Economics of signaling

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1 Technology influences business models Economics of signaling Signaling = application control!!! Technology decisions affect business models Business models influence technology decisions Example 1: the end2end principle TCP/IP, control at the edges of the network Example 2: Voice over IP (VoIP) H323: preserves vertically integrated control of carriers SIP: allows control to the edges of the network IMS: SIP-based architecture, provides control to network operators We would like to understand the economic implications of technology decisions in the Internet The end2end principle Provides a rationale for moving a function upward in a layered system, closer to the application that uses the function (J.H. Saltzer, D.P. Reed and D.D. Clark) Result: most of the functions are moved to the edges of the network, network does simple tasks (IP) Internet: provides IP functionality only. Edges provide intelligence (TCP and up) Can not control edge applications Telephone network: assumes simple edge devices, has all the intelligence Controls services (creation, usage, pricing) Analogy: freeway system vs railroad tracks -> Technology influences business models! The paradox of the simple network The simple network core (Internet) provides commodity services, cannot make money! Simplicity: key factor for success, low cost No bargaining position due to commoditization The best network is the hardest one to make money running! How to build a sustainable Internet? -> NGN, IPsphere What should be the business of future NSPs?

2 Signaling and competition The Internet evolves from being a research network New requirements, new design principles Important reality: different stakeholders of network infrastructure have interests that are adverse to each other := the tussle (David Clark) New network architecture must accommodate this tussle Application control = signaling protocols Example of tussle-ready signaling technologies: SIP, ENUM, IMS We examine such technologies to analyze their effects on competition: the range of tussle they allow The role of signaling The network control layer influences business models Controls operation of applications and access to content Connects applications to network services Who controls the control?...?? Applications, content Network control (signaling) Network services Offered by other parties Strategic role!! Offered by network operator Topics covered VoIP (briefly) SIP ENUM BT Fusion IMS VoIP Voice over IP

3 VoIP Voice over IP VoIP: all forms of call setup & voice transmission using Internet protocol (IP) technology over private, managed IP-based networks or the public Internet PC-to-PC, PC-to-phone or phone-to-phone The impact of VoIP Voice becomes just another application on the Internet VoIP means different things to different people ILECs & Mobile operators: threat to their main source of revenue as well as antidote (upfront CAPEX vs reduced OPEX and advanced services) IMS CLECs: opportunity (lower barriers to entry) Wholesalers: opportunity (more alternatives to destination control) ASPs: new niche markets End-Users: more value, cost savings Regulator: dilemma VoIP call phases VoIP telephone call procedure is similar to PSTN call setup: getting a dial tone, dialing a phone number, getting a ring or a busy signal at the far end, and picking up the phone to answer the call telephone conversation: voice samples digitized, compressed, packetized, transferred, reordered, buffered (causing extra delay), decompressed and converted back to analog Call control: mute, call-waiting, End of call: tear down but, more complicated since the voice application is decoupled from network services Call setup may involve many intermediaries; each one controls the next hop SIP Session Initiation Protocol

4 Introduction to SIP User s registration with SIP SIP is an end-to-end session signaling protocol A session could be any transaction on the Internet; more suited for multimedia (calls, chat, video conferences, ) It defines how SIP devices will communicate SIP addresses are similar to addresses and used for locating the session s destination(s) In the context of VoIP: identify callee and callee s home provider SIP messages describe the action to be performed In the context of VoIP: call setup, call-state modifications, SIP entities reside at End-users (User Agent Client, User Agent Server) Providers (Proxy server, Location Server, Registrar Server) Invitation through one SIP Proxy server Invitation through one SIP server in redirect mode In this case, the two parties have registered to the same proxy SIP. In this case, the called party has roamed to another proxy SIP.

5 SIP and multimedia session control SIP is based on the request-response paradigm (client-server) but in a distributed way (through proxying): different control structures The end-user grants control to a home provider, because only this provider knows how other users (that learned a SIP address issued by this provider: mnemonic address) can reach her (even in case of roaming) An end-user can acquire any number of SIP addresses (free SIP addresses are also available, i.e. sip2sip.info), but she will have to pay a switching cost ENUM can minimize this switching cost, although some users are restrained to use locked devices When a destination (i.e. PSTN end-user) can be reached by several providers, an intermediate provider (i.e. a wholesaler) possessing this information can control the provider that will participate in the session. SIP does not transport data nor control media path (QoS can be achieved with complementary protocols-systems) ENUM telephone NUmber Mapping (or E.164 NUmber Mapping) Introduction to ENUM ENUM is a global directory of services where users have signedup and can be reached from Service examples: VoIP, voic , POTS Lookup is performed by E.164 numbers (usually in 2 phases) Uses the DNS architecture for acquiring other mnemonic addresses ' 'sip:user@sipservice.com Find the IP address of the user s provider SIP proxy 'sip:user@sipservice.com Generally, enables the finding of alternative routing numbers e.g. Alternative ways to make a phone call to the same person (PSTN or mobile or VoIP) Lower control to the Home Provider Due to bureaucracy ENUM is operating in only a few countries (Switzerland, Austria, ) This has led to the emergence of closed ENUM systems (in parallel to public ENUM) Registration into ENUM A user ( owner of a E.164 number) informs an ENUM registrar about the current services he is currently subscribed into and his preference (he has control) In closed ENUM systems users preferences are absent, so providers have full control Registration is not obligatory (opt-in) I.e. User ckalog enters the following identifiers (in descending preference) 1. sip:ckalog@iptel.org 3. tel: mailto:ckalog@aueb.gr

6 Bypassing PSTN with ENUM (IP-IP calls) 2. Application client formats number into FQDN (e.g., e164.arpa) and looks up name in DNS DNS 3. DNS returns all NAPTR records associated with FQDN BT Fusion 1. End user enters E.164 Number: (e.g., in to: field) 4. Application selects appropriate NAPTR record (e.g., and completes processing IP-based Network BT Fusion The first commercially available service bringing Fixed- Mobile Convergence (since fall 2005) BT decides the most appropriate access network for delivering services, based on subscriber s location 3 choices in case of telephony services: POTS, VoIP, Mobile Combines functionality of a mobile phone with reliability of fixed telephony and/or lower charges (especially for VoIP) Vodafone is the associated mobile operator BT Fusion User owns a special access point and a dual-mode handset User is assigned only one identifying number (from BT) Calls routed to fixed-line network within range of Bluetooth access point (WiFi in future) VoIP if quality is acceptable, POTS otherwise Out of range calls routed to cellular network BT has full control (not the user)! Convergent Handset Cellular network Cell site PSTN Link PSTN Bluetooth or WiFi Fusion Access Point OR NTE ADSL NTE Broadband Link VoIP Gateway

7 Introduction to IMS IMS IP Multimedia Subsystem 3GPP (3rd Generation Partnership Project) is working on IMS 3G Release 6 (standardized version) Releases 7 and 8 are expected until mid 2007 & 2009 respectively A commercial step towards NGN Enables services that are independent from access network technologies IMS is a key functional block to support convergence based on all-ip Many consider IMS as the realization of 4G IMS is to enable the Service Provider to: Rapidly create services with reusing existing network resources Efficiently control user and network through authentication/ authorization and Dynamic Policy Control IMS and NGN 4 layer architecture Services (application servers & content) Service Control (signaling elements) Network Control (policy servers) Transport (networking fabric) IMS does not define services it is a framework enabling to deliver SIP based services All services are rendered by IMS Applications servers & clients Allows for the horizontal decomposition of functions thus completing the IN initial objective IMS does not control the media path on its own IMS performs the policy decision per service request and the QoS functions of the actual network (e.g. G/MPLS routers) enforces the policy Migration phases to IMS VoIP Transport (Partial) replacement of traditional TDM networks and Class4 switches with IP transport and soft-switches Little changes into user experience Cost savings to the provider (and users) Pre-IMS More IP-based real-time services can be offered (not just VoIP) Increased user experience No (or limited) cooperation by providers Full-IMS Complete adoption of IMS service interoperability among different network and service providers Rich user experience

8 IMS QoS Support IMS can control and manage the bandwidth allocated to the application and define its priority on the intra-domain level QoS collapses in the inter-domain level The actual Network QoS for IMS services is provided by the Access Network (e.g. based on UMTS QoS) and the IMS network infrastructure (e.g. based on G/MPLS). During the setup of a session, user equipment (UE) requests network resources (carried in SDP) The proxy-cscf (P-CSCF) then forwards the SDP parameters to the Policy Decision Function (PDF) The PDF then authorizes the related media parameters, according to the users' media messages and the local policy. E.g. a G.711 call would be translated into real-time priority with 80 kbps IP bandwidth requirement After authorization, the authorized media parameters are returned to the UE and to the network element enforcing the policy (e.g. GGSN) IMS and mobility SIP is the protocol used for session management Mobility is enabled through proxy servers and registrars Proxy servers process/forward requests from users and other proxies A registrar stores information about users (IP address of user s terminal or current proxy server) Home provider has control on services received from a roaming user, as he participates in authentication and performs authorization, accounting in order to bill A 4G-provider is expected to be a provider that can interoperate with other providers (independent of access technology) during the provision of a service IMS Main Components Example of a session between 2 roaming users in IMS Call Session Control Function (CSCF): Set of entities for managing user sessions Proxy CSCF: UE s first point of contact (can be either on the visited or home network) Interrogating CSCF: a type of proxy for incoming SIP requests from other networks Serving CSCF: session controller assigned to subscriber (always on the home network) Home Subscriber Server (HSS): a database with subscriber information Registration example 200 OK REG P- CSCF 200 OK REG I- CSCF 200 OK REG S- CSCF Visited network Home network B s home User A A s visited network I- CSCF GPRS S- CSCF P- CSCF I- CSCF Required on registration, optional on session establish SIP voice packets Required on registration, optional on session establish I- CSCF A s home network S- CSCF I- CSCF Optional GPRS P- CSCF B s visited network User B network

9 Content strategies A walled garden is a mechanism for a provider to restrict the user experience by confining the user to a specific region/space as defined by the provider more profit for the provider traditional strategy of cable operators & cellular providers An open access portal model allows the user unrestricted access to whatever content is available. based on the End-to-End principle of Internet network operators charge purely on traffic (bit pushers) IMS and business models Single Provider walled garden Multi-Provider walled garden Providers (of access network, services, ) can form coalitions, allowing subscribers of a coalition-member to get service But, users won t be able to buy services from non-member providers Component-based services: Each service can be decomposed into a mixture of components A component maybe used by many services (e.g. charging, accounting) Components for the same task can belong to different providers (competition) Need for brokers The problem IPsphere Creating a commercially sustainable framework for IP services Realizing Next Generation Revenues Internet is not a single large infrastructure that continues to be developed apace, but a federation of separate cooperating IP networks An imbalance in the risk vs reward for the participants threatens the cooperative outcome and the IP market Today s IP service framework lacks the means to compensate partnering service providers in proportion to their contribution of resources to an end-to-end service How to ensure that investments in service innovation and infrastructure development are rewarded and encouraged? Need for mechanisms that allow the compensation for incremental investments in development and deployment of new services Any resource capability contributed to enhance an overall retail service offer should be framed in a business context

10 The sustainability of the Internet www services succeeded due to the almost zero marginal cost of adding www applications to a fixed-price Internet access platform This allowed many new diverse relationships and experiences to be conceived and tried out, many www players forged significant buyerseller relationships on the basis of the Internet s global connectivity They arbitraged the relatively low cost of Internet BW, representing net market loss viewed from the perspective of conventional telecom service portfolios Similarly, new operators enjoyed a low barrier of entry but eventually did not managed to build sustainable businesses Incumbents network operators naturally seek to develop new service revenues to offset losses due to arbitrage of traditional portfolios Conclusion: next generation of services and revenues will depend on the online industry s capability to sustain investment by all stakeholders, and cheap enough not to drive innovation out A solution Middle ground: allow providers to specify and charge for services offered to their customers and other providers No incentive for walled gardens since revenue is generated by participating in the service value chain of competitors Handles the challenge of developing a standard efficient and flexible framework and business models to deal with operational and administrational processes associated with service planning, marketing, fulfilling and assuring Service management and operations today utilize service-specific monolithic management systems linked to similarly monolithic network technology As telecommunication providers move to a converged service delivery platform this vertical structure needs to be broken down in order to facilitate the creation, provisioning and management of these new services that span multiple provider boundaries and stakeholder control domains. The IPsphere Framework has been developed to enable providers to concurrently optimize flexibility and efficiency by focusing on the translation of a generalized service offering into a set of generalized resource commitments to meet the overall service goals In the IPsphere Framework Services are structured via the decomposition of a Service into constituent Elements that represent the capabilities of a set of technology resources The IPsphere Framework allows a service provider (called Administrative Owner) to provide an end-to-end Service, while collaborating with partnering service providers (called Element Owners) that are responsible for the Elements composing the Service The scope of the IPsphere Framework is based on two key aspects namely, service abstraction: providing a mechanism to declare a service offer in terms of technical and business constraints service decomposition: mapping a service offer to resource commitment across one or more providers. IPSphere is the vision for an internet that is capable of being partitioned into virtually independent service-specific subnetworks/overlays Internet will be a subnetwork with best-effort quality service attributes can be controlled as on a private IP network This vision is gaining increased attention from stakeholders Successor of Juniper Networks Infranet vision Members include service providers, system integrators, software developers and infrastructure vendors (including Cisco) Purpose: viable business models for service providers Tasks Identify and develop the missing parts of the underlying IP infrastructure In association with a third-party body in order to be compatible with existing & emerging standards Design a commercial framework that will bring trust among providers and create a more flexible value chain IPSphere can complement IMS, by bringing QoS

11 IPsphere architecture elements Traffic Handling (TH) Stratum delivers packets from one end point to another Most traditional networking technologies and equipment reside in this stratum (routers, Multiplexers, ) Network Policy and Control (NP&C) Stratum Coordinates the delivery of packets in the TH Stratum (push policy decisions to network elements on the TH Stratum for enforcement) brings intelligence to the network Traditional network OSS and policy servers reside in this stratum IPsphere architecture elements Service Structuring Stratum (SSS) Has few roots in traditional networking Based on Web Services for managing collaborative services (service creation, discovery, negotiation, activation, assurance and provision) Every participating provider publish a list of Elements to a registry that represent services and roles the provider is willing to accept Services are created by assembling elements in a structured fashion A Grid-like marketplace Traditional Internet IPsphere internet Today's Internet is an ad hoc, cooperative collection of independent IP networks Main principles End-to-end : intelligence lies at the edge more control to end-users network neutrality : treat all IP packets with Besteffort the paradox of the best network Flat-rate pricing is prevalent End A Intermediate nodes End B The IPsphere is a model for putting network services into a business context by linking service creation with service ordering and fulfillment Enables a wide range of business models Requires network intelligence (providers acquire more control)

12 Vertically Integrated Services Explicit walled garden Cooperative Services Revenues in proportion to the resources each partner contributes (implicit walled garden) Best-effort case: Internet IPsphere internet IPsphere service creation The IPsphere divides a service into Elements, which include Access Transport/Connection Content/Processing Users/Access point A given service may have any number of elements of any of these types as needed, and services are created by combining Elements contributed by providers. IPsphere service creation IPsphere service examples Each Element has a software method or module that is published as a web service and which links to underlying network management or policy management capabilities to actually control the service A provider publishes a set of web services and its attributes (i.e. price) onto the SSS VPN for the elements he contributes Providers, who want to create a service by combining elements from partners, exchange web-service-based messages

13 IPsphere characteristics Assurance through SLAs Security through well defined interfaces Quality of service by setting up inter-carrier MPLS paths Differentiated services Not only on price, but service attributes as well On-demand services: end-user applications shall automatically request the level of security, quality of service and bandwidth they need from their network provider and have that delivered across the internet

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