other computers.

Today, the microcomputer has evolved from a small, low-power computer into a very powerful, easy-to-use system with a large amount of low-cost software. Today’s microcomputers have more raw computing power than a mainframe of the 1990s. Perhaps more surprisingly, corporations today have far more total computing power sitting on desktops in the form of microcomputers than they have in their large central mainframe computers.

Today, the most important aspect of computers is networking. The Internet is everywhere, and virtually all computers are networked. Most corporations are rapidly building distributed systems in which information system applications are divided among a network of computers. This form of computing, called client-server computing, will dramatically change the way information systems professionals and users interact with computers. The office of the future that interconnects microcomputers, mainframe computers, fax machines, copiers, teleconferencing equipment, and other equipment will put tremendous demands on data communications networks.

These networks already have had a dramatic impact on the way business is conducted. Networking played a key role—among many other factors—in the growth of Wal-Mart Stores, Inc., into one of the largest forces in the North American retail industry. That process has transformed the retailing industry. Wal-Mart has dozens of mainframes and thousands of network file servers, microcomputers, handheld inventory computers, and networked cash registers. (As an aside, it is interesting to note that every single microcomputer built by IBM in the United States during the third quarter of 1997 was purchased by Wal-Mart.) At the other end of the spectrum, the lack of a sophisticated data communications network was one of the key factors in the bankruptcy of Macy’s in the 1990s.

In retail sales, a network is critical for managing inventory. Macy’s had a traditional 1970s inventory system. At the start of the season, buyers would order products in large lots to get volume discounts. Some products would be very popular and sell out quickly. When the sales clerks did a weekly inventory and noticed the shortage, they would order more. If the items were not available in the warehouse (and very popular products were often not available), it would take six to eight weeks to restock them. Customers would buy from other stores, and Macy’s would lose the sales. Other products, also bought in large quantities, would be unpopular and have to be sold at deep discounts.

In contrast, Wal-Mart negotiates volume discounts with suppliers on the basis of total purchases but does not specify particular products. Buyers place initial orders in small quantities. Each time a product is sold, the sale is recorded. Every day or two, the complete list of purchases is transferred over the network (often via a satellite) to the head office, a distribution center, or the supplier. Replacements for the products sold are shipped almost immediately and typically arrive within days. The result is that Wal-Mart seldom has a major problem with overstocking an unwanted product or running out of a popular product (unless, of course, the supplier is unable to produce it fast enough).

A Brief History of the Internet

The Internet is one of the most important developments in the history of both information systems and communication systems because it is both an information system and a communication system. The Internet was started by the U.S. Department of Defense in 1969 as a network of four computers called ARPANET. Its goal was to link a set of computers operated by several universities doing military research. The original network grew as more computers and more computer networks were linked to it. By 1974, there were 62 computers attached. In 1983, the Internet split into two parts, one dedicated solely to military installations (called Milnet) and one dedicated to university research centers (called the Internet) that had just under 1,000 host computers or servers.

In 1985, the Canadian government completed its leg of BITNET to link all Canadian universities from coast to coast and provided connections into the American Internet. (BITNET is a competing network to the Internet developed by the City University of New York and Yale University that uses a different approach.) In 1986, the National Science Foundation in the United States created NSFNET to connect leading U.S. universities. By the end of 1987, there were 10,000 servers on the Internet and 1,000 on BITNET.

Performance began to slow down due to increased network traffic, so in 1987, the National Science Foundation decided to improve performance by building a new high-speed backbone network for NSFNET. It leased high-speed circuits from several IXCs and in 1988 connected 13 regional Internet networks containing 170 LANs (local area networks) and 56,000 servers. The National Research Council of Canada followed in 1989 and replaced BITNET with a high-speed network called CA*net that used the same communication language as the Internet. By the end of 1989, there were almost 200,000 servers on the combined U.S. and Canadian Internet.

Networks in the First Gulf War


The lack of a good network can cost more than money. During Operation Desert Shield/Desert Storm, the U.S. Army, Navy, and Air Force lacked one integrated logistics communications network. Each service had its own series of networks, making communication and cooperation difficult. But communication among the systems was essential. Each day a navy aircraft would fly into Saudi Arabia to exchange diskettes full of logistics information with the army —an expensive form of ”wireless” networking.

This lack of an integrated network also created problems transmitting information from the United States into the Persian Gulf. More than 60 percent of the containers of supplies arrived without documentation. They had to be unloaded for someone to see what was in them and then reloaded for shipment to combat units.

The logistics information systems and communication networks experienced such problems that some Air Force units were unable to quickly order and receive critical spare parts needed to keep planes flying. Officers telephoned the U.S.-based suppliers of these parts and instructed them to send the parts via FedEx.

Fortunately, the war did not start until the United States and its allies were prepared. Had Iraq attacked, things might have turned out differently.

Similar initiatives were undertaken by most other countries around the world, so that by the early 1990s, most of the individual country networks were linked together into one worldwide network of networks. Each of these individual country networks was distinct (each had its own name, access rules, and fee structures), but all networks used the same standards as the U.S. Internet network so they could easily exchange messages with one another. Gradually, the distinctions among the networks in each of the countries began to disappear, and the U.S. name, the Internet, began to be used to mean the entire worldwide network of networks connected to the U.S. Internet. By the end of 1992, there were more than 1 million servers on the Internet.

Originally, commercial traffic was forbidden on the Internet (and on the other individual country networks), because the key portions of these networks were funded by the various national governments and research organizations. In the early 1990s, commercial networks began connecting into NSFNET, CA*net, and the other government-run networks in each country. New commercial online services began offering access to anyone willing to pay, and a connection into the worldwide Internet became an important marketing issue. The growth in the commercial portion of the Internet was so rapid that it quickly overshadowed university and research use. In 1994, with more than 4 million servers on the Internet (most of which were commercial), the U.S. and Canadian governments stopped funding their few remaining circuits and turned them over to commercial firms. Most other national governments soon followed. The Internet had become commercial.

The Internet has continued to grow at a dramatic pace. No one knows exactly how large the Internet is, but estimates suggest there are more than 600 million servers on the Internet, which is still growing rapidly. In the mid-1990s, most Internet users were young (under 35 years old) and male, but as the Internet matures, its typical user becomes closer to the underlying average in the population as a whole (i.e., older and more evenly split between men and women). In fact, the fastest growing segment of Internet users is retirees.

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