Read “Monitoring Employees on Networks: Unethical or Good Business?” on p. 210 (Ch. 6) of Essentials of Management Information Systems.Answer…

Read “Monitoring Employees on Networks: Unethical or Good Business?” on p. 210 (Ch. 6) of Essentials of Management Information Systems. Answer the following questions in 200 to 300 words:

• How does e-mail benefit an organization? Why might an organization want to limit how an employee uses e-mail during work hours? What is an e-mail’s path once it leaves an organization?

• What is the effect of instant messaging on organizational networks? What are benefits and drawbacks of using instant messaging in an organization?

• What are benefits and drawbacks of web page and search engine use in an organization?

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

S T U D E N T L E A R N I N G O B J E C T I V E S

After completing this chapter, you will be able to answer the
following questions:

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

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

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

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

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

Telecommunications,
the Internet, and
Wireless Technology

L E A R N I N G O B J E C T I V E S
6C H A P T E R

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CHAPTER OUTLINE
Chapter-Opening Case: Los Angeles International

Airport Soars with New Networking Technology

6.1 Telecommunications and Networking in Today’s
Business World

6.2 Communications Networks

6.3 The Global Internet

6.4 The Wireless Revolution

6.5 Hands-On MIS Projects

Business Problem-Solving Case: Google Versus
Microsoft: Clash of the Technology Titans

LOS ANGELES INTERNATIONAL AIRPORT SOARS WITH NEW NETWORKING
TECHNOLOGY

What does it take today to be a state-of-the art international airport? Los Angeles
World Airports (LAWA) is trying to answer this question. LAWA is the department of
the City of Los Angeles, California, that owns and operates Los Angeles International
Airport (LAX), the Van Nuys Airport, the LA/Ontario International Airport, and the
LA/Palmdale Regional Airport. These airports’ physical facilities and IT infrastructure
were out of date. The new generation of giant aircraft with very large wingspans didn’t
fit most of LAWA’s existing airport gates. What’s more, LAWA needed more powerful
computing and networking capabilities to make its operations more efficient and
convenient for travelers.

To recapture its place among first-rate international airports, LAWA began upgrading
both physical facilities and IT infrastructure at Los Angeles International Airport’s Tom
Bradley Terminal in late 2006. All projects will be completed by 2013. The terminal will

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almost double in size, and the entire airport will have a new Ethernet local-area network
(LAN). LAX’s network is linked to LAWA’s other airports.

LAWA management wants to make its network available to the 70 airlines that use its
airports to generate additional revenue and defray costs. The airlines will be billed for these
technologies on a usage basis. Larger airlines will probably continue to use their own
telecommunications lines and networks, but many smaller airlines will opt for using the
LAWA network to avoid the expense of purchasing and maintaining their own technology.

LAWA is relying increasingly on technology for virtually everything, and a wireless
network is critical. The airport’s wireless Wi-Fi network will expand throughout the entire
airport. For a fee, passengers are able to access the Internet from any public areas, from
curbside to the nose of the aircraft. When planes arrive at the gate, they can use wireless
connections to order parts and relay instructions to maintenance staff. Wireless handheld
devices are used for monitoring and checking bags. Wireless devices called COWs
(common use on wheels) can be wheeled directly to passengers standing in long lines to
help them obtain tickets and check in. The COWs tie into the airport’s common-use systems
and have a flight information display screen on top. The flexibility provided by wireless
technology made it possible reorganize work activities to increase efficiency and customer
service.

In May 2009, LAWA launched a new intranet site for its approximately 4,000 employ-
ees. The intranet provides staff members with the latest news about the airports and airport/-
airline business, along with chat rooms, blogs, and wikis to share knowledge and expertise.
The majority of LAWA employees have access to the intranet from their desktop computers.
Employees who don’t have a desktop computer were recently supplied with a handheld
version of the intranet. LAWA is considering opening some portions of the intranet to city
officials, councilmen, and perhaps local community groups who could benefit from the
information.

Sources: Eileen Feretic, “The Future of Flight,” Baseline, June 2009; “CIO Profiles: Dom Nessi: Deputy Executive
Director and CIO, Los Angeles World Airports, Information Week, May 4. 2009; and www.airport-la.com, accessed July
12, 2009.

Los Angeles World Airports illustrates some of the powerful new capabilities and opportu-
nities provided by contemporary networking technology. LAWA added a powerful local-
area network to connect devices and aircraft within its airports and wireless Wi-Fi technol-
ogy to support wireless devices and Internet access. These technologies improved customer
service and increased efficiency for both airports and airlines.

The chapter-opening diagram calls attention to important points raised by this case and
this chapter. LAWA has to compete with other airports as an international destination or
stopping point for many airlines. If it didn’t upgrade to a state-of-the-art physical or tech-
nology infrastructure, it would lose business from the growing number of international
flights using giant airplanes. Its image as an airport for international flights would suffer.

Management decided to expand the airports and implement new networking technology,
including a powerful local-area network for the airport, Wi-Fi wireless networking, wireless
devices for check-in and Internet access, and a new intranet. These improvements made the
airport easier to use for both passengers and airlines, saving time and operating costs.
LAWA had to redesign its ticketing, check-in, and other processes to take advantage of the
new technology.

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6.1 Telecommunications and Networking in Today’s
Business World

If you run or work in a business, you can’t do without networks. You need to communicate
rapidly with your customers, suppliers, and employees. Until about 1990, you used the
postal system or telephone system with voice or fax for business communication. Today,
however, you and your employees use computers and e-mail, the Internet, cell phones, and
mobile computers connected to wireless networks for this purpose. Networking and the
Internet are now nearly synonymous with doing business.

NETWORKING AND COMMUNICATION TRENDS

Firms in the past used two fundamentally different types of networks: telephone networks
and computer networks. Telephone networks historically handled voice communication, and
computer networks handled data traffic. Telephone networks were built by telephone
companies throughout the twentieth century using voice transmission technologies (hard-
ware and software), and these companies almost always operated as regulated monopolies
throughout the world. Computer networks were originally built by computer companies
seeking to transmit data between computers in different locations.

Thanks to continuing telecommunications deregulation and information technology
innovation, telephone and computer networks are slowly converging into a single digital
network using shared Internet-based standards and equipment. Telecommunications
providers, such as AT&T and Verizon, today offer data transmission, Internet access, cellular
telephone service, and television programming as well as voice service. Cable companies,
such as Cablevision and Comcast, now offer voice service and Internet access. Computer
networks have expanded to include Internet telephone and limited video services.
Increasingly, all of these voice, video, and data communications are based on Internet
technology.

Both voice and data communication networks have also become more powerful (faster),
more portable (smaller and mobile), and less expensive. For instance, the typical Internet
connection speed in 2000 was 56 kilobits per second, but today more than 60 percent of U.S.
Internet users have high-speed broadband connections provided by telephone and cable TV
companies running at 1 to 15 million bits per second. The cost for this service has fallen
exponentially, from 25 cents per kilobit in 2000 to a fraction of a cent today.

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194 Part II: Information Technology Infrastructure

Increasingly, voice and data communication, as well as Internet access, are taking place
over broadband wireless platforms, such as cell phones, handheld digital devices like
Kindles, and PCs in wireless networks. In a few years, more than half the Internet users in
the United States will use smartphones and mobile netbooks to access the Internet. In 2009,
73 million Americans access the Internet through mobile devices, and this number is
expected to double by 2013 (eMarketer, 2009).

WHAT IS A COMPUTER NETWORK?

If you had to connect the computers for two or more employees together in the same office,
you would need a computer network. Exactly what is a network? In its simplest form, a
network consists of two or more connected computers. Figure 6-1 illustrates the major
hardware, software, and transmission components used in a simple network: a client
computer and a dedicated server computer, network interfaces, a connection medium,
network operating system software, and either a hub or a switch.

Each computer on the network contains a network interface device called a network
interface card (NIC). Most personal computers today have this card built into the mother-
board. The 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).

The network operating system (NOS) routes and manages communications on the
network and coordinates network resources. It can reside on every computer in the network,
or it can reside primarily on a dedicated server computer for all the applications on the
network. A server computer is a computer on a network that performs important network
functions for client computers, such as serving up Web pages, storing data, and storing the
network operating system (and hence controlling the network). Server software, such as
Microsoft Windows Server, Linux, and Novell Open Enterprise Server, are the most widely
used network operating systems.

Figure 6-1
Components of a Simple Computer Network
Illustrated here is a very simple computer network, consisting of computers, a network operating system residing on a dedicated
server computer, cable (wiring) connecting the devices, network interface cards (NIC), switches, and a router.

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Chapter 6: Telecommunications, the Internet, and Wireless Technology 195

Most networks also contain a switch or a hub acting as a connection point between the
computers. Hubs are very simple devices that connect network components, sending a
packet of data to all other connected devices. A switch has more intelligence than a hub and
can filter and forward data to a specified destination on the network.

What if you want to communicate with another network, such as the Internet? You
would need a router. A router is a communications processor used to route packets of data
through different networks, ensuring that the data sent gets to the correct address.

Networks in Large Companies
The network we’ve just described might be suitable for a small business. But what about
large companies with many different locations and thousands of employees? As a firm
grows, and collects hundreds of small local-area networks, these networks can be tied
together into a corporate-wide networking infrastructure. The network infrastructure for a
large corporation consists of a large number of these small local-area networks linked to
other local-area networks and to firmwide corporate networks. A number of powerful
servers support a corporate Web site, a corporate intranet, and perhaps an extranet. Some of
these servers link to other large computers supporting back-end systems.

Figure 6-2 provides an illustration of these more complex, larger scale corporate-wide
networks. Here you can see that the corporate network infrastructure supports a mobile
sales force using cell phones, mobile employees linking to the company Web site, internal
company networks using mobile wireless local-area networks (Wi-Fi networks), and a
videoconferencing system to support managers across the world. In addition to these com-
puter networks, the firm’s infrastructure usually includes a separate telephone network
that handles most voice data. Many firms are dispensing with their traditional telephone
networks and using Internet telephones that run on their existing data networks (described
later).

As you can see from this figure, a large corporate network infrastructure uses a wide
variety of technologies—everything from ordinary telephone service and corporate data
networks to Internet service, wireless Internet, and wireless cell phones. One of the major

Figure 6-2
Corporate Network
Infrastructure
Today’s corporate
network infrastructure is
a collection of many
different networks from
the public switched
telephone network, to
the Internet, to corporate
local-area networks
linking workgroups,
departments, or office
floors.

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problems facing corporations today is how to integrate all the different communication
networks and channels into a coherent system that enables information to flow from one part
of the corporation to another, from one system to another. As more and more communica-
tion networks become digital, and based on Internet technologies, it will become easier to
integrate

them.

KEY DIGITAL NETWORKING TECHNOLOGIES

Contemporary digital networks and the Internet are based on three key technologies:
client/server computing, the use of packet switching, and the development of widely used
communications standards (the most important of which is Transmission Control
Protocol/Internet Protocol, or TCP/IP) for linking disparate networks and computers.

Client/Server Computing
We introduced client/server computing in Chapter 5. Client/server computing is a distrib-
uted computing model in which some of the processing power is located within small,
inexpensive client computers, and resides literally on desktops, laptops, or in handheld
devices. These powerful clients are linked to one another through a network that is
controlled by a network server computer. The server sets the rules of communication for the
network and provides every client with an address so others can find it on the network.

Client/server computing has largely replaced centralized mainframe computing in which
nearly all of the processing takes place on a central large mainframe computer. Client/server
computing has extended computing to departments, workgroups, factory floors, and other
parts of the business that could not be served by a centralized architecture. The Internet is
the largest implementation of client/server computing.

Packet Switching
Packet switching is a method of slicing digital messages into parcels called packets, send-
ing the packets along different communication paths as they become available, and then
reassembling the packets once they arrive at their destinations (see Figure 6-3). Prior to the
development of packet switching, computer networks used leased, dedicated telephone
circuits to communicate with other computers in remote locations. In circuit-switched net-
works, such as the telephone system, a complete point-to-point circuit is assembled, and
then communication can proceed. These dedicated circuit-switching techniques were expen-
sive and wasted available communications capacity—the circuit was maintained regardless
of whether any data were being sent.

196 Part II: Information Technology Infrastructure

Figure 6-3
Packed-Switched
Networks and
Packet
Communications
Data are grouped into
small packets, which are
transmitted indepen-
dently over various
communications chan-
nels and reassembled at
their final destination.

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Packet switching makes much more efficient use of the communications capacity of a
network. In packet-switched networks, messages are first broken down into small fixed bun-
dles of data called packets. The packets include information for directing the packet to the
right address and for checking transmission errors along with the data. The packets are
transmitted over various communications channels using routers, each packet traveling
independently. Packets of data originating at one source will be routed through many
different paths and networks before being reassembled into the original message when they
reach their destinations.

TCP/IP and Connectivity
In a typical telecommunications network, diverse hardware and software components need
to work together to transmit information. Different components in a network communicate
with each other only by adhering to a common set of rules called protocols. A protocol is a
set of rules and procedures governing transmission of information between two points in a
network.

In the past, many diverse proprietary and incompatible protocols often forced business
firms to purchase computing and communications equipment from a single vendor. But
today corporate networks are increasingly using a single, common, worldwide standard
called Transmission Control Protocol/ Internet Protocol (TCP/IP). TCP/IP was devel-
oped during the early 1970s to support U.S. Department of Defense Advanced Research
Projects Agency (DARPA) efforts to help scientists transmit data among different types of
computers over long distances.

TCP/IP uses a suite of protocols, the main ones being TCP and IP. TCP refers to the
Transmission Control Protocol (TCP), which handles the movement of data between
computers. TCP establishes a connection between the computers, sequences the transfer of
packets, and acknowledges the packets sent. IP refers to the Internet Protocol (IP), which is
responsible for the delivery of packets and includes the disassembling and reassembling of
packets during transmission. Figure 6-4 illustrates the four-layered Department of Defense
reference model for TCP/IP.

1. Application layer. The Application layer enables client application programs to access
the other layers and defines the protocols that applications use to exchange data. One of
these application protocols is the Hypertext Transfer Protocol (HTTP), which is used to
transfer Web page files.

2. Transport layer. The Transport layer is responsible for providing the Application
layer with communication and packet services. This layer includes TCP and other
protocols.

3. Internet layer. The Internet layer is responsible for addressing, routing, and packaging data
packets called IP datagrams. The Internet Protocol is one of the protocols used in this layer.

Chapter 6: Telecommunications, the Internet, and Wireless Technology 197

Figure 6-4
The Transmission
Control
Protocol/Internet
Protocol (TCP/IP)
Reference Model
This figure illustrates the
four layers of the TCP/IP
reference model for
communications.

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4. Network Interface layer. At the bottom of the reference model, the Network Interface
layer is responsible for placing packets on and receiving them from the network
medium, which could be any networking technology.

Two computers using TCP/IP are able to communicate even if they are based on different
hardware and software platforms. Data sent from one computer to the other passes down-
ward through all four layers, starting with the sending computer’s Application layer and
passing through the Network Interface layer. After the data reach the recipient host com-
puter, they travel up the layers and are reassembled into a format the receiving computer can
use. If the receiving computer finds a damaged packet, it asks the sending computer to
retransmit it. This process is reversed when the receiving computer responds.

6.2 Communications Networks

Let’s look more closely at alternative networking technologies available to businesses.

SIGNALS: DIGITAL VS. ANALOG

There are two ways to communicate a message in a network: either using an analog signal or
a digital signal. An analog signal is represented by a continuous waveform that passes
through a communications medium and has been used for voice communication. The most
common analog devices are the telephone handset, the speaker on your computer, or your
iPod earphone, all of which create analog wave forms that your ear can hear.

A digital signal is a discrete, binary waveform, rather than a continuous waveform.
Digital signals communicate information as strings of two discrete states: one bit and zero
bits, which are represented as on–off electrical pulses. Computers use digital signals and
require a modem to convert these digital signals into analog signals that can be sent over (or
received from) telephone lines, cable lines, or wireless media that use analog signals (see
Figure 6-5). Modem stands for modulator-demodulator. Cable modems connect your com-
puter to the Internet using a cable network. DSL modems connect your computer to the
Internet using a telephone company’s land line network. Wireless modems perform the same
function as traditional modems, connecting your computer to a wireless network that could
be a cell phone network, or a Wi-Fi network. Without modems, computers could not commu-
nicate with one another using analog networks (which include the telephone system and cable
networks).

TYPES OF NETWORKS

There are many different kinds of networks and ways of classifying them. One way of
looking at networks is in terms of their geographic scope (see Table 6.1).

Local-Area Networks
If you work in a business that uses networking, you are probably connecting to other
employees and groups via a local-area network. A local-area network (LAN) is designed to

198 Part II: Information Technology Infrastructure

Type Area

Local-area network (LAN) Up to 500 meters (half a mile); an office or floor of a
building

Campus-area network (CAN) Up to 1,000 meters (a mile); a college campus or
corporate facility

Metropolitan-area network (MAN) A city or metropolitan area

Wide-area network (WAN) A transcontinental or global area

TABLE 6.1

Types of Networks

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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 also are used to link to
long-distance wide-area networks (WANs, described later in this section) and other
networks around the world using the Internet.

Review Figure 6-1, which could serve as a model for a small LAN that might be used in
an office. One computer is a dedicated network file server, providing users with access to
shared computing resources in the network, including software programs and data files.
The server determines who gets access to what and in which sequence. The router connects
the LAN to other networks, which could be the Internet or another corporate network, so
that the LAN can exchange information with networks external to it. The most common
LAN operating systems are Windows, Linux, and Novell. Each of these network operating
systems supports TCP/IP as their default networking protocol.

Ethernet is the dominant LAN standard at the physical network level, specifying the
physical medium to carry signals between computers, access control rules, and a standard-
ized set of bits used to carry data over the system. Originally, Ethernet supported a data
transfer rate of 10 megabits per second (Mbps). Newer versions, such as Fast Ethernet and
Gigabit Ethernet, support data transfer rates of 100 Mbps and 1 gigabits per second (Gbps),
respectively, and are used in network backbones.

The LAN illustrated in Figure 6-1 uses a client/server architecture where the network
operating system resides primarily on a single file server, and the server provides much of
the control and resources for the network. Alternatively, LANs may use a peer-to-peer
architecture. A peer-to-peer network treats all processors equally and is used primarily in
small networks with 10 or fewer users. The various computers on the network can
exchange data by direct access and can share peripheral devices without going through a
separate server.

In LANs using the Windows Server family of operating systems, the peer-to-peer archi-
tecture is called the workgroup network model in which a small group of computers can
share resources, such as files, folders, and printers, over the network without a dedicated
server. The Windows domain network model, in contrast, uses a dedicated server to manage
the computers in the network.

Larger LANs have many clients and multiple servers, with separate servers for specific
services, such as storing and managing files and databases (file servers or database servers),
managing printers (print servers), storing and managing e-mail (mail servers), or storing and
managing Web pages (Web servers).

Sometimes LANs are described in terms of the way their components are connected
together, or their topology. There are three major LAN topologies: star, bus, and ring
(see Figure 6-6).

In a star topology, all devices on the network connect to a single hub. Figure 6-6
illustrates a simple star topology in which all network traffic flows through the hub. In an
extended star network, multiple layers of hubs are organized into a hierarchy.

In a 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. All machines on the network receive the same signals, and software installed on
the client computers enables each client to listen for messages addressed specifically to it.
The bus topology is the most common Ethernet topology.

Chapter 6: Telecommunications, the Internet, and Wireless Technology 199

Figure 6-5
Functions of the
Modem
A modem is a device that
translates digital signals
into analog form (and
vice versa) so that com-
puters can transmit data
over analog networks
such as telephone and
cable networks.

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A 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 transmit. The ring topology is primarily found in older LANs using Token Ring
networking software.

Metropolitan- and Wide-Area Networks
Wide-area networks (WANs) span broad geographical distances—entire regions, states,
continents, or the entire globe. The most universal and powerful WAN is the Internet.
Computers connect to a WAN through public networks, such as the telephone system or
private cable systems, or through leased lines or satellites. A metropolitan-area network
(MAN) is a network that spans a metropolitan area, usually a city and its major suburbs. Its
geographic scope falls between a WAN and a LAN.

PHYSICAL TRANSMISSION MEDIA

Networks use different kinds of physical transmission media, including twisted wire, coax-
ial cable, fiber optics, and media for wireless transmission. Each has advantages and limita-
tions. A wide range of speeds is possible for any given medium depending on the software
and hardware configuration.

Twisted Wire
Twisted wire consists of strands of copper wire twisted in pairs and is an older type of trans-
mission medium. Many of the telephone systems in buildings had twisted wires installed for
analog communication, but they can be used for digital communication as well. Although an
older physical transmission medium, the twisted wires used in today’s LANs, such as CAT5,
can obtain speeds up to 1 Gbps. Twisted-pair cabling is limited to a maximum recommended
run of 100 meters (328 feet).

Coaxial Cable
Coaxial cable, similar to that used for cable television, consists of thickly insulated copper
wire, which can transmit a larger volume of data than twisted wire. Cable was used in early
LANs and is still used today for longer (more than 100 meters) runs in large buildings.
Coaxial has speeds up to 1 Gbps.

200 Part II: Information Technology Infrastructure

Figure 6-6
Network Topologies
The three basic network
topologies are the star,
bus, and ring.

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Fiber Optics and Optical Networks
Fiber-optic cable consists of bound strands of clear glass fiber, each the thickness of a human
hair. Data are transformed into pulses of light, which are sent through the fiber-optic cable by a
laser device at rates varying from 500 kilobits to several trillion bits per second in experimental
settings. Fiber-optic cable is considerably faster, lighter, and more durable than wire media, and
is well suited to systems requiring transfers of large volumes of data. However, fiber-optic cable
is more expensive than other physical transmission media and harder to install.

Until recently, fiber-optic cable had been used primarily for the high-speed network
backbone, which handles the major traffic. Now cellular phone companies such as Verizon
are starting to bring fiber lines into the home for new types of services, such as Verizon’s
Fiber Optic Services (FiOS) Internet service that provides up 50 Mbps download speeds.

Wireless Transmission Media
Wireless transmission is based on radio signals of various frequencies. There are three kinds of
wireless networks used by computers: microwave, cellular, and Wi-Fi networks. Microwave
systems, both terrestrial and celestial, transmit high-frequency radio signals through the
atmosphere and are widely used for high-volume, long-distance, point-to-point communica-
tion. Microwave signals follow a straight line and do not bend with the curvature of the earth.
Therefore, long-distance terrestrial transmission systems require that transmission stations be
positioned about 37 miles apart. Long-distance transmission is also possible by using commu-
nication satellites as relay stations for microwave signals transmitted from terrestrial stations.

Communication satellites use microwave transmission and are typically used for trans-
mission in large, geographically dispersed organizations that would be difficult to network
using cabling media or terrestrial microwave, as well as for home Internet service, especially
in rural areas. For instance, the global energy company BP p.l.c. uses satellites for real-time
data transfer of oil field exploration data gathered from searches of the ocean floor. Using
geosynchronous satellites, exploration ships transfer these data to central computing centers
in the United States for use by researchers in Houston, Tulsa, and suburban Chicago. Figure
6-7 illustrates how this system works. Satellites are also used for home television and
Internet service. The two major satellite Internet providers (Dish Network and DirectTV)
have about 30 million subscribers, and about 17 percent of all U.S. households access the
Internet using satellite services (eMarketer, 2009).

Cellular systems also use radio waves and a variety of different protocols to communi-
cate with radio antennas (towers) placed within adjacent geographic areas called cells.
Communications transmitted from a cell phone to a local cell pass from antenna to
antenna—cell to cell—until they reach their final destination.

Chapter 6: Telecommunications, the Internet, and Wireless Technology 201

Figure 6-7
BP’s Satellite
Transmission
System
Communication satellites
help BP transfer seismic
data between oil explo-
ration ships and research
centers in the United
States.

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Wireless networks are supplanting traditional wired networks for many applications and
creating new applications, services, and business models. In Section 6.4, we provide a
detailed description of the applications and technology standards driving the “wireless revo-
lution.”

Transmission Speed
The total amount of digital information that can be transmitted through any telecommunications
medium is measured in bits per second (bps). One signal change, or cycle, is required to
transmit one or several bits; therefore, the transmission capacity of each type of telecommuni-
cations medium is a function of its frequency. The number of cycles per second that can be sent
through that medium is measured in hertz—one hertz is equal to one cycle of the medium.

The range of frequencies that can be accommodated on a particular telecommunications
channel is called its bandwidth. The bandwidth is the difference between the highest and
lowest frequencies that can be accommodated on a single channel. The greater the range of
frequencies, the greater the bandwidth and the greater the channel’s transmission capacity.
Table 6.2 compares the transmission speeds of the major types of media.

6.3 The Global Internet

We all use the Internet, and many of us can’t do without it. It’s become an indispensable
personal and business tool. But what exactly is the Internet? How does it work, and what
does Internet technology have to offer for business? Let’s look at the most important Internet
features.

WHAT IS THE INTERNET?

The Internet has become the world’s most extensive, public communication system that now
rivals the global telephone system in reach and range. It’s also the world’s largest implemen-
tation of client/server computing and internetworking, linking millions of individual net-
works all over the world. This global network of networks began in the early 1970s as a U.S.
Department of Defense network to link scientists and university professors around the world.

Most homes and small businesses connect to the Internet by subscribing to an Internet ser-
vice provider. An Internet service provider (ISP) is a commercial organization with a perma-
nent connection to the Internet that sells temporary connections to retail subscribers. EarthLink,
NetZero, AT&T, and Time Warner are ISPs. Individuals also connect to the Internet through
their business firms, universities, or research centers that have designated Internet domains.

There are a variety of services for ISP Internet connections. Connecting via a traditional
telephone line and modem, at a speed of 56.6 kilobits per second (Kbps) used to be the most
common form of connection worldwide, but it is quickly being replaced by broadband

202 Part II: Information Technology Infrastructure

Medium Speed

Twisted wire Up to 1 Gbps

Microwave Up to 10 Mbps

Satellite Up to 10 Mbps

Coaxial cable Up to 1 Gbps

Fiber-optic cable Up to 6+ Tbps

TABLE 6.2

Typical Speeds of
Telecommunications
Transmission Media

Mbps = megabits per second
Gbps = gigabits per second
Tbps = terabits per second

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connections. Digital subscriber line (DSL), cable, and satellite Internet connections, and T
lines provide these broadband services.

Digital subscriber line (DSL) technologies operate over existing telephone lines to carry
voice, data, and video at transmission rates ranging from 385 Kbps all the way up to 9 Mbps.
Cable Internet connections provided by cable television vendors use digital cable coaxial
lines to deliver high-speed Internet access to homes and businesses. They can provide high-
speed access to the Internet of up to 10 Mbps. In areas where DSL and cable services are
unavailable, it is possible to access the Internet via satellite, although some satellite Internet
connections have slower upload speeds than other broadband services.

T1 and T3 are international telephone standards for digital communication. They are
leased, dedicated lines suitable for businesses or government agencies requiring high-speed
guaranteed service levels. T1 lines offer guaranteed delivery at 1.54 Mbps, and T3 lines
offer delivery at 45 Mbps.

INTERNET ADDRESSING AND ARCHITECTURE

The Internet is based on the TCP/IP networking protocol suite described earlier in this chapter.
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 sep-
arated by periods. For instance, the IP address of www.microsoft.com is 207.46.250.119.

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 original message.

The Domain Name System
Because it would be incredibly difficult for Internet users to remember strings of 12
numbers, the Domain Name System (DNS) converts IP addresses to domain names. The
domain name is the English-like name that corresponds to the unique 32-bit numeric IP
address for each computer connected to the Internet. DNS servers maintain a database con-
taining IP addresses mapped to their corresponding domain names. To access a computer on
the Internet, users need only specify its domain name.

DNS has a hierarchical structure (see Figure 6-8). At the top of the DNS hierarchy is the
root domain. The child domain of the root is called a top-level domain, and the child domain

Chapter 6: Telecommunications, the Internet, and Wireless Technology 203

Figure 6-8
The Domain Name
System
Domain Name System is
a hierarchical system
with a root domain, top-
level domains, second-
level domains, and host
computers at the third
level.

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of a top-level domain is called is a second-level domain. Top-level domains are two- and
three-character names you are familiar with from surfing the Web, for example, .com, .edu,
.gov, and the various country codes such as .ca for Canada or .it for Italy. Second-level
domains have two parts, designating a top-level name and a second-level name—such as
buy.com, nyu.edu, or amazon.ca. A host name at the bottom of the hierarchy designates a
specific computer on either the Internet or a private network.

The most common domain extensions currently available and officially approved are
shown in the following list. Countries also have domain names such as .uk, .au, and .fr
(United Kingdom, Australia, and France, respectively). In the future, this list will expand to
include many more types of organizations and industries.

.com Commercial organizations/businesses

.edu Educational institutions

.gov U.S. government agencies

.mil U.S. military

.net Network computers

.org Nonprofit organizations and foundations

.biz Business firms

.info Information providers

Internet Architecture and Governance
Internet data traffic is carried over transcontinental high-speed backbone networks that
generally operate today in the range of 45 Mbps to 2.5 Gbps (see Figure 6-9). These trunk
lines are typically owned by long distance telephone companies (called network service
providers) or by national governments. Local connection lines are owned by regional
telephone and cable television companies in the United States that connect retail users in
homes and businesses to the Internet. The regional networks lease access to ISPs, private
companies, and government institutions.

204 Part II: Information Technology Infrastructure

Figure 6-9
Internet Network
Architecture
The Internet backbone
connects to regional
networks, which in turn
provide access to
Internet service
providers, large firms,
and government institu-
tions. Network access
points (NAPs) and metro-
politan-area exchanges
(MAEs) are hubs where
the backbone intersects
regional and local
networks and where
backbone owners
connect with one
another.

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Each organization pays for its own networks and its own local Internet connection
services, a part of which is paid to the long-distance trunk line owners. Individual Internet
users pay ISPs for using their service, and they generally pay a flat subscription fee, no
matter how much or how little they use the Internet. A debate is now raging on whether
this arrangement should continue or whether heavy Internet users who download large
video and music files should pay more for the bandwidth they consume. The Interactive
Session on Organizations explores this topic, as it examines the pros and cons of network
neutrality.

No one “owns” the Internet, and it has no formal management. However, worldwide
Internet policies are established by a number of professional organizations and govern-
ment bodies, including the Internet Architecture Board (IAB), which helps define the
overall structure of the Internet; the Internet Corporation for Assigned Names and
Numbers (ICANN), which assigns IP addresses; and the World Wide Web Consortium
(W3C), which sets Hypertext Markup Language and other programming standards for the
Web.

These organizations influence government agencies, network owners, ISPs, and soft-
ware developers with the goal of keeping the Internet operating as efficiently as possible.
The Internet must also conform to the laws of the sovereign nation-states in which it oper-
ates, as well as the technical infrastructures that exist within the nation-states. Although in
the early years of the Internet and the Web there was very little legislative or executive inter-
ference, this situation is changing as the Internet plays a growing role in the distribution of
information and knowledge, including content that some find objectionable.

The Future Internet: IPv6 and Internet2
The Internet was not originally designed to handle the transmission of massive quantities of
data and billions of users. Because many corporations and governments have been given
large blocks of millions of IP addresses to accommodate current and future workforces, and
because of sheer Internet population growth, the world will run out of available IP addresses
using the existing addressing convention by 2012 or 2013. Under development is a new
version of the IP addressing schema called Internet Protocol version 6 (IPv6), which
contains 128-bit addresses (2 to the power of 128), or more than a quadrillion possible
unique addresses.

Internet2 and Next-Generation Internet (NGI) are consortia representing 200 universi-
ties, private businesses, and government agencies in the United States that are working on a
new, robust, high-bandwidth version of the Internet. They have established several new
high-performance backbone networks with bandwidths ranging from 2.5 Gbps to 9.6 Gbps.
Internet2 research groups are developing and implementing new technologies for more
effective routing practices; different levels of service, depending on the type and importance
of the data being transmitted; and advanced applications for distributed computation, virtual
laboratories, digital libraries, distributed learning, and tele-immersion. These networks do
not replace the public Internet, but they do provide test beds for leading-edge technology
that may eventually migrate to the public Internet.

INTERNET SERVICES AND COMMUNICATION TOOLS

The Internet is based on client/server technology. Individuals using the Internet control
what they do through client applications on their computers, such as Web browser soft-
ware. The data, including e-mail messages and Web pages, are stored on servers. A client
uses the Internet to request information from a particular Web server on a distant com-
puter, and the server sends the requested information back to the client over the Internet.
Chapters 4 and 5 describe how Web servers work with application servers and database
servers to access information from an organization’s internal information systems
applications and their associated databases. Client platforms today include not only PCs
and other computers but also cell phones, small handheld digital devices, and other infor-
mation appliances.

Chapter 6: Telecommunications, the Internet, and Wireless Technology 205
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206 Part II: Information Technology Infrastructure

INTERACTIVE SESSION: ORGANIZATIONS Should Network Neutrality Continue?

What kind of Internet user are you? Do you primarily
use the Net to do a little e-mail and look up phone
numbers? Or are you online all day, watching YouTube
videos, downloading music files, or playing massively
multiplayer online games? If you’re the latter, you are
consuming a great deal of bandwidth, and hundreds of
millions of people like you might start to slow the
Internet down. YouTube consumed as much bandwidth
in 2007 as the entire Internet did in 2000. That’s one of
the arguments being made today for charging Internet
users based on the amount of transmission capacity
they use.

According to one November 2007 report, a
research firm projected that user demand for the
Internet could outpace network capacity by 2011.

If this happens, the Internet might not come to a
screeching halt, but users would be faced with slug-
gish download speeds and slow performance of
YouTube, Facebook, and other data-heavy services.
(Heavy use of iPhones in urban areas such as New
York and San Francisco has already degraded service
on the AT&T wireless network.)

Other researchers believe that as digital traffic on
the Internet grows, even at a rate of 50 percent per
year, the technology for handling all this traffic is
advancing at an equally rapid pace.

In addition to these technical issues, the debate
about metering Internet use centers around the concept
of network neutrality. Network neutrality is the idea
that Internet service providers must allow customers
equal access to content and applications, regardless of
the source or nature of the content. Presently, the
Internet is indeed neutral: all Internet traffic is treated
equally on a first-come, first-served basis by Internet
backbone owners. The Internet is neutral because it
was built on phone lines, which are subject to “com-
mon carriage” laws. These laws require phone compa-
nies to treat all calls and customers equally. They can-
not offer extra benefits to customers willing to pay
higher premiums for faster or clearer calls, a model
known as tiered service.

Now telecommunications and cable companies
want to be able to charge differentiated prices based on
the amount of bandwidth consumed by content being
delivered over the Internet. In June 2008, Time Warner
Cable started testing metered pricing for its Internet
access service in the city of Beaumont, Texas. Under
the pilot program, Time Warner charged customers an
additional $1 per month for each gigabyte of content
they downloaded or sent over the bandwidth limit of
their monthly plan. The company reported that 5 per-
cent of its customers had been using half the capacity

on its local lines without paying any more than low-
usage customers, and that metered pricing was “the
fairest way” to finance necessary investments in its
network infrastructure.

This is not how Internet service has worked
traditionally and contradicts the goals of network neu-
trality. Advocates of net neutrality are pushing
Congress to regulate the industry, requiring network
providers to refrain from these types of practices. The
strange alliance of net neutrality advocates includes
MoveOn.org, the Christian Coalition, the American
Library Association, every major consumer group,
many bloggers and small businesses, and some large
Internet companies like Google and Amazon.

Internet service providers point to the upsurge in
piracy of copyrighted materials over the Internet.
Comcast, the second largest Internet service provider
in the United States, reported that illegal file sharing of
copyrighted material was consuming 50 percent of its
network capacity. At one point Comcast slowed down
transmission of BitTorrent files, used extensively for
piracy and illegal sharing of copyrighted materials,
including video. Comcast drew fierce criticism for its
handling of BitTorrent packets, and the FCC ruled that
Comcast had to stop slowing peer-to-peer traffic in the
name of network management. Comcast then filed a
lawsuit challenging the FCC’s authority to enforce
network neutrality.

Net neutrality advocates argue that the risk of
censorship increases when network operators can
selectively block or slow access to certain content.
There are already many examples of Internet providers
restricting access to sensitive materials (such as
anti-Bush comments from an online Pearl Jam con-
cert, a text-messaging program from pro-choice group
NARAL, or access to competitors like Vonage).
Pakistan’s government blocked access to anti-Muslim
sites and YouTube as a whole in response to content
they deemed defamatory to Islam.

Proponents of net neutrality also argue that a neu-
tral Internet encourages everyone to innovate without
permission from the phone and cable companies or
other authorities, and this level playing field has
spawned countless new businesses. Allowing unre-
stricted information flow becomes essential to free
markets and democracy as commerce and society
increasingly move online.

Network owners believe regulation like the bills
proposed by net neutrality advocates will impede
U.S. competitiveness by stifling innovation and hurt
customers who will benefit from “discriminatory”
network practices. U.S. Internet service lags behind

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Chapter 6: Telecommunications, the Internet, and Wireless Technology 207

1. What is network neutrality? Why has the Internet
operated under net neutrality up to this point in
time?

2. Who’s in favor of network neutrality? Who’s
opposed? Why?

3. What would be the impact on individual users,
businesses, and government if Internet providers
switched to a tiered service model?

4. Are you in favor of legislation enforcing network
neutrality? Why or why not?

other many other nations in overall speed, cost, and
quality of service, adding credibility to the providers’
arguments.

Network neutrality advocates counter that U.S.
carriers already have too much power due to lack of
options for service. Without sufficient competition, the
carriers have more freedom to set prices and policies,
and customers cannot seek recourse via other options.
Carriers can discriminate in favor of their own content.
Even broadband users in large metropolitan areas lack
many options for service. With enough options for
Internet access, net neutrality would not be such a
pressing issue. Dissatisfied consumers could simply
switch to providers who enforce net neutrality and
allow unlimited Internet use.

On September 21, 2009, the U.S. Federal
Communications Commission (FCC) announced its
intention to formalize a set of rules supporting net neu-

1. Visit the Web site of the Open Internet Coalition
and select five member organizations. Then visit
the Web site of each of these organizations or
surf the Web to find out more information about
each. Write a short essay explaining why each
organization is in favor of network neutrality.

2. Calculate how much bandwidth you consume
when using the Internet every day. How many
e-mails do you send daily and what is the size of
each? (Your e-mail program may have e-mail
file size information.) How many music and
video clips do you download daily and what is
the size of each? If you view YouTube often,
surf the Web to find out the size of a typical
YouTube file. Add up the number of e-mail,
audio, and video files you transmit or receive on
a typical day.

trality based on principles that the FCC has embraced
since August 2005. These rules entitle consumers to
lawful Internet content, applications, and services of
their choice, and to use devices of their choice to con-
nect to the Internet. The rules also support competition
among Internet network, application, service, and con-
tent providers. Two new rules would prevent ISPs
from discriminating against particular content and
ensure disclosure of their network management prac-
tices. For the first time, all of these rules would be
applied to wireless companies.

Sources: Fawn Johnson and Amy Schatz, “FCC Chairman Proposes ‘Net Neutrality’
Rules,” The Wall Street Journal, September 21, 2009; Grant Gross, “FCC Chairman
Calls for Formal Net Neutrality Rules,” IDG News Service, September 21, 2009;
Joanie Wexler: “Net Neutrality: Can We Find Common Ground?” Network World,
April 1, 2009; Andy Dornan, “Is Your Network Neutral?” Information Week, May 18,
2008; Steve Lohr, “Video Road Hogs Stir Fear of Internet Traffic Jam,” The New York
Times, March 13, 2008; and Peter Burrows, “The FCC, Comcast, and Net
Neutrality,” Business Week, February 26, 2008.

CASE STUDY QUESTIONS MIS IN ACTION

Internet Services

A client computer connecting to the Internet has access to a variety of services. These
services include e-mail, electronic discussion groups, chatting and instant messaging,
Telnet, File Transfer Protocol (FTP), and the Web. Table 6.3 provides a brief description
of these services.

Each Internet service is implemented by one or more software programs. All of the
services may run on a single server computer, or different services may be allocated to
different machines. Figure 6-10 illustrates one way that these services can be arranged in
a multitiered client/server architecture.IS

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208 Part II: Information Technology Infrastructure

E-mail enables messages to be exchanged from computer to computer, with capabilities
for routing messages to multiple recipients, forwarding messages, and attaching text
documents or multimedia files to messages. Although some organizations operate their own
internal electronic mail systems, most e-mail today is sent through the Internet. The costs of
e-mail is far lower than equivalent voice, postal, or overnight delivery costs, making the
Internet a very inexpensive and rapid communications medium. Most e-mail messages
arrive anywhere in the world in a matter of seconds.

Nearly 90 percent of U.S. workplaces have employees communicating interactively
using chat or instant messaging tools. Chatting enables two or more people who are simul-
taneously connected to the Internet to hold live, interactive conversations. Chat systems now
support voice and video chat as well as written conversations. Many online retail businesses
offer chat services on their Web sites to attract visitors, to encourage repeat purchases, and
to improve customer service.

Capability Functions Supported

E-mail Person-to-person messaging; document sharing

Chatting and instant messaging Interactive conversations

Newsgroups Discussion groups on electronic bulletin boards

Telnet Logging on to one computer system and doing work
on another

File Transfer Protocol (FTP) Transferring files from computer to computer

The Web Retrieving, formatting, and displaying information
(including text, audio, graphics, and video) using
hypertext links

TABLE 6.3

Major Internet
Services

Figure 6-10
Client/Server Computing on the Internet
Client computers running Web browser and other software can access an array of services on servers over the Internet. These
services may all run on a single physical server or on multiple specialized physical servers.

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Instant messaging is a type of chat service that enables participants to create their own
private chat channels. The instant messaging system alerts the user whenever someone on
his or her private list is online so that the user can initiate a chat session with other individu-
als. Instant messaging systems for consumers include Yahoo! Messenger, Google Talk, and
Windows Live Messenger. Companies concerned with security use proprietary instant
messaging systems such as Lotus Sametime.

Newsgroups are worldwide discussion groups posted on Internet electronic bulletin
boards on which people share information and ideas on a defined topic, such as radiology or
rock bands. Anyone can post messages on these bulletin boards for others to read. Many
thousands of groups exist that discuss almost all conceivable topics.

Employee use of e-mail, instant messaging, and the Internet is supposed to increase
worker productivity, but the accompanying Interactive Session on People shows that this
may not always be the case. Many company managers now believe they need to monitor and
even regulate their employees’ online activity. But is this ethical? Although there are some
strong business reasons why companies may need to monitor their employees’ e-mail and
Web activities, what does this mean for employee privacy?

Voice over IP
The Internet has also become a popular platform for voice transmission and corporate net-
working. Voice over IP (VoIP) technology delivers voice information in digital form using
packet switching, avoiding the tolls charged by local and long distance telephone networks
(see Figure 6-11). Calls that would ordinarily be transmitted over public telephone networks
would travel over the corporate network based on the Internet Protocol, or the public
Internet. Voice calls can be made and received with a desktop computer equipped with a
microphone and speakers or with a VoIP-enabled telephone.

Telecommunications service providers (such as Verizon) and cable firms (such as Time
Warner and Cablevision) provide VoIP services. Skype offers free VoIP worldwide using a
peer-to-peer network, and Google has its own free VoIP service.

Although there are up-front investments required for an IP phone system, VoIP can
reduce communication and network management costs by 20 to 30 percent. For example,
VoIP saves Virgin Entertainment Group $700,000 per year in long distance bills. In addition
to lowering long distance costs and eliminating monthly fees for private lines, an IP network
provides a single voice-data infrastructure for both telecommunications and computing
services. Companies no longer have to maintain separate networks or provide support
services and personnel for each different type of network.

Chapter 6: Telecommunications, the Internet, and Wireless Technology 209

Figure 6-11
How Voice over IP Works
An VoIP phone call digitizes and breaks up a voice message into data packets that may travel along different routes before being
reassembled at the final destination. A processor nearest the call’s destination, called a gateway, arranges the packets in the
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210 Part II: Information Technology Infrastructure

INTERACTIVE SESSION: PEOPLE Monitoring Employees on Networks: Unethical or Good Business?

As Internet use has exploded worldwide, so have the
use of e-mail and the Web for personal business at the
workplace. Several management problems have
emerged: First, checking e-mail, responding to instant
messages, or sneaking in a brief YouTube or MySpace
video create a series of nonstop interruptions that
divert employee attention from the job tasks they are
supposed to be performing. According to Basex, a
New York City business research company, these dis-
tractions take up as much as 28 percent of the average
U.S. worker’s day and result in $650 billion in lost
productivity each year!

Second, these interruptions are not necessarily
work-related. A number of studies have concluded that
at least 25 percent of employee online time is spent on
non-work-related Web surfing, and perhaps as many as
90 percent of employees receive or send personal
e-mail at work.

Many companies have begun monitoring their
employee use of e-mail, blogs, and the Internet,
sometimes without their knowledge. A recent
American Management Association (AMA) survey of
304 U.S. companies of all sizes found that 66 percent
of these companies monitor employee e-mail
messages and Web connections. Although U.S. com-
panies have the legal right to monitor employee
Internet and e-mail activity while they are at work, is
such monitoring unethical, or is it simply good busi-
ness?

Managers worry about the loss of time and
employee productivity when employees are focusing
on personal rather than company business. Too much
time on personal business, on the Internet or not, can
mean lost revenue or overbilled clients. Some employ-
ees may be charging time they spend trading their per-
sonal stocks online or pursuing other personal busi-
ness to clients, thus overcharging the clients.

If personal traffic on company networks is too
high, it can also clog the company’s network so that
legitimate business work cannot be performed.
Schemmer Associates, an architecture firm in Omaha,
Nebraska, and Potomac Hospital in Woodridge,
Virginia, found their computing resources were lim-
ited by a lack of bandwidth caused by employees
using corporate Internet connections to watch and
download video files.

When employees use e-mail or the Web at
employer facilities or with employer equipment, any-
thing they do, including anything illegal, carries the
company’s name. Therefore, the employer can be
traced and held liable. Management in many firms fear
that racist, sexually explicit, or other potentially

offensive material accessed or traded by their employ-
ees could result in adverse publicity and even lawsuits
for the firm. Even if the company is found not to be
liable, responding to lawsuits could cost the company
tens of thousands of dollars.

Companies also fear leakage of confidential
information and trade secrets through e-mail or blogs.
A recent survey conducted by the American
Management Association and the ePolicy Institute
found that 14 percent of the employees polled
admitted they had sent confidential or potentially
embarrassing company e-mails to outsiders.

U.S. companies have the legal right to monitor
what employees are doing with company equipment
during business hours. The question is whether
electronic surveillance is an appropriate tool for
maintaining an efficient and positive workplace. Some
companies try to ban all personal activities on corpo-
rate networks—zero tolerance. Others block employee
access to specific Web sites or social sites or limit
personal time on the Web.

For example, Enterprise Rent-A-Car blocks
employee access to certain social sites and monitors
the Web for employees’ online postings about the
company. Ajax Boiler in Santa Ana, California, uses
software from SpectorSoft Corporation that records all
the Web sites employees visit, time spent at each site,
and all e-mails sent. Flushing Financial Corporation
installed software that prevents employees from
sending e-mail to specified addresses and scans e-mail
attachments for sensitive information. Schemmer
Associates uses OpenDNS to categorize and filter Web
content and block unwanted video.

Some firms have fired employees who have stepped
out of bounds. One-third of the companies surveyed in
the AMA study had fired workers for misusing the
Internet on the job. Among managers who fired
employees for Internet misuse, 64 percent did so
because the employees’ e-mail contained inappropriate
or offensive language, and more than 25 percent fired
workers for excessive personal use of e-mail.

No solution is problem free, but many consultants
believe companies should write corporate policies on
employee e-mail and Internet use. The policies should
include explicit ground rules that state, by position or
level, under what circumstances employees can use
company facilities for e-mail, blogging, or Web
surfing. The policies should also inform employees
whether these activities are monitored and explain
why.

IBM now has “social computing guidelines” that
cover employee activity on sites such as Facebook and

210 Part II: Information Technology Infrastructure
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1. Should managers monitor employee e-mail and
Internet usage? Why or why not?

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

3. Should managers inform employees that their
Web behavior is being monitored? Or should
managers monitor secretly? Why or why not?

Twitter. The guidelines urge employees not to conceal
their identities, to remember that they are personally
responsible for what they publish, and to refrain from
discussing controversial topics that are not related to
their IBM role.

The rules should be tailored to specific business
needs and organizational cultures. For example,
although some companies may exclude all employees
from visiting sites that have explicit sexual material,
law firms or hospital employees may require access to
these sites. Investment firms will need to allow many

Explore the Web site of online employee monitoring
software such as Websense, Barracuda Networks,
MessageLabs, or SpectorSoft, and answer the follow-
ing questions.

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

2. How can businesses benefit from using this soft-
ware?

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 response.

of their employees access to other investment sites.
A company dependent on widespread information
sharing, innovation, and independence could very
well find that monitoring creates more problems than
it solves.

Sources: Michelle Conline and Douglas MacMillan, “Web 2.0: Managing
Corporate Reputations,” Business Week, May 20, 2009; Dana Mattioli, “Leaks
Grow in a World of Blogs,” The Wall Street Journal, July 20, 2009; James Wong,
“Drafting Trouble-Free Social Media Policies,” Law.com, June 15, 2009; Nancy
Gohring, “Over 50 Percent of Companies Fire Workers for E-Mail, Net Abuse,”
InfoWorld, February 28, 2008; Bobby White, “The New Workplace Rules: No
Video-Watching,” The Wall Street Journal, March 4, 2008; and Maggie Jackson,
“May We Have Your Attention, Please?” Business Week, June 23, 2008.

CASE STUDY QUESTIONS MIS IN ACTION

Chapter 6: Telecommunications, the Internet, and Wireless Technology 211

Another advantage of VoIP is its flexibility. Unlike the traditional telephone network,
phones can be added or moved to different offices without rewiring or reconfiguring the
network. With VoIP, a conference call is arranged by a simple click-and-drag operation on
the computer screen to select the names of the conferees. Voice mail and e-mail can be
combined into a single directory.

Unified Communications
In the past, each of the firm’s networks for wired and wireless data, voice communications,
and videoconferencing operated independently of each other and had to be managed
separately by the information systems department. Now, however, firms are able to merge
disparate communications modes into a single universally accessible service using unified
communications technology. Unified communications integrates disparate channels for
voice communications, data communications, instant messaging, e-mail, and electronic
conferencing into a single experience where users can seamlessly switch back and forth
between different communication modes. Presence technology shows whether a person is
available to receive a call. Companies will need to examine how work flows and business
processes will be altered by this technology in order to gauge its value.

CenterPoint Properties, a major Chicago area industrial real estate company, used
unified communications technology to create collaborative Web sites for each of its real
estate deals. Each Web site provides a single point for accessing structured and unstructured
data. Integrated presence technology lets team members e-mail, instant message, call, or
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Virtual Private Networks
What if you had a marketing group charged with developing new products and services for
your firm with members spread across the United States? You would want to be able to
e-mail each other and communicate with the home office without any chance that outsiders
could intercept the communications. In the past, one answer to this problem was to work
with large private networking firms who offered secure, private, dedicated networks to
customers. But this was an expensive solution. A much less-expensive solution is to create a
virtual private network within the public Internet.

A virtual private network (VPN) is a secure, encrypted, private network that has been
configured within a public network to take advantage of the economies of scale and
management facilities of large networks, such as the Internet (see Figure 6-12). A VPN
provides your firm with secure, encrypted communications at a much lower cost than the
same capabilities offered by traditional non-Internet providers who use their private
networks to secure communications. VPNs also provide a network infrastructure for
combining voice and data networks.

Several competing protocols are used to protect data transmitted over the public
Internet, including Point-to-Point Tunneling Protocol (PPTP). In a process called tunneling,
packets of data are encrypted and wrapped inside IP packets. By adding this wrapper around
a network message to hide its content, business firms create a private connection that travels
through the public Internet.

THE WEB

You’ve probably used the Web to download music, to find information for a term paper, or to
obtain news and weather reports. The Web is the most popular Internet service. It’s a system
with universally accepted standards for storing, retrieving, formatting, and displaying
information using a client/server architecture. Web pages are formatted using hypertext with
embedded links that connect documents to one another and that also link pages to other
objects, such as sound, video, or animation files. When you click a graphic and a video clip
plays, you have clicked a hyperlink. A typical Web site is a collection of Web pages linked
to a home page.

Hypertext
Web pages are based on a standard Hypertext Markup Language (HTML), which formats
documents and incorporates dynamic links to other documents and pictures stored in the

212 Part II: Information Technology Infrastructure

Figure 6-12
A Virtual Private Network Using the Internet
This VPN is a private network of computers linked using a secure “tunnel” connection over the
Internet. It protects data transmitted over the public Internet by encoding the data and “wrapping”
them within the Internet Protocol (IP). By adding a wrapper around a network message to hide its
content, organizations can create a private connection that travels through the public Internet.

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same or remote computers (see Chapter 4). Web pages are accessible through the Internet
because Web browser software operating your computer can request Web pages stored on an
Internet host server using the Hypertext Transfer Protocol (HTTP). HTTP is the commu-
nications standard used to transfer pages on the Web. For example, when you type a Web
address in your browser, such as www.sec.gov, your browser sends an HTTP request to the
sec.gov server requesting the home page of sec.gov.

HTTP is the first set of letters at the start of every Web address, followed by the
domain name, which specifies the organization’s server computer that is storing the
document. Most companies have a domain name that is the same as or closely related to
their official corporate name. The directory path and document name are two more pieces
of information within the Web address that help the browser track down the requested
page. Together, the address is called a uniform resource locator (URL). When typed into
a browser, a URL tells the browser software exactly where to look for the information. For
example, in the URL http://www.megacorp.com/content/features/082602.html, http
names the protocol used to display Web pages, www.megacorp.com is the domain name,
content/features is the directory path that identifies where on the domain Web server the
page is stored, and 082602.html is the document name and the name of the format it is in
(it is an HTML page).

Web Servers
A Web server is software for locating and managing stored Web pages. It locates the Web
pages requested by a user on the computer where they are stored and delivers the Web pages
to the user’s computer. Server applications usually run on dedicated computers, although
they can all reside on a single computer in small organizations.

The most common Web server in use today is Apache HTTP Server, which controls 46
percent of the market. Apache is an open source product that is free of charge and can be
downloaded from the Web. Microsoft Internet Information Services is the second most com-
monly used Web server, with a 22 percent market share.

Searching for Information on the Web
No one knows for sure how many Web pages there really are. The surface Web is the part of
the Web that search engines visit and about which information is recorded. For instance,
Google visited about 50 billion in 2008 although publicly it acknowledges indexing more
than 25 billion. But there is a “deep Web” that contains an estimated 800 billion additional
pages, many of them proprietary (such as the pages of The Wall Street Journal Online,
which cannot be visited without an access code) or that are stored in protected corporate
databases.

Search Engines Obviously, with so many Web pages, finding specific Web pages that can
help you or your business, nearly instantly, is an important problem. The question is, how
can you find the one or two pages you really want and need out of billions of indexed Web
pages? Search engines attempt to solve the problem of finding useful information on the
Web nearly instantly, and, arguably, they are the “killer app” of the Internet era. Today’s
search engines can sift through HTML files, files of Microsoft Office applications, PDF
files, as well as audio, video, and image files. There are hundreds of different search engines
in the world, but the vast majority of search results are supplied by three top providers:
Google, Yahoo!, and Microsoft’s recently released Bing search engine.

Web search engines started out in the early 1990s as relatively simple software programs
that roamed the nascent Web, visiting pages and gathering information about the content of
each page. The first search engines were simple keyword indexes of all the pages they vis-
ited, leaving the user with lists of pages that may not have been truly relevant to their search.

In 1994, Stanford University computer science students David Filo and Jerry Yang
created a hand-selected list of their favorite Web pages and called it “Yet Another
Hierarchical Officious Oracle,” or Yahoo!. Yahoo! was not initially a search engine but
rather an edited selection of Web sites organized by categories the editors found useful, but
it has since developed its own search engine capabilities.

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In 1998, Larry Page and Sergey Brin, two other Stanford computer science students,
released their first version of Google. This search engine was different: Not only did it index
each Web page’s words but it also ranked search results based on the relevance of each page.
Page patented the idea of a page ranking system (PageRank System), which essentially
measures the popularity of a Web page by calculating the number of sites that link to that
page as well as the number of pages which it links to. Brin contributed a unique Web crawler
program that indexed not only keywords on a page but also combinations of words (such as
authors and the titles of their articles). These two ideas became the foundation for the
Google search engine. Figure 6-13 illustrates how Google works.

Search engine Web sites are so popular that many people use them as their home page,
the page where they start (see Chapter 9). As useful as they are, no one expected search
engines to be big money makers. Today, however, search engines are the foundation for the
fastest growing form of marketing and advertising, search engine marketing.

Search engines have become major shopping tools by offering what is now called
search engine marketing. When users enter a search term at Google, Bing, Yahoo!, or any
of the other sites serviced by these search engines, they receive two types of listings:
sponsored links, for which advertisers have paid to be listed (usually at the top of the search
results page), and unsponsored “organic” search results. In addition, advertisers can
purchase small text boxes on the side of search results pages. The paid, sponsored advertise-
ments are the fastest growing form of Internet advertising and are powerful new marketing
tools that precisely match consumer interests with advertising messages at the right
moment. Search engine marketing monetizes the value of the search process. In 2009,
search engine marketing generated $12.2 billion in revenue, half of all online advertising.
Ninety eight percent of Google’s annual revenue of $22 billion comes from search engine
marketing (eMarketer, 2009).

214 Part II: Information Technology Infrastructure

Figure 6-13
How Google Works
The Google search engine is continuously crawling the Web, indexing the content of each page, calculating its popularity, and
storing the pages so that it can respond quickly to user requests to see a page. The entire process takes about one-half second.

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Because search engine marketing is so effective, companies are starting to optimize their
Web sites for search engine recognition. The better optimized the page is, the higher a
ranking it will achieve in search engine result listings. Search engine optimization
(SEO) is the process of improving the quality and volume of Web traffic to a Web site by
employing a series of techniques that help a Web site achieve a higher ranking with the
major search engines when certain keywords and phrases are put in the search field. One
technique is to make sure that the keywords used in the Web site description match the key-
words likely to be used as search terms by prospective customers. For example, your Web
site is more likely to be among the first ranked by search engines if it uses the keyword
“lighting” rather than “lamps” if most prospective customers are searching for “lighting.” It
is also advantageous to link your Web site to as many other Wet sites as possible because
search engines evaluate such links to determine the popularity of a Web page and how it is
linked to other content on the Web. The assumption is the more links there are to a Web site,
the more useful the Web site must be.

In 2008, about 100 million people each day in the United States alone used a search engine,
producing over 17 billion searches a month. There are hundreds of search engines but the top
three (Google, Yahoo!, and Bing) account for 90 percent of all searches (see Figure 6-14).

Although search engines were originally built to search text documents, the explosion in
online video and images has created a demand for search engines that can quickly find spe-
cific videos. The words “dance,” “love,” “music,” and “girl” are all exceedingly popular in
titles of YouTube videos, and searching on these keywords produces a flood of responses
even though the actual contents of the video may have nothing to do with the search term.
Searching videos is challenging because computers are not very good or quick at recogniz-
ing digital images. Some search engines have started indexing movies scripts so it will be
possible to search on dialogue to find a movie. One of the most popular video search engines
is Blinkx.com, which stores 18 million hours of video and employs a large group of human
classifiers who check the contents of uploaded videos against their titles.

Intelligent Agent Shopping Bots Chapter 11 describes the capabilities of software agents
with built-in intelligence that can gather or filter information and perform other tasks to
assist users. Shopping bots use intelligent agent software for searching the Internet for
shopping information. Shopping bots such as MySimon or Google Product Search can help
people interested in making a purchase filter and retrieve information about products of
interest, evaluate competing products according to criteria the users have established, and
negotiate with vendors for price and delivery terms. Many of these shopping agents search

Chapter 6: Telecommunications, the Internet, and Wireless Technology 215

Figure 6-14
Top U.S. Web
Search Engines
Google is the most popu-
lar search engine on the
Web, handling 70
percent of all Web
searches.

Sources: Based on data from SeoConsultants.com, September 25, 2009.

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216 Part II: Information Technology Infrastructure

the Web for pricing and availability of products specified by the user and return a list of sites
that sell the item along with pricing information and a purchase link.

Web 2.0
Today’s Web sites don’t just contain static content—they enable people to collaborate, share
information, and create new services and content online. Web 2.0 refers to these second-
generation interactive Internet-based services. If you have shared photos over the Internet at
Flickr or another photo site, posted a video to YouTube, created a blog, used Wikipedia, or
added a widget to your Facebook page, you’ve used some of these Web 2.0 services.

Web 2.0 has four defining features: interactivity, real-time user control, social participa-
tion (sharing), and user-generated content. The technologies and services behind these fea-
tures include cloud computing, software mashups and widgets, blogs, RSS, wikis, and social
networks.

Mashups and widgets, which we introduced in Chapter 4, are software services that
enable users and system developers to mix and match content or software components to
create something entirely new. For example, Yahoo’s photo storage and sharing site Flickr
combines photos with other information about the images provided by users and tools to
make it usable within other programming environments.

These software applications run on the Web itself instead of the desktop. With Web 2.0,
the Web is not just a collection of destination sites, but a source of data and services that can
be combined to create applications users need. Web 2.0 tools and services have fueled the
creation of social networks and other online communities where people can interact with
one another in the manner of their choosing.

A blog, the popular term for a Weblog, is a personal Web site that typically contains a
series of chronological entries (newest to oldest) by its author, and links to related Web
pages. The blog may include a blogroll (a collection of links to other blogs) and trackbacks
(a list of entries in other blogs that refer to a post on the first blog). Most blogs allow readers
to post comments on the blog entries as well. The act of creating a blog is often referred to
as “blogging.” Blogs are either hosted by a third-party site such as Blogger.com,
LiveJournal.com, TypePad.com, and Xanga.com, or prospective bloggers can download
software such as Movable Type to create a blog that is housed by the user’s ISP.

Blog pages are usually variations on templates provided by the blogging service or soft-
ware. Therefore, millions of people without HTML skills of any kind can post their own
Web pages and share content with others. The totality of blog-related Web sites is often
referred to as the blogosphere. Although blogs have become popular personal publishing
tools, they also have business uses (see Chapters 9 and 10).

If you’re an avid blog reader, you might use RSS to keep up with your favorite blogs
without constantly checking them for updates. RSS, which stands for Rich Site Summary or
Really Simple Syndication, syndicates Web site content so that it can be used in another set-
ting. RSS technology pulls specified content from Web sites and feeds it automatically to
users’ computers, where it can be stored for later viewing.

To receive an RSS information feed, you need to install aggregator or news reader soft-
ware that can be downloaded from the Web. (Microsoft Internet Explorer includes RSS
reading capabilities.) Alternatively, you can establish an account with an aggregator Web
site. You tell the aggregator to collect all updates from a given Web page, or list of pages, or
gather information on a given subject by conducting Web searches at regular intervals. Once
subscribed, you automatically receive new content as it is posted to the specified Web site.

A number of businesses use RSS internally to distribute updated corporate information.
Wells Fargo uses RSS to deliver news feeds that employees can customize to see the busi-
ness news of greatest relevance to their jobs. RSS feeds are so popular that online publishers
are developing ways to present advertising along with content.

Blogs allow visitors to add comments to the original content, but they do not allow visi-
tors to change the original posted material. Wikis, in contrast, are collaborative Web sites
where visitors can add, delete, or modify content on the site, including the work of previous
authors. Wiki comes from the Hawaiian word for “quick.”

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Chapter 6: Telecommunications, the Internet, and Wireless Technology 217

Wiki software typically provides a template that defines layout and elements common to
all pages, displays user-editable software program code, and then renders the content into an
HTML-based page for display in a Web browser. Some wiki software allows only basic text
formatting, whereas other tools allow the use of tables, images or even interactive elements,
such as polls or games. Most wikis provide capabilities for monitoring the work of other
users and correcting mistakes.

Because wikis make information sharing so easy, they have many business uses. For
example, Motorola sales representatives use wikis for sharing sales information. Instead of
developing a different pitch for every client, reps reuse the information posted on the wiki.
The U.S. Department of Homeland Security’s National Cyber Security Center deployed a
wiki to facilitate collaboration among federal agencies on cybersecurity. NCSC and other
agencies use the wiki for real-time information sharing on threats, attacks, and responses
and as a repository for technical and standards information.

Social networking sites enable users to build communities of friends and professional
colleagues. Members each typically create a “profile,” a Web page for posting photos,
videos, MP3 files, and text, and then share these profiles with others on the service identified
as their “friends” or contacts. Social networking sites are highly interactive, offer real-time
user control, rely on user-generated content, and are broadly based on social participation
and sharing of content and opinions. Leading social networking sites include Facebook,
MySpace (each with over 100 million members), and LinkedIn (for professional contacts).

For many, social networking sites are the defining Web 2.0 application, and one that will
radically change how people spend their time online; how people communicate and with
whom; how business people stay in touch with customers, suppliers, and employees; how
providers of goods and services learn about their customers; and how advertisers reach
potential customers. The large social networking sites are also morphing into application
development platforms where members can create and sell software applications to other
members of the community. Facebook alone had over 1 million developers who created over
350,000 applications for gaming, video sharing, and communicating with friends and
family. We will talk more about business applications of social networking in Chapters 9 and
10, and you can find social networking discussions in many other chapters of the text. You
can also find a more detailed discussion of Web 2.0 in our Learning Tracks.

Web 3.0: The Future Web
Every day about 100 million Americans enter 500 million queries to search engines. How
many of these 500 million queries produce a meaningful result (a useful answer in the first
three listings)? Arguably, fewer than half. Google, Yahoo!, Microsoft, and Amazon are all
trying to increase the odds of people finding meaningful answers to search engine queries.
But with over 50 billion Web pages indexed, the means available for finding the information
you really want are quite primitive, based on the words used on the pages, and the relative
popularity of the page among people who use those same search terms. In other words, it’s
hit and miss.

To a large extent, the future of the Web involves developing techniques to make search-
ing the 50 billion Web pages more productive and meaningful for ordinary people. Web 1.0
solved the problem of obtaining access to information. Web 2.0 solved the problem of
sharing that information with others, and building new Web experiences. Web 3.0 is the
promise of a future Web where all this digital information, all these contacts, can be woven
together into a single meaningful experience.

Sometimes this is referred to as the Semantic Web. “Semantic” refers to meaning. Most
of the Web’s content today is designed for humans to read and for computers to display, not
for computer programs to analyze and manipulate. Search engines can discover when a
particular term or keyword appears in a Web document, but they do not really understand its
meaning or how it relates to other information on the Web. You can check this out on Google
by entering two searches. First, enter “Paris Hilton”. Next, enter “Hilton in Paris”. Because
Google does not understand ordinary English, it has no idea that you are interested in the
Hilton Hotel in Paris in the second search. Because it cannot understand the meaning ofIS

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pages it has indexed, Google’s search engine returns the most popular pages for those
queries where “Hilton” and “Paris” appear on the pages.

First described in a 2001 Scientific American article, the Semantic Web is a collaborative
effort led by the World Wide Web Consortium to add a layer of meaning atop the existing
Web to reduce the amount of human involvement in searching for and processing Web infor-
mation (Berners-Lee et al., 2001).

Views on the future of the Web vary, but they generally focus on ways to make the Web
more “intelligent,” with machine-facilitated understanding of information promoting a more
intuitive and effective user experience. For instance, let’s say you want to set up a party with
your tennis buddies at a local restaurant Friday night after work. One problem is that you
had earlier scheduled to go to a movie with another friend. In a Semantic Web 3.0 environ-
ment, you would be able to coordinate this change in plans with the schedules of your tennis
buddies, the schedule of your movie friend, and make a reservation at the restaurant all with
a single set of commands issued as text or voice to your handheld smartphone. Right now,
this capability is beyond our grasp.

Work proceeds slowly on making the Web a more intelligent experience, in large part
because it is difficult to make machines, including software programs, that are truly intelli-
gent like humans. But there are other views of the future Web. Some see a 3-D Web where
you can walk through pages in a 3-D environment. Others point to the idea of a pervasive
Web that controls everything from the lights in your living room, to your car’s rear view mir-
ror, not to mention managing your calendar and appointments.

Other complementary trends leading toward a future Web 3.0 include more wide-
spread use of cloud computing and SaaS business models, ubiquitous connectivity among
mobile platforms and Internet access devices, and the transformation of the Web from a
network of separate siloed applications and content into a more seamless and interopera-
ble whole. These more modest visions of the future Web 3.0 are more likely to be realized
in the near term.

6.4 The Wireless Revolution

If you have a cell phone, do you use it for taking and sending photos, sending text messages,
or downloading music clips? Do you take your laptop to class or to the library to link up to
the Internet? If so, you’re part of the wireless revolution! Cell phones, laptops, and small
handheld devices have morphed into portable computing platforms that let you perform
some of the computing tasks you used to do at your desk.

Wireless communication helps businesses more easily stay in touch with customers,
suppliers, and employees and provides more flexible arrangements for organizing work.
Wireless technology has also created new products, services, and sales channels, which we
discuss in Chapter 9.

If you require mobile communication and computing power or remote access to
corporate systems, you can work with an array of wireless devices, including cell phones,
smartphones, and wireless-enabled personal computers. We introduced smartphones in
our discussions of the mobile digital platform in Chapters 1 and 4. In addition to voice
transmission, they feature capabilities for e-mail, messaging, wireless Internet access,
digital photography, and personal information management. The features of the iPhone and
BlackBerry illustrate the extent to which cellphones have evolved into small mobile
computers.

CELLULAR SYSTEMS

Digital cellular service uses several competing standards. In Europe and much of the rest of
the world outside the United Sates, the standard is Global System for Mobile
Communication (GSM). GSM’s strength is its international roaming capability. There are
GSM cell phone systems in the United States, including T-Mobile and AT&T Wireless.

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The major standard in the United States is Code Division Multiple Access (CDMA),
which is the system used by Verizon and Sprint. CDMA was developed by the military
during World War II. It transmits over several frequencies, occupies the entire spectrum, and
randomly assigns users to a range of frequencies over time. In general, CDMA is cheaper to
implement, is more efficient in its use of spectrum, and provides higher quality throughput
of voice and data than GSM.

Earlier generations of cellular systems were designed primarily for voice and limited
data transmission in the form of short text messages. Wireless carriers now offer more
powerful cellular networks called third-generation (3G) networks, with transmission
speeds ranging from 144 Kbps for mobile users in, say, a car, to more than 2 Mbps for sta-
tionary users. This is sufficient transmission capacity for video, graphics, and other rich
media, in addition to voice, making 3G networks suitable for wireless broadband Internet
access. Many of the cellular handsets available today are 3G-enabled, including the newest
version of Apple’s iPhone.

3G networks are widely used in Japan, South Korea, Taiwan, Hong Kong, Singapore,
and parts of northern Europe. In U.S. locations without 3G coverage, U.S. cellular carriers
have upgraded their networks to support higher-speed transmission. These interim 2.5G
networks provide data transmission rates ranging from 60 to 354 Kbps, enabling cell
phones to be used for Web access, music downloads, and other broadband services.
AT&T’s EDGE network used by the first-generation iPhone is an example. PCs equipped
with a special card can use these broadband cellular services for anytime, anywhere wire-
less Internet access.

The next evolution in wireless communication, called 4G networks, is entirely packet-
switched and capable of providing between 1 Mbps and 1 Gbps speeds, with premium qual-
ity and high security. Voice, data, and high-quality streaming video will be available to users
anywhere, anytime. Commercial deployment of 4G networks will take place within the next
few years. Telecommunications companies such as Sprint, Verizon, and NTT DoCoMo have
started rolling out 4G systems. You can find out more about cellular generations in the
Learning Tracks for this chapter.

WIRELESS COMPUTER NETWORKS AND INTERNET ACCESS

If you have a laptop computer, you might be able to use it to access the Internet as you move
from room to room in your dorm, or table to table in your university library. An array of
technologies provide high-speed wireless access to the Internet for PCs and other wireless
handheld devices as well as for cell phones. These new high-speed services have extended
Internet access to numerous locations that could not be covered by traditional wired Internet
services.

Bluetooth
Bluetooth is the popular name for the 802.15 wireless networking standard, which is useful
for creating small personal-area networks (PANs). It links 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, pagers, computers, printers, and computing devices using Bluetooth
communicate with each other and even operate each other without direct user intervention
(see Figure 6-15). For example, a person could direct a notebook computer to send a docu-
ment file wirelessly to a printer. Bluetooth connects wireless keyboards and mice to PCs or
cell phones to earpieces without wires. Bluetooth has low-power requirements, making it
appropriate for battery-powered handheld computers, cell phones, or PDAs.

Although Bluetooth lends itself to personal networking, it has uses in large corporations.
For example, FedEx drivers use Bluetooth to transmit the delivery data captured by their
handheld PowerPad computers to cellular transmitters, which forward the data to corporate
computers. Drivers no longer need to spend time docking their handheld units physically in
the transmitters, and Bluetooth has saved FedEx $20 million per year.

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Wi-Fi
The 802.11 set of standards for wireless LANs is also known as Wi-Fi. There are three stan-
dards in this family: 802.11a, 802.11b, and 802.11g. 802.11n is a new standard for increas-
ing the speed and capacity of wireless networking.

The 802.11a standard can transmit up to 54 Mbps in the unlicensed 5-GHz frequency
range and has an effective distance of 10 to 30 meters. The 802.11b standard 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
802.11g standard can transmit up to 54 Mbps in the 2.4-GHz range. 802.11n can transmit at
more than 600 Mbps.

802.11b was the first wireless standard to be widely adopted for wireless LANs and
wireless Internet access. 802.11g is increasingly used for this purpose, and systems capable
of handling 802.11n are becoming available.

In most Wi-Fi communications, wireless devices communicate with a wired LAN using
access points. An access point is a box consisting of a radio receiver/transmitter and
antennas that links to a wired network, router, or hub.

Figure 6-16 illustrates an 802.11 wireless LAN operating in infrastructure mode that
connects a small number of mobile devices to a larger wired LAN. Most wireless devices
are client machines. The servers that the mobile client stations need to use are on the wired
LAN. The access point controls the wireless stations and acts as a bridge between the main
wired LAN and the wireless LAN. (A bridge connects two LANs based on different
technologies.) The access point also controls the wireless stations.

Laptop PCs now come equipped with chips to receive Wi-Fi signals. Older models may
need an add-in wireless network interface card.

Wi-Fi and Wireless Internet Access
The 802.11 standard also provides wireless access to the Internet using a broadband
connection. In this instance, an access point plugs into an Internet connection, which could
come from a cable TV line or DSL telephone service. Computers within range of the access
point use it to link wirelessly to the Internet.

Businesses of all sizes are using Wi-Fi networks to provide low-cost wireless LANs and
Internet access. Wi-Fi hotspots are springing up in hotels, airport lounges, libraries, cafes,
and college campuses to provide mobile access to the Internet. Dartmouth College is one of
many campuses where students now use Wi-Fi for research, course work, and entertainment.

220 Part II: Information Technology Infrastructure

Figure 6-15
A Bluetooth
Network (PAN)
Bluetooth enables a
variety of devices, includ-
ing cell phones, PDAs,
wireless keyboards and
mice, PCs, and printers,
to interact wirelessly with
each other within a small
30-foot (10-meter) area.
In addition to the links
shown, Bluetooth can be
used to network similar
devices to send data
from one PC to another,
for example.

IS
B
N
1-256-42913-9
Essentials of MIS, Ninth Edition, by Kenneth C. Laudon and Jane P. Laudon. Published by Prentice Hall. Copyright © 2011 by Pearson Education, Inc.

Hotspots typically consist of one or more access points positioned on a ceiling, wall,
or other strategic spot in a public place to provide maximum wireless coverage for a specific
area. Users in range of a hotspot are able to access the Internet from laptops, handhelds, or
cell phones that are Wi-Fi enabled, such as Apple’s iPhone. Some hotspots are free or do not
require any additional software to use; others may require activation and the establishment
of a user account by providing a credit card number over the Web.

Wi-Fi technology poses several challenges, however. Right now, users cannot freely
roam from hotspot to hotspot if these hotspots use different Wi-Fi network services. Unless
the service is free, users would need to log on to separate accounts for each service, each
with its own fees.

One major drawback of Wi-Fi is its weak security features, which make these wireless
networks vulnerable to intruders. We provide more detail about Wi-Fi security issues in
Chapter 8.

Another drawback of Wi-Fi networks is susceptibility to interference from nearby
systems operating in the same spectrum, such as wireless phones, microwave ovens, or other
wireless LANs. Wireless networks based on the 802.11n specification solve this problem by
using multiple wireless antennas in tandem to transmit and receive data and technology to
coordinate multiple simultaneous radio signals. This technology is called MIMO (multiple
input multiple output).

WiMax
A surprisingly large number of areas in the United States and throughout the world do not
have access to Wi-Fi or fixed broadband connectivity. The range of Wi-Fi systems is no
more than 300 feet from the base station, making it difficult for rural groups that don’t have
cable or DSL service to find wireless access to the Internet.

The IEEE developed a new family of standards known as WiMax to deal with these
problems. WiMax, which stands for Worldwide Interoperability for Microwave Access, is
the popular term for IEEE Standard 802.16, known as the “Air Interface for Fixed
Broadband Wireless Access Systems.” WiMax has a wireless access range of up to 31 miles,
compared to 300 feet for Wi-Fi and 30 feet for Bluetooth, and a data transfer rate of up to 75

Chapter 6: Telecommunications, the Internet, and Wireless Technology 221

Figure 6-16
An 802.11 Wireless
LAN
Mobile laptop computers
equipped with network
interface cards link to
the wired LAN by com-
municating with the
access point. The
access point uses radio
waves to transmit net-
work signals from the
wired network to the
client adapters, which
convert them into data
that the mobile device
can understand. The
client adapter then trans-
mits the data from the
mobile device back to
the access point, which
forwards the data to the
wired network.

Mbps. The 802.16 specification has robust security and quality-of-service features to sup-
port voice and video.

WiMax antennas are powerful enough to beam high-speed Internet connections to
rooftop antennas of homes and businesses that are miles away. Cellular handsets and laptops
with WiMax capabilities are appearing in the marketplace. Clearwire, which is owned by
Sprint Nextel, is using WiMax technology as the foundation for the 4G networks it is
deploying throughout the United States. Clearwire plans expects to offer this service to 120
million people by the end of 2010. However, the future of WiMax is cloudy because Verizon
Wireless and wireless providers are basing their 4G networks on a competing technology
called Long-Term Evolution (LTE).

RFID AND WIRELESS SENSOR NETWORKS

Mobile technologies are creating new efficiencies and ways of working throughout the
enterprise. In addition to the wireless systems we have just described, radio frequency iden-
tification systems and wireless sensor networks are having a major impact.

Radio Frequency Identification
Radio frequency identification (RFID) systems provide a powerful technology for
tracking the movement of goods throughout the supply chain. RFID systems use tiny tags
with embedded microchips containing data about an item and its location to transmit radio
signals over a short distance to RFID readers. The RFID readers then pass the data over a
network to a computer for processing. Unlike bar codes, RFID tags do not need line-of-sight
contact to be read.

The RFID tag is electronically programmed with information that can uniquely identify
an item plus other information about the item, such as its location, where and when it was
made, or its status during production. Embedded in the tag is a microchip for storing the
data. The rest of the tag is an antenna that transmits data to the reader.

The reader unit consists of an antenna and radio transmitter with a decoding capability
attached to a stationary or handheld device. The reader emits radio waves in ranges
anywhere from 1 inch to 100 feet, depending on its power output, the radio frequency
employed, and surrounding environmental conditions. When an RFID tag comes within the
range of the reader, the tag is activated and starts sending data. The reader captures these
data, decodes them, and sends them back over a wired or wireless network to a host
computer for further processing (see Figure 6-17). Both RFID tags and antennas come in a
variety of shapes and sizes.

Active RFID tags are powered by an internal battery and typically enable data to be
rewritten and modified. Active tags can transmit for hundreds of feet but may cost several
dollars and upward per tag. Automated toll-collection systems such as New York’s E-ZPass
use active RFID tags.

Passive RFID tags do not have their own power source and obtain their operating power
from the radio frequency energy transmitted by the RFID reader. They are smaller, lighter,
and less expensive than active tags, but only have a range of several feet.

In inventory control and supply chain management, RFID systems capture and manage
more detailed information about items in warehouses or in production than bar coding
systems. If a large number of items are shipped together, RFID systems track each pallet,
lot, or even unit item in the shipment. This technology may help companies such as
Wal-Mart improve receiving and storage operations by improving their ability to “see”
exactly what stock is stored in warehouses or on retail store shelves.

Wal-Mart has installed RFID readers at store receiving docks to record the arrival of
pallets and cases of goods shipped with RFID tags. The RFID reader reads the tags a second
time just as the cases are brought onto the sales floor from backroom storage areas. Software
combines sales data from Wal-Mart’s point-of-sale systems and the RFID data regarding the
number of cases brought out to the sales floor. The program determines which items will
soon be depleted and automatically generates a list of items to pick in the warehouse to

222 Part II: Information Technology Infrastructure
IS

Chapter 6: Telecommunications, the Internet, and Wireless Technology 223

replenish store shelves before they run out. This information helps Wal-Mart reduce out-of-
stock items, increase sales, and further shrink its costs.

The cost of RFID tags used to be too high for widespread use, but now it is less than 10
cents per passive tag in the United States. As the price decreases, RFID is starting to become
cost-effective for some applications.

In addition to installing RFID readers and tagging systems, companies may need to
upgrade their hardware and software to process the massive amounts of data produced by
RFID systems—transactions that could add up to tens or hundreds of terabytes.

Software is used to filter, aggregate, and prevent RFID data from overloading business
networks and system applications. Applications often need to be redesigned to accept large
volumes of frequently generated RFID data and to share those data with other applications.
Major enterprise software vendors, including SAP and Oracle-PeopleSoft, now offer RFID-
ready versions of their supply chain management applications.

Wireless Sensor Networks
If your company wanted state-of-the art technology to monitor building security or detect
hazardous substances in the air, it might deploy a wireless sensor network. Wireless sensor
networks (WSNs) are networks of interconnected wireless devices that are embedded into
the physical environment to provide measurements of many points over large spaces. These
devices have built-in processing, storage, and radio frequency sensors and antennas. They
are linked into an interconnected network that routes the data they capture to a computer for
analysis.

These networks range from hundreds to thousands of nodes. Because wireless sensor
devices are placed in the field for years at a time without any maintenance or human
intervention, they must have very low power requirements and batteries capable of lasting
for years.

Figure 6-18 illustrates one type of wireless sensor network, with data from individual
nodes flowing across the network to a server with greater processing power. The server acts
as a gateway to a network based on Internet technology.

Wireless sensor networks are valuable in areas such as monitoring environmental
changes, monitoring traffic or military activity, protecting property, efficiently operating and
managing machinery and vehicles, establishing security perimeters, monitoring supply
chain management, or detecting chemical, biological, or radiological material.

Figure 6-17
How RFID Works
RFID uses low-powered radio transmitters to read data stored in a tag at distances ranging from 1 inch to 100 feet.
The reader captures the data from the tag and sends them over a network to a host computer for processing.

224 Part II: Information Technology Infrastructure

6.5 Hands-On MIS Projects

The projects in this section give you hands-on experience evaluating and selecting commu-
nications technology, using spreadsheet software to improve selection of telecommunica-
tions services, and using Web search engines for business research.

MANAGEMENT DECISION PROBLEMS

1. Your company supplies ceramic floor tiles to Home Depot, Lowe’s, and other home
improvement stores. You have been asked to start using radio frequency identification
tags on each case of tiles you ship to help your customers improve the management of
your products and those of other suppliers in their warehouses. Use the Web to identify
the cost of hardware, software, and networking components for an RFID system for
your company. What factors should be considered? What are the key decisions that have
to be made in determining whether your firm should adopt this technology?

2. BestMed Medical Supplies Corporation sells medical and surgical products
and equipment from over 700 different manufacturers to hospitals, health clinics, and
medical offices. The company employs 500 people at seven different locations in west-
ern and midwestern states, including account managers, customer service and support
representatives, and warehouse staff. Employees communicate via traditional telephone
voice services, e-mail, instant messaging, and cell phones. Management is inquiring
about whether the company should adopt a system for unified communications. What
factors should be considered? What are the key decisions that have to be made in deter-
mining whether to adopt this technology? Use the Web, if necessary, to find out more
about unified communications and its costs.

IMPROVING DECISION MAKING: USING SPREADSHEET
SOFTWARE TO EVALUATE WIRELESS SERVICES

Software skills: Spreadsheet formulas, formatting
Business skills: Analyzing telecommunications services and costs

In this project, you’ll use the Web to research alternative wireless services and use spread-
sheet software to calculate wireless service costs for a sales force.

Figure 6-18
A Wireless Sensor
Network
The small circles repre-
sent lower-level nodes
and the larger circles
represent high-end
nodes. Lower-level nodes
forward data to each
other or to higher-level
nodes, which transmit
data more rapidly and
speed up network perfor-
mance.

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 communication, send
30 text messages per day, and five photos per week. Use your spreadsheet software to deter-
mine the wireless service and handset that will offer the best pricing per user over a two-year
period. For the purposes of this exercise, you do not need to consider corporate discounts.

ACHIEVING OPERATIONAL EXCELLENCE: USING WEB SEARCH
ENGINES FOR BUSINESS RESEARCH

Software skills: Web search tools
Business skills: Researching new technologies

This project will help develop your Internet skills in using Web search engines for business
research.

You want to learn more about ethanol as an alternative fuel for motor vehicles. Use the
following search engines to obtain that information: Yahoo!, Google, and Bing. 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?

Chapter 6: Telecommunications, the Internet, and Wireless Technology 225

LEARNING TRACKS

The following Learning Tracks provide content relevant to topics covered in this
chapter:

1. Computing and Communications Services Provided by Commercial
Communications Vendors

2. Broadband Network Services and Technologies

3. Cellular System Generations

4. Wireless Applications for Customer Relationship Management, Supply Chain
Management, and Healthcare

5. Web 2.0

Review Summary

1 What are the principal components of telecommunications networks and key net-working technologies? A simple network consists of two or more connected comput-
ers. 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 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.IS

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, including the Internet. Protocols provide a common set of rules that enable com-
munication among diverse components in a telecommunications network.

2 What are the main telecommunications transmission media and types of net-works? The principal physical transmission media are twisted copper telephone wire,
coaxial copper cable, fiber-optic cable, and wireless transmission. 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 communications satellites are used for wireless
communication over long distances.

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 compo-
nents 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.

Cable Internet connections provide high-speed access to the Web or corporate intranets
at speeds of up to 10 Mbps. A T1 line supports a data transmission rate of 1.544 Mbps.

3 How do the Internet and Internet technology work, and how do they support com-munication and e-business? The 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 more user-friendly domain names. Worldwide
Internet policies are established by organizations and government bodies, such as the
Internet Architecture Board (IAB) and the World Wide Web Consortium (W3C).

Major Internet services include e-mail, newgroups, chatting, instant messaging, Telnet,
FTP, and the Web. Web pages are based on Hypertext Markup Language (HTML) and can
display text, graphics, video, and audio. Web site directories, search engines, and RSS
technology help users locate the information they need on the Web. RSS, blogs, social net-
working, and wikis are features of Web 2.0.

Firms are also starting to realize economies by using VoIP technology for voice trans-
mission and by using virtual private networks (VPNs) as low-cost alternatives to private
WANs.

4 What are the principal technologies and standards for wireless networking, com-munication, and Internet access? Cellular networks are evolving toward high-speed,
high-bandwidth, digital packet-switched transmission. Broadband 3G networks are capable
of transmitting data at speeds ranging from 144 Kbps to more than 2 Mbps. 4G networks
capable of transmission speeds that could reach 1 Gbps are starting to be rolled out.

Major cellular standards include Code Division Multiple Access (CDMA), which is
used primarily in the United States, and Global System for Mobile Communications (GSM),
which is the standard in Europe and much of the rest of the world.

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).

226 Part II: Information Technology Infrastructure
IS

5 Why are radio frequency identification (RFID) and wireless sensor networks valu-able for business? Radio frequency identification (RFID) systems provide a powerful
technology for tracking the movement of goods by using tiny tags with embedded data about
an item and its location. RFID readers read the radio signals transmitted by these tags and
pass the data over a network to a computer for processing. Wireless sensor networks (WSNs)
are networks of interconnected wireless sensing and transmitting devices that are embedded
into the physical environment to provide measurements of many points over large spaces.

Chapter 6: Telecommunications, the Internet, and Wireless Technology 227

Internet Protocol (IP)
address, 203

Internet service provider
(ISP), 202

Internet2, 205
Local-area network (LAN),

198
Metropolitan-area network

(MAN), 200
Microwave, 201
Modem, 198
Network interface card

(NIC), 194
Network operating system

(NOS), 194
Packet switching, 196
Peer-to-peer, 199
Personal-area networks

(PANs), 219
Protocol, 197
Radio frequency identifica-

tion (RFID), 222
Ring topology, 200
Router, 195
RSS, 216
Search engines, 213
Search engine marketing, 214
Search engine optimization

(SEO), 215

Semantic Web, 217
Shopping bots, 215
Smartphones, 218
Social networking, 217
Star topology, 199
Switch, 195
T1 lines, 203
Telnet, 207
Topology, 199
Transmission Control

Protocol/Internet Protocol
(TCP/IP), 197

Twisted wire, 200
Unified communications, 211
Uniform resource locator

(URL), 213
Virtual private network

(VPN), 212
Voice over IP (VoIP), 209
Web 2.0, 216
Web 3.0, 217
Web site, 212
Wide-area networks (WANs),

200
Wi-Fi, 220
Wiki, 216
WiMax, 221
Wireless sensor networks

(WSNs), 223

3G networks, 219
4G networks, 219
Bandwidth, 202
Blog, 216
Blogosphere, 216
Bluetooth, 219
Broadband, 193
Bus topology, 199
Cable Internet

connections, 203
Cell phone, 201
Chat, 208
Coaxial cable, 200
Digital subscriber line (DSL),

203
Domain name, 203
Domain Name System

(DNS), 203
E-mail, 208
Fiber-optic cable, 201
File Transfer Protocol

(FTP), 207
Hertz, 202
Hotspots, 221
Hubs, 195
Hypertext Transfer Protocol

(HTTP), 213
Instant messaging, 2

Key Terms

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.

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

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.
• Define a LAN, and describe its components and the functions of each component.
• Name and describe the principal network topologies.IS

228 Part II: Information Technology Infrastructure

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

• Define the Internet, describe how it works, and explain how it provides business value.
• Explain how the Domain Name System (DNS) and IP addressing system work.
• List and describe the principal Internet services.
• Define and describe VoIP and virtual private networks, and explain how they provide

value to businesses.
• List and describe alternative ways of locating information on the Web.
• Compare Web 2.0 and Web 3.0.

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

• Define Bluetooth, Wi-Fi, WiMax, and 3G networks.
• Describe the capabilities of each and for which types of applications each is best suited.

5. Why are RFID and wireless sensor networks (WSNs) valuable for business?
• Define RFID, explain how it works, and describe how it provides value to businesses.
• Define WSNs, explain how they work, and describe the kinds of applications that use

them.

Discussion Questions

1. It has been said that within the next few
years, smartphones will become the single
most important digital device we own.
Discuss the implications of this statement.

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

Video Cases

Video Cases and Instructional Videos illustrating some of the concepts in this chapter are
available. Contact your instructor to access these videos.

Collaboration and Teamwork

Evaluating Smartphones
Form a group with three or four of your classmates. Compare the capabilities of Apple’s
iPhone with a smartphone 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, service plan and handset costs, and the services 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 Google Sites to post links to Web
pages, team communication announcements, and work assignments; to brainstorm; and to
work collaboratively on project documents. Try to use Google Docs to develop a presenta-
tion of your findings for the class.

Chapter 6: Telecommunications, the Internet, and Wireless Technology 229

BUSINESS PROBLEM-SOLVING CASE

Google Versus Microsoft: Clash of the Technology Titans

computing. It is banking on the idea that Internet-based
computing will supplant desktop computing as the way
most people work with their computers. Users would use
various connectivity devices to access applications from
remote servers stored in data centers, as opposed to
working locally from their machine.

One advantage to the cloud computing model is that
users would not be tied to a particular machine to access
information or do work. Another is that Google would
be responsible for most of the maintenance of the data
centers that house these applications. But the disadvan-
tages of the model are the requirement of an Internet
connection to use the applications, as well as the security
concerns surrounding Google’s handling of your infor-
mation. Google is banking on the increasing ubiquity of
the Internet and availability of broadband and Wi-Fi
connections to offset these drawbacks.

Microsoft already has several significant advantages to
help remain relevant even if cloud computing is as good
as Google advertises. The company has a well-
established and popular set of applications that many
consumers and businesses feel comfortable using. When
Microsoft launches a new product, users of Office
products and Windows can be sure that they will know
how to use the product and that it will work with their
system.

Cloud computing nevertheless represents a threat to
Microsoft’s core business model, which revolves around
the desktop as the center for nearly all computing tasks.
If, rather than buying software from Microsoft, con-
sumers can instead buy access to applications stored on
remote servers for a much cheaper cost, the desktop sud-
denly no longer occupies that central position. In the
past, Microsoft used the popularity of its Windows oper-
ating system (found on 95 percent of the world’s per-
sonal computers) and Office to destroy competing prod-
ucts such as Netscape Navigator, Lotus 1-2-3, and
WordPerfect. But Google’s offerings are Web-based, and
thus not reliant on Windows or Office. Google believes
that the vast majority of computing tasks, around 90
percent, can be done in the cloud. Microsoft disputes this
claim, calling it grossly overstated.

Microsoft clearly wants to bolster its Internet presence
in the event that Google is correct. It tried to acquire
Yahoo in early 2008 for $45 billion, and failed.
Microsoft wanted not only to bolster its Internet pres-
ence but also to end the threat of an advertising deal
between Google and Yahoo. In June 2008, those chances
diminished further due to a partnership between Google
and Yahoo under which Yahoo outsourced a portion of

Google and Microsoft, two of the most prominent
technology companies to arise in the past several
decades, are poised to square off for dominance of the
workplace and the Internet. The battle is already well
underway. Google has dominated the Internet, while
Microsoft has dominated the desktop. But both are
increasingly seeking to grow into the other’s core busi-
nesses. The competition between the companies is
becoming fierce.

Differences in the strategies and business models of
the two companies illustrate why this conflict will shape
our technological future. Google began as one search
company among many. But the effectiveness of its
PageRank search algorithm and online advertising
services, along with its ability to attract the best and
brightest minds in the industry, have catapulted Google
to global prominence. The company’s extensive
infrastructure allows them to offer the fastest search
speeds and a variety of Web-based products. Google
believes that online applications will be one of its next
big businesses, as its core search and search-advertising
businesses mature.

Microsoft achieved its giant stature on the strength of
its Windows operating system and Office desktop
productivity applications, which are used by over 500
million people worldwide. Sometimes vilified for its
anti-competitive practices, the company and its products
are nevertheless staples for businesses and consumers
looking to improve their productivity with computer-
based tasks.

Today, the two companies have very different visions
for the future, influenced by the continued development
of the Internet and increased availability of broadband
Internet connections. Google believes that the matura-
tion of the Internet will allow more and more comput-
ing tasks to be performed via the Web, on computers
sitting in remote data centers rather than on your desk-
top or computers owned by individual business firms.
This idea is known as cloud computing, and it is central
to Google’s business model going forward. Microsoft,
on the other hand, has built its success around the
model of desktop computing. Microsoft’s goal is to
embrace the Internet while persuading consumers to
retain the desktop as the focal point for computing
tasks.

With a vast array of Internet-based products and tools
for online search, online advertising, digital mapping,
online collaboration, digital photo management, digital
radio broadcasting, blogging, social networking, and
online video viewing, Google has pioneered cloud

its advertising to Google. Google planned to deliver
some of its ads alongside some of the less profitable
areas of Yahoo’s search, since Google’s technology is far
more sophisticated and generates more revenue per
search than any competitor. Microsoft struck back in
July 2009 by reaching a deal with Yahoo in which Yahoo
will use the Bing search engine.

Microsoft’s new goals are to “innovate and disrupt in
search, win in display ads, reinvent portal and social
media experiences.” Although Microsoft faces consider-
able hurdles in achieving these goals, it has made some
progress. In May 2009, Microsoft launched a new
Internet search engine called Bing, which has received
very favorable reviews for the quality of its results as
well as its features and design. Bing still ranks behind
Yahoo and Google in popularity, but it is attracting many
users. Microsoft hopes it will help it muscle in on
Google’s core market in Internet search advertising.

In the meantime, Google is developing a new operat-
ing system based on its Chrome Web browser. The
Google Chrome Operating System is initially intended
for use in low-cost netbook computers (see Chapter 4),
but will be able to power full-size PCs. The operating
system is fast, lightweight, and capable of getting a user
onto the Web in a few seconds, and will further Google’s
vision of Internet-based computing.

The centerpiece of Google’s efforts to encroach on
Microsoft’s turf is its Google Apps suite. These are a
series of Web-based applications that include Gmail,
instant messaging, calendar, word processing, presenta-
tion, and spreadsheet applications (Google Docs), and
tools for creating collaborative Web sites. These
applications are simpler versions of Microsoft’s Office
applications, and Google is offering basic versions of
them for free, and “Premier” editions for a fraction of
Microsoft’s price. Subscribing to the Premier edition of
Google Apps costs $50 per year per person, as opposed
to approximately $500 per person to purchase Microsoft
Office.

Google believes that most Office users don’t need the
advanced features of Word, Excel, and other Office
applications, and have a great deal to gain by switching
to Google Apps. Small businesses, for example, might
prefer cheaper, simpler versions of word processing,
spreadsheet, and electronic presentation applications
because they don’t require the complex features of
Microsoft Office. Microsoft disputes this, saying that
Office is a result of many years and dollars of research
indicating what consumers want, and that consumers are
very satisfied with their products. Many businesses
agree, saying that they are reluctant to move away from
Office because it is the “safe choice.” These firms are
often concerned that their data is not stored on-site and
that they may be in violation of laws like Sarbanes-
Oxley as a result, which requires that companies

maintain and report their data to the government upon
request.

Microsoft is countering by offering more software
features and Web-based services to bolster its online
presence. These include SharePoint, a Web-based
collaboration and document management platform
(see Chapter 2) and Microsoft Office Live, providing
Web-based services for e-mail, project management, and
organizing information, as well as online extensions to
Office.

In September 2009, Microsoft unveiled its Web-hosted
Office Web Apps version of its new Office 2010 desktop
suite. Office Web Apps include Word for word process-
ing, Excel for spreadsheets, PowerPoint for presenta-
tions, and One Note for gathering and sharing informa-
tion. A free ad-supported version of Office Web is
available to consumers via Microsoft’s Windows Live
online service. Other versions will be available for
businesses for a fee. Users of Office Web Apps who have
the desktop version of Office will be able to switch
seamlessly between the two tools.

Microsoft hopes that such lightweight and Web-based
versions of its products will blunt competition from
Google Docs and other popular options without curtail-
ing the profitability of its products that still run on PC
desktops or corporate servers. Microsoft’s Windows 7
operating system has a version that runs well on the tiny
netbooks.

The battle between Google and Microsoft isn’t just
being waged in the area of office productivity tools, Web
browsers, and operating systems. The two companies are
trading blows in a multitude of other fields, including
Web maps, online video, cell phone software, and online
health record keeping tools. Salesforce.com (see the case
study at the end of Chapter 4) represents the site of
another conflict between the two giants. Microsoft has
attempted to move in on the software as a service (SaaS)
model popularized by Salesforce.com, offering a com-
peting CRM product for a fraction of the cost. Google
has gone the opposite route, partnering with Salesforce
to integrate their CRM applications with Google Apps
and creating a new sales channel to market Google Apps
to businesses that have already adopted Salesforce CRM
software.

Both companies are attempting to open themselves up
as platforms to developers. Google has already launched
its Google App Engine, which allows outside program-
mers to develop and launch their own applications for
minimal cost. In a move that represented a drastic
change from their previous policy, Microsoft announced
that it would reveal many key details of its software that
had previously been kept secret. Programmers will have
an easier time building services that work with Microsoft
programs. Microsoft’s secrecy once helped them control
the marketplace by forcing other companies to use

230 Part II: Information Technology Infrastructure
IS

Chapter 6: Telecommunications, the Internet, and Wireless Technology 231

Windows rather than develop alternatives, but if they
can’t do the same to Google Apps, it makes sense to try
a different approach to attract developers.

Time will tell whether or not Microsoft is able to fend
off Google’s challenge to its dominance in the tech
industry. Many other prominent companies have fallen
victim to paradigm shifts, such as mainframes to
personal computers, traditional print media to Internet
distribution, and, if Google has its way, personal
computers to cloud computing.

Sources: Jessica E. Vascellaro, “Google Strives to Help Online Software Catch Up,”
The Wall Street Journal, July 15, 2009; Neil McAllister, “Sneak Peek: Microsoft
Office Web Apps,” InfoWorld, September 18, 2009; Miguel Helft, “Bing Delivers
Credibility to Microsoft,” The New York Times, July 14, 2009 and “Google’s Free
Phone Manager Could Threaten a Variety of Services,” The New York Times, March
12, 2009; Jessica Hodgson, “Microsoft to Offer Office over Web as It Responds to
Google Threat,” The Wall Street Journal, July 14, 2009; Miguel Helft and Ashlee
Vance, “Google Ploans a PC Operating System,” The New York Times, July 8, 2009;
Clint Boulton,”Microsoft Marks the Spot,” eWeek, May 5, 2008; Andy Kessler, “The
War for the Web,” The Wall Street Journal, May 6, 2008; John Pallatto and Clint
Boulton, “An On-Demand Partnership” and Clint Boulton, “Google Apps Go to
School,” eWeek, April 21, 2008; Miguel Helft, “Google and Salesforce Join to Fight
Microsoft.” The New York Times, April 14, 2008; and Robert A. Guth, Ben Worthen,
and Charles Forelle, “Microsoft to Allow Software Secrets on Internet,” The Wall
Street Journal, February 22, 2008.

Case Study Questions
1. Define and compare the business strategies and

business models of Google and Microsoft.

2. Has the Internet taken over the PC desktop as the
center of the action? Why or why not?

3. Why has Microsoft attempted to acquire Yahoo?
How does it affect its business model? Do you
believe this is a good move?

4. What is the significance of Google Apps to Google’s
future success?

5. Would you use Google Apps instead of Microsoft
Office applications for computing tasks? Why or why
not?

6. Which company and business model do you believe
will prevail in this epic struggle? Justify your
answer.

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