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- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
In an increasingly interconnected world, "Communication Networks Economy" provides the rational understanding necessary to provide universal access to communication means in an efficient way. This book presents the principal elements of the economics of a network as it stands today, taking into account experiences of technicians in the field.
The author gives a simplified picture of the current situation in terms of structures and architecture of a network, bearing in mind the necessary quality of service and the profitability of investments, accompanied by references to recent economic works. An overview is given on the general themes of regulation and tariff principles, and the relations between supply and demand, from the perspectives of professional and residential users and network operators. Different aspects of the present situations of networks and the incidence of the Internet on the economy are also presented.
In conclusion, the reader will obtain an overview of the most significant issues likely to influence the economics of communications networks as they are today.
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Veröffentlichungsjahr: 2016
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Table of Contents
Cover
Title
Copyright
Preface
1 The Challenges of Building a Network
1.1. Construction of a national network
1.2. Security of network operations
1.3. State communications network
1.4. System for connecting network users
1.5. The search for regulations and network growth
1.6. Land use planning
1.7. So-called “network” laws
1.8. Usage metrics for digital technology
1.9. Conclusions
2 Network Structure and Architecture
2.1. Analog and digital
2.2. Distribution network
2.3. Long-distance connections
2.4. Next-generation networks
2.5. Internet
2.6. Digital network terminals
2.7. Internet applications
2.8. Overview of network connections
2.9. Network management staff
2.10. Assessments considered by network operators
3 Communications Services Regulations
3.1. The international regulatory framework
3.2. The European regulatory framework
3.3. Main French authorities involved
3.4. 1980s tariff principles
3.5. 1990s reform
3.6. Tariff principles in force in 2016
3.7. Pricing practices
4 Supply and Demand in Communications
4.1. Providers and customers
4.2. Obligations of network operators
4.3. Remote payments
4.4. “P2P” exchanges
4.5. Remote computing
4.6. Features of the digital economy
5 The Impact of the Internet on the Economy
5.1. Network operators and the new economic order
5.2. The Internet’s original provisions
5.3. The new economy
5.4. Longevity of network services
5.5. The Internet and politics
5.6. Experts faced with the future of the Internet
6 The Economy and the Future of the Internet
6.1. Building a national network
6.2. Internet network structures
6.3. Network regulations and pricing systems
6.4. The issue of supply and demand
6.5. The Internet and the economy
6.6. An Internet of optimists
Appendices
Appendix 1: GNP, GNI and GDP
Appendix 2: Potential Harmfulness of Radio Waves
Appendix 3: ICT and Telecommunications: Sustainable Development
Appendix 4: Variation in “Working Day” Telephone Traffic in 1970
Appendix 5: Hourly Variation in National Phone Tariffs (1985)
Appendix 6: Measuring the Information Society (11 October 2012) – ITU
Appendix 7: The Development of SIM Cards
Appendix 8: List of Recommendations from ITU-T Study Group 3
Appendix 9: The Cost of Capital
Appendix 10: NGN and the Internet in Figures
Appendix 11: Standardization of Mobile Financial Services (Extract – ITU-T, February 2016)
Appendix 12: The Internet’s Flaws (Vint Cerf)
Bibliography
Glossary
Index
End User License Agreement
List of Tables
1 The Challenges of Building a Network
Table 1.1.
Distribution of French forest ownership in 2010
Table 1.2.
ICT development indexes
2 Network Structure and Architecture
Table 2.1.
Division of the areas of managers and operators
Table 2.2.
Major global wireless communications systems
Table 2.3.
Comparison of the types of terminal available in 2015
Table 2.4.
Different instant messaging applications [Source: NEXMO]
3 Communications Services Regulations
Table 3.1.
Breakdown of a network’s management expenditure in 1985
Table 3.2.
Development of tariff principles
List of Illustrations
1 The Challenges of Building a Network
Figure 1.1.
“Christallerian” models of the “centrality” theory (Wikipedia)
Figure 1.2.
Distribution of jobs in the United States in 1970 and 1990 (County Business Patterns, US Department of Commerce, cited by Paul Tréhin
4
)
Figure 1.3.
Pareto distribution applied to telecommunications centers
Figure 1.4.
Jipp curve in 1993
2 Network Structure and Architecture
Figure 2.1.
Connections in digital technology
Figure 2.2.
Voice connections on a digital network
Figure 2.3.
Connection of fax machines to digital networks
Figure 2.4.
Call termination
Figure 2.5.
Subscriber connections in ADSL, HFC and radio-cable composite
Figure 2.6.
FTTx arrangements
Figure 2.7.
10G-EPON system for long distances and coupling across an access network infrastructure (source: ECOC Cannes 2014, www.photoniques.com)
Figure 2.8.
The concept of connections between the Internet and the fixed and mobile networks of two countries. The dotted vertical line represents the border between two neighboring countries. (ISOC, Internet Society – IMS Internet Multimedia Subsystem – Peer: Pair or GIX). (Source: Migration scenarios from legacy networks to NGN in developing countries (ITU-2013))
Figure 2.9.
Structure of customer collection in NGN (Source: ITU)
Figure 2.10.
IETF relationships
Figure 2.11.
Networks connected through IXP
Figure 2.12.
Coordination between the four categories of technical expertise
3 Communications Services Regulations
Figure 3.1.
Relationships between international bodies
Figure 3.2.
Relationships between European and French bodies
Figure 3.3.
Connections between circuit-switched networks
Figure 3.4.
GIX and IXP: Subscribers to Internet service providers A and B have access to the Internet through peer-to-peer GIX and IXP hubs
Figure 3.5.
Pricing stances of operator offers (according to TERAConsultants)
4 Supply and Demand in Communications
Figure 4.1.
Probability of sales distribution
Figure 4.2.
Hourly click rate on a French language website
5 The Impact of the Internet on the Economy
Figure 5.1.
Economics of producing integrated circuits, according to G. Moore (On the x-axis, the number of circuits per integrated circuit. On the y-axis, the relative costs of manufacturing components)
Figure 5.2.
Revenue of the semiconductor industry between 1968 and 2004
Appendix 1: GNP, GNI and GDP
Figure A1.1.
Intersection of human activities, according to the vision for a fair and sustainable GDP
Appendix 10: NGN and the Internet in Figures
Figure A10.1.
Decrease in telephony costs (in SDR) between 1988 and 2008 (Source ITU-T)
Figure A10.2.
Lifecycle of services in 2015: 1) Introduction – Internet of hings – Mobile financial transactions – 5G; 2) Developments – Broadband – Fiber-optic; 3) Maturity – DSL – 3 and 4G; 4) Decline – RTC – Gigabit Ethernet.
Landmarks
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Series Editor
Pierre-Noël Favennec
Communication Networks Economy
Daniel Battu
First published 2016 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.
Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address:
ISTE Ltd27-37 St George’s RoadLondon SW19 4EUUK
www.iste.co.uk
John Wiley & Sons, Inc.111 River StreetHoboken, NJ 07030USA
www.wiley.com
© ISTE Ltd 2016
The rights of Daniel Battu to be identified as the author of this work have been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.
Library of Congress Control Number: 2016948540
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library
ISBN 978-1-84821-979-3
Preface
The term economics is generally understood to mean sound management. This is associated with openness, good faith, accurate figures and integrity in company accounts, with transparency ensured through satisfactory standards of good practice in relation to investors and the clients who have placed their trust in an organization’s managers.
Network economics focuses on rational planning, which aims to implement only what is necessary and to provide, in the most effective way possible, universal access to the means of communication best suited to the required purposes. It is clear that this definition largely ignores understandings of what is considered necessary and what could be expensive.
Similarly, a country’s economy is the result of an organizational structure in which efficiency is linked to clear objectives. For example, reducing the prices of sought-after industrial goods can encourage the mass export of those products to the international market. For a country’s trading to be assessed positively, it should meet the subjective standards that it seeks to achieve. These may include improving the standard of living of its citizens, repaying the national debt, full employment and making culture and leisure available to everyone.
Without establishing strict rules on the maximum rate of debt or its repayment time, comparing the economic situations of nearby countries may be used to justify the trends observed in balance sheets. To make such comparisons, indexes and suitable, stable metrics are necessary, although economic experts continue to disagree strongly on this issue.
On a technical level, the key criteria required by networks as a priority relate to quality of service, confidentiality and communications security. These criteria affect the economies of telecommunications networks, which may themselves be viewed in different ways if each partner has their own opinions:
– the first area concerns the network operator, which must respond to customer demands with the technology at its disposal. With the assistance of manufacturers who define the development and production of equipment, the operator is responsible for its installation and operation throughout the national network, as well as for selling communications services to professional and residential users. The company, while providing services to its clients, must make a profit that allows it to finance future investments and development and research work;
– the second area concerns network users and whether the services and applications offered by operators truly respond to their needs, taking into account the money spent.
Do each of the two parties, operator and customers, receive what they are entitled to from this exchange of services? There are several questions that can be used as examples to illustrate this issue. Is ISDN, with its two available interfaces, properly suited to the requirements of all companies? Why has frame relay undergone such an important development in the American banking sector in particular and why has its operating life been so brief? Has ATM technology, as logical as it appeared to network experts, been an essential improvement to business services? And is the Internet, as popular and rich in applications as it has become, satisfactory to the range of mobile and fixed users in towns and rural areas?
Internet technology offers bidirectional digital connections of varying speeds between users of all forms of connection, be it sound, text or multimedia. For all that, its implementation presents a certain number of economic difficulties for the network operator. Is the operator properly remunerated for its efforts in this area? Are the regulations underpinning the introduction of competition to the communications market wellsuited to managing such complex digital technology?
For almost three centuries, noted authors have posited a number of economic theories. The expression “political economics” (“EcoPo”, for French-speaking students, from “économie politique”) raises the idea of specific strategic principles or theoretical “natural laws”, able to facilitate the management of goods and services production, which itself requires the involvement of political authorities. The economics of telecommunications networks has developed alongside our society. If there are unmistakable connections between real parameters, developments in network technology should now allow them to emerge in a logical, clear and lasting way.
This work does not to attempt to lay the foundations for a theory specifically geared toward the economics of tomorrow’s communications networks. On the contrary, this book presents a simplified picture of the principal elements of the economics of a network today, intended to be accessible to ordinary technicians, taking into account experiences they acquire in the field. The major elements associated with network economics that affect the quality of services and the profitability of investments are listed, step by step, accompanied by references to recent economic works. In order to discuss the effect of costs on the suitability of services offered by communications networks, this book is organized into the following five chapters:
–
Chapter 1
, based on the history of European networks, focuses on aspects related to building a national network.
–
Chapter 2
focuses on the structures and architecture of a network.
–
Chapter 3
discusses the general themes of regulation and tariff principles, including the latest developments.
–
Chapter 4
is dedicated to supply and demand from the perspectives of professional and residential users and network operators.
–
Chapter 5
brings together different aspects of the present situations of networks and the effect of the Internet on the economy.
In conclusion, the reader will find an overview of the most significant issues likely to influence the economics of communications networks as they are today.
Daniel BATTUJuly 2016
1The Challenges of Building a Network
The user cost of a network is primarily affected by the guidelines put in place for its construction and management. The quality and security of the network dominate the choices made during its development, as they are indicators of a good level of usage on the part of customers and, consequently, of a good return on investment. However, well before taking the economic aspects of a network into account, conditions in the real world very often make it necessary to establish a network as soon as possible in specific places across the territory for political reasons.
1.1. Construction of a national network
1.1.1. Network creation priorities
The construction of a network is the result of will and political strategy. It requires jurisprudence required for managing the so-called “rare resources” attached to network operation. Regulations must be compatible with the development of the network.
1.1.1.1. Primary physical conditions
Responding to an unsatisfied demand, communications networks are constructed year after year, although the hypotheses taken into account at the start of planning may be substantially modified over time. The layout of the network should be designed to be able, going forward, to respond to the needs expressed by citizens at the best possible price. Frugality (here meaning the economical use of resources) should be associated with the need to serve the entire population. The layout of the network must correspond to the territory’s organizational needs, as decided by its political authorities. In the absence of a specific national directive, the person responsible should act “in the best possible way” and take forward-looking actions. From its inception, the network should be designed to serve the majority of large centers through grids that ensure the duplication of communications transmissions, with the largest number of users able to connect to the national network at a later stage.
The implementation of a national network requires planning made up of various stages and taking place over a number of years. Over time, this plan is often remodeled because of new technologies becoming available, proposals for economic development or new needs expressed by a new distribution of customers in the territory.
1.1.1.2. Scalability of regulations
Communications regulations are managed to accommodate any future developments. Initially, the State, which is the source of the project, fixes the legal rules on creating a national operating company (monopoly, cooperative management, administration, delegation to a designated commercial body), as well as the relevant primary legal measures (the rights of public authorities, State requirements, expropriation, certification and status of staff, establishment of user rights and of charges for services open to the public).
The opening of the communications services sector to competition introduces new aspects of regulation, taking into account various standard phases of development (basic services, infrastructure, combining fixed and mobile networks, for example). It is seemingly the relevance of the latest technical and economic events that, as a result of actual demand and economies of scale carried out on network costs, justifies the modification of regulations. The objective is to ensure that the available network services can be accessed by all citizens, in any part of the country and at the best price, without unbalancing the budgets of authorized operating companies, without allowing any of the actors to establish dominance and without calling into question their infrastructure roll out.
1.1.1.3. Initial investments
As a result, significant investments only lose value when they are made too quickly and they should correspond to a purpose highly valued by users. A lot of work carried out in preparation for long distance extensions is often unjustified and does not contribute to the repayment of investments.
During the 1980s, network equipment was designed to last approximately 10 years, a period during which the operator could provide a production follow-up, a maintenance service, intellectual property monitoring and an after-sales service. Markets change quickly at present and marketing experts believe that public tastes are organized around a commercial cycle close to 3 years long. Provision of services, especially devices, should therefore be organized around cycles of approximately 3–5 years, subject to revision.
1.1.1.4. Rare network resources
Cutting investment costs by reducing some necessary work is feasible, if sharing is possible with other bodies. To facilitate wireless connections, high surfaces and antenna installations for hotspots may be shared. Private companies are often established for this purpose to serve as a single access point to provide competing network operators with fast solutions for the installation of antennas in urban areas. Some roof terraces, selected to be easily converted into relay stations, are accessible in exchange with the building’s owners.
Other requirements must be taken into account when creating a network, such as the necessary cable channels, or the need to share the available space with other social amenities (known as common utilities in the United Kingdom), such as the operators of other, public or private, communications networks, highway operation companies, rail networks, quarries or water supply networks.
The frequency ranges for operating wireless connections are available, subject to the authorization of the agent made responsible for those resources by the national regulatory authority. The agent implements the relevant steps adopted internationally by the World Radio Communication Conference (ITU-R) and tenders contracts. Lastly, network addressing (such as TLD), allocated by the managing body, is also a “rare resource” as it is customized through use.
1.1.1.5. Partnership between operators to serve an area
Some operators may jointly participate in building and operating a network. Distribution may be organized by geographic area, by splitting the country into zones of influence, or rather by functionality (national and international) or services (telephone, telex and television). The regulatory authority may also decide to open all services to competition among all potential actors in the territory. The tendering of cable installation work to a third party as part of the delegation of public services may be considered to be sharing infrastructure construction.
For example, in 2015, network operators, including Metroweb (which already operates a fiber-optic network in the Milan area), Vodafone and Wind, decided to work together to build a very high speed network in Italy. Operators and service providers can also collaborate to improve the service in a given territory with the agreement of regulatory authorities.
Geosynchronous satellite communications services provide a potential example for collaboration between companies. Following the performances of land-based and submarine fiber-optics, the company Teledesic believes, for its part, that it is possible to balance out the installation costs of satellite networks through the following activities:
– the manufacturing of important microsatellite constellations to connect the entire world to the Internet;
– the launch of these satellites, their provision, their repair and their reconfiguration in orbit to avoid waiting for a replacement;
– the management of ground operations connections.
1.1.2. Links with the international community
Every country should be connected to its closest neighbors and those with which it shares a language and culture. These relationships are also essential for trading. However, without being directly connected to every country in the world, a country may ask its nearest neighbors for a common organization to address transit traffic.
Each operator has its own international network of relationships with the operators of its choice. It is clear that competition established nationally between operators must be renegotiated internationally, with the financial aspects of transit best negotiated between partners in the same group of actors, and at the agreed value of the exchange rate between the currencies of the countries concerned (see section 3.7.2.1).
In practical terms, each national operator’s network has, for security reasons, several connections dealing with the outflow of international traffic between the dedicated centers in the countries concerned. The international accounts related to this type of traffic are determined on the basis of the average cost of all established international connections, taken in pairs.
1.2. Security of network operations
The security of network operations is based on several considerations:
– network centers should only be accessible to the staff responsible for duties related to maintaining the network;
– the routes of network cables should not show clear vulnerabilities, either to attacks linked to natural phenomena or those caused either on purpose or involuntarily by individuals;
– network equipment should, by its design, respect the rules that allow proper functioning, both electrically and in accordance with the communications protocol used;
– working equipment should be permanently and securely connected to high-reliability power supply equipment;
– warning systems should be prepared to alert maintenance staff to any attempted intrusion or any defect in the equipment.
1.2.1. Security architecture
In networks, messages are transmitted through a complex architecture that may use different media (wires, fiber-optic, terrestrial or satellite wireless media) structured to provide duplication of routing. The standardization process has singled out the communications protocols that allow networks to have the highest level of reliability in routing messages, as well as in the confidentiality of their content. The regulations for installing network equipment and the sturdiness of the equipment and its attachments (supply, antennas, instruments for measuring and managing traffic, etc.) ensure the security of this communications network architecture (ITU-T Recommendations series X.800). The architecture for the security of open systems, defined by ITU-T Recommendation X.805, describes the various elements that may be involved depending on the risks incurred. Security is also addressed, considered in relation to measurements, sectors and established plans (Rec.X.810).
1.2.2. History of security architecture in France
As an example, in the 1970s, the French communications network rested on structures reorganized in 1945 with the cooperation of the Headquarters of the National Defense. As a matter of priority, the meshed network of cables and radio relay links served the administrative centers (prefectures), with the capital accommodating, through fortified works, the national center for this web of communications. Located in a small Parisian fortification, a transmission exchange was connected to the government quarter, in the 7th arrondissement and to political office buildings (such as the Presidential and Prime Ministerial residences). The International Telegraphic Bureau (historically, the primary data center) served news agencies, concentrated north of the Les Halles area, close to the printing houses of the major daily newspapers. The information nervous center and its subdivisions, despite their low density, were structured economically and in the interest of maximum security, as per the context of the era. Due to the availability of new technologies (fiber-optics, satellite connections), the number of connections has widely multiplied, so that the security of connections has had to be ensured on the basis of much greater duplication and an increased flexibility, taking into account user mobility. In summary, security architecture must be adapted to the density of the network and to available technologies.
1.2.3. Operational security of a network
In all countries, network operators are asked by their governments to participate in fighting crime and terrorism. In Africa, operators who do not succeed in eliminating SIM-free (and therefore untraceable) mobile devices from their network are subject to heavy fines. As in wartime, the current climate of insecurity has tightened the links between different State bodies, which provide access to important information with maximum discretion.
Telecommunications network technicians respond to legal requests for interceptions related to security, defense and counter terrorism. Their activities concern fixed and mobile telephone communications, as well as the Internet. Their duties mostly deal with identifying the people communicating, geolocalizing devices and sometimes blocking Websites glorifying terrorism or featuring child pornography. The legal provisions are at times inadequate and the criminal underworld and its economy are often one step ahead.
It goes without saying that a highly protected network is expensive. A permeable network, on the other hand, attracts large numbers of fraudsters of all kinds, as evidenced by the fact that, in 2015, African networks, serving close to a billion people, suffered an enormous volume of large-scale attacks by cybercriminals, particularly in Côte d’Ivoire, Ghana, Nigeria and Senegal. Since 2013, technical elites dealing with specialized protection have been established in those countries, as well as in Burkina Faso, Niger and Senegal.
1.2.4. Elements of network security
Eight major points characterize the different aspects of the security of a communications network (ITU-T. X.series – Data Networks, open systems interconnections and security – X.800 – X.849)1.
1.2.4.1. Authentication (Rec. X.811)
Authentication ensures the validity of the identities claimed by the entities participating in the communication (for example a person, device, service or application). It assures that an entity is not attempting to usurp the identity of another entity (masquerade, masquerade ball, man-in-the-middle) or to reply without authorization to a previous communication made before the breach. The sender and the recipient must both be able to verify the identity of their interlocutor, with the process being more complex in direct communication with visual recognition.
1.2.4.2. Access control (Rec. X.812)
Access control (Know Your Client [KYC], linked to the e-KYC application) protects against the unauthorized use of network resources. It ensures that only authorized persons or devices can access network elements, information flows, services and applications. A firewall is hardware (made of components and software) responsible for insulating a company’s internal network. In particular, firewalls allow network administrators to control access to internal resources from outside (by regulating the flow of traffic to and from those resources).
1.2.4.3. Data confidentiality (Rec. X.814)
Only the sender and the target recipient should be able to understand the content of the message sent. This means that the content should be encoded, namely that its data be disguised in such a way that it can then only be understood by an authorized person. Encryption techniques are often based on one or several keys used to code the data. These data confidentiality measures protect the data from the risk of disclosure.
1.2.4.4. Data integrity (Rec. X.815)
Data integrity ensures the accuracy or completeness of the data sent to the recipient. The data sent are guaranteed to be exempt from any modification, alteration, deletion, creation or reproduction, even if it has undergone processing.
1.2.4.5. Non-repudiation (Rec. X.813)
Non-repudiation provides the means to prevent a person or entity from denying having carried out a particular data-related action. It ensures that proof is made available that can then be presented to a third party and used to prove a certain type of event or action has indeed taken place. The digital signature is also based on encryption operations.
1.2.4.6. Security audit (Rec. X.816)
The security audit ensures that information is only transmitted between the permitted endpoints and that it is neither diverted not intercepted during its transfer.
1.2.4.7. Availability and salvage
The availability of equipment or a system is the percentage of time spent correctly functioning before its first failure added to the total duration when it should have been operational (time spent correctly functioning added to the average repair time). Solutions for data salvage in the event of a crash should be considered among the measures pertaining to availability.
1.2.4.8. Privacy
Privacy includes the protection of information that could be inferred by examining a client’s activities on the network, that is information about Web sites the user has visited and the user’s geographic location, as well as the Internet addresses and names of services used.
1.2.4.9. Industry participation
Within the framework of international collaboration established in the “Global Security Agenda”, manufacturers, including Trend Micro, have made their expertise and research available to the ITU. They have also submitted reports on threats and security alerts, as well as granting access to their research laboratories. If necessary, alerts are sent out in real time via <ESCAPE>, the ITU’s secure portal2.
These definitions have been adopted by all ITU-T delegates. The application of these definitions to the Internet is at times controversial, with some application providers attempting to introduce definitions based on current regulations in the State of California, for example. However, in such cases international regulations take precedence.
1.3. State communications network
In order to pay the fairest price, be less dependent on network operators and, at the same time, be more secure, French State bodies have an Interministerial State Network (Réseau Interministériel de l’Etat (RIE)). Built using the Renater network and constructed in the 1990s, it allows State services to keep functioning in the event of conflict. The RIE interlinks and protects the fixed communications (voice and data) of ministries. A very high speed network architecture allows interministerial information (voice, data and video) to be transmitted without risk of a breach between State sites, as well as a secure connection to the partner networks of ministries via an extranet. It also facilitates the deployment of new applications within ministries. The RIE network’s core infrastructure, coordinated by Orange Business Services, is continually supervised by a dedicated and duly authorized team. There are around 10 access points where computer data converges, alongside 17,000 sites connected across the national territory (mainland France and its Overseas Departments and Territories). Since 2016, all French national police force sites have had secure access to the RIE.
1.4. System for connecting network users
The method of connecting customers to the closest network communications center has changed over time due to the appearance of new technologies. Until 1990, the maximum distance of a wire line between a customer’s terminal and the center was 4.5 km (the relation between the length of the necessary cable and the distance as the crow flies is generally close to the square root of 2, here being 3.180 km). This distance has since been between 20 and 100 km according to the method of connection proposed by the operator of the distribution network (2G, 3 and 4G in mobile technology, in hybrid fiber coaxial or in the fiber-optics associated with VDSL2).
Since 2014, due to resources connected to next generation network (NGN) technology, the distance between the customer terminal and the connection center may reach 150 km (network known as the “Tactile Internet”).
1.5. The search for regulations and network growth
In the past, economic science has attempted to identify the “natural laws” pertaining to the distribution of goods or the evaluation of a certain number of services, measured by the number of objects or the sum total of transactions, in different-sized towns. The “social mathematics” expected by Condorcet in the 18th Century and the establishment of “rules” or “gold standards” between clear and poorly defined economic concepts have proved difficult over time, with the proposed recurrence models rapidly becoming confronted with exceptions and confusing counterexamples. “Correlation does not imply causation!” Simply because two curves are similar does not mean there is a link between them (sources: BVMI, Federal Statistical Office of Germany – Wikipedia).
1.5.1. The need for rules in economics
The rapid economic expansion of Western countries during the 20th Century supported the idea that economic growth could be mathematically linked to manufacturing processes and to the management and correct distribution of the common tools necessary in society. Of course, specific geographic management and a suitable telecommunications framework are necessary to the success of economic activities. Conversely, the telecommunications network must respond to the needs of the national economy. Research has been carried out on these two topics and time has shown that they may sometimes lead to the wrong conclusions and futile investments. Furthermore, developing countries have found themselves damaged by international financial regulations based on imprecise or inappropriate rules.
The changes that have arisen in telecommunications technologies have led industrial companies to manufacture different types of equipment for existing networks. The necessary technical compromises between different generations of hardware enable a response to demand without reducing the quality of service while in fact pursuing the service improvements desired by customers. At present, no single telecommunications technology has succeeded in becoming indispensable in responding to the demands of people around the world. As a result, networks are often made up of equipment from different generations and with different technology. Even in 2016 the Internet is continually evolving, making it difficult to establish workable economic rules to better manage its development.
1.5.2. Definition of common property
Each territory has its own features that allow certain geographic areas to accommodate common property earmarked for telecommunications. The land includes specific satellite orbits intended for communications satellites. The high points in the region, as well as some seafront or riverine areas, must be shared between major operators to best position communications channels and devices (radio antennas and underwater connections).
Communications cables, both aerial and underground, may be installed in a straight line through fields or follow roads and standard mountain pass routes. The use of radio frequencies must be subject to resource sharing between the different beneficiaries.
The need to have a national communications network imposes rules that must be observed by citizens. To that effect, the State has key legal prerogatives for implementing a public utility network. More generally, the British refer to “Common Utilities”, all public or private organizations (Publicly Owned Utility, Investor-Owned Utility), which compete to set up and manage local, regional or national infrastructure, with the aim of providing all citizens, whether as a monopoly or not, with supplies of gas, electricity and water, communications services, transport, irrigation and waste management.
The choice of the locations and the spatial organization of decision-making centers are decided at the first stage of their establishment and these choices are rarely questioned, as it is difficult to alter the original strategy. National capitals are rarely centrally located. However, in 1100 BC, Xi’an was chosen as the capital of China due to its position in the center of the country, in the province of Shaanxi. In 1520, François I, planned to make Romorantin, a small town close to the center of France, an “ideal city”, organized according to popular principles and proposed by Leonardo da Vinci, with two-way traffic and express waterway connections to the rest of Europe, linking central France with the Rhône-Saône axis. Leonardo da Vinci’s premature death led to the abandonment of the project in favor of the construction of Chambord castle. History thus decided that Paris would remain the French capital, with Versailles acting as ceremonial residence for official receptions for foreign guests. The location of Paris, both French capital and economic hub, today goes unquestioned. There is no further need to review the economic impact of moving this vast conurbation today, but it must be managed to best suit modern needs, thought by some observers to be quite restrictive [GRA 47].
In countries with planned economies, the concepts of “public needs” and the economy of means to be used have been greatly expanded and connections have been tested in order to attempt to rationalize the distribution of essential goods and services to the populations of urban areas of all sizes. Population movements have even been carried out to make the practices of economic policy correspond with its theoretical requirements. Even today, within the European Community, the concept of optimally sized urban areas, conurbations or regional centers are the subject of debates and economic assessments (see section 1.6.1).
Although nowadays the general consensus is that pursuing the “Ideal City” is nothing short of utopian, the notion remains that there is a physical or mathematical link between society and the technical tools necessary for city life. For the record, several studies have previously been put forward on this subject, the majority of which have been to no avail.
1.5.3. The first national accounts
It was François Barrême (1638–1703), a French mathematician, who laid the foundations for national accounts. An expert at the Court of Finances in Paris and an associate of Colbert, he was the inventor of practical accounting tables, known as the universal Barême scale (“Barême universel”), widely used to collect royal revenue and control public spending. On the basis of this work, the royal armed services were able to evaluate the number of hay wagons required by the military.
The civil servants with the responsibility for determining whether the State had the material means necessary for its policies and, within various hierarchies, officials such as majordomo François Vatel strove to ensure that everything happened according to schedule. Such pressures remain in our times, whether regarding emergencies related to a presidential visit or the planned opening of the Olympic Games.
To some extent, the suitability of the geographic location, size and practical organization of common goods mechanisms constitutes an indispensable requirement for the correct functioning of a country. The Middle Ages shaped the history and geography of our regions. The establishment of an administrative center may be explained historically through the possibilities offered by coaching inns and by describing the development of stagecoaches. This logic was accepted by all observers who believed that it could be extended to a changing industrial and social world. It is this research on “economic logic”, which has led to the construction of the various theoretical models proposed over time.
1.5.4. Christaller and Lösch’s “central place” model
The theory of Christallerian central places was designed to attempt to explain or justify the size, positioning and number of towns in a region [CHI 33]. Within this framework, towns and villages serve as centers for the distribution of goods and services for a population according to optimization principles based on transport costs. The centers have a supply of goods and services, which they disseminate to users located in their region through a hierarchy of subcenters. Highly used or inexpensive services are offered in small centers close to consumers, just as rarer or more complex services are available in bigger towns, but further apart. The “rational laws” of supply and demand would explain this hierarchy among urban centers, which would be available to families in France of varying sizes. The hexagonal diagrams of centrality in Figure 1.1 are attempts to illustrate a theory that was later refuted by Lösch [LÖS 54].
Figure 1.1.“Christallerian” models of the “centrality” theory (Wikipedia)
While the principle behind this theory has sometimes been used (land-use planning for the settlement of the polders in the Netherlands, the policy of balanced urban areas in France, the reference model in archeology), it has often failed in rural areas, urban environments and port areas. Pierre Laborde, Senior Lecturer at the University of Bordeaux, has written on this matter that “telex is linked to certain activities (…). But the number of telex terminals per municipality is not always in proportion to its population. Christaller, the original exponent, used telecommunications (the telephone) as a means of expressing geographic centrality. He faced no shortage of criticism and finally renounced the theory himself” [LAB 73]. Despite the criticism, the central places theory is periodically reconsidered, either in relation to the evolution of land-use planning, or the reform of urban centers or the merger of municipalities, with distance (and relative cost) playing a part in the spatial organization of regional activities3.
1.5.5. Central places and Pareto
1.5.5.1. Regarding central places
A country’s “central places” still tell the story of its history and the human, social and economic transformations that have taken place there. The cantonal framework of France, highlighted by geographer Léon Lalanne in 1863, was established according to large, attractive centers and a six-level regional hierarchical structure [UNI 02]. The economy of territories analyzes the economy of space and distinguishes between urban economies and regional approaches under the growth theory. The distribution proposed at the end of the 19th Century by the Swiss economist and sociologist Vilfredo Pareto, introduced as the “80/20 rule”, points out that a small percentage of a population (often) represents the bulk of its value [JUR 60].
1.5.5.2. Inventory of assets according to Pareto
In reality, the so-called “Pareto law” is not a “law”, strictly speaking, but a method of analysis. Pareto’s “log-normal distribution” does not necessarily imply a “magical” 80/20 distribution, but it is a method that can be universally applied by introducing this mathematical instrument to easily separate essential elements from other, less important ones. This dichotomy is viewed as a tool for analysis, particularly of company management (stock, sales, deliveries, disruptions). In logistics, it means that products with a high value or high turnover should be singled out and subject to tight controls, while products with a lesser value or lower turnover would be under more flexible control. The methodological approach is thereby simplified, even though there is still a gray area in terms of demarcation.
1.5.5.3. Examples of Pareto distribution
Pareto’s representation demonstrates that, quite often, 20% of the most widely distributed products or the biggest customers constitute 80% of sales revenue, with, conversely, the remaining 80% being 20% of turnover. Applied to French forests in 2010, this representation emphasizes surfaces larger than 4 ha, ignoring the legitimate interests of smallholders.
In this way, in France in 2010, close to 89% of landowners possessed 23.6% of private French forests and 76.3% of the wooded area was made up of plots larger than 4 ha [LAN 10]. The distribution shown in Table 1.1 explains the structure for administrative management of the forests (set up particularly for surfaces greater than 4 ha) and the underrepresentation in forest-holder associations of owners of small wooded areas, who are responsible for 23% of timber production.
Table 1.1.Distribution of French forest ownership in 2010
Size of wooded plots
No. of owners (thousands)
Percentage of owners
Thousands of hectares sum total
Percentage of surface
Less than 1 ha
2,203
66.5
687
7.5
1–4 ha
729
22.5
1,463
16.1
4–10 ha
231
7
1,425
15.7
10–25 ha
96
3
1,460
16.1
25–100 ha
41
0.8
1,870
20.6
>100 ha
9
0.2
2,174
23.9
Total
3,309
100
9,079
100
Similarly, the distribution of jobs in American companies in 1970 and 1990 gives rise to the representation shown in Figure 1.2. Over 20 years, despite the 1973/1975 oil crisis, this distribution has remained extremely stable.
Figure 1.2.Distribution of jobs in the United States in 1970 and 1990 (County Business Patterns, US Department of Commerce, cited by Paul Tréhin4)
1.5.5.4. Pareto and central places in telecommunications
The inventory of French telecommunications centers, shown using the Pareto distribution (logarithm of the property of centers, classed in order of importance, on the vertical axis and ranking logarithm on the horizontal axis) gives rise to the diagrams shown in Figure 1.3 [PAU 78].
Above a certain size, the straight line representing the property of the largest centers changes slope in relation to less well-equipped centers (1975). Since 1985, this representation method has shown the existence in the network of three groups of centers, first made up of very large Parisian switching and transmission centers, followed by 20–40 centers in regional capitals and holdings of over a thousand small local centers. It should be noted that this inventory covers the installed equipment’s capability to respond to a very high demand for communications without a direct connection to the intensity of actual demand.
Figure 1.3.Pareto distribution applied to telecommunications centers
In practical terms, four remarks can be made on the subject:
– between 1950 and 1980 (left graph), the French network only covered long distances with analog equipment, which had a precise installation modularity. The delay in responding to demand led to large towns being served as a priority and to progressively increasing network capabilities while moving onto medium-sized towns;
– between 1980 and 2000 (right graph), the network had to take into account around a thousand new small centers and introduce numerical type equipment to regional and rural areas. Unfortunately, from an industrial viewpoint, the different groups of materials that had been offered to network operators did not respond to the distribution needs of centers either in terms of equipment modularity or the ability to handle increasing demand for broadband, for example. Network operators have therefore been obliged to manage their equipment with overcapacities in medium-sized centers and undercapacities in large centers;
– since the 2000s, networks have standardized IP packet technology and this has justified the use of high capacity routers in the large centers, and of medium or lower capacity routers;
– as a result of the digitization of networks and the Internet capability that gives each computer system a unique URL address, which can be connected to millions or billions of Internet users, large servers enjoy global connectivity while small personal sites remain continually available, only to receive around a hundred connections per year. This network flexibility has an important technological and economic cost for millions of sites with under-used connections;
