Circuit and Packet Switching:
We can divide data connections through a telecommunications network into different categories based on the principle of how the communications circuit is built between the communicating devices. Data communications through the telecommunications network may use three basic different types of circuits:
Leased or dedicated: The cost of a leased line is fixed per month and depends on the capacity and length of the connection.
Circuit switched or dial-up: The cost of switched service depends on the time the service is used, the data rate, and the distance.
Packet switched: The cost is often fixed and depends on the interface data rate. In some packet-switched networks cost may depend on the amount of transferred data. Agreements with the service provider may specify other parameters that influence the cost, such as the maximum data rate or average data rate.
For corporate data networks, the leased-line solution is often attractive when the LANs of offices in a region need to be interconnected. The network operator provides a permanent circuit and the monthly cost is fixed and depends only on the agreed-on data rate. Over long distances, however, leased lines become expensive and switched service is often preferred. In such a service, several corporate networks share transmission capacity and the cost of the backbone of the telecommunications network operator. Within the switched category there are two subcategories, circuit and packet-switched networks as shown in Figure both of which are used for data transmission.
Circuit-switched networks provide fixed bandwidth and very short and fixed delay. It is the primary technology for voice telephone, video telephone and video conferencing. The disadvantage is that it is inflexible for data communications where the demand for transmission data rate is far from constant but varies extensively over short time scales. Some older generation data networks used the circuit switching principle. In the beginning a circuit-switched connection is dialed up by the data source. The routing is based on the destination subscriber number given when the circuit is established. The connection is released after the communication is over. During a conversation, the data capacity of the connection is fixed and it is reserved only for this conversation regardless of whether the data capacity is used or not. At the end of the call, the circuit is released. ISDN as well as the telephone network use the circuit-switching principle.
Packet-switched networks are specially designed for data communication. The source data are split into packets containing route or destination identifications. The packets are routed toward the destination by packet-switching nodes on the path through the network. The major drawback of the packet-switched technology is that it usually cannot provide a service for applications that require constant and low delay. There are two basic types of packet-switched networks.
virtual circuits and datagram transmission. In the case of virtual circuits, the virtual connection is established at the beginning of each conversation or it is permanently set up and every packet belonging to a certain connection is transmitted via the same established route. The main difference between circuit-switched physical circuits and virtual circuits is that many users share the capacity of the transmission lines and channels between network nodes if virtual instead of physical circuits are used. At a certain moment active users may use all the available capacity if other users are not transmitting anything. The complete address information is not needed in the packets when the connection is established. Only a short connection identifier is included in each packet to define the virtual circuit to which the packet belongs.
Another method for packet-switched data communications is connectionless datagram transmission in which routing devices perform routing procedures, and each packet contains a full destination address. We discuss this layer 3 (network layer) routing principle next.