Cooperative economics developed as both a theory and a concrete
alternative to industrial capitalism in the late 1700s and early 1800s.
As such, it was a form of stateless socialism. The term "socialism," in
fact, was coined in The Cooperative Magazine in 1827.
Such socialisms arose in response to the negative affects of
industrialism, where various clergyman, workers, and industrialists in
England, such as Robert Owen, experimented with various models of
collective farming and community housing with varying degrees of
success. This movement was often integrated with other progressive movements of the era such as women's suffrage and abolitionism.
"British
industrialist Robert Owen (1771–1858) founded a model factory town
around his cotton mill and later established a model socialist
community, New Harmony, in Indiana. Some proponents of women's rights,
such as Emma Martin (1812–1851) in Britain and Flora Tristan (1801–1844)
in France, stirred controversy by promoting socialism as the solution
to female oppression."
While
state socialism was growing popular, rising in the early 1900s,
followed by collapse in the 20th century, the cooperative movement grew
exponentially in all countries affected by socialism and British
colonialism, such as Canada, the U.S., South Africa, and across Europe. Jessica-Gordon Nembhard has produced one of the most thorough academic monographs on cooperative economics entitled Collective Courage: A History of African American Cooperative Economic Thought and Practice,
which looks at how African American communities organized to survive
white nationalism, capitalism, and colonialism in the 20th century. The International Cooperative Alliance (ICA) was formed in 1895 and National Cooperative Business Association founded in 1916.
The post-WWII era experienced a decline in interest towards
cooperatives in the economics profession, with much lower quality and
quantity of the discussion on cooperatives in economics text books
published after the war compared to those published before the war.
The University of Wisconsin Center for Cooperatives was founded in 1962, which was possibly the first organization to collect data on cooperatives. In 2000, the Democracy Collaborative
was created out of the University of Maryland, which (among other
things) facilitates the creation and development of cooperatives. In
2004 the United States Federation of Worker Cooperatives
(USFWC) was founded, which, like the ICA, facilitates worker
cooperatives (see "Types and Structures of Cooperatives" below). The
ongoing success of cooperative economics in providing more effective
alternatives to capitalist firms was so significant by the 21st century
that the United Nations Assembly
"...declared 2012 as
the International Year of Cooperatives, highlighting the contribution
of cooperatives to socio-economic development, in particular recognizing
their impact on poverty reduction, employment generation and social
integration.”
Contemporary cooperative economics has gained even further popularity
since 2012, with numerous TED talks dedicated to the subject; they
demonstrate how cooperative economics is able to solve problems in
housing, food, and poverty that modern industrial countries have so far
been unable to solve. In 2013, the USFWC spawned the Democracy at Work Institute, a sister organization that also facilitates the growth, creation, and conversion of worker cooperatives.
Types and Structures of Cooperatives
General Structures
There are generally five major types of cooperative organizations:
Consumers' cooperative,
in which the consumers of a co-operative's goods and services are
defined as its members (including retail food co-operatives, credit
unions, mutual insurance companies, etc.) (Example: REI, federal credit
unions, etc.)
Producer's cooperatives or a suppliers cooperative, which are owned and organized by producers or suppliers, such as farmers (E.g., OceanSpray, Sunsweet, etc.). The surplus is distributed according to how much goods or services the member has supplied the cooperative.
Purchasing cooperatives, which are owned by organizations that joint-purchase goods or services.
The equity structures of cooperatives are therefore various and unlimited.
Some implement private/investor equity while others do not. Since the
broad purpose of cooperatives is to offer different power structures
than ordinary capitalist institutions (which are owned by profit-seekers
that may or may not work at the firm), as well as to improve the
economic and social life of workers and all who are involved beyond mere
profit and creating products/services, there is much internal debate
about what is truly "cooperative," "democratic," etc. For example, if a firm is 60% owned by private investors and 40% owned
by workers, this would generally not be considered a
"worker-cooperative." ESOPs are also not considered cooperatives even if
workers own 100% of the firm, because of the usual lack of democratic
governance.
Legal Structures
Cooperatives may take on different legal structures depending on jurisdiction, such as an LLC, ESOP, 503c non-profit, or a distinctive cooperative legal structure (if the state provides for one, such as Massachusetts). ESOPs (Equity Stock Ownership Plans, where workers own shares for retirement; see, for example, Bob's Redmill) that implement democratic governance are colloquially referred to as "ESOPeratives."
In 1996, New Zealand passed the Cooperative Companies Act. In 2003 the Statute for a European Cooperative Society created a specific legal structure for cooperatives in the EU.
Facts and Figures on Cooperatives
There are about 3 million cooperatives on the planet.
12% of global humanity is a member of a cooperative.
1 in 3 Americans are coop members.
1.5 million Americans live in a housing cooperative.
Cooperatives electrically power 56% of the United States' landmass and 42 million people.
Coops possess over $1 trillion in assets worldwide and over $640 billion in annual sales.
92 million Americans turn to 7,500 credit unions (client-owned
cooperatives) for financial services; 50,000 American families rely on
cooperative day-care facilities.
The Navy Federal Credit Union (founded 1933) is the world's largest
credit union with 10.8 million members, 345 branches, and $147.9 billion
in assets, serving the men and women of the Armed Forces, Department of
Defense, veterans and their families.
The largest worker-cooperative is Mondragon Corporation in Spain, which has over 80,000 associates (workers).
The largest cooperative sector by membership is mutual insurance, with over a quarter million members.
The most comprehensive data-collection on the largest cooperatives comes from the World Cooperative Monitor.
Distinctives
Cooperatives
are different from conventional firms in that the purpose of the firm
is not to profit shareholders, but to benefit its members (whether
workers, consumers, suppliers or purchasers). Because parts of the
cooperative movement was anti-capitalist but not as revolutionary as Marx
(who aimed to abolish all private property), Marx and Marxists were
hesitant about supporting the cooperative movement (especially consumer
cooperatives) in the 19th century. The value of consumer vs. worker
cooperatives continues to be debated by theorists, activists, and
scholars (see below).
The International Cooperative Alliance provides seven principles of cooperatives, each that contrasts with capitalist firms:
"Voluntary and Open Membership" (in contrast to coerced/involuntary participation)
"Democratic Member Control" (in contrast to nondemocratic control)
"Member Economic Participation" (in contrast to purely transactional relationships and closed-book management)
"Autonomy and Independence" (in contrast to state-owned or corporate-ownership)
"Education, Training, and Information" (in contrast to "Mushroom management" where workers are "kept in the dark," and information is intentionally funneled through power channels)
"Cooperation among Cooperatives" (in contrast to competition amongst firms)
"Concern for Community" (in contrast to purely product or profit-oriented concerns)
An earlier summary of cooperative principles are called the "Rochdale Principles."
Governments may define cooperative enterprises with a simplified version
of the above principles. For example, the Australian government defines a cooperative enterprise as follows:
"They
serve their members by providing goods and services that may be
unavailable or too costly to access as individuals. They share costs and
carry on their enterprise under principles of:
non-discrimination
democracy
independence
education and care for communities."
Cooperative economics is also distinct enough from
capitalist economics in the public square that it has established and
maintains its own domain (.coop).
Cooperatives, Sustainable Development, and Climate Change
Jeffrey
Sachs, an economist who works with the United Nations, has emphasized
the centrality of cooperative models of economics for the future
survival of our species;
though he pays little attention to actual cooperative enterprises and
their development as more sustainable and humane models of production,
he nevertheless contends more broadly that humans must “forge a new era
of cooperation on a global scale" in order to survive.
Elinor Ostrom, the first woman to receive the Nobel Prize
in economics, demonstrated the ability of cooperative enterprises and
organizations to effectively manage environmental goods more than
strictly political or market means.
Forestry and electricity cooperatives are some of the largest in the
world, which puts them in a unique position to address the negative
effects of climate change. E. G. Nadeau provides some examples of what this means in his popular introduction to cooperative economics, The Cooperative Solution:
"Dairyland
Power Cooperative, based in Wisconsin, has been a national leader in
promoting the use of methane gas derived from cow manure as an energy
resource. Kauai Island Utility Cooperative, the youngest generation and
transmission cooperative in the United States, "is aggressively pursuing
diversification of its energy portfolio to include a growing percentage
of hydropower, photovoltaic, bio-fuel, and biomass"
Cooperative Economics as an Alternative to Market Societies
Jessica-Gordon Nembhard in her monograph Collective Courage concludes that:
…cooperatives…use
a sense of solidarity and concern for community to promote economic
alternatives that create economic growth and sustainability. At the same
time, their solidarity and collective action increase productivity and
help stabilize their economic circumstances. Moreover, cooperative
economics is often viewed as a tool or strategy of a larger movement
toward the elimination of economic exploitation and the transition to a
new social order.
Co-operative federalism versus co-operative individualism
A major historical debate in co-operative economics has been between co-operative federalism and co-operative individualism. In an Owenite village of cooperation or a commune,
the residents would be both the producers and consumers of its
products. However, for co-operative enterprise other than communes, the
producers and consumers of its products are two different groups of
people, and usually only one of these groups is given the status of
members (or co-owners).
The differences in goals, purpose, and power between worker and
consumer cooperatives has led to a debate between those who support
consumer co-operatives (known as the Co-operative Federalists) and those who favor worker co-operatives (pejoratively labelled ‘Individualist' co-operativists by the Federalists).
Co-operative federalism
Co-operative
Federalism is the school of thought favouring consumer co-operative
societies. Historically, its proponents have included JTW Mitchell and Charles Gide, as well as Paul Lambert and Beatrice Webb. The co-operative federalists argue that consumers should form co-operative wholesale societies (Co-operative Federations in which all members are co-operators, the best historical example of which being CWS in the United Kingdom),
and that these co-operative wholesale societies should undertake
purchasing farms or factories. They argue that profits (or surpluses)
from these co-operative wholesale societies should be paid as dividends to the member co-operators, rather than to their workers.
Co-operative Individualism
Co-operative
Individualism is the school of thought favouring workers'
co-operatives. The most notable proponents of workers' co-operatives
are, in Britain, the Christian Socialists, and later writers like Joseph Reeves who put this forth as a path to State Socialism. Where the Co-operative Federalists argue for federations in which consumer co-operators federate and receive the monetary dividends, rather, in co-operative wholesale societies the profits (or surpluses) would be paid as dividends to their workers. The Mondragón Co-operatives
in Spain are commonly cited by Co-operative Individualists and a lot of
Co-operative Individualist literature deals with these societies. The
Mondragón Cooperative Corporation has drawn so much attention because in
2010 it was the seventh-largest company in Spain. It consists of about
250 different worker cooperative businesses. The business model they use
includes "extensive integration and solidarity with employees", worker
involvement in policy and committees, a "transparent" wage system, and
"full practice of democratic control". These two schools of thought are not necessarily in opposition, and hybrids of the two positions are possible.
James Warbasse's work, and more recently Johnston Birchall's,
provide perspectives on the breadth of co-operative development
nationally and internationally. Benjamin Ward provided a formal
treatment to begin an evaluation of "market syndicalism." Jaroslav
Vanek wrote a comprehensive work in an attempt to address cooperativism
in economic terms and a "labor-managed economy." David Ellerman began by considering legal philosophic aspects of co-operatives, developing the "labor theory of property."
In 2007 he used the classical economic premise in formulating his
argument deconstructing the myth of capital rights to ownership.
Anna Milford has constructed a detailed theoretical examination of
co-operatives in controlled buyer markets (monopsony), and the
implications for Fair Trade strategies.
Other schools
Socialism and anarchism
Socialists and anarchists, such as anarcho-communists and anarcho-syndicalists,
view society as one big cooperative, and feel that goods produced by
all should be distributed equitably to all members of the society, not
necessarily through a market. All the members of a society are
considered to be both producers and consumers. State socialists tend to favor government administration of the economy, while anarchists and libertarian socialists favor non-governmental coordination, either locally, or through labor unions and worker cooperatives.
Although there is some debate as Bakunin and the collectivists favored
market distribution using currency, collectivizing production, not
consumption. Left libertarians collectivize neither but define their
leftness as inalienable rights to the commons, not collective ownership
of it, thus rejecting Lockean homesteading. See Centre for a stateless society
Utopian socialists feel socialism can be achieved without class struggle and that cooperatives should only include those who voluntarily choose to participate in them. Some participants in the kibbutz movement and other intentional communities fall into this category.
Co-operative commonwealth
In some Co-operative economics literature, the aim is the achievement of a Co-operative Commonwealth; a society based on cooperative and socialist
principles. Co-operative economists – Federalist, Individualist, and
otherwise – have presented the extension of their economic model to its
natural limits as a goal.
This ideal was widely supported in early-twentieth century U.S.
and Canadian leftist circles. This ideal, and the language behind it,
were central to the formation of the Co-operative Commonwealth Federation party in 1932, which became Canada's largest left-wing political party, and continues to this day as the New Democratic Party. They were also important to the economic principles of the Farmer-Labor Party of the United States, particularly in the FLP's Minnesota affiliate,
where advocacy for a Co-operative Commonwealth formed the central theme
of the Party's platform from 1934, until the Minnesota FLP merged with
the state Democratic Party to form the Democratic–Farmer–Labor Party in 1944.
Co-operative Commonwealth ideas were also developed in Great Britain and Ireland from the 1880s by William Morris, which also inspired the guild socialist movement for associative democracy from 1906 right through the 1920s. Guild socialist thinkers included Bertrand Russell, R.H. Tawney and G.D.H. Cole.
Employee ownership
Some economists have argued that economic democracy could be achieved by combining employee ownership on a national scale (including worker cooperatives) within a free market
apparatus. Tom Winters argues that "as with the free market more
generally, it is not free trade itself that creates inequality, it’s how
free trade is used, who benefits from it and who does not."
Cooperative microeconomics
According
to Hervé Moulin, cooperation from a game-theoretic point of view ("in
the economic tradition") is the mutual assistance between egoists. He
distinguishes three modes of such cooperation, which are easily
remembered using the (incomplete) motto of the French Revolution:
liberty: decentralised behaviour, where the collective outcome results from the strategic decisions of selfish agents;
equality: arbitration (by a mechanical formula or benevolent dictator) about actions on the basis of normative principles;
brotherhood: direct agreement between agents after face-to-face bargaining.
These modes are present in every cooperative institution but their virtues are often logically incompatible.
Earth station at the satellite communication facility in Raisting, Bavaria, Germany
Visualization from the Opte Project of the various routes through a portion of the Internet
Telecommunication is the transmission of information by various types of technologies over wire, radio, optical, or other electromagnetic systems. It has its origin in the desire of humans for communication over a distance greater than that feasible with the human voice, but with a similar scale of expediency; thus, slow systems (such as postal mail) are excluded from the field.
The early telecommunication networks were created with copper
wires as the physical medium for signal transmission. For many years,
these networks were used for basic phone services, namely voice and
telegrams. Since the mid-1990s, as the internet has grown in popularity,
voice has been gradually supplanted by data. This soon demonstrated the
limitations of copper in data transmission, prompting the development
of optics.
Etymology
The word telecommunication is a compound of the Greek prefix tele (τῆλε), meaning distant, far off, or afar, and the Latin communicare, meaning to share. Its modern use is adapted from the French, because its written use was recorded in 1904 by the French engineer and novelist Édouard Estaunié. Communication
was first used as an English word in the late 14th century. It comes
from Old French comunicacion (14c., Modern French communication), from
Latin communicationem (nominative communicatio), noun of action from
past participle stem of communicare "to share, divide out; communicate,
impart, inform; join, unite, participate in", literally "to make
common", from communis".
Homing pigeons have occasionally been used throughout history by different cultures. Pigeon post had Persian roots, and was later used by the Romans to aid their military. Frontinus said that Julius Caesar used pigeons as messengers in his conquest of Gaul.
The Greeks also conveyed the names of the victors at the Olympic Games to various cities using homing pigeons. In the early 19th century, the Dutch government used the system in Java and Sumatra. And in 1849, Paul Julius Reuter started a pigeon service to fly stock prices between Aachen and Brussels, a service that operated for a year until the gap in the telegraph link was closed.
In the Middle Ages, chains of beacons
were commonly used on hilltops as a means of relaying a signal. Beacon
chains suffered the drawback that they could only pass a single bit of
information, so the meaning of the message such as "the enemy has been
sighted" had to be agreed upon in advance. One notable instance of their
use was during the Spanish Armada, when a beacon chain relayed a signal from Plymouth to London.
In 1792, Claude Chappe, a French engineer, built the first fixed visual telegraphy system (or semaphore line) between Lille and Paris.
However semaphore suffered from the need for skilled operators and
expensive towers at intervals of ten to thirty kilometres (six to
nineteen miles). As a result of competition from the electrical
telegraph, the last commercial line was abandoned in 1880.
Telegraph and telephone
On 25 July 1837 the first commercial electrical telegraph was demonstrated by English inventor Sir William Fothergill Cooke, and English scientist Sir Charles Wheatstone. Both inventors viewed their device as "an improvement to the [existing] electromagnetic telegraph" not as a new device.
Samuel Morse independently developed a version of the electrical telegraph that he unsuccessfully demonstrated on 2 September 1837. His code was an important advance over Wheatstone's signaling method. The first transatlantic telegraph cable was successfully completed on 27 July 1866, allowing transatlantic telecommunication for the first time.
The conventional telephone was patented by Alexander Bell in 1876. Elisha Gray
also filed a caveat for it in 1876. Gray abandoned his caveat and
because he did not contest Bell's priority, the examiner approved Bell's
patent on 3 March 1876. Gray had filed his caveat for the variable
resistance telephone, but Bell was the first to write down the idea and
the first to test it in a telephone.[88] Antonio Meucci
invented a device that allowed the electrical transmission of voice
over a line nearly thirty years before in 1849, but his device was of
little practical value because it relied on the electrophonic effect requiring users to place the receiver in their mouths to "hear".
The first commercial telephone services were set up by the Bell
Telephone Company in 1878 and 1879 on both sides of the Atlantic in the
cities of New Haven and London.
Radio and television
Starting in 1894, Italian inventor Guglielmo Marconi began developing a wireless communication using the then newly discovered phenomenon of radio waves, showing by 1901 that they could be transmitted across the Atlantic Ocean. This was the start of wireless telegraphy by radio. On 17 December 1902, a transmission from the Marconi station in Glace Bay,
Nova Scotia, Canada, became the world's first radio message to cross
the Atlantic from North America and in 1904 a commercial service was
established to transmit nightly news summaries to subscribing ships,
which could incorporate them into their on-board newspapers.
World War I accelerated the development of radio for military communications. After the war, commercial radio AM broadcasting began in the 1920s and became an important mass medium for entertainment and news. World War II
again accelerated the development of radio for the wartime purposes of
aircraft and land communication, radio navigation and radar. Development of stereo FM broadcasting
of radio took place from the 1930s on-wards in the United States and
displaced AM as the dominant commercial standard by the 1960s, and by
the 1970s in the United Kingdom.
On 25 March 1925, John Logie Baird was able to demonstrate the transmission of moving pictures at the London department store Selfridges. Baird's device relied upon the Nipkow disk and thus became known as the mechanical television. It formed the basis of experimental broadcasts done by the British Broadcasting Corporation beginning 30 September 1929. However, for most of the twentieth-century televisions depended upon the cathode ray tube invented by Karl Braun. The first version of such a television to show promise was produced by Philo Farnsworth and demonstrated to his family on 7 September 1927. After World War II,
the experiments in television that had been interrupted were resumed,
and it also became an important home entertainment broadcast medium.
The simplest vacuum tube, the diode invented in 1904 by John Ambrose Fleming,
contains only a heated electron-emitting cathode and an anode.
Electrons can only flow in one direction through the device—from the
cathode to the anode. Adding one or more control grids within the tube allows the current between the cathode and anode to be controlled by the voltage on the grid or grids.
These devices became a key component of electronic circuits for the
first half of the twentieth century. They were crucial to the
development of radio, television, radar, sound recording and reproduction, long-distance telephone networks, and analogue and early digital computers. Although some applications had used earlier technologies such as the spark gap transmitter for radio or mechanical computers
for computing, it was the invention of the thermionic vacuum tube that
made these technologies widespread and practical, and created the
discipline of electronics.
In the 1940s the invention of semiconductor devices made it possible to produce solid-state
devices, which are smaller, more efficient, reliable and durable, and
cheaper than thermionic tubes. From the mid-1960s, thermionic tubes were
then being replaced with the transistor. Thermionic tubes still have some applications for certain high-frequency amplifiers.
On 11 September 1940, George Stibitz transmitted problems for his Complex Number Calculator in New York using a teletype, and received the computed results back at Dartmouth College in New Hampshire. This configuration of a centralized computer (mainframe) with remote dumb terminals remained popular well into the 1970s. However, already in the 1960s, researchers started to investigate packet switching, a technology that sends a message in portions to its destination asynchronously without passing it through a centralized mainframe. A four-nodenetwork emerged on 5 December 1969, constituting the beginnings of the ARPANET, which by 1981 had grown to 213 nodes. ARPANET eventually merged with other networks to form the Internet. While Internet development was a focus of the Internet Engineering Task Force (IETF) who published a series of Request for Comments documents, other networking advancements occurred in industrial laboratories, such as the local area network (LAN) developments of Ethernet (1983) and Token Ring (1984).
Practical digital mediadistribution and streaming were made possible by advances in data compression, due to the impractically high memory, storage and bandwidth requirements of uncompressed media. The most important compression technique is the discrete cosine transform (DCT), a lossy compression algorithm that was first proposed as an image compression technique in 1972. Realization and demonstration, on 29 October 2001, of the first digital cinema transmission by satellite in Europe of a feature film by Bernard Pauchon, Alain Lorentz, Raymond Melwig and Philippe Binant.
Growth of transmission capacity
The effective capacity to exchange information worldwide through two-way telecommunication networks grew from 281 petabytes (pB) of optimally compressed information in 1986, to 471 pB in 1993, to 2.2 exabytes (eB) in 2000, and to 65 eB in 2007.
This is the informational equivalent of two newspaper pages per person
per day in 1986, and six entire newspapers per person per day by 2007.
Given this growth, telecommunications play an increasingly important
role in the world economy and the global telecommunications industry was
about a US$4.7 trillion sector in 2012. The service revenue of the global telecommunications industry was
estimated to be $1.5 trillion in 2010, corresponding to 2.4% of the
world's gross domestic product (GDP).
Technical concepts
Modern
telecommunication is founded on a series of key concepts that
experienced progressive development and refinement in a period of well
over a century.
Basic elements
Telecommunication
technologies may primarily be divided into wired and wireless methods.
Overall though, a basic telecommunication system consists of three main
parts that are always present in some form or another:
A receiver that takes the signal from the channel and converts it back into usable information for the recipient.
For example, in a radio broadcasting station the station's large power amplifier is the transmitter; and the broadcasting antenna
is the interface between the power amplifier and the "free space
channel". The free space channel is the transmission medium; and the
receiver's antenna is the interface between the free space channel and
the receiver. Next, the radio receiver is the destination of the radio signal, and this is where it is converted from electricity to sound for people to listen to.
Sometimes, telecommunication systems are "duplex" (two-way systems) with a single box of electronics working as both the transmitter and a receiver, or a transceiver. For example, a cellular telephone is a transceiver.
The transmission electronics and the receiver electronics within a
transceiver are actually quite independent of each other. This can be
readily explained by the fact that radio transmitters contain power
amplifiers that operate with electrical powers measured in watts or
kilowatts, but radio receivers deal with radio powers that are measured
in the microwatts or nanowatts.
Hence, transceivers have to be carefully designed and built to isolate
their high-power circuitry and their low-power circuitry from each
other, as to not cause interference.
Telecommunication over fixed lines is called point-to-point communication because it is between one transmitter and one receiver. Telecommunication through radio broadcasts is called broadcast communication because it is between one powerful transmitter and numerous low-power but sensitive radio receivers.
Telecommunications in which multiple transmitters and multiple
receivers have been designed to cooperate and to share the same physical
channel are called multiplex systems.
The sharing of physical channels using multiplexing often gives very
large reductions in costs. Multiplexed systems are laid out in
telecommunication networks, and the multiplexed signals are switched at
nodes through to the correct destination terminal receiver.
Analog versus digital communications
Communications signals can be sent either by analog signals or digital signals. There are analog communication systems and digital communication
systems. For an analog signal, the signal is varied continuously with
respect to the information. In a digital signal, the information is
encoded as a set of discrete values (for example, a set of ones and
zeros). During the propagation and reception, the information contained in analog signals will inevitably be degraded by undesirable physical noise.
Commonly, the noise in a communication system can be expressed as
adding or subtracting from the desirable signal in a completely random way. This form of noise is called additive noise, with the understanding that the noise can be negative or positive at different instants of time.
Unless the additive noise disturbance exceeds a certain
threshold, the information contained in digital signals will remain
intact. Their resistance to noise represents a key advantage of digital
signals over analog signals. However, digital systems fail
catastrophically when the noise exceeds the systems ability to
autocorrect. On the other hand, analog systems fail gracefully. That
is, as noise increases the signal becomes progressively more degraded,
but still usable. Also, digital transmission of continuous data unavoidably adds quantization noise
to the output. This can be reduced, but not entirely eliminated, only
at the expense of increasing the channel bandwidth requirement.
Communication channels
The
term "channel" has two different meanings. In one meaning, a channel is
the physical medium that carries a signal between the transmitter and
the receiver. Examples of this include the atmosphere for sound communications, glass optical fibers for some kinds of optical communications, coaxial cables for communications by way of the voltages and electric currents in them, and free space for communications using visible light, infrared waves, ultraviolet light, and radio waves.
Coaxial cable types are classified by RG type or "radio guide",
terminology derived from World War II. The various RG designations are
used to classify the specific signal transmission applications.
This last channel is called the "free space channel". The sending of
radio waves from one place to another has nothing to do with the
presence or absence of an atmosphere between the two. Radio waves travel
through a perfect vacuum just as easily as they travel through air, fog, clouds, or any other kind of gas.
The other meaning of the term "channel" in telecommunications is seen in the phrase communications channel,
which is a subdivision of a transmission medium so that it can be used
to send multiple streams of information simultaneously. For example, one
radio station can broadcast radio waves into free space at frequencies
in the neighborhood of 94.5 MHz
(megahertz) while another radio station can simultaneously broadcast
radio waves at frequencies in the neighborhood of 96.1 MHz. Each radio
station would transmit radio waves over a frequency bandwidth of about 180 kHz (kilohertz), centered at frequencies such as the above, which are called the "carrier frequencies".
Each station in this example is separated from its adjacent stations by
200 kHz, and the difference between 200 kHz and 180 kHz (20 kHz) is an
engineering allowance for the imperfections in the communication system.
In the example above, the "free space channel" has been divided into communications channels according to frequencies,
and each channel is assigned a separate frequency bandwidth in which to
broadcast radio waves. This system of dividing the medium into channels
according to frequency is called "frequency-division multiplexing". Another term for the same concept is "wavelength-division multiplexing", which is more commonly used in optical communications when multiple transmitters share the same physical medium.
Another way of dividing a communications medium into channels is
to allocate each sender a recurring segment of time (a "time slot", for
example, 20 milliseconds
out of each second), and to allow each sender to send messages only
within its own time slot. This method of dividing the medium into
communication channels is called "time-division multiplexing" (TDM),
and is used in optical fibre communication. Some radio communication
systems use TDM within an allocated FDM channel. Hence, these systems
use a hybrid of TDM and FDM.
Modulation
The shaping of a signal to convey information is known as modulation. Modulation can be used to represent a digital message as an analog waveform. This is commonly called "keying"—a term derived from the older use of Morse Code in telecommunications—and several keying techniques exist (these include phase-shift keying, frequency-shift keying, and amplitude-shift keying). The "Bluetooth" system, for example, uses phase-shift keying to exchange information between various devices. In addition, there are combinations of phase-shift keying and
amplitude-shift keying which is called (in the jargon of the field) "quadrature amplitude modulation" (QAM) that are used in high-capacity digital radio communication systems.
Modulation can also be used to transmit the information of
low-frequency analog signals at higher frequencies. This is helpful
because low-frequency analog signals cannot be effectively transmitted
over free space. Hence the information from a low-frequency analog
signal must be impressed into a higher-frequency signal (known as the "carrier wave") before transmission. There are several different modulation schemes available to achieve this [two of the most basic being amplitude modulation (AM) and frequency modulation
(FM)]. An example of this process is a disc jockey's voice being
impressed into a 96 MHz carrier wave using frequency modulation (the
voice would then be received on a radio as the channel "96 FM"). In addition, modulation has the advantage that it may use frequency division multiplexing (FDM).
Telecommunication networks
A telecommunications network is a collection of transmitters, receivers, and communications channels that send messages to one another. Some digital communications networks contain one or more routers that work together to transmit information to the correct user. An analog communications network consists of one or more switches that establish a connection between two or more users. For both types of networks, repeaters may be necessary to amplify or recreate the signal when it is being transmitted over long distances. This is to combat attenuation that can render the signal indistinguishable from the noise.
Another advantage of digital systems over analog is that their output is
easier to store in memory, i.e. two voltage states (high and low) are
easier to store than a continuous range of states.
Societal impact
Telecommunication has a significant social, cultural and economic impact on modern society. In 2008, estimates placed the telecommunication industry's revenue at US$4.7 trillion or just under three percent of the gross world product (official exchange rate). Several following sections discuss the impact of telecommunication on society.
Microeconomics
On the microeconomic
scale, companies have used telecommunications to help build global
business empires. This is self-evident in the case of online retailer Amazon.com but, according to academic Edward Lenert, even the conventional retailer Walmart has benefited from better telecommunication infrastructure compared to its competitors.
In cities throughout the world, home owners use their telephones to
order and arrange a variety of home services ranging from pizza
deliveries to electricians. Even relatively poor communities have been
noted to use telecommunication to their advantage. In Bangladesh's Narsingdi District, isolated villagers use cellular phones to speak directly to wholesalers and arrange a better price for their goods. In Côte d'Ivoire, coffee growers share mobile phones to follow hourly variations in coffee prices and sell at the best price.
Macroeconomics
On the macroeconomic scale, Lars-Hendrik Röller and Leonard Waverman suggested a causal link between good telecommunication infrastructure and economic growth. Few dispute the existence of a correlation although some argue it is wrong to view the relationship as causal.
Because of the economic benefits of good telecommunication
infrastructure, there is increasing worry about the inequitable access
to telecommunication services amongst various countries of the
world—this is known as the digital divide. A 2003 survey by the International Telecommunication Union
(ITU) revealed that roughly a third of countries have fewer than one
mobile subscription for every 20 people and one-third of countries have
fewer than one land-line telephone subscription for every 20 people. In
terms of Internet access, roughly half of all countries have fewer than
one out of 20 people with Internet access. From this information, as
well as educational data, the ITU was able to compile an index that
measures the overall ability of citizens to access and use information
and communication technologies. Using this measure, Sweden, Denmark and Iceland received the highest ranking while the African countries Nigeria, Burkina Faso and Mali received the lowest.
Social impact
Telecommunication
has played a significant role in social relationships. Nevertheless,
devices like the telephone system were originally advertised with an
emphasis on the practical dimensions of the device (such as the ability
to conduct business or order home services) as opposed to the social
dimensions. It was not until the late 1920s and 1930s that the social
dimensions of the device became a prominent theme in telephone
advertisements. New promotions started appealing to consumers' emotions,
stressing the importance of social conversations and staying connected
to family and friends.
Since then the role that telecommunications has played in social
relations has become increasingly important. In recent years, the
popularity of social networking sites
has increased dramatically. These sites allow users to communicate with
each other as well as post photographs, events and profiles for others
to see. The profiles can list a person's age, interests, sexual
preference and relationship status. In this way, these sites can play
important role in everything from organising social engagements to courtship.
Prior to social networking sites, technologies like short message service (SMS) and the telephone also had a significant impact on social interactions. In 2000, market research group Ipsos MORI
reported that 81% of 15- to 24-year-old SMS users in the United Kingdom
had used the service to coordinate social arrangements and 42% to
flirt.
Entertainment, news, and advertising
News source preference of Americans in 2006.
Local TV
59%
National TV
47%
Radio
44%
Local paper
38%
Internet
23%
National paper
12%
Survey permitted multiple answers
In cultural terms, telecommunication has increased the public's
ability to access music and film. With television, people can watch
films they have not seen before in their own home without having to
travel to the video store or cinema. With radio and the Internet, people
can listen to music they have not heard before without having to travel
to the music store.
Telecommunication has also transformed the way people receive
their news. A 2006 survey (right table) of slightly more than 3,000
Americans by the non-profit Pew Internet and American Life Project in
the United States the majority specified television or radio over
newspapers.
Telecommunication has had an equally significant impact on advertising. TNS Media Intelligence
reported that in 2007, 58% of advertising expenditure in the United
States was spent on media that depend upon telecommunication.
Advertising expenditures in US in 2007
Medium
Spending
Internet
7.6%
$11.31 billion
Radio
7.2%
$10.69 billion
Cable TV
12.1%
$18.02 billion
Syndicated TV
2.8%
$4.17 billion
Spot TV
11.3%
$16.82 billion
Network TV
17.1%
$25.42 billion
Newspaper
18.9%
$28.22 billion
Magazine
20.4%
$30.33 billion
Outdoor
2.7%
$4.02 billion
Total
100%
$149 billion
Regulation
Many
countries have enacted legislation which conforms to the International
Telecommunication Regulations established by the International
Telecommunication Union (ITU), which is the "leading UN agency for
information and communication technology issues".
In 1947, at the Atlantic City Conference, the ITU decided to "afford
international protection to all frequencies registered in a new
international frequency list and used in conformity with the Radio
Regulation". According to the ITU's Radio Regulations adopted in Atlantic City, all frequencies referenced in the International Frequency Registration Board, examined by the board and registered on the International Frequency List "shall have the right to international protection from harmful interference".
From a global perspective, there have been political debates and
legislation regarding the management of telecommunication and
broadcasting. The history of broadcasting
discusses some debates in relation to balancing conventional
communication such as printing and telecommunication such as radio
broadcasting. The onset of World War II brought on the first explosion of international broadcasting propaganda.
Countries, their governments, insurgents, terrorists, and militiamen
have all used telecommunication and broadcasting techniques to promote
propaganda.
Patriotic propaganda for political movements and colonization started
the mid-1930s. In 1936, the BBC broadcast propaganda to the Arab World
to partly counter similar broadcasts from Italy, which also had colonial
interests in North Africa.
Modern insurgents, such as those in the latest Iraq War,
often use intimidating telephone calls, SMSs and the distribution of
sophisticated videos of an attack on coalition troops within hours of
the operation. "The Sunni insurgents even have their own television
station, Al-Zawraa, which while banned by the Iraqi government, still broadcasts from Erbil, Iraqi Kurdistan, even as coalition pressure has forced it to switch satellite hosts several times."
According to data collected by Gartner and Ars Technica sales of main consumer's telecommunication equipment worldwide in millions of units was:
Equipment / year
1975
1980
1985
1990
1994
1996
1998
2000
2002
2004
2006
2008
Computers
0
1
8
20
40
75
100
135
130
175
230
280
Cell phones
N/A
N/A
N/A
N/A
N/A
N/A
180
400
420
660
830
1000
Telephone
Optical fiber provides cheaper bandwidth for long-distance communication.
In a telephone network, the caller is connected to the person to whom they wish to talk by switches at various telephone exchanges.
The switches form an electrical connection between the two users and
the setting of these switches is determined electronically when the
caller dials the number. Once the connection is made, the caller's voice is transformed to an electrical signal using a small microphone in the caller's handset.
This electrical signal is then sent through the network to the user at
the other end where it is transformed back into sound by a small speaker in that person's handset.
As of 2015, the landline telephones in most residential homes are
analog—that is, the speaker's voice directly determines the signal's
voltage.
Although short-distance calls may be handled from end-to-end as analog
signals, increasingly telephone service providers are transparently
converting the signals to digital signals for transmission. The
advantage of this is that digitized voice data can travel side by side
with data from the Internet and can be perfectly reproduced in
long-distance communication (as opposed to analog signals that are
inevitably impacted by noise).
Mobile phones have had a significant impact on telephone
networks. Mobile phone subscriptions now outnumber fixed-line
subscriptions in many markets. Sales of mobile phones in 2005 totalled
816.6 million with that figure being almost equally shared amongst the
markets of Asia/Pacific (204 m), Western Europe (164 m), CEMEA (Central
Europe, the Middle East and Africa) (153.5 m), North America (148 m) and
Latin America (102 m). In terms of new subscriptions over the five years from 1999, Africa has outpaced other markets with 58.2% growth. Increasingly these phones are being serviced by systems where the voice content is transmitted digitally such as GSM or W-CDMA with many markets choosing to deprecate analog systems such as AMPS.
There have also been dramatic changes in telephone communication behind the scenes. Starting with the operation of TAT-8
in 1988, the 1990s saw the widespread adoption of systems based on
optical fibers. The benefit of communicating with optical fibers is that
they offer a drastic increase in data capacity. TAT-8 itself was able
to carry 10 times as many telephone calls as the last copper cable laid
at that time and today's optical fibre cables are able to carry 25 times
as many telephone calls as TAT-8.
This increase in data capacity is due to several factors: First,
optical fibres are physically much smaller than competing technologies.
Second, they do not suffer from crosstalk which means several hundred of them can be easily bundled together in a single cable. Lastly, improvements in multiplexing have led to an exponential growth in the data capacity of a single fibre.
Assisting communication across many modern optical fibre networks is a protocol known as Asynchronous Transfer Mode (ATM). The ATM protocol allows for the side-by-side data transmission
mentioned in the second paragraph. It is suitable for public telephone
networks because it establishes a pathway for data through the network
and associates a traffic contract
with that pathway. The traffic contract is essentially an agreement
between the client and the network about how the network is to handle
the data; if the network cannot meet the conditions of the traffic
contract it does not accept the connection. This is important because
telephone calls can negotiate a contract so as to guarantee themselves a
constant bit rate, something that will ensure a caller's voice is not
delayed in parts or cut off completely. There are competitors to ATM, such as Multiprotocol Label Switching (MPLS), that perform a similar task and are expected to supplant ATM in the future.
In a broadcast system, the central high-powered broadcast tower transmits a high-frequency electromagnetic wave
to numerous low-powered receivers. The high-frequency wave sent by the
tower is modulated with a signal containing visual or audio information.
The receiver is then tuned so as to pick up the high-frequency wave and a demodulator
is used to retrieve the signal containing the visual or audio
information. The broadcast signal can be either analog (signal is varied
continuously with respect to the information) or digital (information
is encoded as a set of discrete values).
The broadcast media industry
is at a critical turning point in its development, with many countries
moving from analog to digital broadcasts. This move is made possible by
the production of cheaper, faster and more capable integrated circuits.
The chief advantage of digital broadcasts is that they prevent a number
of complaints common to traditional analog broadcasts. For television,
this includes the elimination of problems such as snowy pictures, ghosting
and other distortion. These occur because of the nature of analog
transmission, which means that perturbations due to noise will be
evident in the final output. Digital transmission overcomes this problem
because digital signals are reduced to discrete values upon reception
and hence small perturbations do not affect the final output. In a
simplified example, if a binary message 1011 was transmitted with signal
amplitudes [1.0 0.0 1.0 1.0] and received with signal amplitudes [0.9
0.2 1.1 0.9] it would still decode to the binary message 1011— a perfect
reproduction of what was sent. From this example, a problem with
digital transmissions can also be seen in that if the noise is great
enough it can significantly alter the decoded message. Using forward error correction
a receiver can correct a handful of bit errors in the resulting message
but too much noise will lead to incomprehensible output and hence a
breakdown of the transmission.
In digital television broadcasting, there are three competing standards that are likely to be adopted worldwide. These are the ATSC, DVB and ISDB standards; the adoption of these standards thus far is presented in the captioned map. All three standards use MPEG-2 for video compression. ATSC uses Dolby Digital AC-3 for audio compression, ISDB uses Advanced Audio Coding (MPEG-2 Part 7) and DVB has no standard for audio compression but typically uses MPEG-1 Part 3 Layer 2.[118][119]
The choice of modulation also varies between the schemes. In digital
audio broadcasting, standards are much more unified with practically all
countries choosing to adopt the Digital Audio Broadcasting standard (also known as the Eureka 147 standard). The exception is the United States which has chosen to adopt HD Radio. HD Radio, unlike Eureka 147, is based upon a transmission method known as in-band on-channel transmission that allows digital information to "piggyback" on normal AM or FM analog transmissions.
However, despite the pending switch to digital, analog television
remains being transmitted in most countries. An exception is the United
States that ended analog television transmission (by all but the very
low-power TV stations) on 12 June 2009
after twice delaying the switchover deadline. Kenya also ended analog
television transmission in December 2014 after multiple delays. For
analog television, there were three standards in use for broadcasting
color TV (see a map on adoption here). These are known as PAL (German designed), NTSC (American designed), and SECAM
(French-designed). For analog radio, the switch to digital radio is
made more difficult by the higher cost of digital receivers. The choice of modulation for analog radio is typically between amplitude (AM) or frequency modulation (FM). To achieve stereo playback, an amplitude modulated subcarrier is used for stereo FM, and quadrature amplitude modulation is used for stereo AM or C-QUAM.
The Internet is a worldwide network of computers and computer networks that communicate with each other using the Internet Protocol (IP). Any computer on the Internet has a unique IP address
that can be used by other computers to route information to it. Hence,
any computer on the Internet can send a message to any other computer
using its IP address. These messages carry with them the originating
computer's IP address allowing for two-way communication. The Internet
is thus an exchange of messages between computers.
It is estimated that 51% of the information flowing through
two-way telecommunications networks in the year 2000 were flowing
through the Internet (most of the rest (42%) through the landline telephone).
By 2007 the Internet clearly dominated and captured 97% of all the
information in telecommunication networks (most of the rest (2%) through
mobile phones). As of 2008,
an estimated 21.9% of the world population has access to the Internet
with the highest access rates (measured as a percentage of the
population) in North America (73.6%), Oceania/Australia (59.5%) and
Europe (48.1%). In terms of broadband access, Iceland (26.7%), South Korea (25.4%) and the Netherlands (25.3%) led the world.
The Internet works in part because of protocols
that govern how the computers and routers communicate with each other.
The nature of computer network communication lends itself to a layered
approach where individual protocols in the protocol stack run
more-or-less independently of other protocols. This allows lower-level
protocols to be customized for the network situation while not changing
the way higher-level protocols operate. A practical example of why this
is important is because it allows an Internet browser to run the same code regardless of whether the computer it is running on is connected to the Internet through an Ethernet or Wi-Fi
connection. Protocols are often talked about in terms of their place in
the OSI reference model (pictured on the right), which emerged in 1983
as the first step in an unsuccessful attempt to build a universally
adopted networking protocol suite.
For the Internet, the physical medium and data link protocol can
vary several times as packets traverse the globe. This is because the
Internet places no constraints on what physical medium or data link
protocol is used. This leads to the adoption of media and protocols that
best suit the local network situation. In practice, most
intercontinental communication will use the Asynchronous Transfer Mode
(ATM) protocol (or a modern equivalent) on top of optic fiber. This is
because for most intercontinental communication the Internet shares the
same infrastructure as the public switched telephone network.
At the network layer, things become standardized with the Internet Protocol (IP) being adopted for logical addressing. For the World Wide Web, these "IP addresses" are derived from the human-readable form using the Domain Name System
(e.g. 72.14.207.99 is derived from www.google.com). At the moment, the
most widely used version of the Internet Protocol is version four but a
move to version six is imminent.
At the transport layer, most communication adopts either the Transmission Control Protocol (TCP) or the User Datagram Protocol
(UDP). TCP is used when it is essential every message sent is received
by the other computer whereas UDP is used when it is merely desirable.
With TCP, packets are retransmitted if they are lost and placed in order
before they are presented to higher layers. With UDP, packets are not
ordered nor retransmitted if lost. Both TCP and UDP packets carry port numbers with them to specify what application or process the packet should be handled by. Because certain application-level protocols use certain ports,
network administrators can manipulate traffic to suit particular
requirements. Examples are to restrict Internet access by blocking the
traffic destined for a particular port or to affect the performance of
certain applications by assigning priority.
Above the transport layer, there are certain protocols that are
sometimes used and loosely fit in the session and presentation layers,
most notably the Secure Sockets Layer (SSL) and Transport Layer Security (TLS) protocols. These protocols ensure that data transferred between two parties remains completely confidential. Finally, at the application layer, are many of the protocols Internet users would be familiar with such as HTTP (web browsing), POP3 (e-mail), FTP (file transfer), IRC (Internet chat), BitTorrent (file sharing) and XMPP (instant messaging).
Voice over Internet Protocol (VoIP) allows data packets to be used for synchronous
voice communications. The data packets are marked as voice type packets
and can be prioritized by the network administrators so that the
real-time, synchronous conversation is less subject to contention with
other types of data traffic which can be delayed (i.e. file transfer or
email) or buffered in advance (i.e. audio and video) without detriment.
That prioritization is fine when the network has sufficient capacity for
all the VoIP calls taking place at the same time and the network is
enabled for prioritization i.e. a private corporate-style network, but
the Internet is not generally managed in this way and so there can be a
big difference in the quality of VoIP calls over a private network and
over the public Internet.
Local area networks and wide area networks
Despite the growth of the Internet, the characteristics of local area networks
(LANs)—computer networks that do not extend beyond a few
kilometers—remain distinct. This is because networks on this scale do
not require all the features associated with larger networks and are
often more cost-effective and efficient without them. When they are not
connected with the Internet, they also have the advantages of privacy
and security. However, purposefully lacking a direct connection to the
Internet does not provide assured protection from hackers, military
forces, or economic powers. These threats exist if there are any methods
for connecting remotely to the LAN.
Wide area networks
(WANs) are private computer networks that may extend for thousands of
kilometers. Once again, some of their advantages include privacy and
security. Prime users of private LANs and WANs include armed forces and
intelligence agencies that must keep their information secure and
secret.
In the mid-1980s, several sets of communication protocols emerged
to fill the gaps between the data-link layer and the application layer
of the OSI reference model. These included AppleTalk, IPX, and NetBIOS with the dominant protocol set during the early 1990s being IPX due to its popularity with MS-DOS users. TCP/IP existed at this point, but it was typically only used by large government and research facilities.
As the Internet grew in popularity and its traffic was required
to be routed into private networks, the TCP/IP protocols replaced
existing local area network technologies. Additional technologies, such
as DHCP,
allowed TCP/IP-based computers to self-configure in the network. Such
functions also existed in the AppleTalk/ IPX/ NetBIOS protocol sets.
Whereas Asynchronous Transfer Mode (ATM) or Multiprotocol Label
Switching (MPLS) are typical data-link protocols for larger networks
such as WANs; Ethernet and Token Ring are typical data-link protocols
for LANs. These protocols differ from the former protocols in that they
are simpler, e.g., they omit features such as quality of service guarantees, and offer medium access control. Both of these differences allow for more economical systems.
Despite the modest popularity of Token Ring in the 1980s and
1990s, virtually all LANs now use either wired or wireless Ethernet
facilities. At the physical layer, most wired Ethernet implementations
use copper twisted-pair cables (including the common 10BASE-T
networks). However, some early implementations used heavier coaxial
cables and some recent implementations (especially high-speed ones) use
optical fibers. When optic fibers are used, the distinction must be made between multimode fibers and single-mode fibers. Multimode fibers
can be thought of as thicker optical fibers that are cheaper to
manufacture devices for, but that suffer from less usable bandwidth and
worse attenuation—implying poorer long-distance performance.
