Telecommunication networks are heading toward an infrastructural revolution. Something hitherto unseen and with unpredictable consequences, which will affect firms and consumers alike, and indeed all economic actors.
The neologism being used is Next Generation Networks (NGNs). These are information architectures that embody the IP protocol right from the start (another name for them is Full IP Networks). Across these networks, all information (data, voice, video) is encapsulated in packets and carried on the same cable with enormous advantages for all, for the operator, for the company and its infrastructure, as well as for the final consumer.
Until recently, voice had been embedded in the physical layer. Fixed lines were designed and built before Internet existed, when the only possible service was voice. The telephone networks use the well-established copper wire technology, which makes use of circuit commutation to link and enable communication among two users. Given such technology, a sensible pricing model is to make the user pay increasing sums, as the
duration of the call progresses and the distance from the caller widens. In these circumstances, the client is in fact taking growing resources from the network.
With Internet, packet switching has superseded circuit switching, changing the economic model.
Telecommunications using IP treat communication between two users as involving packets of data: these are decomposed in sub packets each containing a header and a control queue, enabling addressing of data to the final destination, where devices of the recipient reassemble the various data packets and put together the information originally sent across the network. A fundamental role in packet communication is played by routers, machines making Internet traffic and Voice over Ip (Voip) applications travel on communication paths chosen according to moment to moment routing decisions. Voip refers to phone calls made via the Internet, and represents an alternative to classic telephony, and to its standard operators and circuit switching.
The IP protocol thus allows a more efficient use of networks. A data packet that is blocked by an obstacle can be rerouted across an alternative network, since its final destination is written onto it. Secondly, unlike circuit switching, data transmission uses the network only for a fraction of time according to bandwidth. NGN also enables price discrimination, thereby encouraging telcos to make people pay dearly for streams of specialized services and cheaply for consumer services.
With the advent on NGNs, Chief Information Officers are called to make important strategic decisions, affecting how their companies will evolve in the new world of people immersed in totally digital communication.
by Ferdinando Pennarola,
Associate Professor of Business Organization and Management of Information System, and
Rector’s Delegate to E-learning, Università Bocconi