Demand for Information Spurs Growth of Data Communications.
The thirst for information accessed by datacomm systems users seems to be unquenchable. According to Michael Tyler, president of Communications Studies and Planning (CSP) International, "As society has become increasingly information oriented, businesses have been forced to rely on on-line data bases for fast electronic retrieval of information. The growth of the on-line data base industry has been one of the most dramatic economic success stories of recent years, especially in light of the 1980 to 1982 recession. Between 1980 and 1983, the industry's annual revenues almost doubled. Revenue projections for 1984 to 1991 for the leading market segments--credit, economics/finance, legal--point to a continuation of growth, although growth rates will fall as the market expands."
Taking 1983 as the base for its forecast, CSP International projects that an average real-growth rate of roughly 13 percent per year for the whole on-line information industry over the following seven years will yield an industry with estimated annual revenues of $5.3 billion in 1991, expressed in 1984 dollars.
Good network design and management are the keys to coping with this demand for information. This is not as easy as it may sound, especially when considering all the changes going on in the telecommunications industry. Deregulation, increased competition, the proliferation of personal computers, local-area networks, integrated voice/data systems and enhanced services (now being offered by the Bell operating companies) have all converged to produced what is commonly known as the multivendor environment, or in simpler terms, confusion.
Thrust into the center of this new world of telecommunications is the communications manager, who is expected to develop budgets and long-range plans in this volatile atmosphere. The telecom manager's duty is to see that the benefits of data communications--higher speed, increased reliability, more efficiency at a lower cost--are there for the end-user . . . the one with the great appetite for information.
Large users are finding that their data communication needs are growing at a rate of 67 percent per year, and the wrong decision now could mean by as early as 1988 these organizations could be bandwidth starved, while paying more for data networking, according to the Yankee Group. "Innovate in data communications or die," warns Howard Anderson, managing director of the Boston-based market research firm.
Choosing the right datacomm gear to get the job done can be part of the solution to insuring access to information. Unfortunately, the number of products and services being offered to solve data communications problems are increasing to the point where the selection process becomes an additional problem. A look at the growth in this area things won't be changing soon.
Leased Lines Transmission Mode of Choice
In a survey of data communications market trends done by Newton-Evans Research Company on current and planned usage of available technologies, leased lines were found to be the transmission mode of choice. Leased lines dominate the data transmission scene, representing about 70 percent of the data communications (transmission) investment among companies surveyed. The Ellicot City, Maryland-based firm notes a trend to decrease the reliance on private lines. By 1987, those surveyed expect leased lines to account for only about 53 percent of the total investment.
Dial-up lines (switched lines) accounted for about 21 percent of the transmission investment among the organizations responding. By 1987, respondents believe that dial-up lines will account for over 18 percent of the budget.
The use of value-added networks (VANs) will reportedly increase to more than twice the current level of usage, according to the survey. Currently, VANs account for about 5.4 percent of the data communications budget among firms that responded. By 1987 VANs are expected to account for about 11.4 percent of the data communications budgets within these firms.
The use of satellite services is also expected to grow significantly over the 1984 through 1987 period. While currently representing less than one percent of the datacomm budget within the companies participating in the survey, the level is expected to increase to a level of more than seven percent.
Microwave links account for about three percent of the datacomm budget and will increase to about 8.6 percent of the budget of this group of companies, Newton-Evans reports.
This group of survey respondents indicated that equipment accounted for about 45 percent of the data communiations budget. Datacomm services accounted for another 35 percent while staff resources consumed 20 percent of the budget.
The demand for equipment will stay strong for the foreseeable future. One indication is the constantly increasing demand for modems. In a report published by Frost & Sullivan, the modem market is projected to have a value of $4 billion in 1988, up from 1984's $1.18 billion.
According to the report, the data communications market encompasses a complex mix of products that are constantly changing due to technological advances. The report states that due to complexities and technical intricacies, the application of digital technology to data communications has been slow. But, the report continues, "in future decades all modes of point-to-point communications will at sometime be under the control of a digital processor." The New York City-based research film predicts this will include all aspects of voice and data transmission, storage and recording.
The report also predicts that the increased interest in data communications will finally spur the real growth in local-area networks. According to the Frost & Sullivan forecast, LANs will have a total market value of $512 million in 1988, growing from 1984's $128 million market.
User need for more cost-effective and capable communications, newer technologies offering a variety of options, declining equipment costs and the proliferation of distributed systems have made the LAN market one of the fastest growing segments of the computer industry according to a report published by International Data Corporation.
The report says the development of cost-effective ways of linking together previously disparate sources of information processing and storage is seen as an essential step toward the goal of higher levels of productivity through automation. IDC, headquartered in Framingham, Massachusetts, claims that nearly every vendor of hardware, software or communications equipment is now, or will be offering users a means to implement such systems.
Not all telecommunications pundits agree on where LANs are going. Datapro Research in New York City believes the growth of the LAN market is stunted. Reasons given include end-user confusion, lack of compatibility and new technologies. Datapro says that the future of the market, which is forecast to reach $1.1 billion by 1990, is most dependent on the technological savvy of the end-user.
Newton-Evans paints a mix picture for LANs. The company's Sandra Klein says there are deficiencies as well as benefits with LANs. "LANs have several drawbacks: they are costly; not all can efficiently shape peripherals and files; and there are no standards to ensure that they are able to communicate with other equipment on the network."
The need to electronically exchange information, mix graphics with text and share files and peripherals has forced many Fortune 500 companies to take a serious look at how they can cost-effectively integrate these resources. For those with a large number of personal computers that are already installed, LANs are available that can tie them together," she reports. "For companies that don't yet have a proliferation of personal computers, multi-user systems are now available that offer personal computer features and shared capability."
The advances made in both voice and data communications have led to the integration of the two technologies. All indications are that integrated voice/data systems will be one of the biggest growth areas in communications through the 1990s.
According to a market study prepared by Advanced Resources Development, a Medfield, Massachusetts consulting firm, 55,000 fully integrated voice/data systems were shipped in 1984. The ARD data says the number will increase to 370,000 lines in 1989. In dollar terms this translates into a jump from $66 million in sales in 1984 to $330 million in 1989. This unit and dollar shipment growth is expected to continue beyond the study's five year forecast period. In the study, an integrated voice/data system is defined as one that transmits both voice and data traffic through a single switch or controller and over a common or closely associated media.
Reasons given for this market growth include improvements in the data-handling capabilities of the PBX, a boom in data communications activity as a result of the computer revolution and information explosion, and an increased interest on the user's part in economizing on communications installations by using one system for multiple kinds of traffic. Users are beginning to realize that this simplified network could combine the best of both telecommunications and data communications technologies.
There is some confusion as to what technology is best suited for the job of accessing information via data communications. A survey of US businesses conducted by Venture Development Corporation, a Wellesley, Massachusetts market-research firm, found a great deal of confusion in the minds of non-owners of workstations as to product capabilities and industry participants. The same survey found that close to 36 percent of non-owners are currently considering the purchase of workstations. Of this group of people, over one fifth actuall intend to purchase workstations within the next year.
BOCs Offer Enhanced Services
One of the biggest changes to affect data communications was the FCC's decision early last March to give the Bell operating companies (BOCs) waiver of Computer II structural separation requirements so they can perform conversion from asynchronous protocols to X.25 packet-switched network protocols in facilities located in their central offices.
Protocol conversion, including asynchronous/X.25 conversion, is included within the definition of enhanced services under the Computer II rules. The BOCs are permitted conversion, but only thrugh a structurally separate affiliate using its own separate processing facilities. any communications channels necessary to provide an enhanced service must be acquired by the subsidiary pursuant to tariff. As long as the subsidiary conforms to the Computer II separation requirements, it need not obtain the approval of the commission to offer any enhanced services.
The separate subsidiaries are therefore free to provide asynchronous/X.25 conversion, in the same way as the VANs providers and other enhanced service vendors provide similar services.
The BOCs, however sought to offer asynchronous/X.25 conversion through their operating companies' affiliates, in conjunction with existing or proposed basic packet-switching services. This approach was found to be inconsistent with the structural separation requirements of Computer II. This led to the BOCs requesting waiver of the Computer II rules to allow this particular protocol conversion service to be provided on an unseparated basis.
The commission concluded that the BOCs have adequately demonstrated that the public interest would be served by allowing them to provide the enhanced service of asynchronous format-compatible packet-switched data transport, using asynchronous/X.25 conversion in facilities co-located with their central office. It said this would result in lower prices to consumers and, over time, real efficiencies in use of exchange and interexchange facilities, making unnecessary additional construction of facilities, the costs of which could raise local telephone rates.
On the following pages CN takes a closer look at data communications with feature articles on specific applications for datacomm products and services, and a round-up of products and services available to users.
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|Date:||May 1, 1985|
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