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This chapter is the second of a trio of chapters devoted to the building blocks of information technology. So far we
have considered hardware and software, but there are two more critical building blocks to go. The hardware and
software must have datato be processed to produce useful results, and the data resource is the focus of Chapter 4.
If every computer were a stand-alone unit with no connection to other computers, then hardware and software and
data would be the end of the story as far as computers are concerned. In fact, until about 40 years ago, that wasthe
end of the story. Today, however, virtually all computers of all sizes communicate directly with other computers by
means of an incredible variety of networks. For computers in organizations, these networks include
intraorganizational local area networks (LANs), backbone networks, and wide area networks (WANs), as well as
the worldwide Internet. For home computers, the most important network is the Internet. In addition to computer
(or data) communications, today’s organizations also depend heavily on voice (telephone) and image (video and
facsimile) communication. This chapter explores the increasingly important topic of telecommunications and
networking.
This chapter’s goal is to cover the telecommunications and networking technology that you as a business
manager need to know. You need to understand the roles and general capabilities of various types of transmission
media and networks, but you do not need to know all the technical details. You need to know the important
terminology and concepts relating to telecommunications and networking. Most important, you need to
understand the interrelationships between hardware, software, and telecommunications and networking so that
you can use the full gamut of information technology to increase your productivity and your organization’s
effectiveness.
Change is everywhere in the information technology domain, but nowhere is this change more evident and
more dramatic than in the realm of telecommunications and networking. A communications revolution is taking
place that directly or indirectly affects the job of every manager, and the primary catalyst is the Internet and the
World Wide Web (an application that runs on the Internet).
The breakup of American Telephone & Telegraph (AT&T) in 1984 created an environment in which a large
number of firms competed to develop and market telecommunications equipment and services. Partially because of
this increased competition, innovation in the telecommunications and networking arena has been at an all-time
high. Digital networks, fiber-optic cabling, cellular telephones, the ability to send both voice and data over the
same wires at the same time, and wireless networks have contributed to the revolution.
At the same time, most large U.S. businesses have restructured internally to reduce layers of middle
management and create a leaner organization. They have also decentralized operations in order to respond
more quickly to market opportunities and competitors’ actions and have created cross-functional teams to improve
business processes and carry out projects. The net result of these internal changes is that communication has
become more important than ever for the remaining, often geographically dispersed, managers. They need rapid,
reliable voice and data communication with other parts of the company and with suppli-ers and customers. Small