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1
HISTORY OF THE FEDERAL TELECOMMUNICATIONS SYSTEM
In which the Federal Telecommunications system is build and
grows, deregulation of the industry takes place, the system
becomes obsol ete, and GSA f aces the real i ty of having to
repl ace the sys tem .
THE DEVELOPMENT OF THE FEDERAL TELECOMMUNICATIONS SYSTEM
During the late l950s, in the atmosphere of the Cold War and the
growing awareness of the importance of communications, the U.S. federal
government began formulating plans for a single telecommunications
network capable of handling its day-to-day administrative needs as well
as the emergency requirements of all civilian agencies. This network
was to be a dedicated switched service through which the civilian (as
opposed to military) government agencies would have a survivable
communications system and also realize the economies of shared usage.
Early in 1961, stimulated by events such as the Cuban missile
crisis, authorization was given to the General Services Administration
(GSA) to proceed with the implementation of the Federal
Telecommunications System (FTS) (Note 1~. Such events had overloaded
Washington's communications, isolated the government, and revealed how
inadequate the government's communications system was when it depended
solely on public service available at that time.
In March 1962, the Bell System received a commitment from GSA to
establish Phase I of the FTS. On February 15, 1963, Phase I was
officially initiated serving 42 cities. The first call on the system
was made the previous day by Jack Brooks, U.S. representative
(Democrat, Texas), and is best described in his own words at the time:
At three minutes before 11 o'clock on the morning of February 14,
1963 I picked up the telephone in the General Services
Administration's building in Washington D.C. and in 37 seconds I
was talking on official government business with the man I wanted
to reach, the Federal Aviation Agency's Assistant Administrator for
FAA's Western Region in his office in Los Angeles, Calif. He
supplied me with the information I needed and we completed the
call. The call marked a highly significant turning point in
government communications. It was the first call made on the new
1
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Federal Telecommunications System. I dialed an FTS operator, was
given an access line to the correct area and I dialed directly the
man with whom I wished to talk. The service was fast and the cost
was about one-half the former commercial rate (Note 2~.
Phase I consisted of a network of four switches: a national center
in Hillsboro, Kan.; two regional centers in Monrovia, Md. and Santa
Rosa, Calif.; and a sectional center in Rockdale-, Ga. Each center
consisted of a major switching machine (a four-wire number five
machine) and the centers were tied together by final trunks. The 42
cities were tied to the four switches by means of access lines
(Note 3~.
The original cities served by the Phase I system were:
Seattle Minneapolis
Portland Des Moines
Berkeley Omaha
San Francisco Kansas City
Oakland Oklahoma City
Sacramento Fort Worth
Los Angeles Dallas
San Diego Houston
Phoenix
Denver
Milwaukee
Chicago
Indianapolis
St. Louis
Louisville
Nashville
Memphis
Birmingham
New Orleans
Detroit
Cleveland
Pittsburgh
Columbus
Cincinnati
Atlanta
Boston
Newark
New York
Philadelphia
Baltimore
Washington
Richmond
Jacksonville
Miami
Even as Phase I was being placed in service, plans for Phase II
were being made to expand the network to serve 8,000 government
locations in 350 cities. Five additional major switching machines
(four-wire number five) at Rosendale, N.Y.; Faulkner, Va.; Norway, Mo.;
Ennis, Tx.; and Yakima, Wash., and several smaller (two wire) machines
were planned to be implemented by mid-1965 for Phase II.
The modest concept represented by Phase I and the Phase II plan
began, however, to change immediately by several orders of magnitude as
major benefits were seen in allowing governmental bodies to communicate
freely. During the months just prior to Phase II implementation, GSA
offered all agencies unlimited on-net and off-net calling privileges at
a flat monthly rate. Because of this, the number of subscribers for
Phase II service greatly exceeded the number for which the network had
been planned. So began a decade and a half of spectacular growth in
response to user agency demand.
Phase II, originally planned for service in mid-1965, was advanced
by a full year. Service actually began on July 6, 1964, creating
serious problems because of lack of facilities. Using any facilities
that could be made available, Phase II was implemented by the American
Telephone and Telegraph Company (AT&T) to provide service to the
expected traffic level. However, at the start of the service
participating agencies flooded the network with an unexpected number of
calls and immediately the existing number of circuits was not adequate
to handle the resulting demand.
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At that time in mid-1964, it was estimated that approximately 1,000
additional circuits were needed to accommodate the traffic being
offered. It was anticipated that another 3,000 to 4,000 circuits would
be required by the end of i965 to handle growth as well as additional
cities and agencies desiring FTS service.
Because of this unexpected demand and recognizing the expanded role
that FTS was to play, the Bell System submitted a network plan in
October 1966 (Note 4) for a major system describing an orderly growth
to meet the projected traffic demand through 1971. This plan described
an approximately linear growth of:
· network trunks from 1,826 in 1964 to 13,517 in 1971;
· total circuits from 6,889 in 1964 to 35,750 in 1971; and
· major switches from 4 in 1963 to 33 in 1964 to 60 by 1971.
A central strategy of this plan was to develop a system that could
serve potential growth beyond 1971. This plan was implemented
essentially as described and the network continued unchanged, except in
capacity, into the early 1980s. By 1970 the network was handling more
than 74,000,000 calls a year and linear growth during the 1970s more
than trebled this figure to 233,000,000 calls handled in 1980 (Note 5~.
THE FTS BY 1980
By 1980 the FTS intercity network served the contiguous United
States, Alaska, Puerto Rico, Hawaii, the Virgin Islands, and Guam.
final network had 52 major switching centers (rather than the 60
planned) and contained about 15,000 network trunks. In addition, there
were about 35,000 access lines that connected the local switches to the
52 major switches, and 10,000 miscellaneous circuits (such as foreign
exchange lines and off-network access lines). This brought the total
to 60,000 circuits, which formed some 11 million miles of
transmission. The system now served approximately 1.3 million users at
over 4,000 locations through 1,655 local switchboards--of which about
400 were managed by GSA.
The FTS supplied by AT&T offered similar features to those offered
by the Bell direct distance dialing system. These included a uniform
dialing plan, direct station-to-station dialing' on- and off-network
calling, automatic alternate routing, and national teleconferencing.
Network survivability was considered important, although to a somewhat
lesser degree than for the military. The FTS shared special switches
(SCAN switches) located in hardened facilities with the military voice
system (AUTOVON), providing a measure of survivability for those
portions. When selecting locations for establishing FTS major
switching machines, the choice was weighted in favor of the sites
affording the greater degree of survivability.
All of this added up to a network bigger than the sum of the 17
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largest private telephone systems In the United States including those
of such corporations as General Motors, General Electric;:and
Westinghouse. The FTS had become the largest private telephone system
in the world and had become a critical system in that it served the
day-to-day administrative needs of more than half of the civilian work
force of the U.S. government.
GRADUAL DEREGUlATION OF THE INDUSTRY
The original FTS was conceived and built in the regulated,
monopolistic world of AT&T and the Bell System. In parallel with the
growth of the FTS, several events were taking place culminating in
deregulation of the industry in the 1980s (Note 6~. Beginning in 1956
the first event in the chain occurred. The Hush-a-Phone Decision of
1956-1957 and the later Carterfone Decision of 1968 established for the
first time a general policy of allowing interconnection of terminal
equipment to AT&T's facilities. In 1959, private line transmission
also began to be affected when the "Above 890" Decision opened the
portion of the radio spectrum above 890 megahertz to private microwave
systems. This in turn led to the MCI Decision of 1969 that authorized
Microwave Communications Inc. (MCI) to offer common carrier services
between Chicago and St. Louis and intermediate points. This
subsequently led to other milestone decisions favoring new entrants
into the field of providing private line services (the Specialized
Common Carrier Decision of 1971 and the Domestic Satellite Decision of
1972).
The impact of these deregulated actions was first felt by the FTS
in L974, when RCA Alascom protested to the General Accounting Office ~
(GAO) the award of a contract by GSA to the Anchorage Telephone Utility
for the installation of a tandem switch. This was to lead to
competition for switches, particularly for local service. The next
significant event occurred in 1977 when MCI approached GSA with a
proposal to provide connecting circuits between Washington, D.C., and
New York to replace AT&T's circuits. After a competitive procurement
this proposal was accepted and MCI became the first provider of
non-AT&T long-distance connections in the FTS system. This presaged
further competition for circuits as companies such as Western Union and
RCA Communications began to offer competitive replacements for AT&T
circuitry. As competition became a general stimulus for change to the
FTS, the mid-1970s saw an event that boded an acceleration of this
stimulus for change--an event that was to trigger the upheaval of the
1980s.
AT&T had been traditionally loath to permit resale and sharing of
its facilities, but in 1976 the FCC determined that restrictions on
resale and sharing were unjust and unreasonable. This allowed-
companies such as MCI to resell services procured under AT&T's
attractive bulk private line tariff known as Telpak--the tariff under
which the FTS was leased and which saved the federal government some
$1.25 billion during the 1970s. In 1977, to avoid MCI's ability to
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purchase and resell Telpak, AT&T filed tariff revisions cancelling
Telpak. After five years of judicial review (with efforts by
government users to delay cancellation), Telpak was withdrawn in May
1981. This, and other similar tariff revisions, raised the price of
the FTS to GSA and its users by approximately $100 million per year
immediately.
A TIME OF REACTION AND UNCERTAINTY
The demise of Telpak became a major stimulus for GSA to take its
own future into its hands and to change the network. It also was the
shock event through which GSA began to face the fact that the current
FTS was rapidly becoming obsolete. Although competition from
deregulation was advancing rapidly, in 1981 it was still natural for
any organization to turn to the Bell system for a solution to its
telecommunications problems. Although GSA turned to the Bell system in
1981 for a solution to the increase in price no proposal or ideas were
forthcoming.
The shortfall of almost $100 million in agencies' budgets for use
of FTS services not only focused customers' attention on the problem
but also began to escalate telecommunications matters within the
customer agencies. Traditionally the job of a telecommunications
manager was a lower-grade and lower-paid job than equivalent automated
data processing (ADP) jobs. Essentially all of the work and
responsibility lay with Bell. Telecommunications managers also
reported to a different part of an agency from ADP, usually reporting
up the administrative services chain together with space management,
buying of supplies, and personnel management rather than in any kind of
technical infrastructure.
However, no matter how ill-prepared technically or managerially
agencies were, the problem quickly escalated through the budget process
from telecommunications managers eventually to assistant secretaries--
perhaps for the first time that anyone at that level had even heard of
telecommunications.
Pressure built and added to GSA' s own concerns about the problem.
Consequently, GSA increased the priority of its program to cut FTS
costs through competition (Note 7~. To a large extent GSA was locked
into the existing architecture of the system which was designed to
exploit the economies of scale of Telpak. As a result, cost cutting
involved identifying where competition could be gained for network
components (switches or circuits) with a view to competing them where
possible to reduce costs. In addition, there was an immediate focus on
where costs could be eliminated in the network. The former thrust led
to circuit competitions and the latter to elimination of operators.
Long-distance circuits were selected for competition as the only
components for which competition was being offered at that time. In
1981 switches were essentially the province of the Bell system, whether
at a national or local level, and were also highly complex components
to experiment with because they existed where traffic was densest and
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hence represented the highest risks. Access lines were not candidates
for replacement either as they were almost entirely the province of
Bell's local service companies. In the long-distance market, however,
several competitors were beginning to parallel the Bell system plant
and were offering similar circuits at competitive prices.
The first major circuit competition encompassed approximately 8,000
circuits in a procurement known as Backbone I. This quantity
represented just over half of the network trunks in the system and
represented all of the trunks for which competition was available.
Many circuits were awarded back to AT&T at reduced prices, but in
addition new vendors care into the system such as Western Union, MCI,
and GTE Sprint. As the circuits were implemented, the resulting costs
averaged a 20 percent reduction under the original AT&T prices on a
total of just over 10 percent of the total network costs.
SATELLITE CIRCUITS PROVIDE A HARD LESSON
At the same time that competition for terrestrial circuits was
pursued, circuits using communications satellites were tried on a pilot
basis between Washington, D.C., and San Francisco. Satellite circuits
were very attractive from a cost point of view as they represented
savings in excess of 60 percent under the existing AT&T circuits. The
pilot effort was successful and subsequently 1,200 circuits were
awarded to RCA for satellite circuits between such points as
Washington, D.C., Houston, Denver, Hawaii, Alaska, and Los Angeles.
This bigger effort was by no means as successful as the pilot
effort. There were two problems. First, the inherent nature of
satellite circuits meant that even when they worked correctly, two
people could not talk at the same time and also there was a marked
delay of almost one-quarter of a second in transmission. These two
features interfered with normal human telephone protocol and raised
acceptance problems with users. Second, there were substantial
problems with the reliability of echo cancelers necessary in the
circuits to make talking possible at all. The unreliable echo
cancelers, coupled with a lack of proper quality monitoring, severely
degraded performance in some cities--particularly the Washington, D.C.,
to Denver route. This was a serious problem that taxed the
capabilities not only of GSA but also the supplier (RCA). In September
1982 communications between Washington, D.C., and Denver (a major
federal center) degraded to a point where at times communication became
impossible. During the fall of 1982 and spring of 1983 several
generations of echo canceler were applied to the problem during which
time immeasurable damage was done to GSA's reputation with its FTS
users and the Office of Management and Budget (OMB).
Before the Denver situation was solved, equally difficult problems
began to emerge in communicating with Houston and the situation verged
on being unmanageable. These events, occurring so soon after the shock
of Telpak's demise and the budgetary embarrassment it caused GSA's
customers, set the stage for hostile customer relations for the
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following years (Note 8).
It should be emphasized that not all of the network problems lay
with the satellite provider. Problems existed in other components that
were exacerbated by the introduction of different technology and
vendors other than Bell. This was further exacerbated by relationships
between vendors. Deregulation was speeding up and divestiture was
imminent at the time of attempts to solve the Denver and Houston
problems. AT&T as a corporation was faced with grass-roots resistance
among its own staff to working with other competitive, deregulated
vendors (perhaps as a result of impending layoffs, organizational
changes, and the uncertainty of the upcoming divestiture). Also, at
higher levels in AT&T the normal processes and procedures used for
decades to work out problems between the long-distance and the local
service companies were dying in preparation for divestiture. Neither
party had experience in working smoothly with the new corporate
structure or new competitive carriers--the industry was having a
nervous breakdown.
Escalation by GSA with all involved vendors resulted in additional
resources being applied to the Denver and Houston problems and resulted
eventually in acceptance by all companies that they had to work
together more efficiently if the government as a customer was not to be
damaged. In addition, it resulted in a change of AT&T representatives
dealing with GSA in 1983. This hard-headed attitude, necessary though
it was to preserve the continuity of government operations, became the
scene setter in many ways for future relations between GSA and AT&T
(Note 9~.
This was a difficult time for GSA (both centrally and in the
regions), for its customers, and for the vendors. Relationships
frequently polarized and in some cases (e.g., Denver customers) the
memory lingered for many years. With the satellite circuit experience,
it became apparent that the GSA technical organization was weak and
that, while the organization may have been sufficient to operate with
AT&T as a monopoly provider, it did not yet have the capability to
manage complicated technology or major change (Note 10~.
Attempts to manage the satellite problem also highlighted that
GSA's technical priorities did not mesh with the problems being faced,
nor did GSA have the necessary systems and structures in place to deal
with challenges of the newly deregulated and coming divesture world.
The events of Denver, Houston, and problems with implementation of an
upgrade to a separate GSA packet-switched network called the Advanced
Record System (ARS), indicated that GSA would have to be very cautious
as to what it could accomplish in the future with its own resources.
Management became very conservative about any proposals made to change
the network (Note 11~.
However, with the exception of satellite circuits, circuit
competition in general was a success and well accomplished by the FTS
organization. As a result, in 1984 a further major competition was
organized called Backbone II. This encompassed 13,500 of the network
trunks but excluded any offering of satellite facilities.
In addition to circuit competitions, begun in earnest in 1981, GSA
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also moved at the same time into a program of replacing manual
operators with computer-like switches where Bell could provide this
function. Operators had been required to handle calls that were
destined for locations outside of the federal community--so called
off-net calls. This program to replace operators was termed the
automatic off-net program and it eventually resulted in the elimination
of approximately $9 million per year in operator costs. This also was
accomplished well by the FTS organization.
Least successful of the cost cutting programs begun in 1981 was an
effort to reduce the grade of FTS service to cut network costs. The
grade of service reflects the probability that a caller will receive a
busy signal indicating that no trunk is available to complete the
call. Cutting circuits out of the system saves money but results in
increasing this probability. Reduction of grade of service was firmly
rejected by the users after implementation and in fact served only to
add to the bad relationship with them. Various other projects aimed at
modeling the network with a view to restructuring it to save costs were
also unfruitful.
FACING UP TO NETWORK REPLACEMENT
In general, the cost cutting program was a success in that by
fiscal year 1985 (FY) annual reductions were totaling $44.6 million on
a base of $414 million. However, while creditable, this program could
not hold out any hope of a solution to the future of the network as
costs were rising faster than they could be reduced. Cost cutting by
buying components competitively could only be an effort to extend the
system life slightly until the overall problem of how to replace the
network was resolved. The main value of the cost cutting program was,
in fact, the experience it gave GSA in conducting competitive
procurements, dealing with the emerging telecommunications industry and
regulatory environment, and testing where their own strengths and
weaknesses lay.
It was a conscious decision therefore, as FY 1984 started, that
while cost cutting and quality improvement programs would continue, the
future lay in:
· determining GSA's role in a deregulated and divested
telecommunications world; and
· changing the FTS network accordingly.
Three things were needed to do this: (1) a head technical manager
for the FTS, who did not have a vested interest in the way that the
current FTS had evolved, to determine its future architecture, (2) a
skilled contractor to provide support resources, and (3) an overall
plan and direction. Accordingly, the first step in the replacement
program would be to move into a thoughtful, high-level effort to
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determine the future of GSA's telecommunications program in a
postdivestiture world (Note 12) and at the some time enter into a major
recruiting program to fill the vacant position of head of the Network
Services organization that handled technical management of the FTS. In
addition, work began to procure competitively the services of an
engineering company that would support Network Services in the
development of the request for proposals (RFPs), the formal procurement
specification for network replacement--the program that eventually
became FTS2000 (Note 13~.
The FTS program branched at this point into two main efforts: (1)
the replacement program, FTS2000; and (2) a program to extend the
system life of the old system by quality and cost control while the
replacement program was being developed. Consequently, plans were made
to continue cost cutting and quality improvement in the old FTS to
extend its life until the replacement was accomplished. These
initiatives led in subsequent years to:
exploring the elimination of the topmost level of the network
switching hierarchy;
competitive procurement of tariffed tandem switching;
implementation of a trouble handling system for quality control
and improved customer relations;
evaluation of handling off-net calls at the head end of the
network rather than the tail end;
moving network trunks and access lines to T-1 lines where
economical and available; and
reconfiguration of off-net egress under Feature Group A (Feature
Group A tariff increases dominated FY 1985 and FY 1986 to an
extent even greater than the original Telpak demise in 1981)
(Note 14~.
These activities had to be given some priority as customers focused
on short-term costs and services and could not be expected to live only
on promises of a future replacement. However, these activities became
secondary as they held out no hope for the future other than as an
interim support strategy. Consequently, the activities received little
management attention. The only thing that would matter in the long run
was replacing the network.
Representative terms from entire chapter:
network trunks
