The basic processes of transmission and switching are cheaper for multiplex digital signals than for their voice-frequency equivalents, and introduce little or no impairment of the message. Conversion between analogue and digital signals introduces much of the cost and almost all of the impairment in a p.c.m. communication system. The long-term plan for a telephone administration should therefore be to introduce an integrated digital network in which only a minimum number of conversions and reconversions is required: ideally only one per connection. Transmission between exchanges should use multiplex p.c.m. and switching of concentrated traffic should be digital (either analogue or electromechanical). A planned transition from present practices towards a digital network is possible, because the partial use of p.c.m. is technically and economically beneficial provided that the applications be carefully chosen. Junction transmission, trunk transmission, tandem switching, group selection in terminal exchanges and integration over limited areas are considered. A digital network whose main traffic is telephony can also carry other messages such as telegraph and data.