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X.25 was developed in the ITU Study Group VII based upon a number of emerging data network projects, such as the research project at the UK's National Physical Laboratory under the direction of Donald Davies who developed the concepts of packet switched networks. In the late 1960s a test network was started, and by 1974 a number of sites had been linked together to form SERCnet (Science and Engineering Research Council Network). SERCnet would later grow and be re-organized as JANET in 1984, which continues in service today, but as a TCP/IP network. Other contributions to the standardising process came from the ARPA project as well as French, Canadian, Japanese and Scandinavian projects emerging in the early 1970s. Various updates and additions were worked into the standard, eventually recorded in the ITU series of technical books describing the telecoms systems. These books were published every fourth year with different colored covers.

The general concept of X.25 was to create a universal and global packet-switched network on what was then the bit-error prone analog phone system. Much of the X.25 system is a description of the rigorous error correction needed to achieve this, a system known as LAP-B. The X.25 model was based on the concept of establishing "virtual calls" through the network, with "data terminating equipment" (DTE's) providing endpoints to users that looked like point-to-connections.

X.25 was developed in the era of dumb terminals connecting to host computers selected in an address protocol (or alternately, two hosts), so the idea of random routing from a single point as in TCP/IP was not considered. As a result, X.25 appears to be a circuit switched network, even though in fact the data itself is packet switched internally. Host machines were described by a phone-number-like address described in the X.121 Address Format, which consisted of a three-digit country code, a one-digit carrier, and a ten-digit National Terminal Number. Note the use of a single carrier digit, allowing for only 10 carriers per country, at the time considered more than enough. However the US soon had more than ten services, and shortened its country code to "31" to allow for up to 100 systems.

For much of its history X.25 was used for permanent virtual circuits (PVCs) to connect two host computers in a dedicated link. This was common for applications such as banking, where distant branch offices could be connected to central hosts for a cost that was considerably lower than a permanent long distance telephone call. X.25 was typically billed as a flat monthly service fee, and then a price-per-packet on top of this. Speeds increased during the years, typically up to 48 or 96 kbit/s.

Publicly-accessible X.25 networks ( Compuserve, TymnetThe history of Tymnet Tymshare was founded in 1966 as a computer services company, that is, it sold computer time (time-sharing), and provided software packages for users. It had two Xerox SDS/XDS 940 computers, and all access was via direct dial-up to th, Euronet) were set up in most countries during the 1970s and 80s, to lower the cost of accessing various online service s, in which the user would first interact with the network interface to set up the connection. Known as switched virtual circuits (SVCs) or "virtual calls" in public data networks', this use of X.25 disappeared from most places fairly rapidly as long distance charges fell in the 1990s and today's Internet started to emerge.

A number of systems were developed to directly use the underlying packet nature of X.25, back when it appeared that X.25 would become the single universal networking system. Many of these were "private" applications, but the X.400In computing, X. 400 is a OSI standard developed by the ITU-T (at the time the CCITT) and promulgated by ISO for the exchange of email (at the time called IPMs Inter Personal Messages). Like most ISO standards to do with application-level networking, it n e-mail system was also based on X.25 as a transmission layer. The basic idea was to develop a universal set of standards for " Open System Interconnect (OSI)Starting in 1982, the International Organization for Standardization ( ISO) along with the ITU-T initiated a new effort in networking called Open Systems Interconnect or OSI . Prior to OSI, networking was completely vendor-developed and proprietary, with", however, industry developments eventually led down the path to Internet .

With the widespread introduction of "perfect" quality digital phone services and error correction in modems, the overhead of X.25 was no longer worthwhile. The result was Frame Relay, essentially the X.25 protocol with the error correction systems removed, and somewhat better throughput as a result.

X.25 networks are still in use throughout the world, although in dramatic decline, being largely supplanted by newer layer 2 technologies such as frame relayFrame relay is an efficient data transmission technique used to send digital information quickly and cheaply to one or many destinations from one point. It can be used for voice, data, local area network (LAN), and wide area network (WAN) traffic. Each fr, ISDNISDN is also short for isosorbide dinitrate Integrated Services Digital Network ISDN is a type of telephone network system, designed to allow digital (as opposed to analogue) transmission of voice and data over ordinary telephone copper wires, resulting i, ATM, POS, and the ubiquitous layer 3 Internet Protocol. They remain some of the only available reliable links in many portions of the third world however, where access to a PDN may be the most reliable and low cost way to access the internet.