Classroom Companion: Business


   Standards and Interconnectivity, Interoperability


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Introduction to Digital Economics

15.4 
 Standards and Interconnectivity, Interoperability
and Backward Compatibility
Interoperability is the key feature of the Internet. Each user can communicate with 
any other user or webpage—on e-mail or via web browsers—independently of the 
technology employed by the other user. Interoperability must therefore exist 
between networks designed with different network technologies and between user 
equipment of different brands and standards. Otherwise, the Internet will split up 
into incompatible islands and loosing much of its value.
In the physical network, technical standards and economical and legal agree-
ments are required to interconnect networks owned by different ISPs. Nontechnical 
agreements may include remuneration for transiting and terminating traffic, liabil-
ities in case of network failure, and terms of cooperation; technical agreements 
may include minimum quality of service commitments such as availability, mini-
mum guaranteed data rate, and maximum latency and data jitter.
There are two incompatible network protocols on the Internet: Internet Protocol 
version 4 (IPv4) and Internet Protocol version 6 (IPv6). IPv4 was specified in 1983 
and is still used in several networks. IPv6 was ready for implementation in 2006, 
but the adoption rate has been slow until recently. IPv6 was developed to provide 
more addressing space than IPv4. The adoption rate of IPv6 has now increased 
 
Chapter 15 · Standards


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rapidly because IPv6 is the only network protocol used in 4G and 5G mobile net-
works. Moreover, the addressing space of IPv4 will be too small for accommodat-
ing billions of connected IoT devices.
The Internet, therefore, consists of islands based on IPv4 and IPv6, and a tech-
nology called tunneling is used to transfer IPv6 packets across IPv4 networks and 
vice versa. Tunneling means that the IPv6 (IPv4) packets are imbedded in the data 
field of IPv4 (IPv6) packets. On the other hand, most terminal equipment contains 
software for both IPv4 and IPv6 so that the equipment can be connected to either 
type of network. This ensures interconnectivity on the Internet.
Interoperability between mobile phones (smartphones) and mobile networks is 
supported by backward compatibility, implying that, for example, a 4G telephone 
can access 2G (GSM) and 3G networks. This is achieved by implementing the 
radio and signaling interfaces of all three standards in the telephone. This is pos-
sible since the evolution of computers have followed Moore’s law: the processing 
and storage capabilities of mobile phones have doubled approximately every 
1.5 year. This means, for example, that the computational power of mobile phones 
in 2001 when 3G was introduced was approximately 60 times bigger than that of 
GSM phones of the same physical size. Similarly, the computational power had 
increased by another factor of 60 when 4G was introduced in 2010 and had 
increased by still another factor of 60 when 5G was introduced in 2019.
The backward compatibility of mobile phones is achieved by implementing the 
three standards in all phones and install algorithms by which the phone can search 
for and identify the type of network serving a particular area. Based on informa-
tion displayed to the user, the selection of network may then be automatic or man-
ual. To assure backward compatibility, the network operators operating a 4G 
network must also operate, at least, a parallel 2G network. Several operators plan 
to discontinue offering 3G networks since 4G offers much better and faster Internet 
connections and because they still offer GSM network access supporting earlier 
standards. However, there are operators that also have shut down their GSM net-
works (e.g., USA and Australia).

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