This case was prepared by Tracy Brown, Charles Foster, Brian McKinley, Scott Reus, and John Squire under the direction of Professor Allan Afuah, Corporate Strategy, University of Michigan Business School. This case was developed as a basis for classroom discussion. It is not intended to illustrate either effective or ineffective handling of an administrative situation. Some data has been masked.

Case 1: 3Com Going Hollywood?*


John Marshall, a recent graduate of The University of Michigan Business School, and 3Com’s industry marketing manager for media and entertainment, sat in his newly remodeled cubicle in Santa Clara, California. As he reviewed his notes, he ruminated about his upcoming meeting with Eric Sternberg, Director of Industry Marketing, and Janice Roberts, Senior VP of Marketing and Business Development.

Eric scheduled the meeting to discuss potential networking opportunities that John had identified in the movie production industry. Unfortunately, due to budget constraints, John knew that the organization could only commit the technical and financial resources to fund one of the projects. Although the healthcare, financial, education, manufacturing and government industry sectors comprised nearly 97% of 3Com’s business, John’s initial calculations showed that the movie production market for enterprise networking equipment would be at least $400 million in 5 years. John also realized that unless he could convince senior management to fund a marketing program devoted to this area, 3Com could be locked out of developing networks for the global post-production and movie making business.


The Networking Industry

Analysts expect the networking industry, growing at 30-50% per year, to surpass annual sales of $50 billion by the year 2000. The markets that comprise this dynamic industry — once the exclusive purview of large corporations, government, and academia — now include Internet service providers (ISPs), telecommunications carriers, small businesses and consumers.

While they once rushed to link computers internally, these organizations now face the need to link computer users to the Internet and corporate intranets. These new links enable small companies and "virtual" businesses to have big-company connectivity and give mobile workers and consumers access and capabilities like never before. The challenges for this fast-moving industry are many and wide-ranging — they include making networking more reliable, affordable, and easy-to-use, resolving Internet and intranet performance imbalance and network security issues, and increasing multimedia accessibility and utilization.

Competitive Landscape

Network infrastructure manufacturers compete in a dynamic, volatile industry. Major players include Cisco, Bay Networks and 3Com (Exhibit 1). Competitors market products in three categories: low end (e.g. Network Interface Cards, NICs, and modems), middle (e.g. network switches), and upper end (e.g. routers). 3Com had enjoyed relatively low competition in the low-end market, until the summer of 1997, when Intel entered the market with a NIC priced significantly below 3Com’s NIC. As a result, 3Com’s stock price plummeted from a high of $81 to $24. After recovering somewhat, 3Com’s stock price dropped again when Intel announced intentions to embed its NIC in the mother board it produced.

In addition to 3Com, Bay Networks and Fore Systems compete fiercely in the middle market. Although Cisco continues to dominate the high end market, other vendors in the high end and middle markets are exerting pressure by improving product offerings. These competitors have also initiated aggressive programming to educate consumers about the viability of switches as a significantly less expensive and equally effective substitute for routers. Cisco has not only held its ground, but also recently announced a strategic alliance with Microsoft and Intel.

3Com Corporation

3Com — whose name stands for Computer, Communication, Compatibility — was co-founded in 1979 by Dr. Robert Metcalfe, an inventor of Ethernet technology. 3Com sells networking equipment (routers, switches, hubs, network interface cards, and modems) and network management software (Transcend Networking). In 1982, 3Com introduced the world's first network adapter for IBM PCs. Since then, 3Com has shipped more than 50 million ethernet network interface cards (NICs).

In the early 1990s, as 3Com struggled to break the $500 million annual revenue hurdle the President and CEO, Eric Benhamou, initiated a growth strategy based on global data networking and acquisitions. With the addition of the U.S. Robotics Corporation in June 1997, 3Com revenues for the fiscal year approached $6 billion, representing more than 30 percent growth over 1996 (Exhibit 2 – Consolidated Balance Sheets). Market capitalization grew from $385 million in January 1992 to $16.7 billion in September 1997.

Today, the company's mission is to bring information and communications to all people, anytime, anywhere. This notion, called pervasive networking, drives all that 3Com is and does. 3Com strives to lead the industry by achieving breakthroughs in areas that allow networks to become pervasive infrastructures: simplicity, affordability, high performance, multimedia readiness, global connectivity (open, standards-based, deregulated), and universality (secure and available to all). In recognition of 3Com's visionary role in networking, President Clinton named Eric Benhamou to the President's Information Technology Advisory Committee.

Organizational Structure and Market Channels

Headquartered in Santa Clara, California, 3Com employees more than 13,200 people in 160 offices in 45 countries on six continents. The company is organized into four business units: Enterprise, Carrier, Client Access, and Palm Computing. Known for its state-of-the-art, high-volume production techniques, 3Com has manufacturing facilities around the world: U.S., Ireland and Israel, with a new facility opening in Singapore in 1998. Support operations are located in the U.S., Asia Pacific, Europe and Latin America, including 135 parts and logistics centers and seven technical escalation centers. Although 3Com is headquartered in the U.S., foreign markets generate 53% of revenues. European markets account for the largest portion of foreign sales.

3Com Corporation is the largest single entity in the world dedicated to the local area network (LAN)- and wide area network (WAN)-based network infrastructures. With nearly $6 billion in annual revenues, it is the second largest networking company in the world behind Cisco Systems, delivering end-to-end connectivity solutions to consumers, small businesses, large enterprises and public network carriers. Its installed base represents over 100 million network connections worldwide, more than any other networking company. In addition to products recognized for quality and reliability, 3Com's strengths lie in a broad and loyal global distribution channel, low cost manufacturing capabilities and growing brand recognition.

Technology Innovation

3Com's heritage of innovation and ingenuity continues today. The company holds 114 U.S. patents, more than any other network company. Patented technologies range from Parallel Tasking® architecture and Dynamic Access™ capabilities in NICs to specialized custom chips for switches and other devices. R&D investment in fiscal year 1997 (ended May 31, 1997) was almost $500 million. Because 3Com develops its own core enabling technologies, it is often able to provide greater value to customers and to commercialize solutions and follow-on upgrades faster than competitors do so.

Asynchronous Transfer Mode (ATM) is widely recognized as a breakthrough networking technology for delivering time-sensitive data, voice and video. Based on uniform 53-byte cells instead of variable-length packets (as in Ethernet), ATM switching is the next generation in a network's bandwidth evolution. Unlike data-only technologies, such as Ethernet or Token Ring, ATM provides guaranteed Quality of Service (QoS) for on-time delivery, supports a wide range of speeds, and can "scale up" to support network growth. ATM is exceptionally adept at handling a variety of traffic types, including real-time high-bandwidth transmissions such as full-motion video. The ATM network topology greatly reduces the latency and jitter problems currently associated with video transmission over a WAN. ATM is the only high-performance technology that spans the LAN and WAN.


3Com offers more than 800 hardware and software products for enterprises, ISPs and carriers, small businesses and consumers. In 1997 alone, major industry publications bestowed more than 60 "best-in-class" awards on 3Com products. The leading computer industry trade publication (Computerworld) ranked 3Com the networking industry leader in customer satisfaction for the second year in a row, based on its strong product-plus-service solutions.

3Com products, segmented into three broad categories according to markets served, enjoy strong brand equity. In fact, 3Com ranks alongside Microsoft and Hewlett-Packard as one of the three technology companies with the strongest brand equity among enterprises and distribution channels in the U.S., according to a 1997 study sponsored by CMP Media, Inc.

Strategic Partnerships

3Com has close relationships with a number of industry partners. PC manufacturers and suppliers deliver PCs preconfigured with 3Com networking solutions to channel partners. Value- Added Resellers (VARs), systems integrators, and distributors sell and service 3Com products in markets around the world.

3Com enjoys its status as a favored partner throughout the world. For the second year in a row, 3Com received (October 1997) the top rating from VARBusiness Magazine's Annual Report Card, which rates vendors' performance in three categories: products/pricing, support and partnership.

Some of the world's largest PC manufacturers — Dell Computer and Gateway 2000 among them— preconfigure their computers with 3Com NICs and remote access solutions as part of the 3Com Network Ready™ program. 3Com has also actively pursued partnering arrangements with industry leaders. 3Com recently established a licensing agreement in which IBM sells the PalmPilot connected organizer as the IBM WorkPad. This agreement extends the reach of the already-popular product into corporate markets via IBM's vast distribution, service and support organization. 3Com’s partnership with IBM extends to technology cooperation and joint development in a number of areas, including ATM and Ethernet technologies.

3Com's strategic alliance with Siemens AG, a world leader in voice networking, targets the creation of new products to address the growing market for integrated voice and data networks while also ensuring interoperability between Siemens' current telecommunications systems and 3Com's enterprise systems.


3Com's strong channel presence in the networking market enables customers to gain access to 3Com solutions through their supplier of choice, as well as from 3Com directly. Increasingly, customers want to work with only one or two key suppliers, and 3Com has been focusing on developing long-term customer relationships.

While 3Com products and services are appropriate for all industries, it has a special focus and dedicated resources on the vertical markets of finance, education, healthcare, retail, government, manufacturing and entertainment and publishing. Leading corporations that are 3Com customers include: Wells Fargo Bank, NationsBank, GMAC Commercial Mortgage, Columbia/HCA Healthcare, Kaiser Permanente, Hong Kong Hospitals Authority, Carnival Cruise Lines, American Retail Group, EuroDollar Car Rental, Stanford University, Nagasaki Institute and the U.S. Federal Court system.


The Movie Industry

Before 1975, a few studios that did everything from writing screenplays to distributing movies dominated the filmed entertainment industry. Actors signed long-term contracts with specific studios that prevented participation in films produced by rival studios without written consent. Since that time, the industry has changed dramatically. There are currently over 5,000 companies that participate in the film production process. While only a few new studios have emerged, a large number of editing, special effects, post production and animation companies have joined the industry. On average, 20 separate companies participate in the production of a new film.

The current structure has allowed the industry to add ever more dramatic special effects, improve cinematography, and create whole new worlds. This technical advancement, however, has not come without expanding costs and increasing time delays. The following chart highlights the average cost and time to market for a Warner Brothers film and the average cost of capital associated with this investment in content. Additional information on the movie industry is included in Exhibit 3.



Number of Films

Average Cost*

Time to Market**

Cost of Capital



$39.8 million

20 months




$26 million

17 months




$17.5 million

15 months


* Average cost of production of a feature film

**Time to market estimated from time of purchase to distribution of screenplay


Organizational Structure of Filmed Entertainment Industry:


Talent Agencies Actors Directors Special Effects Editing Post Production Marketing Distribution


Although all of the above relationships exist, studios do not utilize each source for every film it produces. Certain post production houses or special effects firms will be used for one or two movies and will not be used for others. The movie making process is highly inefficient. Its linear production process gives rise to time delays between each point on the time line. See Exhibit 4 for a detailed time line of the current production process. Not only does the current process create time delays, but it also creates unnecessary and extraordinary costs. Screenplays, scripts, audition tapes and filmed content are couriered or delivered overnight all over the world. Recently, many couriers in Hollywood demanded, and subsequently received, a studio-supplied Lexus in order to make deliveries.

Paradigm Shift:

Today, new technologies are transforming all aspects of moviemaking. Film is no longer film: celluloid is going the way of vinyl records as movies are filmed, produced, edited and distributed digitally. New technologies go beyond visual effects to the digitization of film assets, allowing easier film editing and reusable footage. On the production end, studios strive toward the same goals as do consumer products manufacturers -- lower costs and faster time to market. This shift has become the focus of numerous entertainment companies and most recently the subject of Wired magazine’s November 1997 cover story.

In Hollywood, geography can turn production meetings into logistical nightmares. Take Threshold Entertainment’s current production of Beowulf, starring Christopher Lambert. The director is in London. A few digital designers are in Paris. The second unit is somewhere in the hills of Romania. And don’t forget the visual-effects house in Santa Monica, California, where dozens of digital artists wait anxiously to start on the footage. 

In order to remain competitive, studios are searching for ways to be more efficient and to begin synchronous production. Studios must begin casting and special effects while they are still rewriting the screenplay or to view an effect during the filming process (Exhibit 5). This allows the studios to not only save time, but also to save money on reshoots, editing and post production. Current estimates show that the new process will shave 15-25% off the production time to market and 10% off the production costs. 

In addition to cost savings, studios believe that digitization of content, enhanced compression technology and higher bandwidth into the home will allow direct distribution into the home. Microsoft’s NetShow 2.0 allows a single server to transmit hundreds of nonconcurrent streams of the same movie and higher speed modems should be able to adequately handle most compressed video feeds. Microsoft has signed up more than 40 companies (including Intel and Adobe) to support its new technology and has collaborated with several other companies to ensure that its new technology will become the standard.  

As the technology to provide video-on-demand (VOD) is becoming more accessible, film studios are investigating strategies to sell VOD directly to the end customer and bypass both cable television and video stores. The current barriers to offering VOD include protecting the digital signals from theft during production and transmittal to the customer and determining which companies will provide the fiber or coaxial cable infrastructure. If the film studios could solve the piracy issue, they could then become a force, not only in content, but also distribution. Gerald Levin, CEO of Time Warner, Inc., believes that his company can gain 20-30% of this market by the year 2005. 

Although the future appears bright for the development of the digital production process, it will require a level of cooperation between studios that has traditionally been very difficult to attain. Many people are hesitant to make a commitment because they realize that the technology is constantly changing. No one studio can afford to build a network connecting all 5000 companies engaged in the film production process – will they find a way to develop and share such a network? Will they be able to agree to a standardized protocol? Allocation of costs and revenues among the different studios, who will decide? Disney and Time Warner have $billions invested in broadcast and cable television; will they try to protect these complementary assets or will they proceed with innovation? No one knows the answers to these questions yet, but the development of an integrated digital video network in Hollywood is surely at risk until they can be answered.



In August 1995, over 200 entertainment companies, including major studios, networks, independent production companies, and post-production houses, gathered to discuss how to securely transport data, text, sound, and graphics in the movie-making process. This group is a consortium centered at the Entertainment Technology Center (ETC) at the University of Southern California’s School of Cinema Television. They advocate the use of a fully digital transportation standard called HollyNet. The ETC is attempting to make HollyNet the industry standard, much like past standards of 35mm film and NTSC. 

HollyNet is a high speed, wide area, broad-band, digital, intercompany ATM network. The consortium behind HollyNet hopes that every major studio and broadcast network, as well as dozens of independent production companies and post-production houses will be connected to the network. The key descriptors of this network are intercompany and live. Intercompany networks simplify creation and distribution of high quality digital special effects and animation.  

HollyNet is already under construction. Currently, there are two nodes; one in Burbank and one in West Hollywood. These nodes connect 100 sites and about 100 databases. In 48-60 months thousands more sites will need to be connected, including tens of thousands of databases linking large studios, garage sites and post-production companies.  

To avoid the potential traffic jam associated with this growth schedule, many diverse players in Hollywood will need to collaborate in ways they never have before. HollyNet is looking for advice and guidance from major industry players. This is not only technological connectivity, but also connectivity with emerging media and emerging markets. HollyNet must provide controlled links among companies of all sizes while retaining the ability to accommodate the expected proliferation of new players in the future. 

HollyNet must also provide timely access to data. There is already a data build-up problem and data requirements continue to expand exponentially. There is more data in one feature film than in the entire Library of Congress. More importantly, 70% of the task involves moving and transporting data. Traditionally, people have either shipped (via messenger or plane) or physically traveled in order to review digital video dailies. This involves complex, costly optical effects and substantial cycle time to review effects; mistakes require a complete re-creation. 

HollyNet purports to solve this need to better execute and control data transportation. HollyNet enables easy viewing at many locations simultaneously with the ability to create content in real-time, including remote manipulation and control. HollyNet eliminates the need to compress data, which distorts images. Now, data arrives in a continuous stream and provides the ability to view the whole picture. HollyNet offers this in D1 imaging and CD quality sound. Spielberg tested this technology: he reviewed "Jurassic Park while working on "Schindler’s List" in Europe. Ron Howard used it to improve his quality of life by reviewing films from his home on the East Coast. These remote reviews are at film resolution. 

HollyNet may be the next step in the evolution of the film-making industry. The ETC has challenged industry players: "steer the industry toward the future or someone else will." Their aim is to create the standard and control the future standards.


Sohonet is a high-performance electronic superhighway enabling digital video audio to be accessed instantly. It was designed specifically by the media community for the media community. 

In April 1996, Sohonet was launched as a digital link between media facilities in Soho, London. This Metropolitan Area Network (MAN) allows the London film, video and media industry to transport video, voice and data instantaneously. Sohonet utilizes a FORE Systems ATM network and was the first commercial network of its kind. Operating at 155 megabits per second, media exchange is instantaneous and is transferred at industrial quality. This allows member facilities to speed production, post production and approval – saving valuable time and money.

Sohonet transfers media in minutes, even seconds. Previously, digital video and audio was transferred to tapes and then sent via mail or courier, often times delivered by hand within Soho. Valuable time was lost in delivery, especially when work was sent from Hollywood to the U.K. Mike Farrell, Chairman of Sohonet Limited summarizes the benefits:

With an ATM Network like Sohonet, you can work more efficiently on collaborative projects. At the click of a button, you can see work in progress. This makes you more competitive and opens all sorts of commercial opportunities because you can do more work. Much of the work must be turned around quickly, no matter what the cost. If you can’t turn the work around in, say, 24 hours, you won’t get the job. [Sohonet] eliminates the time delays associated wit the transferring of film images to tape and reloading it from the tape onto another machine.

Sohonet’s members are the UK’s premier film, video and audio post-production houses. Membership is expanding to other media companies that can benefit from the network. For example, Ogilvy & Mather, one of the UK’s largest advertising agencies joined Sohonet in October 1996. Members include:


Cinesite (Europe) Limited Framestore

Media Channel

Smoke and Mirrors Limited The Computer Film Company
The Mill Limited The Tape Gallery
The Moving Picture Company Limited VTR
Visiontext Limited Ogilvy & Mather
Soho 601  

These companies provide an array of services, including digital special effects for movies, computer-generated animation, post-production for TV and radio commercials, post-production of TV programs, music videos and promotions, film restoration, production of corporate, training and other specialized videos.

Because the work is so graphics intensive, it requires broad bandwidth and high data-transfer speeds. The solution is ATM technology which allows for the required minimum bandwidth of 155 Mbits/s (the ideal speed is 622 Mbits/s) and a strong price-performance value. Parts of Sohonet currently operate at 622 Mbits/s and work is underway to bring the entire network to the faster speed.

Soho facilities chose ATM products from FORE Systems and then connected their internal networks together to form a Metropolitan Area Network. (As international links are established, the network will become a Wide Area Network as opposed to the MAN.) FORE Systems is a leader in ATM market, technology, interoperability and price. Farrell noted:

We selected FORE ATM on pure, best-of-breed technical appraisal…They’ve done it before… They listened to what we had to say, understood what we were trying to do, and showed us how to do it… In evaluating the various vendors, we saw that FORE ATM switches would interface well with installed network hardware…we kept coming back to the FORE ATM switch as having subtle but distinct advantages over other offerings.

Sohonet’s ATM network in London is provided jointly by Videotron, London’s largest cable communications operator, and British Telecom (BT). Videotron provides the fiber infrastructure for the inner core of the MAN while BT provides wider service across the UK and Europe. Videotron played the lead role in the design and supply of the ATM network for the UK Education and Research Network Association and BT has over 50 years experience in international communications. Exhibit 6 displays the connections that drive Sohonet.

Transatlantic network services to Hollywood are provided by Cable & Wireless Communications, a company comprised of Bell Cablemedia, Mercury Communications, NYNEX CableComms, and Videotron. Cable & Wireless is one of the world’s leading providers of international telecommunications services, providing a complete range of services for 15 million customers in 70 countries.

Sohonet took top prize in the first Communications Innovations Awards in February, 1997, achieving premier Overall Innovation of the Year status. Sohonet also carried top honors in the private sector end user category. It has also been awarded Network Week magazine’s "Best Use of Products" award in June 1997.

Collaboration among facilities is increasing as well as the speed and efficiency of operations. Companies on Sohonet are able to drag and drop film segments created by the other production houses into their own system for editing. Sending media footage is now as easy as sending email messages. Producers and directors are now able to view the same images and make simultaneous revisions. This speeds the approvals process so movies are completed faster, released to the public sooner, and returns are investment are being achieved quicker.

Further financial benefits are derived from the simple, usage-based fee structure. This means that customers only pay for the size of the file being transferred, making it cost effective for clients of all sizes. Quality is maintained while post-production time has dropped. There is no need to download tapes and, because there are no tapes involved, office space previously dedicated to archiving tapes is freed up for other uses.

Perhaps the most impressive result is the new link between the UK and Hollywood. Directors/Producers in Hollywood can communicate with London via videoconferencing equipment to discuss shots and give approval before the finished shots are sent from London to Hollywood. Colin Brown, Managing Director of Cinesite Europe explains:

This direct link to Hollywood is a critical step in the growth of the UK film industry. London’s principal facility houses have already started to offer their expertise to US producers. The international connection to Sohonet will ensure that these UK companies can communicate quickly and efficiently with the US, virtually wiping out the geographic gulf between the two countries.

Future plans include expansion of Sohonet to the rest of Europe and the Far East.

Neil Harris, Managing Director of Sohonet predicts, "Bringing London and Hollywood closer together is the start of a process that will benefit both film-makers and the digital film industry world wide. We believe that Sohonet can be a key player in building the global media network." Some of the work completed through Sohonet can be seen in such recent film successes as The English Patient, Space Jam, and Executive Decision.

There are two major concerns surrounding Sohonet. The first is a question of security. There exists in Sohonet the ability to tap into the network from outside (i.e. hackers). This could result in bootleg footage being circulated prior to the films release and is a violation of copyright laws.

The second major concern is that of industry power. Many people are questioning the power of Sohonet's members when there is little involvement by the real decision makers - the large Hollywood studios. Until Sohonet lures these studios to the network, many critics will question the power of Sohonet in the media industry.


The Decision

John Marshall reviewed the options for his recommendation. Since his budget was constrained, he could only chose to invest company resources in one project. In order to become a real player in the development of HollyNet, he would need to make a major investment. Any investment and ongoing support for the development of Sohonet would preclude participating in HollyNet. There were many trade-offs. Sohonet was already up and running, yet the network lacked standards for security. On the other hand, no one knew how long the development of HollyNet would take nor what the ETC’s vision for the future of HollyNet would be. John recognized that the agendas of the disparate cast of companies that needed to collaborate on HollyNet would be difficult to coordinate. In either case, he would need to present a persuasive case to Janice Roberts and Eric Sternberg.


Exhibit 1 – Selected Networking Industry Leader Financial Parameters

 December 11, 1997


Ticker Symbol

Market Cap. ($Billion)


Stock Beta



3Com Corporation







Ascend Communcations







Bay Networks







Cabletron Systems







Cisco Systems







Fore Systems








 Exhibit 2 – 3Com Consolidated Balance Sheets


3Com Condensed Consolidated Balance Sheets (Unaudited)

In thousands









Current Assets:

Cash, cash equivalents & temporary cash investments





Trade receivables










Deferred income taxes










Total current assets





Property and equipment - net





Deposits & other assets










Current Liabilities:
Short term debt



$ - $
Accounts Payable





Other accrued liabilities





Income taxes payable





Total current liabilities





Long-term debt





Other long-term obligations





Deferred income taxes





Stockholders' Equity:
Common stock





Unamortized restricted stock grants





Retained earnings





Unrealized net gain (loss) on available-for-sale securities





Accumulated translation adjustments





Total stockholders' equity










 Exhibit 3 – Filmed Entertainment Industry Statistics


Average production budget feature film in 1986

$17.5 million

Average production budget feature film in 1996

$39.8 million

Average marketing budget feature film in 1986

$6.7 million

Average marketing budget feature film in 1996

$19.8 million

Number of movies that made > $20 million in 1986


Number of movies that made > $20 million in 1996


Number of tickets sold in 1996

1.3 billion

US box office receipts in 1996

$5.91 billion

Average number of films seen annually by typical moviegoer


Number of employees in movie industry 1986


Number of employees in movie industry 1996


Percentage of US households with a VCR – 1996


Number of films produced in the US - 1996



Exhibit 4 – Current Linear Structure of Filmed Entertainment Industry

 Exhibit 5 – Simultaneous Digital Production Model


In this model, all of the separate stages of production can occur concurrently and there are no bottlenecks between stages, thus saving considerable time and expense.

Exhibit 6 – Sohonet Network

Abbreviated Glossary of Networking Terms


Async (Asynchronous)

A form of communication in which data is sent using start and stop bits, without regard for the time needed for transmission.

ATM (Asynchronous Transfer Mode)

A packet switching technique which uses packets, or cells, of fixed length to transmit multiple types of information (voice, video, data). Speeds vary from the 1.5 Mpbs to 622 Mbps and above.


Measure of the information capacity of a transmission channel. Strictly speaking, bandwidth is the difference, expressed in hertz (Hz), between the highest and lowest frequencies of the channel.

Bit (binary digit)

The units -- 0 or 1 -- used in the binary numbering system.


A message forwarded to all network destinations.


A distributed system model of computing that brings computing power to the desktop, where users("clients") access resources from servers.

Cell relay

Network transmission format that uses small packets of uniform size, called cells. The fixed-length cells can be processed and transmitted by hardware at very high speeds.

Dial up

A type of communication that is established by a switched-circuit connection using the telephone network.


Applying a specific algorithm to data so as to alter the data's appearance and prevent other devices from reading the information. Decryption applies the algorithm in reverse to restore the data to its original form.


IEEE-standard data link protocol that specifies how data is placed on and retrieved from a common transmission medium. Forms the underlying transport vehicle used by several upper-level protocols.

Fast Ethernet

A 100-Mbps technology based on the 10BASE-T Ethernet CSMA/CD network access method.

Fiber-optic cable

A transmission medium that uses glass or plastic fibers, rather than copper wire, to transport data or voice signals. The signal is imposed on the fibers via pulses (modulation) of light from a laser or a light-emitting diode (LED). Because of its high bandwidth and lack of susceptibility to interference, fiber-optic cable is used in long-haul or noisy applications.

Frame Relay

A packet-switching wide-area technology for interconnecting LANs at high speeds. Frame relay defines the interface between user equipment and a WAN; it does not define internal operation of the network or the interfaces or protocols used within the WAN itself. For this reason, the term "frame- relay cloud" is often used to describe the internal operation of a WAN that has a frame-relay interface.

IEEE (Institute of Electrical and Electronics Engineers)

Committees that develop and propose computer standards, such as the 802 protocols, which define the physical and data link protocols of communication networks. Members represent an international cross section of users, vendors and engineering professionals.


Degradation of the signal as it traverses the cable or the Network Interface Cards (NICs). Common in token ring environments and causes errors in accuracy of signal.

LAN (Local Area Network)

An assembly of computing resources such as PCs, printers, minicomputers and mainframes linked by a common transmission medium such as coaxial cable.


The time delay between when the first bit of a packet is received and the last bit is forwarded.

MAN (Metropolitan Area Network)

A data communication network covering the geographic area of a city (generally, larger than a LAN but smaller than a WAN).


Mega Bits Per Second (one million bits per second)

QoS (Quality of Service)

Term to describe delay, throughput, bandwidth, etc. of a Virtual Connection.


RBOC stands for Regional Bell Operating Company. The companies (the Baby Bells) are the seven regional telephone companies that were spun off as part of the AT&T divestiture in 1984. Examples of a RBOC are Bell Atlantic, Bell Northern, Pacific Bell, US West, Nynex.


Protocol-dependent device that connects subnetworks together. It is useful in breaking down a very large network into smaller subnetworks. Routers introduce longer delays and typically have much lower throughput rates than bridges.

SONET (Synchronous Optical Network)

Standard for digital transmission at rates from 51.84 Mbps to beyond 2.4 Gbps (gigabits per second).


A hardware device that takes an incoming information packet or cell and directs it to one or more of many potential output interfaces.


Communications circuit provided by long-distance carriers for voice and data transmission (1.544 Mbps in U.S. or 2.054 Mbps in Europe); may be divided in 24 separate 64 Kb channels; E-1 in Europe.

TCP/IP (Transmission Control Protocol/Internet Protocol)

Set of protocols developed by the U.S. Defense Department's Advanced Research Projects Agency (ARPA) during the early 1970s. Its intent was to develop ways to connect different kinds of networks and computers.

Virtual Circuit

Circuit-like service provided by the software protocols of a network, enabling two end points to communicate as though connected by a physical circuit. Network nodes provide the addressing information needed in the packets that carry the source data to the destination.

WAN (Wide Area Network)

Public or private computer network serving a wide geographic area.


World Wide Web. The Internet-based hypertext system that you are currently using to view this definition.



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