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Functional specification of call processing in a telephone switching system became more complicated with the progress of common control systems, especially of stored program controlled electronic switching systems, which enabled the introduction of new service features. One approach by state transition diagram that is now widely adopted in Japan is explained and discussed. Since a telephone switching system is one of the sequential machines, the state transition concept is applied to describe its functions. States are assigned to calls and an exact state transition concept is somewhat modified to meet the switching needs. Rules for writing a diagram and decomposition of states for reduction and simplification of states are some of the topics discussed. The results gained from actual application to local and toll switching systems are also shown.