chaser's account to the store's account. This transactional system performs virtually the same functions as automatic teller machines (ATMs) and self-service travelers' check dispensers, but it differs fundamentally from them by using the com- putational capability and memory of the smart card in place of the on-line capabilities of a host computer. The smart card could "personalize" communications terminals, such as home terminals and telephones, acting both as the payment vehicle and the record keeper. It would be very helpful in the med- ical-services field, using its computational power to authenticate claims and carry personal medical histories and treatment records between interdependent, but separate, medical-information systems. It could become a social-services eligibility card, reducing the costs and errors of paper-based systems. It could replace identification documents, such as passes to secured areas, passports, and alien identification cards. 1.2 UNDERSTANDING THE BASICS In order to understand current trends in telecommunications and to appreciate the direction of future trends, it is necessary to under- stand the basics. Let us first look at the elements of a basic telecom network. A network is an arrangement of transmission, switching, signaling and terminal equipment. The transmission system provides the electrical path for information to flow from one location to another. Switch- ing includes identifying and connecting independent transmission links to form a continuous path from one location to another. Sig- naling involves supplying and interpreting the supervisory and ad- dress signals needed to perform the switching operation. Many times organizations with many branches or regional facili- ties have the need to transmit and receive data frequently. They may 4 TELECOMMUNICATIONS use a data communications system consisting of a wide variety of components and many times a variety of services. The combination chosen will depend upon the merits and limitations of various net- works. Perhaps one 