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Long-range forecasting for telecommunications
Long-range forecasting for telecommunications The role of systems analysis
Terence Bates
methods Three forecasting used cations
demand
examined.
research
Successful
of each
technique
validity
of a number
The
author
he
used
valid. has
in
The
technique for
market
innovation place
Unit,
The
of systems with
conditions
Science
of
and
for
the
the author was Policy
University UK.
Operational
Research
He
Research
of is
Sussex, now
Scientist,
Regional
Thames
Authority,
London.
contacted
at
Haversham,
an
the areas
of new services.
Brighton, East
which explicitly
diffusion,
At the time of writing the
the
research
together
acceptability
with
whether past
of its use within
technical
on the
of concepts.
the ‘structure’
described,
outline
depends
developed
modelling is
are
application
questions
concepts were
long-range
of
in telecommuni-
25 Milton
He
Health may
Brookfield Keynes
an North be Rd.
MK19
7AF. UK. The research described in this article was partly funded by the British Post Office’s Long Range Intelligence Division. The author wishes to thank John Clark and Rav Curnow of the Science Policy Research Unit for their helpful comments.
’ At a recent meeting of the Royal Society, ‘Telecommunications in the 1980s and After’, Sir Edward Fennessy. deputy chairman of the British Post Office director of and managing telecommunications, London, argued that continued on page 34
TELECOMMUNICATIONS
The Science Policy Research Unit has been under contract to the British Post Office’s Long Range Intelligence Division to review past methods of research, used to assess the demand for new telecommunications services and to suggest further research. When reviewing worldwide long-range telecommunications forecasting one can identify three major techniques which have been used: data-base techniques; mathematical modelling; and small-scale psychological studies. Yet on close examination all techniques are liable to fail. Data-base techniques can be used to provide projected statistics for the growth of telecommunications services. For example, in order to project the demand for satellite telephone links, one can carry out statistical methods of fitting the ‘best line’ through suitable chosen time series of the number of international telephone conversations per year for the past five years. The analyst, after feeding the data through a computer package, will normally decide that the curve is exponential and supply the decision maker with projections of international telephone conversations per year until the end of the century. The statistical package has really told the analyst which curve best fits the time series and that is all. Such extrapolation of fitted curves or lines can be dangerous, because it can mislead and cause financial loss. However, in retrospect, expansion of telecommunication networks may very well track a known curve, because the policy makers have chosen to expand the system at that rate. Presently there is great talk worldwide of the boom in international calls.’ Yet there must be some point in this expansion where the market for international traffic becomes saturated, and such data-based techniques do not find this point. It can be said that data-based techniques do not require the analyst to understand the telecommunications system but only require the analyst and the decision maker to believe the results. Such research can be deemed forecasting without structure.
Substitution and interaction The second technique used for demand forecasting, mathematical
POLICY
March 1978
33
Long-rangeforecastingfortelecommunications
continuedfrompage
33
with continued exponential growth of worldwide installations telephone international traffic would grow by 18.5% per year. * Communications Studies Group, UK, Long Range Research Report 3. 3 One can postulate that the videophone, if it ever took off, would have an adverse effect on conventional telephone and mail services. ’ Op cit. Ref 2; Roger Pye and Edervn ‘Teleconferencing: is video Williams, valuable or is audio adequate?‘, Telecommunications Policy. Vol 1, No 3, June 1977. pp 230-241.
34
modelling, has been used in two areas: substitution, and interaction of communications services. The concept of substitution is widely used by many telecommunications analysts: electronic mail substitutes conventional mail, teleconferencing substitutes travel, electronic fund transfer substitutes conventional transactions. In order to calculate the demand for any one of these services, the demand for the conventional service can be used to map over to the demand for the new service, by direct substitution. This simplistic substitution idea ignores the basic law of economics, that cost controls demand. The concept of ‘substitution’ has been widely used by the Communications Studies Group, University College, London2 They argue that if the substitution is cost-effective, then such substitution is likely to take place. In work which they carried out for the British Post Office in the area of longdistance travel versus telecommunications, they found in general that telecommunications was more cost-effective than long-distance travel. This type of research is satisfactory, providing that the substitution is direct, and that there are no side-effects. However, to many people a day away from the office is preferable to a day at the office. (Would you sacrifice your next conference for a teleconference substitute?) The concept of substitution in telecommunications can be dangerous, since no telecommunications service directly substitutes another service.. The telecommunications analyst should be more concerned with the side-effects of ‘substitution’ than with the assumption that the concept is valid, and assessing the demand for new services on that premise. A structured list of the advantages and disadvantages of one service with respect to another should be produced when considering the substitution potential of telecommunications services. In the case of long-distance travel versus telecommunications the Communications Studies Group recognized the disadvantages to the user of having to pay for long-distance travel, loss of working time, subsistence allowances and telecommunications tariff charges, but completely ignored advantages inherent in either communications mode. Advantages of travel include relaxation, getting away from the office norms, and overnight stops, to name but a few. There seem to be few social advantages or benefits in the use of teleconferencing. If quantitative methods were to have been used, cost-benefit analysis should have been the chosen method since clearly there are social costs and benefits as well as hard costs. Mathematical models have also been used in long-range telecommunications forecasting to study the interaction of one service with another. Such models use the concept of substitution and crosselasticities of services3 Although mathematical models allow manipulation of sets of key variables to answer key questions, the realization of constructing a reliable mathematical model to look at the interaction of competing services leaves a lot to be desired. In building a mathematical model, three major phases have to be carried out: identification of real world structural features; calibration of a structural model, from real world data; and validation. Within long-range forecasting validation can be difficult; this in turn requires that the analyst has taken a broad approach to the problem and has not ignored the key features, which if left out of the analysis will cause distorted results. The final area of long-range research has been carried out in the area of small-scale psychological studies.4 These studies were set up TELECOMMUNICATIONS
POLICY March
1978
Long-rangeforecastingfor telecommunications
to examine any impediments that the use of the telecommunication medium, as a ‘substitute’ for face-to-face meetings, could cause. This research was not directly policy-related and does not give rise to results which could not have been gained by the use of common sense.5 One can view the future as a network of paths: when a particular technical option is chosen, a particular path is taken. Along some paths lie financially successful services and along others lie potentially financially unsuccessful services. A telecommunications analyst can evaluate the possible future by two distinct types of research: by jumping to nodal points to evaluate whether possible new services or states are ‘good’ or ‘evil’; or by scenario analysis of possible new developments, planning decisions and routes that can be taken to arrive at a given node. Clearly new techniques and methodologies are required to assist the decision maker in taking the right route into a successful future. In long-range forecasting the importance of the concept of holism should not be underestimated. In any problem solving, reductionist techniques are used. In the natural sciences laboratory experiments can be set up, and a number of experiments can be carried out sequentially, searching through a number of possibilities that could cause a response to given stimuli. In the social sciences, systems are large and highly interconnected. The telecommunications analyst runs the risk, when conducting field trials, that the results will be affected by the experimental conditions. In the natural sciences a particular experiment may be repeated a number of times on similar pieces of ‘matter’. In the social sciences the matter consists of human beings, and it should be noted that two human beings are not necessarily alike. The real world is diverse, and consists of many par .s. Any analysis must be carried out on an aggregated level, or will otherwise lack structure, and the results gained will be meaningless. In the remaining part of this paper, three different structured representations of key factors that will play a role in future demand for telecommunication services will be considered.
The holistic model
5 For
the Communications example under Studies Group observed experimental conditions that a person who had a very weak case in a bargaining situation was found to increase his chance of success in convincing another person if the discussion was over the telephone.
TELECOMMUNICATIONS
The telecommunications decision maker or analyst must recognize four distinct but partially interrelated areas that will affect future telecommunication services. These are: user needs; user constraints; technological developments; and technical constraints. One can argue that individuals or enterprises have a basic need to communicate information. This ‘need’ may be latent or already observable at present. In the case for electronic funds transfer one can identify the need for passing financial information from distant locations since this is already in practice. In the case for a telephone network, it is clear that a telephone call does not necessarily substitute for a face-to-face meeting. The user also places constraints on the service, in the form of cost, quality, accessibility and general ergonomics. These micro-user constraints control the demand for a given service. The role of a PTT should be to make available to as many users as possible any service with statutory minimum quality, accessibility and general ergonomic parameters subject to just making a profit. The telecommunications decision maker or analyst must grapple with these key variables when planning a new service. In long-
POLICY March 1978
Long-rangeforecastingforteIecommunications
range forecasting one must ask whether user needs or constraints will change in the next ten to thirty years. The answer is probably that they will not change significantly. Users have a ‘basic’ need to communicate; this need may be latent (non-observable) or observable. The need to communicate will not change, but in some situations the communication mode (eg transported hard copy) may be replaced by electronic transmission, given that the conditions for ‘substitution’ are favourable. The driving forces which will bring about favourable ‘substitution’ are in part technology-related. The area of technological developments divides into hardware and software developments. There have been a number of significant technological advances in recent years in the areas of transmission medium and ‘processing’ devices.6 A number of software techniques for making better use of equipment have been known for several years, including time division multiplexing, frequency division multiplexing, pulse code modulation, time division multiple access, and code division multiple access. The falling price of processing equipment has brought about and will bring about the introduction of these software techniques, which provide a costeffective way of utilizing existing or planned hardware. The decision maker or his analyst also has to consider technological constraints when planning a service. These constraints can be in the form of compatibility problems, genuine technical problems and natural resource radio frequency limitations. In this analysis it is assumed that the PTT ‘organization’ can manage efficiently any size of operation. These four areas affect both the demand and the cost of future services.
Technical innovation
6 For example, fibre optics and wave promise cheap wide band guides while micro-electronics transmission, offers cheap. compact processing of data signals.
36
diffusion model
Any service can be described as a technological package, consisting of a number of technologies, together with the good will of its customers to pay an ‘economic’ price. The introduction of technological developments in the telecommunications network, and the way in which this is done, will ultimately affect present and future services. One can view a telecommunications route as a number of parts that fulfil a technological function together with a user protocol, eg transmit. store. encode, recode, decode, address, re-route, route, etc. These technological functions can be fulfilled by a number of different technological implementation functions. The function transmit can be fulfilled by, for instance, conventional cable, fibre optics, wave guides or radio. The use of each function within a telecommunications route conforms to strict Boolean logic. If the function re-route is used, then upstream of the use of this function should appear the function address, while downstream of the re-route function should appear the final routing function. The transition from one function to another in the network also follows strict logic. I have developed a computer package which requires as data the above-mentioned logical relations and maximum usage allowed on each function; the computer package on running produces as output all routes which conform to the input data file. The computer package is used as a scratch pad; the analyst can model the structure of any system which can be broken down into sequential operations. The computer package assembles systems which are dictated by the logic, and errors in the analyst’s ability to understand the logic of the system are reflected by a number of
TELECOMMUNICATIONS
POLICY
March 1978
Long-rangeforecastingfortelecommunications
system configurations produced by the package, which are not technologically feasible in the real world. The development of the computer package is a significant step forwards in the technique of a morphological analysis.’ After constructing a taxonomy of a given system, incorporating technical options, one can then re-run the taxonomy, mapping out different scenarios for the development of the system. In the case of the taxonomy mentioned so far, the number of different service configurations produced by the suppression of the function store equals eight. (Storage of message on route is not allowed.) The introduction of the store facility in the network increases the number of possible configurations by 448. This tremendous expansion in possible service configurations reflects the increased complexity felt by the seemingly small introduction of a new function. It is partly this expansion of possibilities that creates uncertainty for the telecommunications decision maker. The taxonomic tool can be used to produce a complete ‘space’ of technical possibility, of which some configurations can be innovative.
The market place model In the telecommunications market place the concept of ‘substitution’ is widely used; the taxonomic method within this area can be used to bring out the salient features in present-day methods, and contrast any structural differences created by the use of telecommunications. For example, in the area of the electronic funds transfer, conventional payment methods are substituted by electronic methods, yet services so far conceived do not directly substitute present-day methods. It is these differences between the ‘new’ and the ‘old’ services which create problems. Neither the user nor the banks want to suffer any financial loss, yet EFT services offer instant debiting which destroys the ‘float’. Users who are not satisfied with the goods cannot cancel the transaction, which went through instantaneously. Who is going to pay for the service? Will enough people use it? Which banking services are threatened by EFT? Taxonomic structuring of banking services can put into perspective the differences between conventional services and EFT services. The taxonomic method can be used to generate new service configurations, which include EFT with the ‘float’ and user intervention to cancel transactions. The concept of substitution is important when searching for future markets, but at a micro-level of user acceptability the concept of difference is more important.
Conclusion
’ Johan G. Wissema, ‘Morphological analysis - its application to a company TF investigation’, Futures. Vol 6. No 2, April 1976, pp 146-l 53: F. Zwichy and A.G. Wilson, New Methods of Though? and Procedure, 1966; and F. Zwichy, Morphological Astronomy. (SpringerVerlag, Berlin, 1957).
TELECOMMUNICATIONS
It should be stressed that a taxonomy places structure on a ‘system’, but does not provide any measure of the effectiveness of one configuration with respect to another. However, as mentioned in the above discussion, such attempts to measure worth of ill-structured configurations may fall foul of oversimplification or a too narrowly conceived system boundary. The taxonomic method should be regarded as a forerunner to quantitative methods. The utility of the taxonomic method lies in its descriptive rather than its prescriptive capability, and in this respect its usefulness should not be underestimated.
POLICY March 1978
37
Long-rangeforecastingfortelecommunications
Appendix The taxonomy generator is a computer package which consists of 850 FORTRAN statements. Compiling techniques are used on the input data file, which supplies the following information: name of run; choice of suppression of description; definition of system functions and their internal numerical form; maximum usage setting on each function; connection of piecewise each function; logical forward and backward uses of functions in a system; which are part configurations disallowable. The developed package supplies an error diagnostic to each syntactical error that occurs in the input data file and then terminates the run after the syntax analysis stage has been completed. To illustrate the use and internal working of the taxonomic generator, the consider interface between the user and acceptor of a financial transaction. The user is regarded as a human being, and the acceptor can be either human or machine (eg EFT device). The system can be broken into 14 parts: 0 0 0 0 0 0 0 0 0 0
0
0 0
0
system boundary in; acceptor inspects for negotiability; accept transaction; reject transaction; originator supply identity 1 (personal code, eg PIN, signature); inspector identifies for a match; pass from user to acceptor; make out value of transaction by originator; make out value of transaction by acceptor; pass from acceptor to user; originator supply identity 2 for cross check (eg credit or debit identity card); acceptor supply identity 2 for cross check (eg specimen signature); inspect originator identity 2 for validation; system boundary out.
The order of definitions does not necessarily reflect the order of usage. A table of piecewise connections of each
38
function below :
used in this example
S.B. IN INSP.NE ACCEPT REJECT U.S.ID.l INSP.IDS PASS A-B M.O. OR1 M.O. ACP PASS B-A U.S.ID.2 A.S.ID.2 INSP.ID2 S.B. OUT
is shown
11111 12345678901234 lI....X..XX.X...I 21..XX..........I 3I.X..XX.XX.XXXXI 41...... .. .. ...XI SI......XX..X...I 61..XX..........I 71.X..XX.XX.XXX.I BI....X.X...X...I 91.........X....I lOI.X.....X......I llI....X.XX......I 12I.....X........I 13I..XX..........I 141..............1
The package is designed to find all plausible functional routes between the top left function, system boundary in and the bottom left function, system boundary out, subject to the logical conditions placed upon the use of each function. The table is read as follows, starting from function 1; the next function which could follow this could be either 5, 8, 9, or 11. If the route to 5 had been taken, the next branch could have been to 7,8, or 11 and so on. A tree search is carried out by the package subject to: maximum usage of each function, allowing cycles up to the maximum usage setting; forward and backward logical constraints; and partial configuration disallowable. The usage of a function in a technological system often depends on what has come before and what is to come after. For example, if the function user supply identity 2 (internal code 11) is carried out, then identity 2 should be inspected (internal code 13) or alternatively the transaction may be closed by another inspection downstream which yields a reject function (internal code 4) before the inspection of identity 2 occurred. This information for the above example is supplied by the following line: 11-lXOR.4; If function 11 occurs then function 13 or 4 should appear downstream in the path. Similar notation is used for backwards logic. The following operators recognized by the are compiler incorporated in the package: .OR. .AND. .NOT.
Full syntax analysis is carried out on the input stream of each forward and backwards logical relation; an error diagnostic is given for each error that occurs with the run terminated if an error occurs after all forward and backward cards have been analysed. All spaces are ignored, and line continuations can be gained by the placement of the semicolon character. Partial configurations disallowable can be supplied to the package. In early work it was found useful to suppress certain partial configurations by this method.
Output ofpackage The input data file is listed in the output file; abbreviations of the description of each function are given together with the internal code, so as to facilitate checking. If there are no syntax errors in the data file, the computer package will go on sequentially to build each configuration dictated by the input data file. The checking that observable configurations within the chosen system boundary in the real world also exist in the generated listing and that all generated paths could exist in the real world, provides a check on the validity of the structural identification procedure. A check on the necessary and sufficient degree of disaggregation on the functional elements is provided if all previous real world configurations exist as the disaggregation process expands. In the example described the taxonomy can be run under varying conditions of functional use. If one considers a world that requires no personal identification (eg signature) to carry out a transaction there are two possible routes through the system. The introduction of user personal identification codes increases the complexity of the system to 34 functional routes. The introduction of the plastic cards society, user supply identity 2, increases the number of possible functional alternatives to 489. As noted earlier, it is partly this profusion of possibilities, produced by the introduction of a new function into a system, that creates uncertainty for the decision maker. The taxonomic method can be used to capture the range of possibilities.
TELECOMMUNICATIONS
POLICY
March
1978
Terence Bates
methods Three forecasting used cations
demand
examined.
research
Successful
of each
technique
validity
of a number
The
author
he
used
valid. has
in
The
technique for
market
innovation place
Unit,
The
of systems with
conditions
Science
of
and
for
the
the author was Policy
University UK.
Operational
Research
He
Research
of is
Sussex, now
Scientist,
Regional
Thames
Authority,
London.
contacted
at
Haversham,
an
the areas
of new services.
Brighton, East
which explicitly
diffusion,
At the time of writing the
the
research
together
acceptability
with
whether past
of its use within
technical
on the
of concepts.
the ‘structure’
described,
outline
depends
developed
modelling is
are
application
questions
concepts were
long-range
of
in telecommuni-
25 Milton
He
Health may
Brookfield Keynes
an North be Rd.
MK19
7AF. UK. The research described in this article was partly funded by the British Post Office’s Long Range Intelligence Division. The author wishes to thank John Clark and Rav Curnow of the Science Policy Research Unit for their helpful comments.
’ At a recent meeting of the Royal Society, ‘Telecommunications in the 1980s and After’, Sir Edward Fennessy. deputy chairman of the British Post Office director of and managing telecommunications, London, argued that continued on page 34
TELECOMMUNICATIONS
The Science Policy Research Unit has been under contract to the British Post Office’s Long Range Intelligence Division to review past methods of research, used to assess the demand for new telecommunications services and to suggest further research. When reviewing worldwide long-range telecommunications forecasting one can identify three major techniques which have been used: data-base techniques; mathematical modelling; and small-scale psychological studies. Yet on close examination all techniques are liable to fail. Data-base techniques can be used to provide projected statistics for the growth of telecommunications services. For example, in order to project the demand for satellite telephone links, one can carry out statistical methods of fitting the ‘best line’ through suitable chosen time series of the number of international telephone conversations per year for the past five years. The analyst, after feeding the data through a computer package, will normally decide that the curve is exponential and supply the decision maker with projections of international telephone conversations per year until the end of the century. The statistical package has really told the analyst which curve best fits the time series and that is all. Such extrapolation of fitted curves or lines can be dangerous, because it can mislead and cause financial loss. However, in retrospect, expansion of telecommunication networks may very well track a known curve, because the policy makers have chosen to expand the system at that rate. Presently there is great talk worldwide of the boom in international calls.’ Yet there must be some point in this expansion where the market for international traffic becomes saturated, and such data-based techniques do not find this point. It can be said that data-based techniques do not require the analyst to understand the telecommunications system but only require the analyst and the decision maker to believe the results. Such research can be deemed forecasting without structure.
Substitution and interaction The second technique used for demand forecasting, mathematical
POLICY
March 1978
33
Long-rangeforecastingfortelecommunications
continuedfrompage
33
with continued exponential growth of worldwide installations telephone international traffic would grow by 18.5% per year. * Communications Studies Group, UK, Long Range Research Report 3. 3 One can postulate that the videophone, if it ever took off, would have an adverse effect on conventional telephone and mail services. ’ Op cit. Ref 2; Roger Pye and Edervn ‘Teleconferencing: is video Williams, valuable or is audio adequate?‘, Telecommunications Policy. Vol 1, No 3, June 1977. pp 230-241.
34
modelling, has been used in two areas: substitution, and interaction of communications services. The concept of substitution is widely used by many telecommunications analysts: electronic mail substitutes conventional mail, teleconferencing substitutes travel, electronic fund transfer substitutes conventional transactions. In order to calculate the demand for any one of these services, the demand for the conventional service can be used to map over to the demand for the new service, by direct substitution. This simplistic substitution idea ignores the basic law of economics, that cost controls demand. The concept of ‘substitution’ has been widely used by the Communications Studies Group, University College, London2 They argue that if the substitution is cost-effective, then such substitution is likely to take place. In work which they carried out for the British Post Office in the area of longdistance travel versus telecommunications, they found in general that telecommunications was more cost-effective than long-distance travel. This type of research is satisfactory, providing that the substitution is direct, and that there are no side-effects. However, to many people a day away from the office is preferable to a day at the office. (Would you sacrifice your next conference for a teleconference substitute?) The concept of substitution in telecommunications can be dangerous, since no telecommunications service directly substitutes another service.. The telecommunications analyst should be more concerned with the side-effects of ‘substitution’ than with the assumption that the concept is valid, and assessing the demand for new services on that premise. A structured list of the advantages and disadvantages of one service with respect to another should be produced when considering the substitution potential of telecommunications services. In the case of long-distance travel versus telecommunications the Communications Studies Group recognized the disadvantages to the user of having to pay for long-distance travel, loss of working time, subsistence allowances and telecommunications tariff charges, but completely ignored advantages inherent in either communications mode. Advantages of travel include relaxation, getting away from the office norms, and overnight stops, to name but a few. There seem to be few social advantages or benefits in the use of teleconferencing. If quantitative methods were to have been used, cost-benefit analysis should have been the chosen method since clearly there are social costs and benefits as well as hard costs. Mathematical models have also been used in long-range telecommunications forecasting to study the interaction of one service with another. Such models use the concept of substitution and crosselasticities of services3 Although mathematical models allow manipulation of sets of key variables to answer key questions, the realization of constructing a reliable mathematical model to look at the interaction of competing services leaves a lot to be desired. In building a mathematical model, three major phases have to be carried out: identification of real world structural features; calibration of a structural model, from real world data; and validation. Within long-range forecasting validation can be difficult; this in turn requires that the analyst has taken a broad approach to the problem and has not ignored the key features, which if left out of the analysis will cause distorted results. The final area of long-range research has been carried out in the area of small-scale psychological studies.4 These studies were set up TELECOMMUNICATIONS
POLICY March
1978
Long-rangeforecastingfor telecommunications
to examine any impediments that the use of the telecommunication medium, as a ‘substitute’ for face-to-face meetings, could cause. This research was not directly policy-related and does not give rise to results which could not have been gained by the use of common sense.5 One can view the future as a network of paths: when a particular technical option is chosen, a particular path is taken. Along some paths lie financially successful services and along others lie potentially financially unsuccessful services. A telecommunications analyst can evaluate the possible future by two distinct types of research: by jumping to nodal points to evaluate whether possible new services or states are ‘good’ or ‘evil’; or by scenario analysis of possible new developments, planning decisions and routes that can be taken to arrive at a given node. Clearly new techniques and methodologies are required to assist the decision maker in taking the right route into a successful future. In long-range forecasting the importance of the concept of holism should not be underestimated. In any problem solving, reductionist techniques are used. In the natural sciences laboratory experiments can be set up, and a number of experiments can be carried out sequentially, searching through a number of possibilities that could cause a response to given stimuli. In the social sciences, systems are large and highly interconnected. The telecommunications analyst runs the risk, when conducting field trials, that the results will be affected by the experimental conditions. In the natural sciences a particular experiment may be repeated a number of times on similar pieces of ‘matter’. In the social sciences the matter consists of human beings, and it should be noted that two human beings are not necessarily alike. The real world is diverse, and consists of many par .s. Any analysis must be carried out on an aggregated level, or will otherwise lack structure, and the results gained will be meaningless. In the remaining part of this paper, three different structured representations of key factors that will play a role in future demand for telecommunication services will be considered.
The holistic model
5 For
the Communications example under Studies Group observed experimental conditions that a person who had a very weak case in a bargaining situation was found to increase his chance of success in convincing another person if the discussion was over the telephone.
TELECOMMUNICATIONS
The telecommunications decision maker or analyst must recognize four distinct but partially interrelated areas that will affect future telecommunication services. These are: user needs; user constraints; technological developments; and technical constraints. One can argue that individuals or enterprises have a basic need to communicate information. This ‘need’ may be latent or already observable at present. In the case for electronic funds transfer one can identify the need for passing financial information from distant locations since this is already in practice. In the case for a telephone network, it is clear that a telephone call does not necessarily substitute for a face-to-face meeting. The user also places constraints on the service, in the form of cost, quality, accessibility and general ergonomics. These micro-user constraints control the demand for a given service. The role of a PTT should be to make available to as many users as possible any service with statutory minimum quality, accessibility and general ergonomic parameters subject to just making a profit. The telecommunications decision maker or analyst must grapple with these key variables when planning a new service. In long-
POLICY March 1978
Long-rangeforecastingforteIecommunications
range forecasting one must ask whether user needs or constraints will change in the next ten to thirty years. The answer is probably that they will not change significantly. Users have a ‘basic’ need to communicate; this need may be latent (non-observable) or observable. The need to communicate will not change, but in some situations the communication mode (eg transported hard copy) may be replaced by electronic transmission, given that the conditions for ‘substitution’ are favourable. The driving forces which will bring about favourable ‘substitution’ are in part technology-related. The area of technological developments divides into hardware and software developments. There have been a number of significant technological advances in recent years in the areas of transmission medium and ‘processing’ devices.6 A number of software techniques for making better use of equipment have been known for several years, including time division multiplexing, frequency division multiplexing, pulse code modulation, time division multiple access, and code division multiple access. The falling price of processing equipment has brought about and will bring about the introduction of these software techniques, which provide a costeffective way of utilizing existing or planned hardware. The decision maker or his analyst also has to consider technological constraints when planning a service. These constraints can be in the form of compatibility problems, genuine technical problems and natural resource radio frequency limitations. In this analysis it is assumed that the PTT ‘organization’ can manage efficiently any size of operation. These four areas affect both the demand and the cost of future services.
Technical innovation
6 For example, fibre optics and wave promise cheap wide band guides while micro-electronics transmission, offers cheap. compact processing of data signals.
36
diffusion model
Any service can be described as a technological package, consisting of a number of technologies, together with the good will of its customers to pay an ‘economic’ price. The introduction of technological developments in the telecommunications network, and the way in which this is done, will ultimately affect present and future services. One can view a telecommunications route as a number of parts that fulfil a technological function together with a user protocol, eg transmit. store. encode, recode, decode, address, re-route, route, etc. These technological functions can be fulfilled by a number of different technological implementation functions. The function transmit can be fulfilled by, for instance, conventional cable, fibre optics, wave guides or radio. The use of each function within a telecommunications route conforms to strict Boolean logic. If the function re-route is used, then upstream of the use of this function should appear the function address, while downstream of the re-route function should appear the final routing function. The transition from one function to another in the network also follows strict logic. I have developed a computer package which requires as data the above-mentioned logical relations and maximum usage allowed on each function; the computer package on running produces as output all routes which conform to the input data file. The computer package is used as a scratch pad; the analyst can model the structure of any system which can be broken down into sequential operations. The computer package assembles systems which are dictated by the logic, and errors in the analyst’s ability to understand the logic of the system are reflected by a number of
TELECOMMUNICATIONS
POLICY
March 1978
Long-rangeforecastingfortelecommunications
system configurations produced by the package, which are not technologically feasible in the real world. The development of the computer package is a significant step forwards in the technique of a morphological analysis.’ After constructing a taxonomy of a given system, incorporating technical options, one can then re-run the taxonomy, mapping out different scenarios for the development of the system. In the case of the taxonomy mentioned so far, the number of different service configurations produced by the suppression of the function store equals eight. (Storage of message on route is not allowed.) The introduction of the store facility in the network increases the number of possible configurations by 448. This tremendous expansion in possible service configurations reflects the increased complexity felt by the seemingly small introduction of a new function. It is partly this expansion of possibilities that creates uncertainty for the telecommunications decision maker. The taxonomic tool can be used to produce a complete ‘space’ of technical possibility, of which some configurations can be innovative.
The market place model In the telecommunications market place the concept of ‘substitution’ is widely used; the taxonomic method within this area can be used to bring out the salient features in present-day methods, and contrast any structural differences created by the use of telecommunications. For example, in the area of the electronic funds transfer, conventional payment methods are substituted by electronic methods, yet services so far conceived do not directly substitute present-day methods. It is these differences between the ‘new’ and the ‘old’ services which create problems. Neither the user nor the banks want to suffer any financial loss, yet EFT services offer instant debiting which destroys the ‘float’. Users who are not satisfied with the goods cannot cancel the transaction, which went through instantaneously. Who is going to pay for the service? Will enough people use it? Which banking services are threatened by EFT? Taxonomic structuring of banking services can put into perspective the differences between conventional services and EFT services. The taxonomic method can be used to generate new service configurations, which include EFT with the ‘float’ and user intervention to cancel transactions. The concept of substitution is important when searching for future markets, but at a micro-level of user acceptability the concept of difference is more important.
Conclusion
’ Johan G. Wissema, ‘Morphological analysis - its application to a company TF investigation’, Futures. Vol 6. No 2, April 1976, pp 146-l 53: F. Zwichy and A.G. Wilson, New Methods of Though? and Procedure, 1966; and F. Zwichy, Morphological Astronomy. (SpringerVerlag, Berlin, 1957).
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It should be stressed that a taxonomy places structure on a ‘system’, but does not provide any measure of the effectiveness of one configuration with respect to another. However, as mentioned in the above discussion, such attempts to measure worth of ill-structured configurations may fall foul of oversimplification or a too narrowly conceived system boundary. The taxonomic method should be regarded as a forerunner to quantitative methods. The utility of the taxonomic method lies in its descriptive rather than its prescriptive capability, and in this respect its usefulness should not be underestimated.
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Appendix The taxonomy generator is a computer package which consists of 850 FORTRAN statements. Compiling techniques are used on the input data file, which supplies the following information: name of run; choice of suppression of description; definition of system functions and their internal numerical form; maximum usage setting on each function; connection of piecewise each function; logical forward and backward uses of functions in a system; which are part configurations disallowable. The developed package supplies an error diagnostic to each syntactical error that occurs in the input data file and then terminates the run after the syntax analysis stage has been completed. To illustrate the use and internal working of the taxonomic generator, the consider interface between the user and acceptor of a financial transaction. The user is regarded as a human being, and the acceptor can be either human or machine (eg EFT device). The system can be broken into 14 parts: 0 0 0 0 0 0 0 0 0 0
0
0 0
0
system boundary in; acceptor inspects for negotiability; accept transaction; reject transaction; originator supply identity 1 (personal code, eg PIN, signature); inspector identifies for a match; pass from user to acceptor; make out value of transaction by originator; make out value of transaction by acceptor; pass from acceptor to user; originator supply identity 2 for cross check (eg credit or debit identity card); acceptor supply identity 2 for cross check (eg specimen signature); inspect originator identity 2 for validation; system boundary out.
The order of definitions does not necessarily reflect the order of usage. A table of piecewise connections of each
38
function below :
used in this example
S.B. IN INSP.NE ACCEPT REJECT U.S.ID.l INSP.IDS PASS A-B M.O. OR1 M.O. ACP PASS B-A U.S.ID.2 A.S.ID.2 INSP.ID2 S.B. OUT
is shown
11111 12345678901234 lI....X..XX.X...I 21..XX..........I 3I.X..XX.XX.XXXXI 41...... .. .. ...XI SI......XX..X...I 61..XX..........I 71.X..XX.XX.XXX.I BI....X.X...X...I 91.........X....I lOI.X.....X......I llI....X.XX......I 12I.....X........I 13I..XX..........I 141..............1
The package is designed to find all plausible functional routes between the top left function, system boundary in and the bottom left function, system boundary out, subject to the logical conditions placed upon the use of each function. The table is read as follows, starting from function 1; the next function which could follow this could be either 5, 8, 9, or 11. If the route to 5 had been taken, the next branch could have been to 7,8, or 11 and so on. A tree search is carried out by the package subject to: maximum usage of each function, allowing cycles up to the maximum usage setting; forward and backward logical constraints; and partial configuration disallowable. The usage of a function in a technological system often depends on what has come before and what is to come after. For example, if the function user supply identity 2 (internal code 11) is carried out, then identity 2 should be inspected (internal code 13) or alternatively the transaction may be closed by another inspection downstream which yields a reject function (internal code 4) before the inspection of identity 2 occurred. This information for the above example is supplied by the following line: 11-lXOR.4; If function 11 occurs then function 13 or 4 should appear downstream in the path. Similar notation is used for backwards logic. The following operators recognized by the are compiler incorporated in the package: .OR. .AND. .NOT.
Full syntax analysis is carried out on the input stream of each forward and backwards logical relation; an error diagnostic is given for each error that occurs with the run terminated if an error occurs after all forward and backward cards have been analysed. All spaces are ignored, and line continuations can be gained by the placement of the semicolon character. Partial configurations disallowable can be supplied to the package. In early work it was found useful to suppress certain partial configurations by this method.
Output ofpackage The input data file is listed in the output file; abbreviations of the description of each function are given together with the internal code, so as to facilitate checking. If there are no syntax errors in the data file, the computer package will go on sequentially to build each configuration dictated by the input data file. The checking that observable configurations within the chosen system boundary in the real world also exist in the generated listing and that all generated paths could exist in the real world, provides a check on the validity of the structural identification procedure. A check on the necessary and sufficient degree of disaggregation on the functional elements is provided if all previous real world configurations exist as the disaggregation process expands. In the example described the taxonomy can be run under varying conditions of functional use. If one considers a world that requires no personal identification (eg signature) to carry out a transaction there are two possible routes through the system. The introduction of user personal identification codes increases the complexity of the system to 34 functional routes. The introduction of the plastic cards society, user supply identity 2, increases the number of possible functional alternatives to 489. As noted earlier, it is partly this profusion of possibilities, produced by the introduction of a new function into a system, that creates uncertainty for the decision maker. The taxonomic method can be used to capture the range of possibilities.
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POLICY
March
1978