WTPF – 2001
On IP Telephony
Saburo TANAKA
Councellor, TSB/ITU
Saburo.tanaka@itu.int
Note: The views expressed in this presentation are those of the author and do not necessarily reflect the opinions of the ITU or its membership.
WTPF - IP Telephony 2
Agenda
Overview of WTPF
Purpose
Agenda for WTPF
What are the issues?
What is IP Telephony
Opportunities and challenges
Policy and Regulatory issues
What will be the impact of IP Telephony?
In developed countries
In developping countries
Results of WTPF
WTPF - IP Telephony 3
Overview of WTPF
(Held in Geneva from 7-9 March 2001)
Purpose
To provide a forum for discussion and for exchange
views
WTFP shall not produce prescriptive regulatory
outcome but prepare report
The general implication of IP Telephony
Actions to assist Member States & Sector Members to
facilitate adaption to the new environment
Action to assist MS & SM in meeting the human
resource development
Attendance
WTFP was attended by 757 persons (121 MS including
25 LDC, 99 SM)
WTPF - IP Telephony 4
What is IP Telephony?
Definition
IP Telephony: a generic term for the transmission of
voice, fax over packet-switched IP-based networks
Voice over IP: The transmission of voice over circuit
employing Internet Protocol
Internet Telephony: Transmission of voice over the
Internet
A wide variety of services can be provided using
combination of: the type of terminal devices used, where
the gateways are located and the underlying means of
transmission.
WTPF had only “working definition” and it requested ITU-T
to define more clear definition on “IP Telephony” and
“Internet Telephony”.
A call from the GSTN to an IP terminal
IP network IP access
GSTN
POP(Gateway)
Normally a local call, H.323.
handled by Telco A
International
boundary
International geographic part
Carrier Domain of the call. There is no 1 to 1
correspondance to normal PSTN
distance
IP-Based network domain
e i a
T rm n t i ng
e o
Nt wrk
SN D
P T/ IS N
L N
/PM
e ok
IP Ntwr IWF
oa r i u d
L c l o d st ri b t e
nt n
fu c i o
oa r i u d
L c l o d st ri b t e
n t n IW
fu c i o F
a i te fr m /
PT
Cl l i n ti a d o S N
P T/
to S N
SN D
P T/ IS N
L N
/PM
ri i a
O g n ting
e o
Nt wrk
Call from International Telecommunication Network
(ITN) to another ITN via IP-based Network
Call from IP Network User to the ITN Call from ITN to an IP-based Network user
3
H 3r S [1
.2o IP ] IP Pe r
tw
I N ok
rma
te inl c s
c
Ae s tw
Pe r
I N ok IP
c s
c
Ae s
IWF oa r is u d
Lc lod tribte
ll
a itia d o I N r
C in te fr mPe ok
tw ntio
fuc n oa r is
Lc lod tribte
u d
PT D M
toSN SN L N
/I /P fuc n IW
ntio F C in te fr PT
ll m
a itia d oSN
SN D
/I
PT SN
LN
/PM SN D
/I
PT SN
LN
/PM
3
. 3 r IP ]
H2 o S [1 0040 0
T 2 8 8 -0 H2 o S
3
. 3 r IP
(0 1 7
164)
t rmal
e i n Call from an IP-based Network user to t rmal
e i n
another IP-based Network user via an ITN
IP IP
N o
IP etwrk
ccess
A ccess
A
o o i rb t
s e
L cal rd t i u d
IWF N o
IP etwrk
a ta fro IP etwrk
i
Cl i i ted m N o
n nio
fu ct n
P T/ D/ M
I P
to S NS NL N
SN D
I
P T/ S N o o i rb t
s e
L cal rd t i u d
PM
/L N IWF
nio
fu ct n
1. Computer to computer
Internet
Phone Gateway Computer Phone Gateway Computer
Needs similarly equipped Internet users (e.g., IP
telephony software, multimedia PC etc), both
logged-on simultaneously
Main motivation: avoidance of usage-based
telephone charges
Software vendors include VocalTec, Camelot etc
Market: Less than 15 million potential users?
2a. Internet
Computer to
telephone or Phone Gateway
Computer
fax
Desktop PC Public Switch Telephone
Suitably equipped Internet users able to call any
telephone user (not necessarily vice versa)
Main motivation: Reduction of international
telephone charges
Service providers include IDT (Net2Phone), FWD
Market potential : Sending 800 million telephone users
2b. Internet
Computer Web Server
to service
provider
telephone
Phone Gateway
Desktop PC Public Switch Computer at
Service Provider
Suitably equipped Internet users browse Website
and choose voice/video connection option
Main motivation: Service provider can interact
directly with potential clients, via voice or other
electronic means
Market potential: Integration of sales-oriented web
site and telemarketing. Pornography, Gambling ...
3. Telephone Internet
to telephone
(fax to fax) Phone Gateway
Computer
Phone Gateway
Computer
via Internet
Telephone Public Switch Telephone
Any telephone user to any other
Main motivation: Accounting rate bypass, market
entry for non-facilities-based carriers
Potential service providers include any PTO with
settlement payments deficit (e.g., US = US$5.7bn)
Market potential : 850+ million telephone users
Audio Demonstrations
Samples of Encoded Speech
Packet-Loss Effects
Wideband Capabilities
Samples of Encoded Speech
(1) PCM at 64 kbit/s - as a reference
(2) 8 kbit/s speech codec
“Rice is often served in round bowls.”
“The soft cushion broke the man’s fall.”
“The small pup gnawed a hole in the sock.”
“The meal was cooked before the bell
rang.”
WTPF - IP Telephony 14
Opportunities and challenges
Opportunities
Unifying platform for emerging converged network
Reduce prices to consumers and the costs of market
entry for operators
In terms of volume of traffic carried and level of
investment committed
Challenges
Undermine the pricing structure of the incumbent
Public Telecommunication Operators (PTOs)
Transition to IP-based networks also poses significant
human ressource development challenges
WTPF - IP Telephony 15
IP-based networks = the technology
of choice?
Several major PTOs will migrate all their
international traffic onto IP
The apparently lower cost of moving traffic over
IP-based network
Necessity in the age of the Information Society
May serve as a dynamic stimulus to economic
growth
To offer much wider and diverse range of multi-
media services and innovative applications
But how about for developing countries?
No answer, study requested to ITU-T
The influence of IP Telephony on price
IDC forecasts that “Web Talk”
revenues will reach US$16.5 bn 16.5
by 2004 with
135 billion mins of traffic
Gartner Group forecast that IP “Web Talk”
Telephony and competition in revenues,
Europe will reduce prices by US$bn
75% by 2002
IP Telephony as % of all
int’l calls in 2004
Tarifica forecast 40% 0.208
Analysys forecast 25%
In developing countries, the 2000 2004
majority of IP Telephony calls
are incoming Source: IDC.
Minutes of use by month,
Hongkong SAR ('000s)
1'500
1'250
Dial-up Internet
1'000
(via PSTN)
750
500
250 International voice
(incoming and outgoing)
0
4 6 8 10 12 2 4 6 8 10 12 02
98 98 98 98 98 99 99 99 99 99 99 00
Source: OFTA (www.ofta.gov.hk)
Deutsche Telekom
Percentage change in call
volume (minutes) 1998/99 86.3%
36.0%
-7.1% 7.2%
-2.1%
Domestic Int'l Local calls Calls to Calls to
long- outgoing mobile Internet (T-
distance calls networks Online)
Source: Deutsche Telekom annual report.
Dial-up Internet traffic as % of
total traffic minutes
40%
35% Telia (Sweden) 38%
30%
25%
27%
19.5%
20%
Telenor (Norway)
15% 12%
18%
10%
Telecom Portugal
5% 8.5%
0%
1998 1999
Source: PTO annual reports. Note: For Telia, Internet traffic as % of local minutes. For others, as % of total
Infrastructure capacity and costs,
TransAtlantic cables, 1988-2001
10'000 100'000
Circuit capacity (64 kbit/s, 000s)
Circuit costs,
falling by 72% p.a . 10'000
Circuit cost p.a. (US$)
1'000
1'000
100
100
10
10
Circuit capacity,
rising by 89% p.a.
1 1
TAT-8 PTAT-1 TAT-10 TAT- AC-1 TAT-14 Flag
1988 1989 1992 12/13 1999 2000 Atlantic
1996 2001
Source: ITU, adapted from FCC.
Note: Circuit costs assume a usage level of 18%, a compression level of 5:1 and a life-time of 20 years.
Challenges
Revenue gain and revenue loss
Accounting Rate IP-Telephony Difference
Collect Collect
PTO in US$ 1.00 from user US$ 1.00 from user
Developed Pays US $ 0.55 Pays US$ 0.30 to ISP for +0.25 US$
country settlement. terminating call.
Retains US $ 0.45 Retains US$ 0.70
PTO in Receives US $ 0.02
Receives US $ 0.55
Developing -0.53 US$
settlement. local call charge.
country
Receives 0.30 US $ for
ISP in terminating charge
Developing 0 Pays 0.02 US $ for local +0.28 US$
country call.
Retains 0.28 US $
WTPF - IP Telephony 22
Different Policy and Regulatory
approaches
Possible government policy objectives for IP-Teleph.
Universal Service/Universal Access
Affordable telecommunications services
Tariff re-balancing
Ensuring a level-playing field for competitors and new entrants
Promotion of new technologies and services
Stimulating investment in network build-out and new services
Impact on revenue streams of incumbent operators
Technology transfer
Human resource development
Economic growth as a whole and in particular in the
communications sector.
WTPF - IP Telephony 23
The general picture
At present, several broad national policy emerge
First, there are countries that include some or all
forms of IP Telephony within their regulatory system
Second, there are countries that prohibit IPTelephony
Third, there are countries that do not regulate IP
Telephony
Lastly, there are countries where the situation is
uncertain or the issue remains to be formally
addressed.
Status of IP Telephony in ITU Member States
No specific prohibition for Angola, Antigua and Barbuda, 1Argentina, Bhutan, Congo,Costa Rica,
voice/fax over the Public Dominican Republic, Estonia 2, Gambia, Guatemala, Guyana,
Internet or over IP-based
networks
Madagascar, Malta, Mexico, Mongolia 2, Nepal, New Zealand, Poland,
Slovak Republic, St Lucia 1, St Vincent3, Tonga, Uganda, United
States4, Viet Nam
Permitted or not regulated, if EU Countries5, Hungary (if delay =/>250ms and packet loss >1%),
not real-time (not considered
Iceland
voice telephony)
Permitted. If real-time, subject Czech Republic, Hong kong SAR, Japan, Singapore, Switzerland
to light conditions
(notification/registration may be
required, other basic provisions
of voice regulation
Permitted. If real-time, treated Australia, Canada, China, Korea (Rep.), Malaysia
similarly to other voice
telecommunications services
(licensable, subject to more
extensive provisions of voice
regulation)
Countries that prohibit the use Albania, Azerbaijan, Belize, Botswana, Cambodia, Cameroon, Côte
of both the Public Internet and d’Ivoire, Croatia, Cuba, Ecuador, Eritrea, Gabon, Indonesia, India, Israel,
IP-based networks for voice or
fax services
Jordan, Latvia, Lithuania, Morocco, Mozambique, Myanmar
Nicaragua, Nigeria, Pakistan, Paraguay, Qatar, Romania, Senegal,
Seychelles, Swaziland ,Thailand, Togo, Trinidad and Tobago, Tunisia,
Turkey
Countries that permit voice/fax Cyprus, Ethiopia, Kenya, Peru, Philippines
over IP based networks but
prohibit over public Internet
WTPF - IP Telephony 25
Other Policy and Regulatory issues
License restriction
A few countries expressly license PTOs to
provide IP Telephony -
Regulatory distinction
Type of service, Voice or Data, Mode of
network transmission, Quality of service
Ffunctional equivalence
Technological Neutrality
Impact of IP Telephony on Universal
Service/Access
Developing country concerns
Developing countries receive no international
settlement payments for IP traffic
Increasingly, incoming IP traffic includes IP
telephony and fax traffic which they must terminate
They must pay to peer with US/EU backbone
Peering costs are rising as IP traffic continues to
grow exponentially
They must pay both half-circuits of the
International Private Line to the foreign ISP
Even though traffic flows in both directions over the
circuit, once it is established
Telephone and fax traffic shifting to the Internet
What will replace the US$7 bn from settlements?
Pricing IP for voice services
In competitive, low-price markets
Main market opportunity for IP Telephony is for
value-added services, e.g., unified messaging
In markets in transition to competition
IP Telephony offers a route towards early
introduction of competition and creates downward
pressure on prices
In high-price, monopoly markets
Where permitted, IP Telephony creates opportunities
for low-cost calls
Even if not permitted, IP Telephony is widely used to
reduce costs of international call termination
IP Telephony wants to be “free”
Cumulative number of Dialpad users & call minutes
Since launch on 18 Oct. 1999
6 350
Registered users (million)
Users 300
Call minutes (million)
5
minutes 250
4
200
3
150
2
100
1 50
0 0
18-Oct- 22-Nov- 10-Dec- 12-Jan- 04-Apr-
99 99 99 99 00
Source: ITU, adapted from DialPad.com press releases.
Opinion A
(The general implication of IP Telephony)
WTPF is of view that
IP Telephony application are best supplied in a market in which
consumers have choice
Government regulation should aim to foster an effective competitive
environment
Regulation may be appropriate where there is market failure or when
public interest cannot be adequately met by industry
Member States should examine the implication of applying existing
regulatory regime to IP-based services and application
WTPF invites
MS & SM to consider the possibility of the introduction and of the
deployment of IP technologies and IP application
All MS to review their current regulatory framework with a view to:
– Encourage investment
– Achieving public policy goals in the context of a converged communication service
environment
– Considering the possibility of opening their communication services market with
respect to IP Telephony by adopting a competition oriented approach
Opinion B
(Action to assist MS & SM in adopting to the changes in the
telecommunication environment due to the emergence of IP Telephony)
WTPF invite the Secretary General and the Director of the Bureaux
To promote understanding of the potential benefits of IP-based
technologies and IP application to assist MS &SM, particularly
developing countries
(i) by updating previous IP Telephony case studies;
(ii) by carrying out cost studies;
(iii) by helping to attract investment and promoting the use of
international lending, Bureaux
In the pursuit of the above, to conduct regional workshops in partnership
with Member States and Sector Members
(i) how telecommunication infrastructure build-out;
(ii) technologies that can support IP Telephony;
(iii) how to create an environment that will attract investment;
(iv) issues such as cost structures, pricing mechanisms, interconnection,
numbering, quality of service and market consideration, etc.
Opinion C
(meeting the human resource development challenges)
WTPF invites the ITU, in particularly ITU-D
to facilitate the sharing of knowledge and views, by Member States and Sector
Members
Invites ITU-D
1 to encourage Member States and Sector Members to create integrated human
resources transition plans;
2 to assist Member States and Sector Members in evaluating and identifying new and
changing human resources requirements;
3 to draw upon existing BDT research and skilled personnel to identify:
(i) HRD/HRM and training issues related to network evolution;
(ii) HRD/HRM and training issues related to new technologies, including IP;
(iii) skills leading to the creation of a business environment that will attract
infrastructure investment,
Invites ITU-T and ITU-R….
Invites Sector Members…
Invites SM & MS….
invites ….
Opinion D
(Essential studies by the ITU to facilitate the introduction of IP
Telephony)
WTPF invites the three ITU Sectors
each, for matters within its competence, and based on contributions from ITU Member States and
Sector Members, to initiate new studies or pursue current ones, and to present any findings as
soon as possible, to facilitate the introduction of “IP telephony” on a global basis, particularly with
respect to:
1. in ITU-R,
compatibility and inter-operability of radio access between IP networks and PSTNs,
2. in ITU-T,
a) a clear working definition of “IP telephony” and “Internet telephony”;
b) whether, and to what extent:
i) to require compatibility of “IP telephony” with the existing international telephone service;
ii) compatibility should also include, but not be limited to, aspects of performance;
c) whether, and to what extent:
i) to consider the possibilities of how “IP telephony” can be a part of national PSTNs;
ii) aspects of traffic identification and measurement;
d) identifying the cost elements of international IP connectivity
3. In ITU-D,
taking account of the need of developing countries to plan a strategy of migration for their
networks into IP-based networks