Fixed Mobile Convergence: How to play when you don't have both networks. Peter Waters Partner June

Transcription

1 Fixed Mobile Convergence: How to play when you don't have both networks Peter Waters Partner June

2 BT s Vision of FMC At home ADSL/Ethernet PSTN/ISDN 3G/GPRS/EDGE/HSDPA Hotel ADSL / Ethernet Wi-Fi ISDN/PSTN Office Lan Ethernet Wi-Fi 3G/GPRS EDGE/HSDPA Homeworkers Lan Ethernet 3G/GPRS EDGE/HSDPA PSTN/ISDN On the road 3G/GPRS/EDGE/HSDPA At the venue Wi-Fi, 3G+ Public places Wi-Fi 3G/GPRS/EDGE/HSDPA PSTN/ISDN _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 2

3 The Challenges. I m a fixed network operator without a mobile network: how to provide voice mobility? how to provide broadband anyplace anytime I m a mobile operator without a fixed network: how to provide local telephony substitute? how to provide high speed bandwidth at home/office? I m a service provider with no fixed or mobile network: how to integrate fixed access products and MVNOs to compete against network-based FMC operators Liability limited by a scheme approved under Professional Standards legislation _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 3

4 The promise of FMC. Pyramid Research says that by the end of 2009, FMC global revenues will be $80 billion or 6% of total communications spend. behind this (modest) growth lie substantial technical and regulatory challenges: carriers have struggled to get fixed and mobile calls on a single bill, let alone build a true FMC product _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 4

5 FMC in a narrowband telephony world _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 5

6 Strategic Issues easy to see why a fixed network operator wants/needs a mobile telephony option, but why the reverse given mobile network covers fixed locations? fixed telephony option important to mobile operators because: consumer concerns over quality ( lifeline), but rapidly fading fixed telephony tariff structure for local calls _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 6

7 Convergence or Substitution? mobile substitution for fixed telephony is a real, accelerating trend: 78% of global telephony connections are mobile by 2004, 50% of all US voice traffic was mobile originated by 2009, 50% of all EU voice traffic will be mobile originated _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 7

8 Filling the Gap Dual mode mobile/cordless handsets allowed FMC But mobile operator dependent on fixed network wholesale switched telephony service small discount to retail cordless Mobile Operator resells PTSN line to fill fixed gap PSTN fixed operator uses MVNO to fill the gap Inside the home handset pointed at cordless antennae Outside the home handset roamed back on mobile network _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 8

9 I can do without You! fixed operators are seeking ways to achieve FMC while cutting out mobile operators: using unlicensed mobile access (UMA) solutions, such as WIFI for their part, mobile operators are seeking to use geographic location capabilities to emulate PSTN telephony _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 9

10 But, the reality is that Fixed struggles without Mobile in absence of ubiquitous UMA coverage, mobile network roaming still needed BT Fusion originally launched on Bluetooth and home wireless base station but now uses Motorola dual mode WIFI/UMA handset seamless roaming across BT Openzone hot spots but Vodafone GSM MVNO still needed between Openzone islands BT hotspots home office airport GSM roaming _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 10

11 Mobile More Easily does without Fixed Mobile Operators (MNOs) can offer on-net solutions to emulate PSTN local telephony pricing by a combination of their geographic location capabilities and billing systems: home zone base station home outside home zone, mobile charges apply local PSTN charges apply _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 11

12 But problems faced by MNOs emulating PSTN Access to PSTN numbers: PSTN calling rates for the mobile subscription is only half the story in building a PSTN emulation service In A party-pays countries, calling parties are reluctant to make calls to mobile numbers Interconnection: Fixed and mobile interconnection regimes usually differ both charge levels and charge structures While mobile operator offering fixed retail pricing, mobile interconnection continues to apply _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 12

13 The Numbering Game Numbers convey charging information to calling parties: PSTN numbers support geographic based charging mobile numbers are nomadic Numbering plans typically segment numbering into geographic blocks and mobile blocks and do not allow cross over _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 13

14 Numbering Plan Requirements But read your numbering plan carefully! The numbering plan may be tightly drafted to prohibit fixed PSTN numbers being used on mobile networks. However, more usually, the numbering plan will require that services for which fixed numbers are used have certain characteristics: ie geographic association (ie. a subscribe location in the numbering area) and call charge (flat or low call charges). As long as these characteristics are met, the numbering plan may not prescribe underlying network technology _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 14

15 Mobile Networks Mimicking PSTN MNOs can design their FMC services so that the fixed number is used in a manner which mimics the use of numbers in the fixed network if mobile outside Auckland, end user chooses to terminate call to voic or call forwarded voic dual nos. 09 xxxxxxx 02 xyxxxxxx Auckland closed numbering area 09 if mobile within Auckland PSTN zone, terminated if 09 call routed to PoI for Auckland calling party pays $0 if dials PTSN number, but $0.50 per min if dials mobile number _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 15

16 MNO Interconnection Issues In calling party countries, mobile termination charges typically substantially exceed fixed termination charges PoI. $0.01 x for fixed termination ( $0.01) x (6-12) for mobile termination _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 16

17 Why Does the MNO care about Interconnection? The asymmetry favours mobile operators, so why would the MNO care if it s retail PSTN emulation services continue to be treated as fixed to mobile calls? 2 reasons: Call termination charges are based on the character of the dialled number. MNO will not get to use PSTN numbers if fixed operators still have to pay mobile termination Bill or keep applies between fixed networks _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 17

18 New Zealand Case Study calling party pays $0.00 PoI calling party pays $0.00 Telecom no termination charge paid by TCL bill and keep no termination charge paid by Telecom Telstra Clear calling party pays $0.00 Vodafone home zone Telecom pays termination of $0.25 per minute Vodafone pays $0.01 per minute calling party pays $ _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 18

19 New Zealand Regulator s Decision Commission agreed with Vodafone that met definition of PSTN local to local call: The defining characteristics of these calls are that they are voice calls, and that the number from which the call originates and the number of the intended recipient of the call are allocated to the same Telecom local calling area. How Vodafone handles such a call beyond the point of interconnection is not relevant to Telecom s obligation to supply the designated access service _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 19

20 New Zealand Regulator s Decision (contd.) Commission accepted that termination charge model (ie. F to M model) would undermine Vodafone s local calling product: as termination costs higher on mobile then fixed, Telecom could pass on costs to retail calling parties calling Vodafone local PSTN numbers termination charges would encourage operators to chase customers with high inbound all volumes Vodafone would be discouraged competing for customers with high outbound calls _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 20

21 Fixed-Mobile Number Portability (FMNP) While IN solutions have been preferred by regulators for both Mobile and Fixed number portability, separate platforms have tended to be built. Regulators are at sixes and sevens on Fixed-Mobile number portability. OFTA in HK accepted consultant views that: there is still value for consumers in separate fixed or mobile numbers no evidence that a barrier to FMC irreversible decision Court in Italy ruled against Vodafone on FMNP _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 21

22 Moves to FMNP In the US, the FCC mandated FMNP as part of original number portability decision, but delayed by litigation. Brazil has required FMNP. Ofcom in UK has proposed a common database solution for number portability across fixed and mobile networks, partly to address FMC. Phased introduction by ENUM standard ports all telephone numbers to single, unified IP address. Trials in many EU countries _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 22

23 New Zealand Case Study Mobile number portability and fixed number portability are separate regulated services. However, industry has designed and implemented a common IN solution across fixed and mobile networks _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 23

24 New Zealand Case Study Commerce Commission accepted Vodafone argument that fixed numbers could be ported to a mobile network: A fixed telephone network service is characterised by a connection between the local switch and a telephone device located in or on a building with which the user has some form of relationship or occupation or use. The telephone device is not required to be physically attached to the building but should normally be located on the end-user s premises. Provided the above conditions are satisfied, the connection may be provided using any type if wired or wireless network technology (including cellular technology) _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 24

25 The Future of Interconnection in an FMNP World PoI ported fixed number calling party dials ported fixed number but does not know hosted on mobile called mobile pays retail charge termination charge paid by mobile operator termination charge paid by fixed operator equal to fixed termination charge _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 25

26 Interconnection Post-FMNP Calling party and calling network can no longer rely on number to identify retail or interconnection charges. Fixed termination charge is lowest common denominator and can be applied symmetrically between fixed and mobile (with a bill & keep option). Only called party knows if using value of mobility, so pays a retail charge for inbound calls. MNO earns inbound termination revenue and inbound retail revenue to cover higher costs of mobile network _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 26

27 FMC in broadband world _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 27

28 BT s Broadband FMC Vision: Seamless Technology anywhere, anytime, anyplace Broadcast Home Small office HSDPA Out and about GSM Wireless broadband at the heart of our strategy 3G Wimax Enterprise Broadband _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 28

29 VoB + WiFi + GSM UMA/dual mode WiFi/GSM services now offered in over a dozen EU markets. Orange Unik service provides: VoB over broadband roaming between WiFi hotspots GSM/3G to fill in the gaps _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 29

30 Tough Start, Slow Going In EU, only 200,000 FMC subscribers at end of 2006 less 3% of triple play subscriptions Total Subs Net Monthly Adds Source: Pyramid YE2006 Jan-07 Feb _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 30

31 Cross Network Challenges for mobile operators: lack of naked DSL service for fixed operators: lack of regulated MVNO service for non-network based service providers both problems!! _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 31

32 (a) Mobile Operators seeking Fixed Access _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 32

33 Naked DSL Regulated bitstream services typically require the customer to continue to take the incumbent PSN service. Data channel Voice channel access seeker broadband and VoB service retail service disabled The naked DSL service disables the voice channel so no other provider can use. The access seeker itself does not use the voice channel _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 33

34 Naked DSL (contd.) As VoB is intended as substitute for PSTN telephony, a requirement to purchase PSTN line with bitstream undercuts access seeker offering. Naked DSL is now required in New Zealand and being pushed in the EU: all a question of cost: how to recover incumbent s lost contribution to fixed line costs _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 34

35 But do MNOs really need [fixed?] for high bandwidth? Do MNOs which offer HSPA at 1.5 Mbit/s need fixed? For example, Telstra NextG at 1.5 Mbit/s is at entry level xdsl rate (but faster than free WiFi) Normally, mobile data usage charges are high beyond the included bucket levels A combination of fixed and mobile allows high speed (cheaper) access at home and in the office and demonstrates the mobility value proposition _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 35

36 (b) Fixed Network seeking Mobile Access: MVNO _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 36

37 MVNOs disappointing record to date MVNOs had a significant impact in some markets, but on the whole have failed to deliver on their promise. MVNOs have followed a thin model and are little more than resellers or dealers _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 37

38 Full, intermediate and thin MVNOs EIR AUC Voic IN HLR SMSC Prepaid VAS MS ME SIM BTS RAC VLR (G)MSC PSTN thin MVNO intermediate MVNO Air Interface OMC full MVNO MS: Mobile Station OMC: Operations and Maintenance Centre ME: Mobile Equipment (G)MSC: (Gateway) Mobile services Switches Centre SIM: Subscriber Identity Module HLR: Home Location Register BSS: Base Station subsystem VLR: Visitor Location Register BTS: Base Transceiver Station EIR: Equipment Identity Register RAC: Radio Access Controller PSTN: Public Switched Telephone Network AUC: Authorisation Centre _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 38

39 MVNOs in 2G World MVNOs have been good at: brand innovation: Virgin appeal to the young simplification of contracts/pricing plans customer service MVNOs in Danish market now account for over 35% of total market: so successful that incumbent acquired largest MVNO. Mobile prices have fallen by over 60% since MVNOs entered the market in Denmark _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 39

40 But limited MVNO product innovation Regulators (HK, Ireland) which mandated MVNOs did so to encourage innovation: [MVNOs will] enable small and medium sized content providers to provide more innovative content, applications and services OFTA. MVNO infrastructure limited to platforms to support voic , ring tones and some limited content. As a result, attraction of MVNOs to regulators had waned _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 40

41 MVNOs and 3G 3G promises more opportunities for MVNOs: greater bandwidth = more service differentiation consumer demand for new services technological ability to tunnel across MNO network _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 41

42 The MNO Tunnel User request Access Point Name identifies GGSN exit Visited SGSN GTP Tunnel GGSN Distinguished by APN Mobile Base stations not shown GPRS backbone Home or visited Mobile end which can Transfer to another SGSN as the mobile moves Fixed end Gi interface _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 42

43 MVNOs, 3G and FMC The technological capability to tunnel across a 3G network can be combined with bitstream service, which is also a tunnelling approach, to link a single IP core Fixed device Mobile device Bitstream access 3G GPRS access IP core facilities based or access _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 43

44 Conclusion The basic ingredients for FMC are there: the compelling proposition : seamless connectivity, anywhere, anytime the technology: IP core + IP in fixed and wireless access networks allow seamless IP cloud some evidence of demand: though only slowly building _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 44

45 Conclusion (contd.) The challenges are significant: FMC products require both fixed network and mobile network inputs it s not substitution (query: new mobile networks like Telstra s NextG) most operators do not have both networks (divestitures in 1990s) and so require regulated or commercial access to the other network _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 45

46 Conclusion (contd.) Numbering: regulators, and maybe more than consumers, are clinging to geographic association of fixed numbers in any event, is this unrealistic with nomadic VoIP services? Interconnection: are MNOs having their cake and eating it by seeking dual F2M and F2 virtual F arrangements on their networks? do we need a new interconnection approach (OFTA in HK)? _1.PPT Fixed to Mobile Convergence: How to play when you don't have both networks June 2007 page 46