Below are just some of the terms you will encounter when reading about telecom and networking equipment companies. In addition to our list below, the best place to go on the Internet for a definition of a technology or telecommunications term is Whatis.com . SBC Communications (NYSE: SBC) also has a decent glossary, which you can link to from the bottom right of their home page .
Access Lines: A term for the individual telephone lines that connect business and residential customers to the telecom network. Investors may also encounter the term.
Access Line Equivalents: Refers to additional lines sold to businesses or homes for data or other services. They may not be physically separate lines, but additional channels on the current line.
ADSL: An acronym for Asymmetric Digital Signal Line. ADSL is one of the many versions of DSL in existence. DSL enables high-speed voice, video, and data connections over the regular copper phone wires that connect most homes and businesses to the larger telecom network. The "asynchronous" in ADSL refers to the fact that "upstream" data transmission speeds, from the user to the network, are slower -- perhaps 128 Kbps (kilobits per second) -- than "downstream" speeds from the network to the user, which may reach 1.5 Mbps (megabits per second). ADSL was one of the first DSL technologies rolled out for consumer use. See also DSL.
ATM: An acronym for Asynchronous Transfer Mode, which is a packet-switching protocol that enables voice, video, and data transmission over networks originally built for voice transmission. Internet Protocol , or IP, performs similar functions for data networks. Fool scribe George Runkle penned an excellent description of the differences between ATM and IP for the Drip Portfolio.
Bandwidth: The transmission capacity of a communications channel, whether it is fiber optic, copper wire, or wireless. Digital bandwidth is measured in bits per second (bps). For example, a standard dial-up modem connects to the Internet at 56 Kbps, or 56,000 bps. For more about bandwidth, see broadband, below.
Bit Per Second (BPS): The unit of measurement used for gauging the speed of a digital transmission. Faster speeds are measured at the megabit, or millions of bits, per second (Mbps) level, while telecom backbone networks transmit voice phone calls and data at Gigabit, or billions of bits, per second (Gbps) rates. Newer technologies are boosting backbone transmission speeds to trillions of bits, or terabits per second (Tbps).
Broadband: A catch-all term referring to any digital transmission speed of about 1.5 Mbps (megabits) or higher, usually used in the context of an Internet connection. The most common consumer forms of broadband Internet connections are over cable TV lines and through Digital Subscriber Line (DSL) technology, which uses standard copper phone lines. Broadband Internet access is also available over satellite and fixed wireless connections.
Central offices (COs): The automated switching offices that direct phone calls to and from customers, and connect users to Internet Service Provider (ISP) and long-distance networks. There are thousands of COs around the country. According to Annabel Dodd's excellent book, The Essential Guide to Telecommunications , the first central office switch was patented in 1891 by one Almon Strowger, who felt the operators that were then relied on to connect calls were listening in on his conversations.
Circuit-switched networks: The current phone system, also called the "Plain Old Telephone System" (POTS) or the Public Switched Telephone Network (PSTN), is a circuit-switched network, meaning that each phone call, when dialed, opens a direct path, or circuit, between the callers. Newer methods, such as Internet Protocol (IP), are packet-switched, meaning that data is broken up into packets and sent over different routes over the network, and then reassembled at the other end. Circuit-switching is not as efficient as packet-switching, but at this point is considered more reliable for voice communication.
Competitive Local Exchange Carrier (CLECs): A CLEC is a company providing local phone services in competition with the Bell operating companies or independent phone companies, which are generally referred to as Incumbent Local Exchange Carriers (ILECs). A newer version of the CLECs are the DLECs, which are "Data Local Exchange Carriers," and provide competitive data services such as DSL.
Dense Wave Division Multiplexing (DWDM): This technology exponentially increases the capacity of fiber-optic networks, by transmitting multiple data streams simultaneously, using different colors of light on each fiber strand. Previously, only a few different lightwaves were transmitted across fiber lines; the latest technologies enable 16 different channels, with future developments likely to increase that number.
Digital Subscriber Line (DSL): DSL enables high-speed voice, video, and data connections over the regular copper phone wires that connect most homes and businesses to the larger telecom network. DSL is the technology most local telecom companies are relying on to offer bundled, high-speed services and compete with alternate carriers, such as cable and satellite companies. See also ADSL.
Frame Relay: Frame relay is a way of transmitting data over public networks, frequently between local area networks (LANs), and can be a cheap alternative to private data lines.
Interexchange Carriers (IXCs): As part of the AT&T breakup in 1984, local access transport areas, or LATAs, were set up, roughly corresponding to metropolitan areas and population size. There are 197 LATAs in the US , ranging from California 's eleven to only one for many states. Only Regional Bell Operating Companies (RBOCs) and independent ILECs were allowed to carry calls within LATAs, and only Interexchange Carriers were allowed to transmit calls between LATAs. However, the Telecommunications Act of 1996 set up conditions under which RBOCs could provide long-distance, or inter-LATA services, and Interexchange carriers could provide local services.
Incumbent Local Exchange Carrier (ILEC): ILECs are Regional Bell Operating Companies (RBOCs) and other independent telephone providers that own their own facilities, and predate the Telecommunications Act of 1996, which spurred an explosion of Competitive Local Exchange Carriers (CLECs). Many of the CLECs use facilities of the ILECs to connect to their customers.
Internet Protocol (IP): Internet Protocol is the protocol, or set of rules, that performs the addressing function of the Internet. Every packet of data traveling over Internet networks includes an IP address of its destination and of its sender. This IP address is used by routers and other devices to direct Internet traffic to its proper destination.
Local Area Network (LAN): Small networks, usually in an office, that connect PCs, printers, and servers together, enabling users to share access to peripherals such as printers and scanners, as well as databases and Internet connections.
Local Loop or "Last Mile": The final portion of the telecom network that connects to a customer's home or business. Last mile connections can be through copper wire, fiber optics, or fixed wireless systems.
Next Generation Networks: A catch-all term used to describe the converged communications networks that telecom carriers are evolving towards. Generally, next-generation networks will be fiber optic, packet-switched, data-optimized high-speed networks with sophisticated management capabilities.
Packet Switching: A method of sending data over networks, packet-switching involves breaking up communications -- be they voice, video, e-mail, or Internet transmissions -- into individually addressed data packets, which are then sent across the network to their destination. Different packets comprising the same transmission, such as a large graphic file, can be sent over different routes, and then reassembled at their destination. As a result, packet-switching can more efficiently utilize network capacity than circuit-switched networks.
PCS: Stands for personal communications services. PCS is a digital wireless service that provides greater geographic coverage, and therefore more widespread mobility, than traditional cellular phone service. PCS also uses a higher transmission frequency. Sprint PCS (NYSE: PCS) is currently the leader in PCS wireless services.
Points of Presence (POPs): This term has several different meanings in different parts of the telecom industry. For telecom carriers, a POP refers to the connection between the facilities of an interexchange carrier and a local phone provider, where the two companies transfer voice and data transmissions to each others' networks. For Internet providers, a POP is an access point to the Internet, with a distinct Internet Protocol (IP) address. And for wireless carriers, a POP is equivalent to one potential customer their network has the capacity to serve.
Public Switched Telephone Network (PSTN): Also referred to as the "Plain Old Telephone System (POTS)," the PSTN is the circuit-switched phone system, with analog local loops, largely in use today.
Scalable: A venerable high-tech term, used to refer to equipment that can handle huge variations -- primarily increases -- in usage.
SONET: An acronym for Synchronous Optical Network, SONET is an interface standard that converts electric pulses to light pulses and back, and enables telecom carriers to transmit data from a variety of sources over the same networks.
Virtual Private Networks (VPNs): A business service provided by many telecom carriers, VPNs provide corporations with secure, dedicated connections between their facilities, using the public networks. This saves companies the expense of purchasing or leasing their own private lines.
Voice over IP (VoIP): The use of Internet Protocol to send voice calls, during which digitized voice data is broken into packets and transmitted through packet-switching, just as other communications are transmitted over the Internet.
