Services over Internet Protocol: Voice is just the beginning

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1 Services over Internet Protocol: Voice is just the beginning Marilyn Cade. Director IP Networking, Internet and E-Commerce AT&T and Chair, Positively Broadband Campaign

2 Topics: Services Over IP: VoIP is Just the Beginning Top Ten Technology Trends The Rise of IP Communications VoIP: Voice is Just the Beginning A family of services that are just beginning New Thinking Needed on Models of Governance Revolutionary for Consumers Evolutionary for Enterprises A driver for Broadband for Consumers/Productivity and Cost savings to Enterprises, and Network Investment by Services Providers VoIP: Many Challenges: We Can t Take VoIP s Success for Granted. What Industry can do to ensure VoIP s Success 2

3 Top Ten Technology Trends 1. IP Will Eat Everything! 2. Broadband Will Be Common 3. Wireless Internet Will Be Big Driving Mobility 4. Sensor Networks Will Be Everywhere 5. Convergence of Communications & Computers Will Become a Reality 6. Death of Locality 7. Security Is Critical 8. NexGen Distributed Computing Is Growing 9. Home LANs Will Proliferate 10. Data Mining Information Mining 3

4 IP Will Eat Everything

5 From: The Communications Industry is Undergoing Massive Transformation to One MPLS/IP Network Legacy Networks To: Common IP/MPLS Backbone Voice Network Frame/ATM 4ESS 5ESS 5ESS Frame/ATM/Voice/IP-VPN The Internet BX9000 BX9000 BX9000 Private Line Network MSE Route Servers Route Servers Global IP Network MSE MPLS Core Frame/ATM/Voice/IP-VPN IP Backbone MPLS: MultiProtocol Label Switching 5

6 IP is the the Bridge to the Future Teleworker Wireless Internet Private Networks (WAN/VPN) Secure High Performance Predictable Reliable Non-Regulated Corporate Intranet Supplier Corporate Extranet Public Voice Networks (PSTN) Scalable Ubiquitous Variable Performance Seamless Flexible Regulated LAN Supplier Teleworker Supplier ISP Customer 6

7 IP Enables the Next Generation of Applications COMMUNICATION LAYERS Content Layer (movies, books, papers, information, etc.) Application Layer (voice, video, web, chat, , etc.) Logical Layer (IP addressing, wireless handoffs, etc. Physical Layer (electric, co-axial, copper, wireless, fiber) Open standard data networks, such as IP, operate in layers that allow applications to be separated from the infrastructure Enables multiple players to enter the market at different layers and compete, stimulating innovation The type of the network (electric, co-axial, copper, wireless, fiber) no longer dictates the application or services Concept compliments of Kevin Werbach 7

8 IP Phone Telephone IP Makes the Vision of Any Device to Any Device over Any Network Possible DSL Modem VoIP Router Cable Modem Internet/IP Networks (178,000+ networks) 3G Cell phone Laptop LAN Connection VoIP Gateway Phone Line Cordless Phone Wifi PDA DSL Line ISP Gateway PBX Gateway Cable Modem WiFi Access Point Desktop Telephone Phone Line ipbx (Gateway) IP Softphone VoIP Custom Dialer PBX Telephone IP Phone 8

9 VoIP

10 VoIP Technology Will Challenge Traditional Assumptions and Traditional Regulatory Models VoIP is more than Voice The Voice/ Data dichotomy is eroding rapidly VoIP is not simple voice, but rather a converged multimedia application that supports voice, data and video Innovation and investment by fixed and wireless operators in IP networks will have an economic impact IP communications have the potential to disrupt the status quo in service provider environment, elevating applications Revolutionary opportunity for consumers; evolutionary for businesses VoIP development and regulation should follow a cellular model rather than a traditional fixed voice model services will improve over time, not overnight, to meet customer demand 10

11 The Eras of VoIP Emerging Applications Convergence & Consolidation Arbitrage 11

12 IP Enabled Voice Services The Early Days NCP NCP PSTN Local Local Network LEC ADJ Edge-to-Edge Circuit Edge Switch Edge Switch Upchain ADJ 4ESS 4ESS Real Time Network Routing PBX Int l Carrier NGBE NGBE CCE IP/Internet Core NGBE PNBE Int l Carrier Local CLEC/ILEC Customer Router/Gateway 12 Advanced Voice Features Across TDM VoIP transport with hop-on/hop-off PBX Definitions BE Border Element CCE Call Control Element ING Integrated Network Gateway NCP Network Control Point NGBE Network Gateway Border Element PNBE Peer Network Border Element

13 IP Enabled Voice Services Today s Build-out LEC LEC - TDM Wholesale Customer IP PBX EVPN Carrier ES-ING IP-Enabled Edge SIP CPE NGBE PNBE IP Residence DSL Cable Etc. Local BE App Srvr CCE IP/MPLS/ Internet Core Local ING App Srvr App Srvr IP - Applications Media Srvr IP-Enabled Local Network SIP PNBE NGBE ES-ING Int l Carrier IP-Enabled Edge PBX - TDM LEC Interconnect local, toll & international switches with IP. Replace Adjuncts with Media Servers to reduce capex. Interconnect private VPNs with public VoIP services. 13 Definitions BE Border Element CCE Call Control Element ING Integrated Network Gateway NGBE Network Gateway Border Element PNBE Peer Network Border Element BS - Business

14 IP Changes Investment New Investment Essential to Enable Real time IP Applications Billions of Dollars of Equipment Expenditure $70 $60 $50 $40 $30 $20 $10 $ Data/Communication Networks Worldwide Equipment Investment Estimate 2003(E) 2004(E) 2005(E) 2006(E) 2007(E) CORE Carrier and Enterprise Backbones (DWDM, Routers, Switches - optical, WAN, & converged) ACCESS (CPE, Concentrators, DWDM Metro, Firewall, VPN, Wireless LAN, Ethernet Switches) END POINT Enterprise CPE (IP PBXs & phones) Source: Based on data from Prudential Securities Note: Software, network integration, consulting and product support expenditures are expected to match and eventually surpass total equipment expenditures per year. 14

15 Traditional Telecom Services Voice Becomes Another Data Application On an IP Network IP/Internet Applications Internet Protocol (IP) separates applications from the network: Voice is not longer restricted to telephone networks Voice becomes another IP data application Circuit Switched Voice Enhanced/ Information Services Public Phone Network Voice Video SIP.. H IP Domain Name Service Satellite, Wireless, Cable, Phone, Electric Networks WWW SMTP POP3.. DNS.. HTTP TCP UDP...RTP (Internet Protocol) Packet Routed Data Physical Layer Logical Layer Application Layer 15

16 Media New Models of Governance Needed Current Norm Telecom DEVICES CONTENT APPLICATIONS NETWORKS Computing Stovepipe regulation by industry and sectors but INTERNET PROTOCOL changes everything Vertical convergence Horizontal convergence New Questions: Jurisdiction Accountability Liability Industry/Gov t Cooperation 16

17 Definitions Internet Telephony: In the beginning, Internet telephony simply meant the technology and techniques to let you make voice phone calls local, long distance, and international over the Internet using your PC the definition of Internet telephony is broadening day by day to include all forms of media (voice, video, image), and all forms of messaging and all variations of speed from real-time to time-delayed. IP Telephony: (As defined by Microsoft) IP Telephony is an emerging set of technologies that enables voice, data, and video collaboration over existing IP-based LANs, WANs and the Internet. Specifically, IP Telephony uses open IETF and ITU standards to move multimedia traffic over any network that uses IP (the Internet Protocol). Voice over IP (VoIP): The technology used to transmit voice conversations over a data network using the Internet Protocol. Such data network may be the Internet or a corporate Intranet, or managed networks typically used by long and local service traditional providers and ISPs that use VoIP. Source: Newton s Telecom Dictionary, 18 th edition 17

18 VoIP: An information service that delivers voice communications and enables voice convergence with other data applications and devices. WHAT THE FUTURE HOLDS: Presence (Instant Messenger, Follow me) One Number / Follow Me Services IP Call Centers Universal Messaging Virtual Meetings / Collaboration (like NetMeeting) Real time language translation IP Centrex Multi-Point Videoconferencing Desktop Multimedia Push to Talk Cellular Voice Chat 18

19 The Evolution of Residential VoIP Computer Telephone Broadband WWW 2004 VoIP Gateway DSL or Cable Modem PSTN Computer DSL or Cable Modem Broadband WWW Telephone Phone Line PSTN Telephone WWW Computer k Modem Phone Line PSTN Telephone Phone Line PSTN Copyright AT&T 2004 AT&T 2003

20 Snapshot: U.S. Domestic VOIP Market Just Beginning Subs (M) U.S. POTS Lines ~ 100M Domstic IP Adoption Goldman Sachs In-Stat/MDR Morgan Stanley Snapshot Snapshot 2 nd line penetration is 18% Only 25M homes have a high speed internet connection 40 M households don t have a PC Domestic IP Telephony Subscribers (in millions) Goldman Sachs Morgan Stanley In-Stat/MDR * * includes PC-to-Phone Traditional phone service has 168 M lines; wireless 170 M numbers # of Domestic VOIP players still emerging Cable: Cablevision, Cox, Time Warner ISP: Earthlink, Yahoo BB LEC/IXC: Qwest, AT&T Virtual: Vonage, Voiceglo, Voicepulse,!connecthere, Packet8 PC: Net2Phone, Free World Dialup 20

21 Emerging VoIP Revenues (hardware and services) are also Dwarfed by Global Voice Revenues Global voice telecom revenues and network usage continue to grow driven by technology options Communications is cumulative Applications are shifting from wireline voice to a mix of voice, mobile, , chat and instant messaging REVENUE (Billions of Dollars) Voice Telecom Services were $856 Billion in 2000; expected to reach $1.4 Trillion by 2005 compared to less than $7 Billion for VoIP revenues by REVENUE (Billions of Dollars VoIP Technology (Equipment) VoIP Service Provider (ISP) VoIP Wholesale (Network) Worldwide Voice Telecom Svcs. VoIP Technology (Equipment) VoIP Wholesale (Network) VoIP Service Provider (ISP) Sources: RADICATI Group, Inc., Voice Over IP Market Trends , IDC, Worldwide Telecommunications Services Revenue Forecast and Analysis,

22 VoIP s Challenges: Operational, Standards, Policy/Regulatory

23 Who Should Set Policy for Global IP Networks and VoIP? FCC? FTC? Congress? State Legislatures? National Parliaments/ Governments/ Courts? European Union? ITU? WTO? WIPO? IETF? ETSI? APEC? National Parliaments? National Parliaments? 23

24 International VoIP Policy Activity ITU Survey on Implementation of IP Telephony in Developing Countries: Countries vary in their treatment re regulation: Include VoIP/all forms in regulatory system Prohibit implementation - Not planning to regulate Some have not yet addresses these issues 35 respondents to ITU survey: Only Spain, Sudan, Singapore, Lituania, Denmark said : should not be regulated. OECD Report: More Recent Proceedings Considering VoIP / VoB Regulatory Framework US, UK, EC, Canada, Germany Anticipated Proceedings: Hong Kong, India, Australia, Singapore, Sweden Issues Arising in Proceedings and Discussions with Policy Makers Different issues emphasized outside US US focusing on regulatory framework primarily as it impacts legacy inter-carrier compensation and USO considerations Outside US, focus on regulatory framework in light of specific rights and obligations that impact customer demand, economic development, and public safety (e.g numbering resources, entry barriers, law enforcement assistance) Multilateral Interests : ITU and OECD 24

25 International VoIP: Where it s Growing Japan Korea China Philippines India Hong Kong Poland Russia Bulgaria Ukraine Turkey Senegal Nigeria Kenya Mexico Colombia Brazil Peru 25

26 VoIP s General Challenges: Much Work to do to Compete with PSTN and Develop Right Regulatory Environment OPERATIONAL Physical and logical interconnection Infrastructure availability Infrastructure affordability Quality of service Security Billing Customer care Fulfillment and device support Coexistence with legacy equipment and networks increasing architectural complexity POLICY Regulatory classification Licensing restrictions Number Resource Allocation Interconnection Charges Law Enforcement Assistance Access to Emergency Services Emergency Service QoS/Power Supply Tariff/Price Controls Universal Service 26

27 What WITSA Might Do to Ensure VoIP s Success Backgrounder Paper helps to frame VoIP s story Education and Briefings essential for policy makers across range of governmental agencies, NOT just regulatory agencies Be aware that legislation is underway in many countries and may limit who and how VoIP can be provided; work with others to influence legislation. Sometimes telecom legislation included VoIP; be aware that incumbents often seek to prevent anyone else from providing VoIP Business Associations and allies, such as ISP Associations, others could join together to tell VoIP s story, of economic investment, productivity, new consumer services, etc. A picture is worth a thousand words approach: work with equipment providers, or VoIP Services providers to show the technology and tell the policy story at the same time 27

28 Questions and Discussion Marilyn Cade

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