7. TELEPHONY

Telephony, a century-old technology, is expanding rapidly in new directions. In addition to traditional landline phones, telephony now includes a diverse range of technologies, including mobile (cellular, satellite), and broadband (cable, DSL, satellite) connections. These services are used for multiple, overlapping purposes, for transmitting both voice and, increasingly, data traffic. This section highlights some of the trends in telephony and estimates the volume of this information flow.

I. Standard Fixed Lines

A. United States

According to the International Telecommunication Union (ITU), there are 190 million main telephone lines in the United States as of 2002. The average telephone line is used primarily for local calling and is used over an hour per day for all types of calls (faxes, modems, etc.)

The number of U.S. landline phones has dropped by more than 5 million, or nearly 3 percent, since 2000, the Federal Communications Commission (FCC) reported in June, 2003. There is a growing trend to use the cell phone as the primary phone, without any need for landlines.

On the other hand, the number of phone lines per household has risen. J.D. Powers and Associates reports that 26 percent of American households now have two or more telephone lines--a 73 percent increase since 1996.

Table 7.1: United States Fixed Telephone Line Usage (in billions)

Year

Local Minutes

Intrastate Minutes

Interstate Minutes

Total Dial Equipment Minutes

1999

3,378

452

585

4,414 billion (74 billion hours)

2000

3,909

472

616

4,998 billion (83 billion hours)

2001

3,784

420

615

4,819 billion (80 billion hours)

Source: Federal Communications Commission Trends in Telephone Service, August 2003

A few disclaimers on the numbers reported in Table 7.1: these figures are dial equipment minutes, "measured as calls enter and leave telephone switches so two dial equipment minutes are counted for every conversation minute." Also, the FCC notes that "most calls are not metered and estimates of total calling are subject to wide margins of error" because "most subscribers purchase service with unlimited local calling." Finally, the 2001 figures are extrapolated from previous years because as of that year, companies are no longer required to report these numbers to the FCC.

Using the statistics in Table 7.1 and our conversion factor for audio recordings (64 KB per second), we can calculate the total annual storage for voice traffic in the United States: 9.25 exabytes. Compression could reduce storage requirements by a factor of 6 to 8, resulting in a total of 1.2 to 1.5 exabytes.

B. World

There are 1.1 billion main telephone lines in the world as of 2002, according to the ITU. If we estimate, as in the ENST study, that each line carries 3,441 minutes each year, the worldwide total is 3,785 billion minutes, equivalent to 15 exabytes of data.

II. International Calling

TeleGeography reports that "Consumers and businesses worldwide spent 144 billion minutes—or a combined total of 274,000 years—on calls abroad in 2001." While this represents an increase of 10 percent over 2000, it is also the slowest growth rate in 20 years.

VOICE OVER IP (VOIP)

The ability to send voice messages over the Internet is a rapidly growing area in communication this year and will continue to grow as more companies adopt the technology into their infrastructure. Experts report rapid growth in all areas of this technology, including adoption, investment, and revenue. Frost & Sullivan predict VoIP will account for around 75 percent of world voice services by 2007.

Source: CommWeb 2002

III. Mobile

In number, cell phones are creeping up on landline phones. They already comprise about 43 percent of all U.S. phones, according to the International Telecommunication Union, up from 37 percent in 2000.

Worldwide there were 1.14 billion mobile cellular subscribers in 2002; this figure is slightly higher than the total number of main telephone lines.

According to the Cellular Telecommunications and Internet Association (CTIA), over 600 billion wireless minutes were used in 2002. This represents an increase of more than 35 percent over 2001 and is equivalent to 2.3 exabytes.

Recent trends show how wireless text messages (short message services) are becoming more important commodities for wireless communication companies. Many companies are allowing competitiors to send text messages to other companies' phones in an effort to gain market share and revenue from the popularity of text-messaging systems. AT&T's recent affiliation with the American Idol television show has helped them reach customers who wish to use telephones, but could not vote for their favorite 'Idol' because lines were busy. Throughout the season, over 7.5 million text messages were sent to the voting system.

Europe still dominates the SMS and mobile communication arena. IDC research found there were 176 million e-mails sent between cell phones in the United States. Next year, they believe there will be 1.5 billion emails sent via mobile phones. In Europe, there are an estimated 30 billion messages exchanged each month by this method.

IV. Broadband

A. United States

Broadband access to the Internet is available through a range of advanced technologies such as asymmetric digital subscriber line (ADSL), wireline other than ADSL, coaxial cable, fiber and satellite and fixed wireless. The number of such high-speed lines has increased by approximately 3 million lines every 6 months during the last 2 years (see Table 7.2).

Table 7.2: United States High Speed Telephone Lines (over 200 kbps in at least one direction)

Date

Number of Lines

June 2000

4.4 million

December 2000

7.1 million

June 2001

9.6 million

December 2001

12.8 million

June 2002

16.2 million

December 2002

19.9 million

Source: Raw data from FCC Trends in Telephone Service, August 2003. Chart, How much information 2003

Naturally, with more high-speed Internet access available, more people are using this method to connect to the Internet. As of May 2003, 39 million, or 13 percent of all Americans connect to the Internet via broadband, according to Nielsen-NetRatings.

The Pew Internet & American Life Project reports that cable modems are the primary broadband technology currently in use in the United States: "In March 2003, 67 percent of broadband users connect using cable modems — up from 63 percent in March 2002 — while DSL had 28 percent of the broadband market in March 2003, down from 34 percent a year earlier."

Pew also reported on how online activities differed between dial-up and broadband users; they report that "broadband users are extraordinarily active information gatherers, multimedia users, and content creators," as shown in Table 7.3.

Table 7.3: Daily Internet Activities: Broadband Users vs. Dial-Up Users

Activity

Broadband Users

Dial-Up Users

News

41%

23%

Research for work

30%

15%

Participation in group

12%

4%

Content creation

11%

3%

Stream multimedia

21%

7%

Download music

13%

3%

Source: Pew Internet & American Life Project

B. World

There are currently 35.9 million subscribers to broadband services worldwide, with Western Europe as the fastest growing segment of the world adopting broadband DSL (Digital Subscriber Line) technology in homes and businesses. Asia-Pacific areas lead with 15.4 million subscribers, while Western Europe has been growing at a rate of 121 percent to 9.37 million subscribers in 2002.

South Korea and Taiwan have the highest density of DSL subscribers (per hundred main lines), while the United States and South Korea have the highest number of DSL subscribers in the world.

V. Wireless

Cyberatlas reports "A trend to watch is the number of users who connect wirelessly, as their numbers have doubled from 2002 — 4 percent or roughly 1.4 million users now surf without wires."

Researchers believe that in the next 5 years, over 90 million laptops and PDAs ready to access WLAN will enter the market.

HotSpots are locations that are setup to provide Internet access through a wireless network to nearby computers. Market researches indicate that the U.S. WLAN HotSpots count is expected to increase from 4,000 HotSpots today to over 40,000 in 5 years, catering to over 20 million HotSpot users.

According to various reports, Bluetooth chip shipments that touched 10.4 million last year, is expected to cross 40 million this year, and 690 million in 2006. Researchers believe that more than 50 percent of the Bluetooth chips will be embedded in cellular phones, and by 2005, 75 percent of all cellular phones will have an embedded Bluetooth chip.

The adoption of wi-fi in many Starbucks, MacDonald's, and even a few airports in India are helping the public gradually become familiar with this 'new' means of Internet access. They may also generate more revenue for these companies, since they provide access through a subscription service (some are also offered through pre-paid cards).

REFERENCES

Release date: October 27, 2003. © 2003 Regents of the University of California