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Chapter 6Telecommunications, the Internet and Wireless Technology

Student Objectives

1. Describe the components of telecommunications networks and identify key networking technologies.

2. Evaluate transmission media and the types of networks available to organizations.

3. Demonstrate how the Internet and Internet technology work and how they support communication and e-business.

4. Identify and describe the principal technologies and standards for wireless networking, communication, and Internet access.

5. Assess the business value of radio frequency identification and wireless sensor networks.

Chapter Outline

6.1 Telecommunications and Networking in Today’s Business World

Networking and Communication TrendsWhat is a Computer Network?Key Digital Networking Technologies

6.2 Communications NetworksPhysical Transmission Media

6.3 The Global InternetWhat is the Internet?Internet Addressing and ArchitectureInternet Services and Communication ToolsThe World Wide WebIntranets and Extranets

6.4 The Wireless RevolutionCellular SystemsWireless Computer Networks and Internet Access

RFID and Wireless Sensor Networks6.5 Hands-On MIS

Key Terms

The following alphabetical list identifies the key terms discussed in this chapter. The page number for each key term is provided.

Network operating system (NOS), 193

Bandwidth, 200 Packet switching, 194

Blog, 212 Peer-to-peer, 197

Bluetooth, 214 Personal-area networks (PANs), 214

Broadband, 192 Personal digital assistants (PDAs), 213

Bus topology, 198 Protocol, 195

Cable Internet connections, 201 Radio frequency identification (RFID), 217

Cell phone, 200 Ring topology, 198

Chat, 204 Router, 193

Coaxial cable, 199 RSS, 212

Digital subscriber line (DSL), 201 Search engines, 209

Domain name, 201 Search engine marketing, 210

Domain name systems (DNS), 201 Semantic Web, 211

E-mail, 204 Shopping bots, 211

Fiber-optic cable, 199 Smart phones, 213

File Transfer Protocol (FTP), 204 Star topology, 198

Firewalls, 212 Switch, 193

Hertz, 200 T1 lines, 201

T3 lines, 201

Hotspots, 216 Third-generation (3G) networks, 214

Topology, 197

Hubs, 193 Transmission Control Protocol/Internet Protocol (TCP/IP), 195

Hypertext Transfer Protocol (HTTP), 208 Twisted wire, 198

Instant messaging, 204 Uniform resource locator (URL), 209

Internet Protocol (IP) address, 201 Virtual private network (VPN), 208

Internet service provider (ISP), 200 Voice over IP (VoIP), 205

Internet telephony, 202 Web 2.0, 111

Internet2, 203 Web site, 208

Local-area network (LAN), 197 Wide-area networks (WAN), 198

Metropolitan-area network (MAN), 198 Wi-Fi, 215

Microwave systems, 199 Wikis, 212

Modem, 196 WiMax, 216

Network interface card (NIC), 192 Wireless sensor networks (WSNs), 218

Teaching Suggestions

Chapter 6 presents crucial concepts and terminology since telecommunications, networks, and the Internet are now introducing fundamental changes in businesses. The opening case, “Hyatt

Regency Osaka Uses Wireless Networking for High-Touch Service”, illustrates some of the new capabilities and opportunities provided by contemporary networking technology.

The Hyatt Regency Osaka (HRO) realized it had a competitive disadvantage because of its location—away from central Osaka. It used new wireless technology to help compensate for its location by offering a superior customer experience that distinguishes it from competitors.

HRO’s use of telecommunications, the Internet, and wireless technology presented new opportunities for employees to provide its customers with services that would keep them coming back. Employees were more productive because of the innovations while customers were more satisfied. HRO’s wireless technology is also providing new guest services, which increase revenue and customer satisfaction.

The opening vignette provides an example of how businesses are adapting their business models to accommodate new technologies based on the Internet. It shows how companies must continually evolve as technology improves.

Section 6.1, “Telecommunications and Networking in Today’s Business World” Telecommunications and networks are vital to the majority of businesses today, and this section explains why. Since telecommunications technology serves as the foundation for electronic commerce and the digital economy, the concepts and terminology in Chapter 6 are important for both MIS and business majors. This section explains the basic configuration of networks, regardless of their size.

A contemporary corporate network infrastructure relies on both public and private infrastructures to support the movement of information across diverse technological platforms. It includes the traditional telephone system, mobile cellular communication, wireless local area networks, videoconferencing systems, a corporate Web site, intranets, extranets, and an array of local and wide area networks, including the Internet.

Contemporary networks have been shaped by the rise of client/server computing, the use of packet switching, and the adoption of TCP/IP as a universal communications standard for linking disparate networks and computers. Client/server networks have distributed much of the organization’s computing power to the desktop and factory floor. Packet switching makes more efficient use of network communications capacity by breaking messages into small packets that are sent independently along different paths in a network and then reassembled at their destination. Protocols provide a common set of rules that enable communication among diverse components in a telecommunications network. TCP/IP is a suite of protocols that has become the dominant model of achieving connectivity among different networks and computers. It is the connectivity model used in the Internet.

Section 6.2, “Communications Networks” As many of your students are visual learners, you should bring several props to show. For example, bring twisted wire, coaxial cable, and fiber-optic cable to show to the class. You should discuss the advantages and disadvantages of each type of media with your students. Students should note the different ranges (frequencies) of

wireless media. Also, you should discuss bandwidth and its connection to frequencies, as this is a critical concept today.

This section describes the different network topologies and how they pass data across a network. As several of your students may be employed, ask these working students to discuss the networks used by their organizations. For instance, ask your students to identify the topologies and how the networks are used.

Section 6.3, “The Global Internet” Most students are familiar with the Internet and motivated to discuss it. You might begin discussing this section by asking students how they spend their time on the Internet. Also, ask them to identify which client platforms they currently use or have used. Ask your students to identify several of the many benefits that the Internet offers to organizations. Ask them to provide specific examples that they have read about in the text or have personally observed. “The World Wide Web” presents important Internet concepts.

The principal Internet services and communication tools are e-mail, chatting, instant messaging, newsgroups, telnet, file transfer protocol, and the Web. Most students will probably be familiar with these services, having used them in their personal life. What they may not understand or relate to quite yet, is how effective the tools are in a business setting. These tools reduce time and cost when firms must manage organizational activities and communicate with many employees. As several of your students may be employed, ask these working students to discuss the communications tools their organization uses. How is Voice over Internet Protocol (VoIP) integrated with data communication?

Make students aware that while the new information technology infrastructure provides many benefits and capabilities, it does require careful management and planning. Challenges posed by networking and the Internet include loss of management control over information systems; the need for organizational change; and the difficulty of ensuring infrastructure scalability and reliability.

Interactive Session: People: Monitoring Employees on Networks: Unethical or Good Business?

Case Study Questions

1. Should managers monitor employee e-mail and Internet usage? Why or why not?

Answers will vary on this question. The case study statistics show that corporate misuse and abuse of email for personal reasons is exploding. Simply stated, employees who use company resources for work not related to the company are, in essence, engaged in “service theft.” They are being paid to work for the company, and this does not include abusing corporate resources for personal time. Companies are in business to generate profits for their shareholders. Managers certainly should be concerned with the loss of time and employee productivity, the additional traffic it creates on their networks that inhibits the efficiency for real business purposes, lost revenue or missed opportunities, as well as overcharging clients because of lost employee efficiencies. The company itself is responsible for the use of its resources and what

employees do while using them. Adverse publicity can seriously affect a company and could even result in very expensive lawsuits. Companies also fear e-mail leakage of trade secrets. Other legal and regulatory problems involve the safe keeping of all e-mails that are generated on corporate equipment. This information must be retained for specific time periods and may be requested as evidence in a lawsuit.

2. Describe an effective e-mail and Web use policy for a company.

Like all policies an effective e-mail and Web use policy must be carefully designed and clearly communicated to all persons who use these corporate resources. There are a number of different policies in existence. Some companies allow absolutely no personal use of corporate networks whereas others allow some degree of activity that is easily monitored. A good policy will detail exactly what type of activity is acceptable and what is not allowed. The policy should clearly articulate sanctions that will be followed for any and all offenses in relation to the policy. Most of all, rules for Internet usage should be tailored to specific business needs and organizational cultures.

As an instructor you might wish to show students an example of the University of South Australia’s policy at http://www.unisa.edu.au/policies/policies/corporate/C22.asp

MIS In Action

Explore the Web site of online employee monitoring software such as SpectorSoft, NetVizor, SpyTech, or Activity Monitor and answer the following questions.

1. What employee activities does this software track? What can an employer learn about an employee by using this software?

From SpectorSoft Web site: The Spector Pro keylogger will instantly inform you whenever they type, or even simply view, any “alert words” or phrases that you specify. Spector Pro continuously looks for alert words in everything they type, every web site they visit, all chats/Instant Messages and in each email sent or received. Every time a keyword is detected, Spector Pro will immediately email you a detailed report of when, where and how the keyword was used.

2. How can businesses benefit from using this software?

A testimonial from the SpectorSoft Web site: “With Spector Pro, we were immediately able to discover which employees were non-productive. Not only has Spector Pro helped us weed out lazy workers, it also helped to uncover fraud in some of our departments. In addition, this program has also allowed us to realize and resolve training issues we've experienced with our internal software. Spector Pro is very stealthy, has no noticeable effect on system performance and provides excellent return on investment.”

3. How would you feel if your employer used this software where you work to monitor what you are doing on the job? Explain your answer.

Answers will vary based on student experiences and beliefs.

Section 6.4, “The Wireless Revolution” Ask your students how many of them use cellular phones, personal communication services (PCS), or personal digital assistants (PDA). If you have the class time, you can ask the campus IT director to discuss the telecommunications technology used on your campus, take a tour of the campus facilities, or invite an IT director from a local company to discuss his company’s telecommunications technology. Ask your students to find out what their university does in order to support mobile wireless communications. Have them investigate applications where Bluetooth, Wi-FI, or hotspot technology is used and how it benefits them. Are they able to use their own personal appliances to connect and utilize these technologies on their campus? Most students are excited to demonstrate their “latest devices”, and you may wish to ask one of them to discuss the capabilities of theirs. Ask them to discuss what they like or dislike about the features found on their appliance.

Interactive Session: Organizations: Wal-Mart Grapples with RFID

Case Study Questions:

1. How is RFID technology related to Wal-Mart’s business model? How does it benefit suppliers?

Wal-Mart’s basic business model is “low cost.” RFID promises to reduce supply chain costs and improve the availability of items on store shelves. The world’s biggest retail chain wants RFID readers installed at store receiving docks to record the arrival of pallets and cases of goods. Software uses sales data from its point-of-sale systems and the RFID data about the number of cases brought out to the sales floor to determine which items will soon be depleted. The information system will generate a list of items to pick in the warehouse to replenish store shelves before they run out.

Wal-Mart is sharing all its RFID data with suppliers through its Retail Link extranet. The RFID data improve inventory management because suppliers know exactly where their goods are located within 30 minutes of the goods’ movement from one part of a Wal-Mart store to another. Sales improve because the system allows Wal-Mart to always have products in stock.

2. What people, organization, and technology factors explain why Wal-Mart suppliers have had trouble implementing RFID systems?

Wal-Mart initially hoped to have up to 12 of its 130 distribution centers using RFID by January 2006. As of October 2007, only five have implemented the technology, along with 600 of Wal-Mart’s 60,000 suppliers and 600 Wal-Mart retail stores.

Organization factors: Costs of RFID tags, readers, and supporting systems are a barrier. Suppliers have to purchase not only the tags for every item they send to Wal-Mart, but also additional hardware—readers, transponders, antennas, and software to track and analyze the data. Suppliers also have to pay for new software programs to integrate the RFID software with their inventory and manufacturing systems.

People: Suppliers must change some of their business processes to incorporate the new RFID systems with their other systems. The tags must be attached to products by hand at the warehouse.

Technology: RFID tags may not perform properly when they are near certain liquids, metals, or porous objects. To ensure accuracy and proper performance, suppliers may have to use more expensive tags.

3. What conditions would make adopting RFID more favorable for suppliers?

Wal-Mart expects its suppliers to bear the brunt of the implementation costs for the RFID system. Meeting Wal-Mart’s RFID requirements might run over $20 million for a large supplier. Even though some Wal-Mart suppliers report benefits from RFID, other suppliers say they don’t expect any return from their RFID investments for years, if at all.

If Wal-Mart was more willing to share some of the implementation costs, then perhaps its suppliers would be more willing to speed up implementation of the new system.

4. Should Wal-Mart require all its suppliers to use RFID? Why or why not? Explain your answer.

Students’ answers will vary based on their experiences and beliefs.

MIS In Action

Explore the RFID Privacy Page at the Electronic Privacy Information Center (EPIC) www.epic.org/privacy/rfid and answer the following questions.

1. Describe some RFID applications that might pose a threat to privacy. What information does RFID enable them to track?

RFID applications that might pose a threat to privacy include implantation in humans and using RFID chips in “PASS” cards for travelers between North American countries. RFID chips can contain just about any information you can think of. Chips implanted in humans can contain vital medical information that could be used in an emergency. The chips can also instantaneously track the location of any person, anywhere.

2. How do these applications threaten personal privacy? How serious is this threat?

“While corporate giants tout the merits of RFID technology, civil liberties advocates point out that the ability to track people, products, vehicles, and even currency would create an Orwellian world where law enforcement officials and nosy retailers could read the contents of a handbag—perhaps without a person's knowledge—simply by installing RFID readers nearby. Such a fear is not unfounded. Currently, some RFID readers have the capacity to read data transmitted by many different RFID tag. This means that if a person enters a store carrying several RFID tags—for example, in articles of clothing or cards carried in a wallet—one RFID reader can read the data emitted by all of the tags, and not simply the signal relayed by in-store products. This capacity enables retailers with RFID readers to compile a more complete profile of shoppers than would be possible by simply scanning the bar codes of products a consumer purchases.

The proposed uses of RFID tags pose exponentially greater risks to personal privacy. Many technology experts predict the development of a seamless network of millions of RFID receivers strategically placed around the globe in airports, seaports, highways, distribution centers, warehouses, retail stores, and consumers' homes, all of which are constantly reading, processing, and evaluating consumers behaviors and purchases. In addition to undermining a consumer's ability to enjoy a lifestyle in relative anonymity, critics of the technology counter that the information gathered by RFID readers could be obtained by the government for surveillance or monitoring the activities of citizens, or even misused by hackers and criminals. Even more, the ever-expanding use of RFID chips would leave no aspect of life safe from the prying eyes of retail and corporate giants. Chips integrated into commonplace products such as floor tiles, shelf paper, cabinets, appliance, exercise equipment, and grocery and packaged products would allow even our most intimate activities to be monitored. (www.epic.org/privacy/rfid Web site, copied November 2007)

3. Should these RFID applications be deployed? Why or why not? Justify your answer.

Obviously, answers will vary by student. This question provides an opportunity to incorporate a discussion about how new technologies can inadvertently invade and threaten individual privacy even though they may help improve business processes.

6.5. Hands-On MIS

Achieving Operational Excellence: Using Internet Tools to Increase Efficiency and Productivity: Dirt Bikes USA

Software skills: Web browser software and presentation softwareBusiness skills: Employee productivity analysis

Dirt Bikes’s management is concerned about how much money is being spent communicating with people inside and outside the company and on obtaining information about developments in the motorcycle industry and the global economy. You have been asked to investigate how Internet tools and technology could be used to help Dirt Bikes employees communicate and obtain information more efficiently. Dirt Bikes provides Internet access to all its employees who use desktop computers.

1. How could the various Internet tools help employees at Dirt Bikes? Create a matrix showing what types of employees and business functions would benefit from using each type of tool and why.

The Internet is far easier and less expensive to use for much of telecommunications than more traditional technologies. In addition, the cost of installation and training for using the Internet is very low. Cost for using the Internet is low enough that many smaller companies that could not afford telecommunications earlier are now using it, which means they are able to compete with other companies through modern technology. Students must also recognize that Dirt Bikes is still a relatively small company. Internet tools can reduce costs but students should not expect Dirt Bikes to make the large-sized gains bigger companies can achieve. Nonetheless, the Internet and its many tools should be of help to Dirt Bikes now and even more as it grows.

A SAMPLE MATRIX:

Tool Department BenefitE-mail Sales Communicate and share documents with customers and

dealersAccounting Exchange orders, invoices, and other necessary

documents Newsgroups Customer relations A bulletin board for sales reps, service reps, and

customers to exchange information and ideasDesign Discuss scientific issues with non- Dirt Bikes scientists,

designers, producers.Chatting Sales Salespersons on road discuss problems with home staff

Management Consult with management of Dirt Bikes’ suppliersWeb Production Handle production problems, research the experiences of

othersFinance Follow investment markets, interest rates and own

investmentsTelnet Sales Use home computer to make presentations to potential

customersSupply chain Suppliers obtain Dirt Bikes production status to help plan

deliveries FTP Design Share large design files with distant colleagues

Supplies Make large Dirt Bikes design documents available to suppliers

Wireless devices such as Internet-enabled cell phones or Wi-Fi enabled PCs can be useful when employees need to be away from their home base and yet need to use the Internet. Instant messaging and e-mail can be excellent tools for communicating with other employees and with customers, suppliers and all the other non-employees. Students may find other uses for Internet tools and services not covered here.

2. How could Dirt Bikes benefit from intranets for its sales and marketing, human resources, and manufacturing and production departments? Select one of these departments and describe the kind of information that could be provided by an intranet for that department. How could this intranet increase efficiency and productivity for that department?

Again, there are a multitude of responses students can give. Students must realize that intranets are internal, and they inexpensively allow connectivity for all computers, a very valuable facility for sharing information within the company. Dirt Bikes can use an intranet to make sales reports and attendance reports at races easily available for all employees. Racing videos can be posted to the intranet for all to view. Human resources can instantly update employee handbooks and benefits information. The information is rapidly available and the company saves printing and distribution costs. Finance and accounting can integrate its information online for management and help sales and production monitor revenues and costs. The marketing and sales staff can share their reports, leads, and insights with designers about changing ideas on motorcycle design. The supply chain staff can monitor production’s status while accounting can obtain all necessary information on the purchase of supplies.

Intranets give companies an opportunity to increase productivity while reducing costs. The production unit can monitor possible design changes and even offer input on ways to make the proposed changes that will be easier and cheaper to manufacture. Moreover, the whole design process can be significantly speeded up when proposals and changes to the design are instantly shared. Management can use the design and production information on the intranet to monitor the whole process.

Manufacturing needs close contact with designers, those managing their supply chain, and even accounting. Sales must also communicate information that manufacturing needs so that it can plan for and execute its production plans. Even finance and accounting need some information from these various departments.

Students should identify the specific information needed by the department they select, where it comes from, and how communicating it on a timely basis can increase productivity and efficiency.

3. (Optional) If possible, use electronic presentation software to summarize your findings for management.

Improving Decision Making: Using Spreadsheet Software to Evaluate Wireless Services

Software skills: Spreadsheet formulas, formattingBusiness skills: Analyzing telecommunications services and costs

You would like to equip your sales force of 35 based in Cincinnati, Ohio, with mobile phones that have capabilities for voice transmission, text messaging, and taking and sending photos. Use the Web to select a wireless service provider that provides nationwide service as well as good service in your home area. Examine the features of the mobile handsets offered by each of these vendors. Assume that each of the 35 salespeople will need to spend three hours per day during business hours (8 A.M. to 6 P.M.) on mobile voice communications, send 30 text messages per day, and five photos per week. Use your spreadsheet software to determine the wireless service and handset that will offer both the best pricing per user over a two-year period. For the purposes of this exercise, you do not need to consider corporate discounts.

Answers will vary, since plan rates and costs of mobile phones are constantly changing. The answer to the following question can be found in the sample solution found in the Microsoft Excel file named Ess8ch06solutionfile.xls.

Achieving Operational Excellence: Using Web Search Engines for Business Research

Software Skills: Web search toolsBusiness skills: Researching new technologies

You have heard that ethanol is a promising alternative fuel for motor vehicles, and you would like to learn more about how it is made and where it is used. Use the following search engines to obtain that information: Yahoo!, Google, and MSN. If you wish, try some other search engines as well. Compare the volume and quality of information you find with each search tool. Which tool is the easiest to use? Which produced the best results for your research? Why?

Answers will vary according to the search phrases students enter in the search engines. The object of this question should be for students to explore new search engines and Web services and not stick with “what they already know.” To that end, encourage students to use a different search engine that what they normally use and explore how their search results are framed—sponsored links or organic listings. Also encourage them to search for audio and video files, blogs, wikis, and Web 2.0 services about the subject. Is the information more useful, less useful, pertinent, or trustworthy? Do they prefer simple text documents or do they find the newer Web services more helpful?

Review Questions

1. What are the principal components of telecommunications networks and key networking technologies?

Describe the features of a simple network and the network infrastructure for a large company.

A simple network consists of two or more connected computers. Basic network components include computers, network interfaces, a connection medium, network operating system software, and either a hub or a switch. The networking infrastructure for a large company relies on both public and private infrastructures to support the movement of information across diverse technological platforms. It includes the traditional telephone system, mobile cellular communication, wireless local-area networks, videoconferencing systems, a corporate Web site, intranets, extranets, and an array of local and wide-area networks, including the Internet. This collection of networks evolved from two fundamentally different types of networks: telephone networks and computer networks.

Name and describe the principal technologies and trends that have shaped contemporary telecommunications systems.

Client/Server computing, the use of packet switching, and the development of widely used communications standards such as TCP/IP are the three technologies that have shaped contemporary telecommunications systems.

Client/Server computing has extended to networking departments, workgroups, factory floors, and other parts of the business that could not be served by a centralized architecture. The Internet is based on client/server computing. Packet Switching technology allows nearly full use of almost all available lines and capacity. This was not possible with the traditional dedicated circuit-switching techniques that were used in the past. Having a set of protocols for connecting diverse hardware and software components has provided a universally agreed upon method for data transmission. TCP/IP is a suite of protocols that has become the dominant.

2. What are the main telecommunications transmission media and types of networks?

Name the different types of physical transmission media and compare them in terms of speed and cost.

Table 6-2 summarizes typical speeds and costs for telecommunications transmission media. Typical speeds and costs for several of the transmission media are provided below.

Medium Speed Cost

Twisted wire up to 100 Mbps LowMicrowave up to 600+ MbpsSatellite up to 600+ MbpsCoaxial cable up to 1 GbpsFiber-optic cable up to 6+ Tbps High

Define a local-area network (LAN), describe its components and the functions of each component?

A LAN is a telecommunications network that is designed to connect personal computers and other digital devices within a half-mile or 500-meter radius. LANs typically connect a few computers in a small office, all the computers in one building, or all the computers in several buildings in close proximity. LANs require their own dedicated channels.

Components of a typical LAN consists of: computers (dedicated server and clients), a network operating system (NOS) residing on a dedicated server computer, cable (wiring) connecting the devices, network interface cards (NIC), switches or a hub, and a router.

NIC each computer on the network contains a network interface device. Connection medium – for linking network components; can be a telephone wire,

coaxial cable, or radio signal in the case of cell phone and wireless local-area networks (Wi-Fi networks).

NOS routes and manages communications on the network and coordinates network resources.

Dedicated server provides users with access to shared computing resources in the network. The server determines who gets access to what and in what sequence.

Client computers are connected to one another. Switches or hub act as a connection point between the computers. Hubs are very

simple devices that connect network components and send data packets to other connected devices. A switch has more intelligence than a hub and can filter and forward data to a specified destination.

Router a special communications processor used to route data packets through different networks, ensuring messages are sent to the correct address.

Name and describe the principal network topologies.

The principal network topologies include: Star topology : all devices on the network connect to a single hub and all network

traffic flows through the hub. Bus topology : one station transmits signals, which travel in both directions along a

single transmission segment. All of the signals are broadcast in both directions to the entire network, with special software to identify which components receive each message.

Ring topology : connects network components in a closed loop. Messages pass from computer to computer in only one direction around the loop and only one station at a time may tansmit.

3. How do the Internet and Internet technology work and how do they support communication and e-business?

Define the Internet, describe how it works and explain how it provides business value.

The Internet is a vast network of computers that connects millions of people all over the world. The Internet uses the client/server model of computing and the TCP/IP network

reference model. Every computer on the Internet is assigned a unique numeric IP address. No one owns the Internet, and it has no formal management organization. However, worldwide Internet policies are established by organizations and government bodies, such as the Internet Architecture Board and the World Wide Web Consortium. The Internet must also conform to the laws of the sovereign nation-states in which it operates, as well as the technical infrastructure that exist within the nation-state.

The Internet enables employees to gain remote access to the company’s internal systems through its Web site. They are able to better service customers and suppliers, improve operational efficiency, increase productivity, lower operational costs, have a broader market base, and reach more individual customers on a global scale by establishing a Web presence. The cost of e-mail and other Internet services tend to be far lower than equivalent voice, postal, or over night delivery costs, making the Internet a very inexpensive communication medium. It is also a very fast method of communication, with messages arriving anywhere in the world in a matter of seconds or minutes.

Explain how the domain name and IP addressing system work.

A domain name is the English-like name that corresponds to the unique 32-bit numeric IP address for each computer connected to the Internet. The Domain Name System (DNS) converts IP addresses to domain names so that users only need to specify a domain name to access a computer on the Internet instead of typing the numeric IP address. DNS servers maintain a database containing IP addresses mapped to their corresponding domain names.

The Internet is based on the TCP/IP networking protocol suite. Every computer on the Internet is assigned a unique Internet Protocol (IP) address, which currently is a 32-bit number represented by four strings of numbers ranging from 0 to 255 separated by periods.

When a user sends a message to another user on the Internet, the message is first decomposed into packets using the TCP protocol. Each packet contains its destination address. The packets are then sent from the client to the network server and from there on to as many other servers as necessary to arrive at a specific computer with a known address. At the destination address, the packets are reassembled into the orginal message.

List and describe the principal Internet services.

Table 6.3 lists and describes the major Internet services.

E-mail person-to-person messaging; document sharing. Newsgroups discussion groups on electronic bulletin boards. Chatting and instant messaging interactive conversations. Telnet logging on to one computer system and doing work on another. File Transfer Protocol (FTP) transferring files from computer to computer. World Wide Web retrieving, formatting, and displaying information (including text,

audio, graphics, and video) using hypertext links.

Define and describe VoIP and virtual private networks and explain how they provide value to businesses.

Voice over Internet Protocol (VoIP) enables Internet technology to be used for telephone voice transmission over the Internet or private networks. VoIP offers the advantage of avoiding tolls charged by local and long-distance telephone networks. VoIP provides businesses an opportunity to reduce costs because they no longer have to maintain separate networks or provide support services and personnel for each different type of network. It gives organizations flexibility because phones can be added or moved to different offices without rewiring or reconfiguring networks.

Virtual private networks are secure, encrypted, private networks that have been configured within a public network to take advantage of the economies of scale and management facilities of large networks, such as the Internet. VPNs are low-cost alternatives to private WANs. VPNs give businesses a more efficient network infrastructure for combining voice and data networks.

List and describe alternative ways of locating information on the Web.

Search engines a facility on the Web that helps you find sites with the information and/or services you want. Examples: Google, Yahoo!, MSN, AOL, and Ask Jeeves.

Intelligent agent shopping bots use intelligent agent software for searching the Internet for shopping information. Examples: MySimon and Froogle

Semantic Web reduces the amount of human involvement in searching for and processing Web information. It’s still in its infancy but promises to establish specific meanings for data on the Web, categories for classifying the data, and relationships between classification categories.

Web 2.0 provides second-generation interactive Internet-based services that enable people to collaborate, share information, and create new services online. Web 2.0 software applications run on the Web itself instead of the desktop and bring the vision of Web-based computing closer to realization.

Blogs are informal yet structured Web sites where subscribing individuals can publish stories, opinions, and links to other Web sites of interest.

Rich Site Summary or Really Simple Syndication (RSS) is a simple way for people to have content they want pulled from Web sites and fed automatically to their computers, where it can be stored for later viewing. It’s commonly used with blogs.

Wikis are collaborative Web sites where visitors can add, delete, or modify content on the site, including the work of previous authors.

Define and explain the difference between intranets and extranets. Explain how they provide value to businesses.

Web technology and Internet networking standards provide the connectivity and interfaces for internal private intranets and private extranets that can be accessed by many different kinds of computers inside and outside the organization.

Intranet is an internal (private) organizational network that provides access to data across the enterprise and is protected from public users by firewalls. It uses the

existing company network infrastructure along with Internet connectivity standards and software developed for the World Wide Web. Intranets create networked applications that can run on many different kinds of computers throughout the organization, including mobile handheld computers and wireless remote access devices.

Extranet is an intranet that is restricted to an organization and authorized outside users like customers and suppliers. A company uses firewalls to ensure that access to its internal data is limited and remains secure.

Both intranets and extranets reduce operational costs by providing additional connectivity for coordinating disparate business processes within the firm and for linking electronically to customers and suppliers. Extranets often are employed for collaborating with other companies for supply chain management, product design and development, and training efforts.

4. What are the principal technologies and standards for wireless networking, communication and Internet access?

Define Bluetooth, WiFi, WiMax, and 3G networks.

Standards for wireless computer networks include Bluetooth (802.15) for small personal-area networks (PANs), Wi-Fi (802.11) for local-area networks (LANs), and WiMax (802.16) for metropolitan-area networks (MANs). Bluetooth can link up to eight devices within a 10-meter area using low-power, radio-based communication and can transmit up to 722 Kbps in the 2.4 GHz band. Wireless phones, keyboards, computers, printers, and PDAs using Bluetooth can communicate with each other and even operate each other without direct user intervention.

Wi-FI is useful for creating wireless LANs and for providing wireless Internet access. Its access range is limited to anywhere between 300 feet and three miles. Hotspots are public access points individuals use to obtain high speed Internet access.

WiMax has a wireless access range of up to 31 miles and a data transfer rate of up to 75 Mbps, making it suitable for providing broadband Internet access in areas lacking DSL and cable lines. The 802.16 specification also has robust security and quality-of-service features to support voice and video.

3G is a short term for third-generation wireless technology, especially mobile communications. Cellular networks have evolved from slow-speed (1G) analog networks to high-speed, high-bandwidth, digital packet-switched, third-generation (3G) networks with speeds ranging from 144 Kbps to more than 2 Mbps for data transmission.

Describe the capabilities of each and for which types of applications each is best suited.

Bluetooth: access very limited; useful for creating small personal-are networks.

Wi-fi: access is limited to 10 to 30 meters; useful for creating small local area networks

WiMax: access is limited to a range up to 31 miles: useful for creating wide area networks

3G networks: access is available on major cellular telephone carriers that have configured their networks for 3G services.

5. Why are radio frequency identification (RFID) and wireless sensor networks valuable for business?

Define radio frequency identification (RFID), explain how it works and how it provides value to businesses.

Mobile wireless technology facilitates supply chain management by capturing data on the movement of goods as these events take place and by providing detailed, immediate information as goods move among supply chain partners. Radio frequency identification (RFID) systems provide a microchip that contains data about an item and its location. The tags transmit radio signals over a short distance to special RFID readers. The RFID readers then pass the data over a network to a computer for processing.

RFID gives businesses an opportunity to further automate their supply chain networks. The technology allows more data on an RFID chip than typical barcodes. RFID systems track each pallet, lot, or unit item in a shipment. The technology helps companies improve receiving and storage operations by improving their ability to “see” exactly what stock is stored in warehouses or on retail store shelves.

Define wireless sensor networks, explain how they work and describe the kinds of applications that use them.

Wireless sensor networks (WSNs) are networks of interconnected wireless devices with some processing and radio-transmitting capability that are embedded into the physical environment to provide measurements of many points over large spaces.

Wireless sensor networks are valuable for monitoring environmental changes, traffic patterns, security incidents, or supply chain events. Wireless sensor networks can be placed in the field for years without any maintenance or hum intervention. That reduces costs to businesses using them.

Discussion Questions

1. Network design is a key business decision as well as a technology decision. Why?

The design of a network and its capabilities can affect what an organization can and cannot do, how well it operates in multiple locations, what kind of information it can exchange internally and with customers and suppliers. Some business models are dependent on networking. Although managers are not networking experts, they should know the business implications of the networks they choose for their firms.

The world entered the twenty first century on a wave of technology optimism. Today, information and communications technologies seem capable of generating a new level of global prosperity for businesses. Successful network design can raise productivity, create jobs, and increase incomes. Diligent business management firms will examine each specific key business decision carefully, and business management should make sound network design and technology decisions.

2. Should all major retailing and manufacturing companies switch to RFID? Why or why not?

RFID systems are complex and expensive to implement. Businesses that will most likely benefit from RFID technology are those that do a lot of tracking of movement of goods.

Major retailing and manufacturing companies will no doubt switch to RFID technology as its costs fall and its applications increase. Whether or not all major retailing and manufacturing companies should switch to RFID is a matter of choice. They will no doubt go this way in the near future. By doing so, they will increase their operational efficiencies; increases profits, or gain a competitive advantage by lowering overall costs to consumers. Ask your students to review the information in the following Web site: http://www.epic.org/privacy/rfid/ and develop some ideas from there

Video Case Questions

You will find a video case illustrating some of the concepts in this chapter on the Laudon Web site at www.prenhall.com/laudon along with questions to help you analyze the case.

Teamwork: Evaluating Smart phones

Form a group with three or four of your classmates. Compare the capabilities of Apple’s iPhone with a handset from another vendor with similar features. Your analysis should consider the purchase cost of each device, the wireless networks where each device can operate, plan and handset costs, and the services that are available for each device. You should also consider other capabilities of each device, including the ability to integrate with existing corporate or PC applications. Which device would you select? What criteria would you use to guide your selection? If possible, use electronic presentation software to present your findings to the class.

In their analysis, students should set up a table for each of the two devices that they selected and

how they made their comparision. What features did they consider the most valuable. They may use a weighted factor scale and assign weights to each capability to determine which product was the best to meet their needs.

Ensure students explore not just the phones themselves, but also the support networks. That may be a bigger satisfaction factor than the phone.

Direct your students to conduct their search on the Internet for the Web sites listed below.

http://www.verizon.com/http://www.apple.com/http://www.nokia.com/http://www.samsung.com/http://www.motorola.com/

Business Problem-Solving Case: Is Google Becoming Too Powerful?

1. Evaluate Google using the competitive forces and value chain models. What are Google’s sources of competitive advantage? How does Google provide value to the average user? Success brings with it competition. In this case that is exactly what has happened. Search technology was never considered a moneymaker until Google developed a very profitable target ad program to go along with its well-regarded search engine. Google’s revenue comes from two main sources: online advertising and online search services.

Competitive forces it must be concerned with are: substitute products: Yahoo! portal and Microsoft’s MSN search services and its new

Live services provide users with substitutes for Google’s products. NBC’s decision to partner with other Web sites to provide video content is a serious threat to Google.

New market entrants: other companies, smaller and more nimble are continually introducing products that can divert uers.

Sources of competitive advantage include:

Online advertising: accounts for a large portion of Google’s revenue. AdWords: no other search engine/service provides this kind of program. It’s a self-

service advertising program in which vendors bid to have their ads placed alongside search results.

Adsense: scans Web pages for target words and displays appropriate advertisements, enabling Web site operators to generate revenue from their sites.

YouTube: acquired the most popular video site in 2006. DoubleClick: purchased the online advertising company in 2007. Added strength in

banner and video ads as well as strong relationships with Web publishers, advertisers, and ad agencies.

Google provides value to the user by using an inexpensive, flexible infrastructure to speed up Web searches and provide its users with a vast array of Web-based services and software tools. Google only needs to spend $1 for every $3 its competitors spend to deliver a comparable amount of computing power.

Google is continually introducing new, free services to users that threaten to erode traditional software platforms like Microsoft’s industry-leading Office suite. New services like its telephone voice search service threaten traditional telephone directory services but give users more flexibility.

2. What problems and challenges does Google face in this case? What people, organization, and technology factors are responsible for these problems and challenges? Does Google’s business strategy effectively address these challenges? Explain your answer.

Even though Google has enjoyed tremendous success in its short history, it faces challenges from a variety of sources.

Competition in the search engine market is heating up with the entry of both small and large companies.

Microsoft is a major threat to Google with its long-time strategy to diminish or destroy their competitors. Microsoft no longer views Google as a simple provider of search technology. Google is viewed as a software company that threatens to infringe on the markets that Microsoft dominates (operating systems and office productivity).Microsoft with its “deep pockets” has the capital to purchase rights to copyrighted material. It also owns powerful digital rights management software.

Microsoft’s new Vista operating system integrates search technology into the new operating system and into future versions of Office.

Google’s moves into media and digital content have resulted in lawsuits. It’s been sued over copyright infringements even before it purchased YouTube.

NBC Universal and News Corporation have teamed up to launch their own video Web site, which will run television show clips and full-length movies on Yahoo, AOL, MSC, MySpace, and other partner sites. NBC has a sharp advantage since it legally owns the content thereby giving it control of how the clips and movies are used.

Google’s business strategy is one of product differentiation. It continually introduces new products aimed at attracting more users and in turn, more advertisers. Its innovative products give businesses more avenues to reach out to customers.

People: Design, enhance, and offer new product offerings and services. Design people-friendly interfaces. Legal and regulatory compliance will be an issue.

Organization: Demands and changes in the external environment must be constantly evaluated and responded to. Resources may be an issue when dealing with Microsoft and the strategies they will take to overthrow Google.

Technology: Continually deploy new technology.

3. How might a business owner benefit from the services offered by Google? Which Google services and products would be attractive to you if you owned a business? Why would you choose to use these particular products or services?

In a fraction of a second, Google’s technology can evaluate millions of variables about its users and advertisers, correlate them with millions of potential ads, and deliver the message to which each user is most likely to respond. Because this technology makes ads more relevant, users click on ads 50 to 100 percent more often on Google than on Yahoo, creating a better return for advertisers. Businesses are always looking for profitable ways to reach customers and Google is more successful at finding new avenues to users than any other Web-based business. Businesses can build their own AdWords and AdSense programs on their own site thus generating new revenues plus new ways to advertise.

It’s now using its ability to connect users and advertisers through its Gmail e-mail services. The selection of ads is based on the actual text of the messages, meaning that ads aren’t wasted on frivolous, unrelated subjects.

Its telephone voice search service, Google Voice Local Search, enables users to dial an 800 number using speech recognition technology to answer queries about local businesses. It recently launched its Universal Search service, which combines the results from its Web, news, video, image, and other search services on one results page, with links to separate services available at the top of every page.

4. How can Google incorporate wireless technology into its business? Which wireless technologies in particular might lend themselves to extending Google’s success? Visit Google’s Web site and write a summary of the wireless/mobile services that Google currently offers. What other applications of mobile technology can you envision for the company?

Google offers an array of services for cell phones and users on-the-go: Search: flight updates, sports results, weather reports are formatted appropriately for

mobile devices’ smaller screen size Maps: locate nearby businesses and services Gmail: email to and from cell phones and mobile computing devices YouTube: watch and upload videos from anywhere Picasa: view photo albums on mobile computing devices SMS (short message services): stay in touch with the office, family, and friends News: short news updates anywhere, anytime Calendars: never miss an appointment Readers: blogs and news feeds available on mobile devices

Eventually Google may offer live broadcast feeds for news and sports events. In November

2007 Google was toying with the idea of introducing a Google phone that would rival the popular iPhone from Apple. It’s also introducing new application software that will work on any mobile device and enjoy universal support and acceptance on every mobile device.

5. What are the pros and cons of a company like Google extending its reach into new industries? How does Google’s growth affect consumers: How does it impact the business world?

For the most part, most students would probably agree that Google has implemented its solutions successfully as evidenced by the huge ramp-up in revenue, earnings, and stock price. However, there have been issues with some of their products for which it has been severely criticized by privacy advocates and other businesses. For example, its AdWord advertising program has been under fire for click fraud and its Gmail has raised the ire of privacy advocates because it uses the same technology as AdSense to place advertisements alongside messages. The selection of ads is based on the actual text of the messages, meaning that every Gmail message is read by an automated scanner. Google has also angered some members of the entertainment industry by using copyrighted material without permission. It haa also received criticism in its plans to digitize the contents of millions of books. It has been sued by a French news agency for possible copyright violation on Google News.

From the case, it appears that Google is very aware of the challenges and problems that it faces. It knows that its success brings competition into marketplace and that it have to be continually looking for ways to make its product offerings more attractive to users than those of its competitors. Apparently, users love all the new products since Google remains the most used search-related company. Users like the openness of the company and being able to consolidate many of its services into mashups and new applications.

6. How successful do you think Google will be in the future? Google currently has the major share of the Web-based advertising market, however Microsoft and other market entrants will be a major threat to them. The Microsoft corporation have very “deep pockets” and will stop at nothing to overturn and destroy Google’s competitive advantage. Legal and regulatory compliance will be a major issue as this market grows and more concerns are expressed from the external environments.

History, however, is not on Google’s side. Every major company that’s been a force in technology in one era has lost its lead in the next era. For example, IBM was king in the 1940s and 1950s. DEC was king in the mini-computer era during the 1970s. Microsoft was king in the 1980s and 1990s during the reign of desktop computers. Google reigns in the 2000s with its Web-based services. Will it remain on top as technology continues to evolve?

Chapter Summary

Section 6.1: Telecommunications and Networking in Today’s Business World

A simple network consists of two or more connected computers. Basic network components include computers, network interfaces, a connection medium, network operating system software, and either a hub or a switch. The networking infrastructure for a large company relies on both public and private infrastructures to support the movement of information across diverse technological platforms. It includes the traditional telephone system, mobile cellular communication, wireless local-area networks, videoconferencing systems, a corporate Web site, intranets, extranets, and an array of local and wide-area networks, including the Internet. This collection of networks evolved from two fundamentally different types of networks: telephone networks and computer networks.

Contemporary networks have been shaped by the rise of client/server computing, the use of packet switching, and the adoption of Transmission Control Protocol/ Internet Protocol (TCP/IP) as a universal communications standard for linking disparate networks and computers. Client/server networks have distributed much of the organization’s computing power to the desktop and factory floor. Packet switching makes more efficient use of network communications capacity by breaking messages into small packets that are sent independently along different paths in a network and then reassembled at their destinations. Protocols provide a common set of rules that enable communication among diverse components in a telecommunications network. TCP/IP is a suite of protocols that has become the dominant model of achieving connectivity among different networks and computers. It is the connectivity model used in the Internet.

Section 6.2: Communications NetworksThe principal physical transmission media are twisted copper telephone wire, coaxial copper cable, fiber-optic cable, and wireless transmission. The choice of transmission medium depends on the distance and volume of communication required by the organization and its financial resources. Twisted wire enables companies to use existing wiring for telephone systems for digital communication, although it is relatively slow. Fiber-optic and coaxial cable are used for high-volume transmission but are expensive to install. Microwave and satellite are used for wireless communication over long distances. The transmission capacity of a medium is determined by the range of frequencies it can accommodate.

There are different types of networks and network services available to organizations. Network selection and design should be based on the organization’s information requirements and the distance required for transmission. Local-area networks (LANs) connect PCs and other digital devices together within a 500-meter radius and are used today for many corporate computing tasks. Network components may be connected together using a star, bus, or ring topology. Wide-area networks (WANs) span broad geographical distances, ranging from several miles to continents and are private networks that are independently managed. Metropolitan-area networks (MANs) span a single urban area.

Digital subscriber line (DSL) technologies, cable Internet connections, and T1 lines are often used for high-capacity Internet connections. Like ISDN, DSL technologies also operate over existing copper telephone lines to carry voice, data, and video, but they have higher transmission capacities than ISDN. Cable Internet connections provide high-speed access to the Web or

corporate intranets at speeds of up to 10 Mbps. T1 lines are high-speed data lines leased from communications providers and support data transmission rates up to 1.544 Mbps.

Section 6.3: The Global InternetThe Internet is a worldwide network of networks that uses the client/server model of computing and the TCP/IP network reference model. Every computer on the Internet is assigned a unique numeric IP address. The Domain Name System (DNS) converts IP addresses to domain names so that users only need to specify a domain name to access a computer on the Internet instead of typing the numeric IP address. No one owns the Internet and it has no formal management organization. However, worldwide Internet policies are established by organizations and government bodies, such as the Internet Architecture Board and the World Wide Web Consortium. The Internet must also conform to the laws of the sovereign nation-states in which it operates, as well as the technical infrastructure that exist within the nation-state.

Major Internet services include e-mail, newsgroups, chatting, instant messaging, Telnet, FTP, and the World Wide Web. Web pages are based on hypertext markup language (HTML) and can display text, graphics, video, and audio. Web site directories, search engines, the Semantic Web, Web 2.0 services, wikis, blogs, and Rich Site Summary (RSS) technology help users locate the information they need on the Web. Web technology and Internet networking standards provide the connectivity and interfaces for internal private intranets and private extranets that can be accessed by many different kinds of computers inside and outside the organization.

Companies use Voice over Internet Protocol (VoIP) telephony to save money. VoIP enables Internet technology to be used for telephone voice transmission. Internet technology can also reduce communication costs by enabling companies to create virtual private networks (VPNs) as low-cost alternatives to private WANs.

Section 6.4: The Wireless RevolutionCellular networks have evolved from slow-speed (1G) analog networks to high-speed, high-bandwidth, digital packet-switched, third-generation (3G) networks with speeds ranging from 144 Kbps to more than 2 Mbps for data transmission. Second-generation (2G) cellular networks are digital circuit-switched networks used primarily for voice transmission, but they can also transmit data at rates ranging from 9.6 to 14.4 Kbps. 2.5G networks are packet switched, use many existing infrastructure elements, and have data transmission rates ranging from 50 to 144 Kbps.

Standards for wireless computer networks include Bluetooth (802.15) for small personal-area networks (PANs), Wi-Fi (802.11) for local-area networks (LANs), and WiMax (802.16) for metropolitan-area networks (MANs). Bluetooth can link up to eight devices within a 10-meter area using low-power, radio-based communication and can transmit up to 722 Kbps in the 2.4 GHz band. Wireless phones, keyboards, computers, printers, and PDAs using Bluetooth can communicate with each other and even operate each other without direct user intervention.

The most popular of the 802.11 standards is currently 802.11b, which can transmit up to 11 Mbps in the unlicensed 2.4 GHz band and has an effective distance of 30 to 50 meters, although this range can be extended outdoors by using tower-mounted antennas. The 802.11b standard

has been the most widely used standard for creating wireless LANs and providing broadband wireless Internet access. However, 802.11b is vulnerable to penetration by outsiders and interference from other wireless devices in the same frequency spectrum.

WiMax has a wireless access range of up to 31 miles and a data transfer rate of up to 75 Mbps, making it suitable for providing broadband Internet access in areas lacking DSL and cable lines. The 802.16 specification also has robust security and quality-of-service features to support voice and video.

Mobile wireless technology facilitates supply chain management by capturing data on the movement of goods as these events take place and by providing detailed, immediate information as goods move among supply chain partners. Radio frequency identification (RFID) systems provide a microchip that contains data about an item and its location. The tags transmit radio signals over a short distance to special RFID readers. The RFID readers then pass the data over a network to a computer for processing.

Wireless sensor networks (WSNs) are networks of interconnected wireless devices with some processing and radio-transmitting capability that are embedded into the physical environment to provide measurements of many points over large spaces. Wireless sensor networks are valuable for monitoring environmental changes, traffic patterns, security incidents, or supply chain events.