WTPF on IP Telephony

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 GSTN IP network POP(Gateway) IP access Normally a local call, handled by Telco A H.323. Carrier Domain International boundary International geographic part of the call. There is no 1 to 1 correspondance to normal PSTN distance IP-Based network domain T rm n t i n e i a g Nt wrk e o P T/ IS N SN D /PM L N IP Ntwr e ok IW F L c l o d st ri b t e oa r i u d fu c i o nt n L c l o d st ri b t e oa r i u d F fu c i o n t n IW Cl l i n ti a d o S N a i te fr m / PT to S N P T/ P T/ IS N SN D /PM L N O g n tin ri i a g Nt wrk e o 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 H 3r S [1 3 .2o IP ] te inl rma I P Ae s c s c I N ok Pe r tw I N ok Pe r tw I P Ae s c s c C in te fr mPe ok a itia d o I N r ll tw toSN SN L N PT D M /I /P IW F Lc lod tribte oa r is u d fuc n ntio Lc lod tribte oa r is u d F fuc n IW ntio C in te fr PT a itia d oSN ll m PT SN SN D /I /PM LN PT SN SN D /I /PM LN T 2 8 8 -0 0040 0 164) (0 1 7 H2 o S [1 3 . 3 r IP ] e i t rmal n Call from an IP-based Network user to another IP-based Network user via an ITN IP A ccess IP etwrk N o IP A ccess H2 o S 3 . 3 r IP e i t rmal n IW F Cl i i ted m N o a ta fro IP etwrk n i to S NS NL N P T/ D/ M I P L cal rd t i u d o o i rb t s e fu ct n ni o IP etwrk N o P T/ S N SN D I /L N PM IW F L cal rd t i u d o o i rb t s e fu ct n ni o 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. Computer to telephone or fax Internet Phone Gateway Computer 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 <15 million equipped users, receiving >800 million telephone users 2b. Computer to service provider telephone Desktop PC Internet Web Server Public Switch  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 ... Phone Gateway Computer at Service Provider 3. Telephone to telephone (fax to fax) via Internet Internet Phone Gateway Computer Phone Gateway Computer  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 Telephone Public Switch Telephone 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 multimedia 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$16.5 bn by 2004 with 135 billion mins of traffic  Gartner Group forecast that IP Telephony and competition in Europe will reduce prices by 75% by 2002  IP Telephony as % of all int’l calls in 2004  Tarifica forecast 40%  Analysys forecast 25% 16.5 “Web Talk” revenues, US$bn 0.208 2000 2004  In developing countries, the majority of IP Telephony calls are incoming Source: IDC. Minutes of use by month, Hongkong SAR ('000s) 1'500 1'250 1'000 750 500 Dial-up Internet (via PSTN) 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% -2.1% 7.2% Domestic longdistance Int'l outgoing calls Local calls Calls to mobile networks Calls to Internet (TOnline) Source: Deutsche Telekom annual report. 40% 35% Dial-up Internet traffic as % of total traffic minutes Telia (Sweden) 38% 30% 25% 20% 15% 10% 5% 0% 27% 12% Telenor (Norway) 19.5% 18% Telecom Portugal 8.5% 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 cost p.a. (US$) 1'000 Circuit costs, falling by 72% p.a . 10'000 1'000 100 100 10 Circuit capacity, rising by 89% p.a. 1 10 1 Source: Note: ITU, adapted from FCC. Circuit costs assume a usage level of 18%, a compression level of 5:1 and a life-time of 20 years. TAT-8 PTAT-1 TAT-10 TAT- AC-1 TAT-14 Flag 1988 1989 1992 12/13 1999 2000 Atlantic 2001 1996 Circuit capacity (64 kbit/s, 000s) Challenges Revenue gain and revenue loss Accounting Rate IP-Telephony Collect US$ 1.00 from user Pays US$ 0.30 to ISP for terminating call. Retains US$ 0.70 Difference PTO in Developed country PTO in Developing country ISP in Developing country Collect US$ 1.00 from user Pays US $ 0.55 settlement. Retains US $ 0.45 Receives US $ 0.55 settlement. +0.25 US$ Receives US $ 0.02 local call charge. Receives 0.30 US $ for terminating charge Pays 0.02 US $ for local call. Retains 0.28 US $ -0.53 US$ 0 +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 voice/fax over the Public Internet or over IP-based networks Angola, Antigua and Barbuda, 1Argentina, Bhutan, Congo,Costa Rica, Dominican Republic, Estonia 2, Gambia, Guatemala, Guyana, 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 not real-time (not considered voice telephony) Permitted. If real-time, subject to light conditions (notification/registration may be required, other basic provisions of voice regulation EU Countries5, Hungary (if delay =/>250ms and packet loss >1%), Iceland Czech Republic, Hong kong SAR, Japan, Singapore, Switzerland Permitted. If real-time, treated similarly to other voice telecommunications services (licensable, subject to more extensive provisions of voice regulation) Countries that prohibit the use of both the Public Internet and IP-based networks for voice or fax services Australia, Canada, China, Korea (Rep.), Malaysia Albania, Azerbaijan, Belize, Botswana, Cambodia, Cameroon, Côte d’Ivoire, Croatia, Cuba, Ecuador, Eritrea, Gabon, Indonesia, India, Israel, Jordan, Latvia, Lithuania, Morocco, Mozambique, Myanmar Nicaragua, Nigeria, Pakistan, Paraguay, Qatar, Romania, Senegal, Seychelles, Swaziland ,Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey Cyprus, Ethiopia, Kenya, Peru, Philippines Countries that permit voice/fax 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) 5 4 3 2 minutes 250 200 150 100 1 0 18-Oct- 22-Nov- 10-Dec- 12-Jan- 04-Apr99 99 99 99 00 50 0 Source: ITU, adapted from DialPad.com press releases. Call minutes (million) Users 300 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 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-D       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