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					                              IST IP NOBEL "Next generation
                                                                        Title of the document
                              Optical network for Broadband
                                   European Leadership"             33c7fd02-08a2-491d-a19e-
                                                                            5a9256d2fff6.doc




Internal Report
Work Package 2.A.2.4 v. 0
     “Overview of social impact and economic
   opportunities generated by NOBEL concepts”


Status and Version:               Draft
Date of issue:                    19.07.2004
Distribution:                     Project Internal
Author(s):                        Name                        Partner
                                 Alberto Savoldelli           AIP
                                 Raffaello Balocco            AIP
                                 Roberto Cabrelli             AIP
                                 Jesús Lobo                   TID
                                 Juan Fernandez-Palacios      TID
                                 Miroslaw Kantor              AGH
                                 Krzysztof Wajda              AGH
    Checked by:                  Sandrine Pasqualine          Siemens




Table of Contents
1    Introduction                                                                         4
     1.1   Purpose and Scope                                                              4
     1.2    Reference Material                                                            4
        1.2.1 Reference Documents                                                         4
        1.2.2 Acronyms                                                                    5
        1.2.3 Definitions                                                                 5
     1.3   Document History                                                               6
2    NOBEL Network&Services Vision                                                        6
3    Social and Economical Analysis                                                       8
     3.1    Environment                                                                   9
        3.1.1 Economy                                                                     9
        3.1.2 Employment. Need for qualified users.                                      10
        3.1.3 Legislation.                                                               13




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    3.2    Communication Infrastructures                                                      15
       3.2.1 Access Segment                                                                   15
       3.2.2 Metro and Core Infrastructures                                                   23
       3.2.3 Transmission networks                                                            24
       3.2.4 Transport Networks                                                               25
       3.2.5 Acces Nodes                                                                      26
    3.3    Services                                                                           27
       3.3.1 Citizens                                                                         27
       3.3.2 Companies                                                                        32
       3.3.3 Public Administration                                                            37
    3.4   Future Trends                                                                       43
    3.5   Conclusions                                                                         43
4   NOBEL and the Society Information in Europe                                               45
    4.1   Introduction                                                                        45
    4.2    Impact of the socioeconomic evolution on NOBEL concepts                            46
       4.2.1 Economical conditions analysis                                                   46
       4.2.2 Technological conditions analysis                                                48
       4.2.3 Social conditions analysis                                                       50
       4.2.4 Political evolution analysis                                                     51
    4.3    New opportunities generated by NOBEL in the Information Society                    52
       4.3.1 Nobel influence on economy                                                       53
       4.3.2 Introduction of new applications and services                                    54
       4.3.3 Residential users                                                                55
       4.3.4 New opportunities                                                                55
5   Overview of new business opportunities                                                    56
    5.1    Broadband networks value chain and business roles                                  56
       5.1.1 The evolving telecommunications value chain                                      57
       5.1.2 A reference model of business roles for broadband optical networks               58
    5.2    Charging models                                                                    62
       5.2.1 Functional model of charging system (MK)                                         62
       5.2.2 Classifications of charging schemes                                              63
       5.2.3 Charging schemes                                                                 64
       5.2.4 Requirements for charging scheme                                                 65
       5.2.5 Necessity of new charging scheme                                                 66
       5.2.6 Charging scheme function                                                         66
       5.2.7 Accounting issue                                                                 67
       5.2.8 Charging scheme evaluation criteria                                              67
       5.2.9 Competition models                                                               68
       5.2.10 Interconnection issues                                                          69
       5.2.11 Multicasting                                                                    69
    5.3    Preliminary overview of new business models                                        70
       5.3.1 Static vs. dynamic routing and wavelength assignment (RWA) in broadband
       networks                                                                               70
       5.3.2 Transport and grooming of IP/MPLS traffic                                        70
       5.3.3 Metro issues                                                                     72



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6   Conclusions and assessment for further work                                72




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 1         Introduction
 1.1       Purpose and Scope
This deliverable will describe new social and economic opportunities generated by the
breakthrough of NOBEL concepts, and how the future evolution of the main aspects related
to the Information Society in Europe will impact on the implementation of the solutions
proposed by NOBEL. In this respect, the main topics to be addressed within D12 will be:
         Macroeconomic, political and the market regulation environment
         Users’ preferences and behavior (e.g. intensive P2P applications use) as well as
          their impact on services and potential applications evolution.
         Potential market segments definition and assessment in order to find the application
          areas where NOBEL solutions could be viable.
         Charging models for transport services.
As a first step the NOBEL network and services overall vision is introduced. After that, the
current situation and future trends of the socioeconomic environment in Europe is analyzed
taking into account factors such as economy, legislation, infrastructures or services in order
to find new social and economic opportunities generated by the breakthrough of NOBEL
concepts, and assess how the future evolution of the main aspects related to the
Information Society in Europe will impact on the implementation of the solutions proposed
by NOBEL. This socioeconomic analysis is followed by an introduction to basic concepts to
be taken into account for further work about innovative business models for NOBEL
services and applications. Finally, lessons learned from this activity are summarized as
well as main inputs to be provided to the rest of WPs.



 1.2       Reference Material
          1.2.1 Reference Documents
[1]         Katja Ruud, Gartner. "Top 10 Trends in Fixed Voice: Western Europe, 2003". October
            2003.
[2]         Susan Richardson. "ADSL Ports and Service Revenue: Western Europe, 2001-2007".
            October 2003.
[3]         European Comission, Directorate-General for Employment and Social Affairs. "
            Employment in Europe 2003". September 2003.
[4]         eEurope Advisory Group ."Connecting Europe at High Speed: National Broadband
            Strategies". May 2004.
[5]         EuroStat. "Statistics on the information society in Europe". December 2003
[6]         Internet2 NetFlow Statistics Home Page, http://netflow.internet2.edu/weekly
[7]         IP Monitoring Project (IPMON) Home Page, Sprint Advanced Technology Lab,
            http://ipmon.sprintlabs.com/ipmon.php/.




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[8]     A. M. Odlyzko, “Internet traffic growth: Sources and implications”, Optical Transmission
        Systems and Equipment for WDM Networking II, B. B. Dingel, W. Weiershausen, A. K.
        Dutta, and K.-I. Sato, eds., Proc. SPIE, vol. 5247, 2003, pp. 1-15. Available at
        http://www.dtc.umn.edu/~odlyzko/doc/recent.html
[9]     N. Ben Azzouna, C. Fricker, F. Guillemin, “Modeling ADSL traffic on an IP backbone
        link”, INRIA. Work package 2, August 2003.
[10]    NOBEL, Deliverable 6 “Preliminary definition of drivers and requirements for core and metro
        networks supporting end-to-end broadband services for all”
[11]    OECD. "The economic Impact of ICT: Measurement, Evidence and Implications"
[12]    Rainer Händel, " NGN Governance Issues". ITU-T "Worshop on Internet Governance"
[13]    Ipsos. “Telecom Services Indicators, 2004”
[14]    M. Falkner et. all, “An overview of pricing concepts for broadband IP networks”, IEEE
        Comm. Surveys, Second Quarter 2000




       1.2.2 Acronyms




       1.2.3 Definitions




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 1.3      Document History
Version                 Date                    Authors                 Comment




 2        NOBEL Network&Services Vision
NOBEL network vision is based on innovative network (both core and metro) solutions and
technologies for intelligent and flexible optical networks, mainly focussing on
ASON/GMPLS architectures.


                               Reference network scenario




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According to [10], NOBEL services vision can be summarized as follows:




     NOBEL vision is based on a Transport and Services Stratum
          o   The Transport stratum is generalized to a resources stratum (including
              storage, computing, sensors and other HW/SW distributed resources)
          o   The traditional Services stratum is divided in two: Applications (services for
              the user) and Network services (provide connectivity to the user’s
              applications)


                       Functional model of the NOBEL network


                                        APPLICATIONS




                                       SERVICES LAYER




                    MANAGEMENT PLANE                     CONTROL PLANE
                     RESOURCE PLANE (TRANSPORT, COMPUTING, STORAGE, etc)

                           MULTI-SERVICE NETWORK INFRASTRUCTURE




     NOBEL defines five main classes of network services (Public IP, Business IP, VPNs
      L1, L2 and L3).




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                                                                                                                                                                                                                                                                                                              - Narrowband Voice, data (VoIP,...)




                                                                                                                                                                                                                                                                                                                                                                            - Digital distribution, digital cinema
                                                                                                                                                                                                                                                - Video Broadcast (IP-TV)
                                                                                         - Asyncrhonous Mirroring




                                                                                                                                                                                                                                                                                                                                                                                                                                          Tele-medicine/diagnostic
                                                                                                                    - Synchronous Mirroring
                                                                   - Storage on Demand
                                             - Back-Up / Restore




                                                                                                                                                                                                                            - Video on Demand




                                                                                                                                                                                                                                                                                                                                                                                                                     - Video conference
                                                                                                                                                                                                                                                                            - Video Download
                                                                                                                                              Grid computing
                                                                                                                                                               - Compute Grid




                                                                                                                                                                                                                                                                                               - Video Chat
                                                                                                                                                                                              - Utility Grid
                                                                                                                                                                                - Data Grid


                                                                                                                                                                                                               Multimedia




                                                                                                                                                                                                                                                                                                                                                    - Gambling
                                                                                                                                                                                                                                                                                                                                                                 - Gaming
                                   Storage




Public IP
Business IP
VPN - L3    permanent
            on-demand
VPN - L2    permanent, Hi avail
            permanent, Low avail
            on-demand, Hi avail
            on-demand, Low avail
VPN - L1    permanent, Hi avail
            permanent, Low avail
            on-demand, Hi avail
            on-demand, Low avail


In the table, the light blue means that the application will run on this network service, the
dark blue gives a more efficient implementation, the white should be interpreted as this
service have no support for the application and the grey is just a separator between groups
of applications. A detailed explanation of NOBEL services and emerging applications can
be found in [10].




 3        Social and Economical Analysis
The evolution of the Information Society will directly impact on the construction of metro
and core solutions addressed by NOBEL. On the other hand, NOBEL concepts will
contribute to the evolution of the Information Society in Europe. In this respect, the aim of
this chapter will be to analyze a set of factors such as economy environment, legislation,
broadband infrastructures or services demand in order to find key issues to be taken into
account for the evolution of metro and core networks.
This analysis contemplates the following aspects:
        Environment. The first part is dedicated to the study of those elements such as:
         economy, employment and legislation, which have a decisive influence on networks
         development.
        Infrastructures. This section analyses the current situation of infrastructures
         (terminals, acces, metro&core) available in the EU.




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     Services and applications. This section looks at the behaviour of users and their
      main preferences. Three different sectors are analysed: citizens, companies and
      public administration.
                                                                                                                                                  Formatted: Bullets and Numbering


3.1    Environment
 The number of factors that can affect the communication networks development may
 be quite large, but for the purposes of this report they have been classified into four key
 areas: economy, employment and legislation.



      3.1.1 Economy
 A country's economic situation affects investment policies in all areas (technology,
 education, research, etc.), and thus also has an influence on the development and
 deployment of communication networks. There is a strong correlation between the per
 capita GDP and the technology penetration. This can be verified, for example, by
 comparing the Internet penetration with the GDP per capita as shown in figure below.


                                           Technology Penetration and Productivity

                                           35000                                                            Denmark

                                           30000
                                                                                                 UK
                  G D P p e r c a p it a




                                           25000                                    France                  Gernany
                                                                                  Italy
                                           20000

                                                                                  Spain
                                           15000
                                                          Greece
                                           10000
                                                                       Czech Republic
                                            5000                    Croatia               Estonia

                                               0
                                                   0                  2000                   4000                      6000
                                                       In t e r n e t u s e r s p e r 1 0 .0 0 0 in h a b it a n t s



 Source: ITU 2003


 The correlation is quite clear, the greater the GDP, the greater the Internet penetration.
 However, it is not total, for example, Estonia has similar Internet penetration than Italy
 or Spain despite its GDP per capita is much more lower. There are therefore other
 factors which determine the degree of final development of the Information Society
 (legislation, promotion, employment, degree of specialisation of the workforce, etc).
 This correlation between economy and technological development is something of a
 self-propagating circle: investment in new technologies increases productivity and



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business competitiveness which results in benefits to the economy. Equally, these
strengthened economies can make even greater investments in infrastructure, training
and the fight against digital exclusion, thus accelerating growth.
During last years international economies as a whole have been going through a period
of deceleration. The downturn has been greater for Information and Communications
Technology (ICT) companies than for the rest whose performance has been
considerably worse than the average.
In spite of this, the market, both that of IT and communications is slowly recovering, as
can be observed in figure below.


                    Western European ICT market, 2002-2004


       3,5
         3                                                           3,1
                            Market growth (%)
       2,5
         2
       1,5
         1
                                                0,8
       0,5
         0
      -0,5                -0,5
        -1
                     2002                 2003                  2004

Source: EITO 2004


Improved financial conditions for the operators combined with continued growth in
revenue created the conditions for the sector to recover. It is important to highlight that
most of the overall increase in revenues for the sector has come from the new services.
While revenue of telephony services in fixed networks is gradually decreasing, the
revenues of broadband and business data services are increasing [1] [2]. These higher
revenues, increases in profits and a continued reduction in capital expenditure explain
the improvement in ICT market indicators.



   3.1.2 Employment. Need for qualified users.
Information and communication technologies employ between 0.5 and 3.5 of the active
population in Europe. As we can see in the figure below the highest percentage of
population employed in ICT corresponds to Holland and the Scandinavian countries,
where a large number of ICT-related companies are based. On the other hand, the




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worst percentages corresponds to countries such as Greece, Italy, Portugal or Spain
where most of active population is employed in SMEs.




                 Percentage of working population employed in ICT

        3,5

         3

        2,5

         2

        1,5

         1

        0,5

         0
                               g
                             en




                              m




                             ce
                               d




                                                                           l
                             nd




                               k




                                                                                  ce
                               n
                              m




                               y




                                                                ly
                             ria




                                                                         ga
                            ar




                           an
                            ur




                            ai
                           an




                                                              Ita
                         do


                           iu

                         an




                                                                                  e
                         ed
                          la




                          st




                       Sp




                                                                     rtu
                         m

                       bo




                                                                               re
                       m
                        lg
                        nl
         ol




                     Au
                      ng




                     Fr
                    Sw




                     en




                    Be
                     Fi




                     er




                                                                    Po


                                                                              G
                     m
        H




                   Ki
                   D




                   G
                  xe

                 d
              Lu

              te
           ni
          U




Source: OECD 2002                                                                                     Comment [JFP1]: This indicator could be
                                                                                                      updated with more recent data (if we find it)


The employment situation in Europe has changed over recent years due to the
economic slow down. Among the most affected sectors, as stated in the report
Employment in Europe 2003 published by the European Commission for Employment
[3], are those that generated employment in the recent past, mainly the sectors related
to ICT. Between 1995 and 2000, these sectors created around two thirds of the 10
million jobs created in the EU during this period, and in the year 2000 alone they
created a net 1.6 million jobs. Since then, job creation rates have fallen considerably
and the most affected EU states were those that had undergone strong recent growth,
such as Finland, Ireland or Spain.
However as economic cycle is back on the up ICT sector is expected to recover. For
example, as we can see in figure below layoff announcements in telecommunication
companies are gradually decreasing.


              Layoff announcements in Western Europe, thousands




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            10
             9
             8
             7
             6                                                                             2002 '
             5
             4                                                                             2003'
             3
             2
             1
             0
                                             /P dia



                                                           c.
                 ce

                             o




                                              Ve l s



                                                           g

                                                U il


                                                          gy

                                                          re
                                              on a.




                                                          es
                                              ac s



                                                          a
                                                         e
                                                       rin
                          lc




                                                        a
                                                       ru
                                                     rm




                                                     su
                                                      et



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               n




                                                      cl




                                                      iti
                      Te




                                                     et
                                                      e
            na




                                                   tu
                                                   st




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                                                   hi



                                                   R
                              M




                                                En

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                                                ha



                                                 M
           Fi




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                                            or
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                                          al




                                         sp
                                         an
                              ic




                                       an
                                       m
                             m
                           he




                                    Tr
                                    er
                                  th
                          C




                                 O




   Source: CSFB 2003


   On the other hand, there exists an increasing need of businesses for qualified
   employees. As stated in [11] the lack of training is one of the most important barriers
   affecting the diffusion of ICTs. The diffusion of ICTs may be a main contributor to
   productivity growth elsewhere in the economy. However, simply investing in computers
   and modern communications is not enough. Productivity gains are only achieved when
   firms reorganise their business processes and invest in training. However, the lack of
   specific training of the people who work in areas related to the Information Society
   continues to be a matter of concern. This situation is particularly frequent in the
   countries of southern Europe, which is an added obstacle to the development of the
   Information Society.


       Percentage of population working on areas related to IT that has received
                                  specific training.

                   80
                   70
                   60
                   50
                   40
                   30
                   20
                   10
                      0
                                N




                                                              15
                                 L




                                                                       R

                                                                           E

                                                                               P



                                                                                       I
                                                      L
                          K




                                                  K




                                                                   F
                                      D




                                                          L
                                          S

                                              A




                                                                                   B
                              IR
                              FI




                                                      N




                                                                       G
                      D




                                                  U




                                                          EU




Source: Eurobarometer 2002                                                                                      Comment [JFP2]: This indicator could be
                                                                                                                updated with more recent data (if we find it)




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   3.1.3 Legislation.
Factors related to competition and regulatory environment are of capital importance in
the diffusion of ICTs and the deployment of advanced infrastructures. Providing a
predictable legal environment increases certainty to investors, and stimulates the
deployment of innovative and advanced services for users. In that respect, it is
essential to establish a harmonious legal framework which prevents unequal situations
from developing in different EU countries. By way of an example of practices to avoid
was the concession of UMTS licences for which operators had to pay amounts that
increased their own economic difficulties as well as those of manufacturers, which
endangered the rapid growth of the Information Society.
From the beginning, the policy of the European Union on telecommunications has been
focused on the creation of a domestic market and liberalisation regarding the provision
of services and infrastructures. A competitive environment is more likely to lead a firm
to invest in ICT, as a way to strengthen performance and survive, than a more
sheltered environment. Moreover, competition puts downward pressure on the costs of
ICT.
Table below shows the EU approach to the Information Society.


              Union Treaty                             Object of Regulation
                Article 95                      Harmonization of the interior market
           Articles 81 and 82                               Competition
           Articles 47 and 55                   Right to establishment and services
           Articles 163 to 172                      Research and development
               Article 157                  Competitiveness of community companies
           Articles 154 to 156                Promotion of trans-European transport,
                                             energy and telecommunication networks


The purpose of this legal framework is to facilitate access to the Internet and the
development of electronic commerce, as well as the establishment of common
technical standards.
A new European Legislative Framework has been drawn up the "Telecom Package",
which simplifies the large number of existing norms and endeavors to bring the
regulation of the telecommunications sector in line with a liberalized sector with
effective competition, although some norms have been maintained, it is intended to
reduce these and apply the General Defense of Competence norms.




  Directives on the Telecom Package                         Aspect covered




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                                                          Extension of the scope of regulation to all the
                                                          electronic communications networks and
          Common Legislative Framework
                                                          services, in recognition of the sector convergence
                                                          progress.
          Access and Interconnection                      Regulation of the access of new operators to the
                                                          dominant' operators networks and resources.
          Authorizations of Networks and Services         General Authorizations Systems for the provision
                                                          of networks and services. Elimination of the
                                                          concept of individual license.
          Universal Service and Users' Rights             Definition of the Universal Service that is more in
                                                          accord with current technological development, in
                                                          aspects such as narrow band Internet access.
          Data Protection                                 Privacy and protection of user data (data on
                                                          traffic, invoicing. Localization, etc).


          Finally, a very important legislative endeavour, which can impact on the implementation
          of NOBEL solutions, will be the creation of a new regulatory framework for an NGN1
          where contents and infrastructures will be regulated in a differentiated way.
          In that respect, some important issues to be addressed by the new regulatory
          framework for NGN and described in [12] are:
           Reliability and QoS
           Security and safety of the state in general have to be granted by NGNs;
           Data protection and privacy issues
           Carrier selection, carrier pre-selection and interconnection
           Unique numbers, a comprehensive scheme for number allocation and number
            portability are key challenges.


          TID's comment: It's important to mention current initiatives about NGN regulation and
          include a short description.For example, wiill operators' networks liberalizated?.


          TID comment: Is there any initiative related to the liberalization of the operators fibre
          plant? In such case this may inhibit telecom operators from investing in developing new
          services.




1
    ITU-T (SG 13) has recently given the following definition of an NGN:
          “A Next Generation Network (NGN) is a packet-based network able to provide services including
          Telecommunication Services and able to make use of multiple broadband, QoS-enabled transport
          technologies and in which service-related functions are independent from underlying transport-related
          technologies. It offers unrestricted access by users to different service providers. It supports
          generalized mobility which will allow consistent and ubiquitous provision of services to users.”



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 3.2     Communication Infrastructures
The term 'infrastructures' refers to the set of technical media which make up the union
between the offer of services and the user demand.
All the telecommunication services, from telephony to multimedia services and Internet
access services, make use of these infrastructures.. However, the deployment of
infrastructures, especially in the framework of users and networks, requires very high
investment. It is for this reason that their deployment constitutes one of the most complex
points of the process, since a balance must be found between demand and economic
possibilities.
The following sections give a detailed analysis of the deployment of these infrastructure
elements: terminals, access networks and metro&core networks.


                         Communication Infrastructures Model




       3.2.1 Access Segment
As mentioned in section 2, metro and core networks addressed in NOBEL will facilitate the
transparent transport of any kind of broadband services. In this section, we will pay our
attention in those infrastructures which will provide the aggregated traffic from the final
users to the metro and core networks. In that respect, we will analyze the current situation
of either user’s terminals or access networks.

                      3.2.1.1 Terminals
The personal computer continues to be the most widespread terminal used for accessing
information, services and applications on-line, since it offers better multimedia features and




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has maximum interactive capacity. Therefore, its level of implantation among users is a
fundamental indicator.
Sweden, Luxemburg, Denmark or Finland have the highest number of personal computer
per number of inhabitants, with an average rate of approximately 1 personal computer per
every 2 inhabitants. However, in some countries such as Greece, Portugal or Spain the low
penetration of PCs can be a serious barrier for Information Society development.
The evolution of personal computer sales in Europe has been quite slow probably due to
the slowing down of the economy. However, there are countries such as Spain or Austria
which has experienced growth of more than 30% since 2000.


            Penetration of personal computers per every 100 inhabitants.

            70

            60

            50

            40
                                                                            2000'
            30                                                              2003'

            20

            10

             0
                 BE DK DE EL ES FR    IE   IT   LU NL AT PT   F   SE UK



   Source: ITU 2003


On the other hand, the growth in the use of the mobile terminal has been very high,
reaching an average implantation rate in Europe of more than 85 per cent. Said percentage
varies from 69.59 per cent in France to 106.05 per cent in Luxemburg. This high rate might
lead to the conclusion that saturation point is very near.
It is also necessary to point out the scarce deviation of this index among the countries of
the European Union. This has been possible thanks to competition, standardization of
technology (GSM and UMTS) and existing regulation.


             Penetration of cellular telephones per every 100 inhabitants




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                 120

                 100

                  80
                                                                                  1996'
                  60
                                                                                  2000'
                                                                                  2003'
                  40

                  20

                   0
                       BE DK DE EL ES FR   IE   IT   LU NL AT PT   F   SE UK



          Source: ITU 2003
Currently, 3G mobile terminals still has a very low implantation rate. However, it has high
growth expectations as users begin to use data transmission and access services with their
mobile terminal.


            3G subscriber numbers in Western Europe by market segment,
                                    2003–2008
           250

           200

           150                                                           Large corporations
Million




                                                                         SMEs
           100
                                                                         Residential contract
            50
                                                                         Residential prepaid
             0
                  2003    2004 2005        2006      2007 2008
Source: Analysys Research, 2003


Another important consequence of the growth in the use of the mobile terminal is the fixed-
mobile substitution. Up to the year 2001, basic telephony experienced continuous growth in
all Europe, reaching an implantation rate of 55 per cent. However, this growth slowed down




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as a consequence of the maturity of the fixed telephone service and the use of mobile
telephony and, to a lesser extent, VoIP (especially in the business environment).


           Penetration of main telephones lines per every 100 inhabitants

            80

            70

            60

            50
                                                                            1996'
            40
                                                                            2000'
            30                                                              2003'

            20

            10

             0
                 BE DK DE EL ES FR   IE   IT   LU NL AT PT   F   SE UK



   Source: ITU 2003
   The proportion of EU 15 households with at least one fixed line has decreased by 3
   percentage points over 2003 and now stands at 82%. At the same time the proportion
   of households with at least one mobile phone has increased from 77% in 2003 to 81%
   in 2004. Moreover, there is an increasing proportion of households having a mobile
   phone only, with 15% of EU households in 2004 as against 12% in 2003. This
   proportion reaches the highest level of 33% in Finland and Portugal [13].


   TID’s comment: It will be also interesting to find some indicators about the penetration
   of business CPE (customer premises equipment): IP routers, TDM PBX vs. IPBx IP-
   Centrex, ATM switches vs.- Ethernet switches, etc…

                      3.2.1.2 Broadband Access Infrastructures
   As stated in [4], deployment of broadband access infrastructures is growing very
   quickly in Europe. At the end of 2003 there were 22.8 million connections, an increase
   of almost 100% over one year. However, disparities among different countries are still
   significant.


             Broadband take-up in the EU15 (percentage of population)




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          14

          12

          10

           8                                                          Jan. 2003
           6                                                          Jan. 2004

           4

           2

           0
              er k
               en m




              Fi a l




                                                               15
                      nd




              Au ds
              m ly




             Sw d
              G ny




              er g




                                                               K
              Fr in
                        e



               Ire e




             Po ria




                     en
            G ar




                    an
                    ec




            ed ur
                      c
                    iu




                                                             U
           xe Ita




                     g
                     a




                    n




                                                            EU
                    a




                   la
                 an
                   m




                   st
                 rtu
                Sp




                 ed
          N bo
                  lg




                 la




                 nl
                 m
                re
              Be
            D




         Lu




   Source: eEurope 2004


   At the present time, there exist many different types of broadband access networks
   connecting users terminals with metro and core networks.
                                      Narrow band            Broad band
                   Fixed            Fixed Telephony,       xDSL, Cable
                Communications       dial up, ISDN…      modem, Ethernet,
                                                          PLC, WiMax…
                   Mobile            GSM, SMS…          GPRS, UMTS, Wi-Fi
                Communications


Among the new broadband technologies, the solution that is growing at the fastest rate is
DSL (ADSL, SHDSL, VDSL...). With DSL, the same networks are used for the telephone
service become high speed transmission access media, permanent connection (always on)
and capacity for accessing multimedia content.




                    Broadband take-up by technology in the EU15




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           25000000


           20000000

                                                                   Total broadband
           15000000
                                                                   DSL
                                                                   Cable
           10000000
                                                                   Other technologies

           5000000


                 0
                      July 02    January     July 03   Jannuary
                                   03                     04


   Source: Commission Services 2004


The advantages of this technology, together with the explosion of demand for broadband
allowed an interannual growth of around 100%. As shown in the figure below, it is expected
to reach almost 62 million connections by the end of 2007.



  60000

  50000

  40000
                                                                                     Consumer
  30000
                                                                                     Business
  20000

  10000

       0
              2003        2004             2005         2006      2007

Source: EITO, 2004


DSL will remain the leading technology: in 2007, almost 74% of all connections will be
DSL. The broadband cable instead will account for 19% of all connections while new
technology like Metro Ethernet will reach more than 6% of the market.




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Another technology which offers broadband services is the cable modem, normally
associated with optic fibre (a solution technically called HFC or Hybrid Fibre Coaxial).
Although it initially appeared with the fundamental purpose of supplying television signal
diffusion services, the demand for Internet access has led to the reuse of the cable network
that was first deployed to offer this service to already connected users and offer it to
possible new clients as value added. In January 2004, while DSL represented 74% of total
connections and cable reached 22%.


       DSL and cable modem coverage in the EU15 (percentage of population)

                     100

                      80

                      60                                              DSL

                      40                                              Cable


                      20

                       0
                              Urban       Suburban       Rural


   Source: IDATE 2003


Competition among different access platforms is not widespread in Europe. Cable
coverage is relatively limited, especially in the large countries. New platforms bringing fibre-
to-the-home have been built in Sweden and Italy, although mainly in urban areas.
An special mention must be made of the availability of a new technology called PLC
("Power Line Communications"), which enables access to the Internet via the electrical
grid; this solution is now commercially available in some European countries. If this is
successful, it would be sufficient for electricity companies to become competitors in the
Internet access business. At the current time, electricity companies are waiting for the
stability and maturity which will let them take advantages of scale economies.
Wireless technologies such as LMDS, WiMax, UMTS or Wi-Fi are expected to change the
market in the medium term, but currently provide a viable alternative through local trials
only.


The following figure illustrates the type of access connections used by enterprises. Note
that these data do not sum 100% as an enterprise can have more than one type of of
access connection. In general, the highest use of modern infrastructures, such as
broadband, was recorded in the Nordic countries (Denmark, Finland, Sweden and
Norway).




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 Enterprises having access connections: proportion with selected types of access
                                      (%)

  120

  100

   80
                                                                              Modem (56k) + ISDN
   60                                                                         xDSL
                                                                              Other
   40

   20

    0
        DK     EL    IT       LU    NL      AT      PT        FI    SE


   Source: EuroStat, December 2003


Most of enterprises, especially SoHO and SMEs are still using narrowand conections
(PSTN dial up and ISDN). These companies have a very limited acces to network services
and applications (i.e public IP and business IP).
Regarding the use of broadband access connections while large companies use to have
leased lines over fiber or copper. On the other hand, SMEs are mainly making use of
broadband infrastructures based on xDSL. In this respect, SMEs of the Nordic countries
present higher broadband connection percentages with regard to the general pattern.


             Proportion of SMEs using broadband connections, 2003 (%)

              80
              70
              60
              50
              40
              30
              20
              10
               0
                                                         AT
                                          IT




                                                                    FI
                     K

                          E




                                                                               K
                                                               PT
                                    IE
                BE




                                                                         SE
                                               LU

                                                    L
                               15
                     D

                          D




                                                    N




                                                                              U
                              EU




   Source: eEurope 2004



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At this point it is worthy to mention that despite the fast growing of xDSL customers the
most important market for european fixed networks operators are still the business data
services.


                                Europen wireline data market




   Source: Yankee Group 2004


Large companies are starting to migrate to connectivity that is optimised to carry IP traffic,
for example IP-VPNs, Ethernet and digital subscriber line (DSL). By 2008, next-generation
IP services and broadband service revenue will have far outstripped traditional legacy data
services revenue, representing more than 70 percent of the total retail data services
market. The crossover between legacy and nontraditional data services is expected to take
place early in 2005, at which point revenue from legacy will represent less than half the
retail data services total. (For further reference, see Gartner’s research “Market Trends:
Data Migration in Western Europe, 2003-2008”).



       3.2.2 Metro and Core Infrastructures
Currently, different types of services such as telephony, data or IP services are provided by
different network layers and infrastructures. Figure below illustrates a typical carrier
infrastructure.




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                                                             Current Network Scenario


                                                                      xDSL
 Customer equipment                                                                   IP equipment         ATM/FR equipment             Fixed                 Mobile
                                                                    equipment




 Access Network                                   Physical cables (copper, coaxial, fiber), radioelectric spectrum




                                                                                      PSTN,                    ATM/ FR
   Access Nodes                   SDH, DWDM Multiplexers             xDSL             ISDN     BS           Concentrators               MDF                    BS
                                                                                      xDSL




                                                                                                                                                               Circuit Switching
                                                                                                                                          Circuit Switching
 Services Routing
 and Switching                                                                   IP                     FR/ATM              X 25



 Basic Switching
                                                                                                 ATM


 Transmission
                                                                           DWDM /SDH



                      Transport          Leased Lines                 xDSL               IP Data         FR /ATM Data       X.25 Data    Switched Voice




The foundation of most carrier infrastructure is SDH optical transmission- These provide
managed bandwidth for higher layers of switching infrastructure.
         Telephony services use legacy circuit-switched networks (PSTN) and analogical or
          digital telephone handsets which don’t have much intelligence.
         Data services such as Electronic Data Interchange (EDI), Telefax, Datex-L, Datex-
          P, which face the needs of midsize or large companies, use to be offered over
          traditional high-speed transport services, such as leased lines, ATM, X.25 and
          Frame Relay . On the other hand SANs (Storage Area Networks) use to be built over
          other legacy transport technologies (e.g Fibre Channel).
         IP services such as Internet IP VPN or VoIP use to be carried over ATM and SDH.
          However, Ethernet is gaining prominence as replacement solution.



            3.2.3 Transmission networks
Metropolotitan transmission networks for every service use to be implemented by
traditional SDH rings interconnected with digital-cross-connect systems (DCSs). This was
originally built to carry voice traffic. On the other hand, transport in core networks is
provided by point-to-point DWDM systems, usually with a more meshed topology. This
proven approach has long served the transport needs of incumbent network operators.
However, currently it can introduce important scalability problems. Figure below shows a
typical implementation of a metro transmission node where multiple stacked rings of
different capacities are interconnected with equipment with fine granularity (e.g DXC 4/1).


                              Example of Metropolitan Transmission Node




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                         PtP leased lines
                                            ADM                     ADM
                         PtP leased lines

                                            ADM                     ADM
                                                                          STM-1

                                            ADM
                                                                    ADM
              STM-4
                                            ADM

                                                                    ADM
                                            ADM

                                                      DXC 4/1
                                                                    ADM
                                            ADM

              STM-16
                                                                    ADM
                                                                                  STM-4
                                            ADM

                                                                    ADM



                                            ADM                     ADM




                                                                    ADM
                                            ADM


              STM-64                                                       STM-16

                                            ADM                     ADM

                                              STM-1             STM-1
                                                          E1




As shown in the above figure, the traffic growth is achieved by continually overlaying
multiple stacked rings. This solution becomes inefficient, and it consumes unnecessary
space and power.
On the other hand, current SDH networks are controlled by centralized management
systems responsible of provisioning static connections, performance monitoring, etc.
Provisioning mechanisms are very slow it usually requires manual interventions.
Furthermore, there use to be transmission subnetworks from different providers with their
own management system so many times fax or phone communication is required between
the operation centers in order to provide end to end connections. So, many times the
provision of new connections require days or even months.


On the other hand, economical and technical factors have contributed to the
implementation of Ethernet in metro networks (Gigabit Ethernet, 10 Gigabit Ethernet, RPR,
…). Ethernet is well known by users and an end-to-end Ethernet service is an interesting
service to offer, particularly in metropolitan area networks. From the operators’ perspective,
extending Ethernet to the MAN and WAN domains avoids the sequence of protocol
translations that are usually performed and permits a reduction of equipment and
operational costs.
Finally, the most widespread transmission technology for Storage Area Networks (SANs) is
Fibre Channel.



       3.2.4 Transport Networks
There exist separated transport networks ATM, voice, IP over the transmission network:
     ATM switching has been deployed to integrate voice and data networking. ATM is
      also the base protocol for most of today’s ADSL broadband access solutions.




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      Voice networking is itself built on SDH with an architecture comprising access
       nodes, local switches and trunk switches.
      IP networks use to be supported by ATM and SDH. However they are starting to be
       supported either directly over SDH (POS) or over Gigabit Ethernet or 10 Gigabit
       Ethernet. Clearly, as traditional circuit-switched services migrate to IP networks and
       data grows, networks must evolve to accommodate the traffic. However, IP may
       need to become as complex as ATM to replace its functionality.

       3.2.5 Acces Nodes
Currently, traffic is introduced is introduced by different types of access nodes:
      Access Networks Multiplexers: xDSL, HFC, PLC, PON, Wireless, Ethernet
      CPEs
           o   SDH multiplexers: Leased lines, PBXs
           o   ATM and FR concentrators: ATM and FR VPNs
           o   IP routers: IP VPNs
      Local PSTN Exchanges


On the other hand there exists a gradual migration towards IP Access Nodes:
      Access Network Multiplexers: IP DSLAMs, Ethernet, Nodes B…
      CPEs: Ethernet switches, IP routers…
      Voice: VoIP gateways

                                                       W o rld W id e D S L A M D S L P o rt S h ip m e n ts



                                                               4 4 . 3 6 7 .6 1 6
                                                                                             4 2 .8 0 1.4 6 9


                                                                                                                                    3 7 .8 6 0 . 0 7 4


                                                                                                                                                                         3 3 . 6 1 8 .1 0 1

                                                                                                                                                    3 4 .6 4 6 . 8 2 5




                                                                                                                2 3 .8 3 4 .6 4 2

                                          1 3 .7 0 7 .1 8 9              17 .3 6 8 . 3 9 1




                               Y0 4
                                                                    Y0 5
                                                                                                       Y0 6
                       S o u r c e : I n f o n e t ic s R e s e a r c h M a y 2 0 0 4                                                               Y0 7




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 3.3    Services
Following we will analyse main services used and required by different types of users
according to the following clasification.
      Citizens: people who use the infrastructures in a non-professional scope.
      Companies: profit-making entities, although this group may also include
       independent non-profit-making organisations, which apply company management
       procedures in their company management.
      Public Administration: this includes organisations which are aimed at service to the
       citizen and the administration of public assets at all levels.

       3.3.1 Citizens
EU countries have been incorporated into the development of the Internet gradually, in
accord with their size and economic potential. The following figure shows the number of
Internet users in the countries of the European Union since 2000.


                                           Internet Users (thousands)

       140000

       120000

       100000

        80000                                                                                                2000'
                                                                                                             2001'
        60000
                                                                                                             2002'
        40000                                                                                                2003'
        20000

            0
                 -1
                   5
                       BE   DK   DE   EL    ES   FR     IE   IT   LU   NL   AT   PT   F   SE   UK
            EU



   Source: ITU 2003
It illustrates how the greatest number of users is in Germany, with 39 million, followed by
the United Kingdom, which is soon to surpass the 25 million barrier. The most significant
piece of information in this sense is the general growth experienced by all countries in the
area during the last three years. Countries such as Greece and France have experienced a
growth rate of more than 100 per cent, and in the case of Germany, Spain, Ireland and the
United Kingdom, it has been of more than 50 per cent.


                                  Internet Users per 10,000 habitants




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         6000

         5000

         4000

         3000

         2000

         1000

            0
                BE   DK   DE   EL   ES   FR   IE   IT   LU   NL   AT   PT   F   SE   UK


   Source: ITU 2003
The figure above indicates the density of Internet users in the different European countries.
The Northern countries head the list: Denmark, Holland and Sweden, with penetration
values of more than 50 per cent, lead the way. Their climatic characteristics and their
orientation towards constant improvement of the standard of living of the population are the
fundamental reasons justifying this figure. They are followed closely by Finland and Austria
and Germany with values of around 45 per cent. The countries with the lowest level of use
are the Mediterranean countries, possibly due to the character, culture and lifestyle of their
inhabitants, together with the lower level in the deployment of telecommunications
infrastructures. Whatever the case, the lower level of Internet penetration in the countries
of the south of Europe is a phenomenon that cannot be explained by the lack of
infrastructures. It is true that they are somewhat inferior but existing infrastructures are
sufficient for a higher level of penetration. There are other aspects which may explain this
lower level of penetration, and related to the lifestyle and way of distributing leisure time.


As we can check in the figure below Internet consumption is somewhat different among the
different countries of the EU. The countries that most consumes the Internet are Holland,
Denmark, Sweden, Austria and Finland where more than 75% of users go on-line at least
several times a week. Within the European Union this value is around 70%, which confirms
that the majority of those using the Internet do so on a very regular basis.


                                Frequency of Internet Use (%)




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                       60
                       50
                       40
                       30
                       20
                       10
                         0
                              m ark ny ee a in ce n d al y rg ds ria ga l nd en          m
                          giu       a  c Sp ra n ela  It     u a n st         a        do
                        el anm erm Gre                     bo  l      rtu Finl wed i ng
                       B D                    F  Ir       m der Au Po           S dK
                                G                      x e Ne
                                                     Lu                           i te
                                                                                Un

           Every day   Several times a week   A ppro ximately o nce a week   A ppro ximately o nce a mo nth   less o ften




   Source: Eurobarometer, November 2002                                                                                                 Comment [JFP3]: This indicator could be
                                                                                                                                        updated with more recent data (if we find it)


With regard to the applications available on the network, those dedicated to offering
personal communications are worthy of special mention. Among them, e-mail is number
one, as shown in the following figure, with values of around 80 per cent of users that use it
regarding the total number of Internet users in almost all countries of the EU. Another
broadly extended service in the EU is the reception of news. Spanish, Danish, Austrians
and Potuguese users head the list in this area. The intermediate positions are taken up by
services offering sales of tickets and banking services, with the countries with the highest
percentages of use being those with the highest penetration rates, such as Finland and
Sweden.
The use of the Net for training and education is also quite popular. In this case, Italy is
located in first position, followed by other southern countries such as Spain and Portugal.
This popularity of education may be considered surprising, with there being relatively few
contents related directly with distance training. This is because in this countries users use
the Internet for their own training, but following unofficial teaching models.
The least used services are those of job search and discussion groups. In Spain, the latter
is largely accepted, possibly because the service characteristics fit in with the culture and
behavior patterns of the Spanish.
In general, the countries of the south of Europe tend to use the Internet for personal
communication, in many cases with a leisure component.


     Proportion having undertaken specified activities for private purposes (%)




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  100
   80
   60
   40
   20
    0
         m    rk   ny   ee                             ain ance eland                                 Ita
                                                                                                          ly      rg    ds   ria tugal        d       n
                                                                                                                                           lan wede ngdo
                                                                                                                                                          m
     lgiu anma erma Grec                             Sp   Fr    Ir                                             bou erlan Aust     r    Fin
   Be     D    G                                                                                            em      d           Po              S      Ki
                                                                                                      Lux        Ne                               ited
                                                                                                                                                Un

    e-mail                                                    Banking                                                                     News                                     Seek health info.
    Find Job aps.                                             Forums                                                                      Training                                 Seek Travels
    Videoconference                                           Games and Music download


   Source: Eurobarometer-November 2002, EuroStat-December 2003
It is worthy of mention the high percentage of users of games and music download
applications in countries such as Spain and Sweden. These applications use to be very
bandwidth consuming. In this respect, the figures below show the evolution of bandwidth
demand of ADSL user in Spain:


                      Average bandwidth demand of ADSL users (2001)
                                        16



                                        14



                                        12



                                        10
                      Bitrate (Kbps)




                                                                                                                                              Downstream bitrate
                                         8                                                                                                    Upstream bitrate
                                                                                                                                              Downstream/Upstream ratio

                                         6



                                         4



                                         2



                                         0
                                         00


                                                00


                                                       00


                                                               00


                                                                      00


                                                                                0


                                                                                         0


                                                                                                  0


                                                                                                           0


                                                                                                                    0


                                                                                                                             0


                                                                                                                                      0
                                                                             :0


                                                                                      :0


                                                                                               :0


                                                                                                        :0


                                                                                                                 :0


                                                                                                                          :0


                                                                                                                                   :0
                                       1:


                                              3:


                                                     5:


                                                             7:


                                                                    9:

                                                                           11


                                                                                    13


                                                                                             15


                                                                                                      17


                                                                                                               19


                                                                                                                        21


                                                                                                                                 23




                                                                                    Time (h)




   Source: Telefonica


                      Average bandwidth demand of ADSL users (2002)




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               Traffic




                                                                               Download (nw-us)

                                                                               Upload (us-nw)
                                                               10:00

                                                                       12:00

                                                                                14:00

                                                                                        16:00

                                                                                                18:00

                                                                                                        20:00

                                                                                                                 22:00
                         0:00

                                2:00

                                        4:00

                                               6:00

                                                      8:00




                                                              Time
   Source: Telefonica
As we can check in figures above ADSL users bandwidth demand is becoming more
symmetric. The main reason for this behaviour between broadband users is the wide-
spread use of peer-to-peer applications which allow to share and download multiple files of
different types for example music, pictures and videos. Actually, peer-to-peer (P2P) file-
sharing has become the main source of traffic in the Internet, overcoming the web traffic.


                                 Traffic observed in a transit router (2003)

                                                                               P2P
                                                                               67,4%




                                                             OTHER             FTP              email
                                       web                                     0,3%
                                                              23,3%                             1,2%
                                       7,9%
   Source: Telefonica
Indeed, recent traffic measurements show that this kind of applications are the main source
of traffic in the Internet core [6][7][8] and represent up to 80% of the total traffic in access
networks [9].


As shown in figure below, for the following 5 years, non profitable services (P2P) are
expected to be responsible for the highest traffic demand. On the other hand, multimedia
streaming is not expected to dominate core traffic until ten years from now.


                         Evolution of core traffic from consumer applications




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                                                           •Peer to Peer
                                                           •Multimedia
                                                             Streaming


                                                           •Best-Effort Data
                                                           •Voice over IP



Source: Yankee Group, 2004


However the online entertainment market is likely to grow significantly in the coming years.
So there is a need to develop a clear strategy to meet the increasing customer demands


                           Online entertainment market evolution
                    50


                    40
                                                              Optimistic

                    30
             BUSD




                                                              Most likely
                    20


                    10                                      Pessimistic


                    0
                    2002      2003      2004        2005        2006        2007

Source RHK 2004



       3.3.2 Companies
Companies are consumers of a wide range of communication services (e.g leased lines,
VPNs, back up, VoIP, etc). However they can also be providers of Internet contents
(corporate websites, e-commerce, etc).
     Companies as consumers




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Business has been the pioneer in the introduction of the Information Society in Europe. In
2002, 98% of large, 92% of medium and 79% of small companies in the EU had Internet
access.


              Proportion of enterprises using Internet by size, EU15 (%)

             100
              90
              80
              70
              60
              50
              40
              30
              20
              10
               0
                           Small              Medium                   Large


   Source: EuroStat, December 2003


The favourite applications of European enterprises, as customers, are banking and
financial services, around 65 % of all enterprises use them. On-line banking is mainly used
by SMEs, whereas large enterprises had less recourse to bank over the Internet. Large
enterprises used the Internet more for market monitoring.


  Enterprises using the Internet: proportion using selected Internet services (as a
                                customer), EU15 (%)

                   70

                   60

                   50
                                                                Market Monitoring
                   40
                                                                Receiving digital
                   30                                           products
                                                                Banking and financial
                   20
                                                                services
                   10

                   0
                        Small       Medium     Large



   Source: EuroStat, December 2003




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Teleworking could be one of the most important services in the enterprise environment.
Teleworking is defined as paid activity carried outside the company's offices thanks to
information technologies. According to EITO data, in the year 2002, the Nordic countries
such as Finland, Denmark and Holland have the highest implantation penetration rates,
which, in the case of Denmark, reaches 17 per cent.


                        Percentage of teleworking employees in the EU

               16
               14
               12
               10
                8
                6
                4
                2
                0
                            m

                 G ark




                              l
                           nd




                   Au s
                   m ly




                  Sw d
                   G y




                 ed urg
                   Fr n




                                                                         K
                            e



                           ce




                  Po ia
                          ga



                          en
                         nd
                         an




                         an
                          ai
                         ec




                                                                        U
                        Ita
                         iu




                          r
                        la
                      an




                        st
                        m




                      rtu
                     Sp




                     ed
                     bo
                       lg




                      la




                      nl
                      m

                     re




                    Ire
                    en
                   Be




                   er




                   Fi
                   er
                    D




                xe
               N
              Lu




   Source: EITO 2002


As we can see, there is a high degree of correlation between the use of teleworking and
the penetration of broadband, although social factors are also influential. In this way, in
many cases, teleworking is a way of incorporating women into the working world. In Nordic
countries, there are policies promoted by public administration to enable this. In other
cases, the presence of teleworkers is linked to the existence of large companies related to
Information and Communication Technologies, such as Finland and Holland.
However we can say that the acceptance and implementation of teleworking is still slow in
Europe. Some reasons could be the lack of security given by the Internet and the "need" of
companies to verify the degree of occupation of their workers by direct observation
For the implantation of teleworking being an option in the European Union, a labour
legislation is required which protects the situation of the teleworker and the company in
such a way that both are aware of the benefits and feel protected in the event of the
aforementioned problems.
VPNs are expected to be the bussiness aplication introducing more traffic in metro and
core networks for aproximately the next ten years. After that, it is expected to be replaced
by video over IP.




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                     Evolution of bussiness applications traffic growth2




                                                                     •Video over IP
                                                                     •Private WAN Data

                                                                     •Best-Effort Data

                                                                     •Voice over IP




Source:Yankee Group 2004




TID's comment:
To be completed: Indicators about VoIP, VPNs, SANs, Grid, etc…




        Companies as providers
The need for presence and informing clients is the main reason for companies going on the
Internet. According to 2002 data, 64% of small, 80% of medium and 85% of European
companies using the Internet had corporate website .


    Enterprises using the Internet: proportion having a web site or a homepage, EU15
                                            (%)




2
         Service providers were asked to rate each service or application on a scale of 1 to 5, with 5
         representing the most significant contributor to IP/MPLS core traffic growth. Private WAN data (IP
         VPN) includes enterprise data traversing an IP VPN. Best effort data includes applications like Web
         Browsing, e-mail, FTP and newsgroups



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                    90
                    80
                    70
                    60
                    50
                    40
                    30
                    20
                    10
                    0
                            Small                  Medium                  Large



   Source: EuroStat, December 2003


These percentages are higher in countries such as Sweden, Denmark or Germany than in
countries such as Spain Greece or Portugal.


        Proportion of enterprises having a web site or a homepage, 2002 (%)

               90
               80
               70
               60
               50
               40
               30
               20
               10
                0
                    EU   DK DE      EL   ES   IE     IT     LU   NL   AT     PT    FI   SE


   Source: EuroStat, December 2003
The most popular use of the Internet for EU enterprises, as providers, is as a means to
market products (81 %). The proportion of enterprises offering particular services on the
Internet generally rose as a function of the size of an enterprise (see figure 8.2.6). Other
uses are providing catalogues and price lists or after sales support.


Enterprises with a web site or homepage: proportion providing Internet services by
                                  size, EU15 (%)




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                     90
                     80
                     70
                     60
                     50
                     40                                                    Small
                     30                                                    Medium
                     20
                                                                           Large
                     10
                      0
                           Market      Deliver     Provide
                          Products     digital      mobile
                                      products     Interner
                                                   services



   Source: EuroStat, December 2003


As sated in [5], size is a determining factor in on-line sales. Reasons for this lie in the lack
of specialised personnel, among others. An SME, whose purpose does not entail ICT may
have difficulty finding specialists in electronic sales that are also capable of developing
their work alone.



       3.3.3 Public Administration
Public Administrations have an exemplary influence on the ICT development. On one hand
they are introducing a large number of users and civil servants into their use. On the other
hand, the use of the Internet for the provision of services being carried out via e-
government not only constitutes a further exemplary aspect, but also introduces citizens
into the use of the Net in a generalised way.
Public Administration as users

TID's comment: Here we can introduce indicators about the use ICT services by the public
administration (i.e Internet, leased lines, VPNs, VoiP, Grid, etc)

To realise the benefits of ICT services, public administrations, schools and health centres
need to be connected to Internet and interconnected by intranets.

According to [4], connectivity of schools, hospitals and public administrations varies across
countries, with the Nordic countries featuring broadband connections for more than 90% of
institutions.

Currently there exist some public initiatives in different European countries such as
Greece, Netherlands or UK to provide connectivity to public buildings. In this respect, it is
worthy to mention the UK Broadband Aggregation Project where £ 1 billion has been
allocated to increase broadband connectivity in the public sector until 2006, including plans




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to deliver 2Mbps and 8Mbps respectively to all primary and secondary schools and at least
2Mb/s to all hospitals and other Health Authorities.




Public Administrations as Service Providers

The projects of eGovernment are increasing all over Europe: 357 applications were
received in response to the call for applications for the 2003 eEurope Awards for
eGovernment that represents an increase of 27% compared to the 282 applications
submitted for the 2001.The overall objective of the 2003 eEurope Awards for eGovernment
has been that of enabling and facilitating the exchange of views, experiences and good
practices among European countries in the field of eGovernment. The large number of
projects submitted in response to the call has been a clear evidence of the interest that
there is within the European public sector to share experiences and learn about best
practices to improve public eServices and transform government.

One of the biggest challenges for the successful implementation of eGovernment lies at the
very heart of Europe: namely that its cultural and political diversity calls for new ways of
cooperation in implementing integrated eGovernment across all levels of government,
including the pan-European level.It is precisely this diversity that has given rise to a variety
of creative and successful approaches to problem solving and to the implementation of
eGovernment services and solutions throughout Europe.

Public eServices for citizens
The most frequent public services offered to citizens among the submitted applications are
those related to various types of education and training activities, followed by services
focusing on income tax and providing election solutions. This not only indicates the
perceived benefits of this type of services as an eSolution but also gives us an indication of
the practical approach taken by the organizations providing such services.
The rationale behind the decision to make tax services available electronically is that the
various tax collection services generate income for public administrations. Going one step
further and generating integrated back and front office solutions is a practical way to
increase efficiency, especially considering that taxation systems across Europe are often
considered complex. This model also demonstrates an excellent level of cooperation
between government tax offices and other public administrations, aimed at making life
easier for citizens and businesses. In Sweden, for instance, good collaboration has been
achieved between the National Tax Board and the Patent and Registration Office enabling
national electronic registration of companies as well as payment of VAT and PAYE returns.
A variety of projects submitted deal with information services. This reflects key issues for
European citizens and decision makers and provides some evidence of the changes that
have taken place in European society. The huge and often inflexible bureaucratic
structures of the past are gradually being replaced by reactive, responsive and open
government structures which clearly put citizens at the centre of service delivery. A raft of
legislation in Belgium resulting from the Copernicus Reform has supported the introduction
of more transparent government with simplified access for citizens. At the same time it has
introduced a multifunctional, secure identity card which gives citizens and businesses
access to a whole range of services and vital information for daily life through the Federal
Portal. The rigid bureaucratic relationship that once existed between Italian government



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structures and citizens has been replaced by flexible people-centred processes that give
citizens access to the heart of the administration via the citizen portal Italia.gov.it.
Another excellent example is a case in Spain whereby all the services delivered to citizens
have been brought together in Barcelona's Multi-Channel Integrated Service System MISS.
At the same time, the information contained in the city's databases can now be accessed
and scrutinized; these databases already contain a large amount of information supplied by
citizens about themselves. Austria has set up a multifunctional service portal for citizens
named HELP, which deals not only with day-to-day information and services but has also
introduced special measures to cater for the disabled, businesses and tourists. Estonia
has, with its Special Citizens Web Portal with Standard DB-Services, set up a portal that
gives citizens secure access to a range of information about them, collected through
statutory processes, making the system completely transparent.
As for training and educational information and services, the rationale for electronic
developments can be seen in the growing commitment of public administrations to improve
the skills of the workforce by offering this type of services. The field of education and
training provides some good examples of technology used to enable the delivery of
multidimensional curricula, reflecting the importance of choice in education and the
possibility for students to "seamlessly" progress along appropriate career paths. In this
respect, the German BRN dealing with preparation for vocational training in the school
system is clearly a successful method of approach. A British example, the Learning Centre
in Colchester, describes a solution to one of the key issues facing schools in the UK today:
the shortage of teachers and the need to keep their workload to a reasonable level in order
to ensure maximum performance and staff retention. The IT-based resources developed to
address these two crucial issues constitute useful models of good practice for others facing
similar difficulties.
The IT infrastructure put in place to enable eGovernment not only enhances citizen access
to services and information but also enables direct dialogue between citizens and
government, both at national and local level. This has been achieved, for example, in
Latvia by giving all citizens free authenticated e-mail access, providing a personal
communication channel, a built-in messaging system and a subscription to active services
such as automatic notification of events or the latest news. In Italy, the eGovernment
infrastructure has been used to set up a service for providing case information to lawyers,
but it may also be accessed by citizens. This has been sponsored by the Italian Ministry of
Justice.




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                        Public eServices for citizens by category
               18,00%

               16,00%

               14,00%

               12,00%

               10,00%

                8,00%

                6,00%

                4,00%

                2,00%

                0,00%
                    Bu Car cu rity




                                      u es




                             Po pe ns



                                       ec g


                                               er
                                       er rt
                                                n
                             al se ch




                                        d n




                                              ns
                    Pe So ob xes




                      Po g p tra s




                                     lib on




                             in uc n




                                       m s
                             de an e
                              e ifi s
                                       ar n
                           in gis nt




                                    y on
                         El Tr enc
                           gh rt ie




                                    El kin
                          lic erm tio




                                   re atio
                         ov ed tio
                          Pu ecl sio




                          sa y p po




                                            th
                         O r ed cat




                                 ed so
                                             r




                                          tio
                                  ic ati
                                Ce rar
                       ild re me
                                 do cu
                      rs ci sea
                                         ta




                                lic rs
                      M er ca




                                         O
                                         s




                                         a
                                 d is
                                       e




                                      si
                                    m


                         on al
                co




                       Di rl
                                 J




                                g
                               bl




                              bl
               In




                              e




                            th
                        Hi




Source: eEurope, 2003

The figure above gives a clear indication of the multitude of services on offer at present,
although the high proportion of cases submitted in the "Other Services" category (16.55%)
also indicates the scattered nature and the diversity of public services. This was followed
by the "Other education" category (7.38%), "Income Taxes" (7.16%) and solutions related
to "Elections" (6.82%). The small margin between the latter three categories gives us a
clear indication of the priorities of decision makers and of the type of services which have
the greatest perceived benefit for both the public sector and civil society in terms of access,
quality and efficiency improvements, and participation in public governance.

Public eServices for business
TID's comment: In this subsection we are only talking about Italian projects. We should
include information about public eServices for business in other countries or, at least,
explain why we are only focused in Italy

The advent of eGovernment and a fundamental rethink about the way business is
conducted and services delivered, have led to legislation designed to promote flexibility
and a responsive environment within which to conduct business transactions. Although
submissions including Public eServices for Business mainly focus on services related to
"Other Services", two Italian projects provide models that clearly show the benefits of this
modernization process. The Italian Integrated Services for Businesses project has used
information technology to enable swift and unfettered dialogue with both central and local
government. The other related Italian project, TELEMACO, has provided a single virtual
office, a portal through which businesses can access a range of information packages to
support their activities.



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The most prevalent service solutions received are those related to company registration,
public procurement and corporation tax. Again, a logical argument can be constructed
around the development of various support functions for tax services aiming at easing the
bureaucratic burden of private sector interaction with public authorities. In addition, they
can be seen as income generating and time saving. As the complexity of these services
increases, electronic solutions may once again be seen as a practical solution to
streamline internal input and output. Going one step further and generating both an
integrated back and front office solution for users and citizens potentially offers a practical
way to increase efficiency.
Closely linked with tax collection services for citizens and businesses, customs services
throughout Europe perform the invaluable task of controlling trade and collecting revenue.
Living in a society dominated by the global market place requires streamlined and secure
electronic systems to be able to provide quality services to contractors involved in the
movement of goods not only within Europe but worldwide. Sweden has a long tradition of
seafaring and sea-based trade, and it is therefore not surprising that this country has been
at the forefront in developing secure electronic services to support customs procedures
and the secure movement of goods. Another excellent example comes from the Turkish
Customs Administration, which has realized that in order to compete effectively on the
global market they would have to adopt, and adapt to, new electronic systems to keep up
with developments in international trade, whilst combating customs fraud and corruption
and ensuring public security, efficient human resources planning and good governance in
customs.
In conclusion, we see that the category for which most service solutions were submitted
was again "Other Services", with 36.18%. The following three categories were, as stated
earlier, those related to company registration (10.34%), public procurement (10.08%) and
corporation tax (9.56%).

                                     Public eServices for business by category
                     40,00%

                     35,00%

                     30,00%

                     25,00%

                     20,00%

                     15,00%

                     10,00%

                      5,00%

                      0,00%
                                                                                                               ns
                                                                                                               on




                                                                                                                        r
                                  ns




                                                             T


                                                                       n
                                                x




                                                                                                              it s



                                                                                                                 t


                                                                                                                         e
                                                                                                             en
                                                           VA


                                                                      tio
                                             ta




                                                                                                                      th
                                                                                                            io
                                                                                                            si
                                io




                                                                                                           m


                                                                                                        em



                                                                                                                     O
                                             n




                                                                                                         at
                                                                                                          is
                                                                   ra
                              ut




                                                                                                        er
                                          tio




                                                                              m


                                                                                                       ar
                                                                 st
                            ib




                                                                                                      ur
                                                                                                     lp
                                                                               b
                                       ra




                                                                                                    cl
                                                               gi
                         tr




                                                                                                  oc
                                                                            su




                                                                                                   ta
                          n




                                                                                                 de
                                       o




                                                             re
                       co




                                                                                                en
                                    rp




                                                                                                pr
                                                                       ta
                                                         ny




                                                                                       s
                                 Co




                                                                                            nm



                                                                                             ic
                                                                                      m
                    al




                                                                    Da
                                                       pa




                                                                                          bl
                 ci




                                                                                   to


                                                                                         ro
                                                       m
                So




                                                                                      Pu
                                                                                s


                                                                                      vi
                                                                             Cu
                                                    Co




                                                                                   En




Source: eEurope, 2003




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Excluding the "Other Services" category due to the scattered nature of the submissions of
this category and concentrating on the latter three, we clearly see that the main concern of
the public sector is to increase the quality and access to service provision. This can be
seen not only as a result of a need for greater efficiency within the service-providing
organizations but also as a desire to combine it with improvements in service provision to
the private sector and the resulting benefits for corporate stakeholders and society as a
whole.

Public Administration as Providers of Infrastructure

In many countries, as described in [4], municipalities have entered the wholesale market by
rolling out fibre optic networks. We can mention some initiatives in this respect:

Ireland, where the initiative "Irish Metropolitan Area Network" is based on the deployment
of optical fibre rings linking the key business districts in 19 towns and cities across the
country in a partnership with local and regional government organisations. These
Metropolitan Networks will provide connections to businesses, schools, hospitals and
private users on an open-access basis
Sweden, where public support may concern different levels of the network hierarchy
(national backbone, regional and local networks)
France, which is planning the installation of optical networks on a regional or urban scale
to enhance competition
Greece, proposing Public-Private Partnerships to build LANs in under-served areas;
Finland, drawing up national guidelines for regional and local governments on the use of
public funding.

                      3.3.3.1 Penetration of applications




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                          Applications                  Residential penetration [%]   Use [minutes/day]   Business penetration [%]   Use [minutes/day]
Storage
Storage on demand (SoD)
Back-Up / Restore (disaster recovery)
Asyncrhonous mirroring
Synchronous mirroring

Multimedia (bandwidth >10 Mbit/s)
Digital distribution, digital cinema
Telepresence
Video Download

Multimedia (bandwidth > 1 Mbit/s < 10MBit/s)
Video on Demand
Video conference
Video Broadcast (IP-TV)
Telemedicine (advanced disgnostic)

Multimedia (bandwidth > 500 kbit/s < 1 Mbit/s)
Gaming
Video Communication

No-multimedia (low bandwidth <200 kbit/s)
POTS
web surfing
p2p
e-learning (ad es. enciclopedia on line)
e-commerce
e-government
teleworking (LAN access)
Video Chat
Narrowband Voice, data (VoIP,...)

Grid computing
Compute Grid
Data Grid
Utility Grid




  3.4          Future Trends
Content based on the results of the questionnaires


To be completed…
                                                                                                                                                    Formatted: Bullets and Numbering
  3.63.5 Conclusions
       The growth of economy can allow enterprises to invest more money in new services
        and applications and it has a positive impact also on the employment.
       Job creation rates in ICT have fallen considerably during last years due to the
        general economic crisis and the operator's need of reducing capital and operating
        expenses.
       There exists an increasing need of businesses for qualified employees. These need
        will be increased by the introduction of network services proposed by NOBEL in
        enterprises and especially in SMEs.
       A predictable legal environment increases certainty to investors, and stimulates the
        deployment of innovative and advanced network solutions. In that respect, an
        stable new regulatory framework for NGN will be required for the introduction of
        new metro and core solutions.
       Competition, standardization of technology and stable regulation are key factors for
        the widespread of telecommunication services. For example, these three factors
        allowed a very high and uniform mobile penetration in all European countries.




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 Broadband deployment will favour the growing of traffic due to either the
  introduction of new users or the use of high bandwidth consuming applications (see
  section 3.3.2). Network connection speed evolution will be one of the most
  important factors affecting end users' selection of preferred applications and,
  therefore, their bandwidth demand. For instance, ADSL users are much more
  motivated than dial-up users to use bandwidth-intensive Internet applications such
  as sharing computer files, watching video clips or downloading games, pictures and
  videos. Thus, the majority of residential traffic is expected to be generated by two
  main multimedia network applications: peer-to-peer and video multicast (especially
  Video on Demand and HDTV). On the other hand, business usage of broadband
  services such as VPNs and VLANs is expected to grow steadily at double-digit
  rates each year over the next years.
 An expected widespread coverage of broadband access networks by a combination
  of different access technologies (ie DSL, HFC, FFTH, PLC and wireless) will favour
  the increase of nomadism as well as the introduction of network services in any
  kind of environment. For example:
       o   Users (citizens, enterprises, schools, etc) located in rural enviroment or
           isolated areas will be able to use network services and applications
           proposed in NOBEL.
       o   Proffesionals will be able to connect to their companies everywhere (home,
           airports, hotels, etc) by using VPNs over broadband connections. In that
           respect, nomadism will introduce very dynamic and unpredictible traffic on
           metro and core networks.
 Despite the fast growing of residential and business xDSL customers the most
  important market for European fixed networks operators are still the business data
  services (i.e leased lines, ATM VPNs, etc). The expected increase in revenues from
  the more spread use of VPN L1, L2 and L3 services may compensate the losts
  from traditional data services.
 Currently, different types of services such as telephony, data or IP services are
  provided by different network layers and infrastructures. The result is a complex
  network infrastructure and high cost due to number of network elements and
  different technologies.
 Currently transmission networks are controlled by centralized management
  systems. The provision of an end to end connection or the reconfiguration of the
  transmission network are slow and costly processes and can take days or even
  months.
 Traditional consumers of telecommunication services are starting to act also as
  providers of services and applications based on IP and thus increasing the traffic:
       o   Citizens: While WWW was the dominant Internet application during the
           1990s, broadband Internet access connections today, for instance, are
           specially used for peer-to-peer applications which allow to share and
           download multiple files of different types, e.g. music, pictures and videos.
           According to this, it is expected that peer-to-peer applications and specially
           those related to video distribution may become a major source of traffic for
           the foreseeable future.




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           o   Companies: Companies can be either users or providers of Internet
               contents. Most of European enterprises have corporate website (see section
               3.3.2). However, some of the potentially most useful applications in the
               business environment such as e-commerce or teleworking are still in an
               early stage. One of the most important drawbacks for the introduction of
               ICTs in the business segment is the lack of qualified staff (see section
               3.1.2). In this respect, companies may choose between investing in training
               or outsourcing this kind of applications.
           o   Public Administration. As described in section 3.1.3, European governments
               are providing public services over Internet such as e-learning, e-health, etc
               configuring what is called e-government. Furthermore, municipal wholesale
               networks potentially stimulate competition in services.




 4       NOBEL and the Society Information in Europe


In this chapter, ideas and objectives of all NOBEL project partners and consultants has
been merged. Several reports from consultants has been analyzed and in order to collect
opinions from every partner and give a common vision, two questionnaires were given out
among partners. Questionnaires were answered by around twenty-five people working in
NOBEL project..


In first questionnaire, people has to write their ideas about main points of D12 (Grid
applications, VPNs, Information Society and business roles) In second one, people has to
score their answers about D12 points. Both questionnaires are attached in ¿?.



 4.1     Introduction

Every new initiative in a society is influenced from several areas, but this new initiative also
influence society. NOBEL project must know how society can determine its evolution and
how it can influence society evolution. Rejection and acceptance of society will determine
speed of NOBEL deployment.


A society could be split in four main areas: Political, Economical, Social and Technological
(PEST) Each area has necessities which NOBEL must cover if it wants to be accepted.
However, NOBEL can influence changes in this areas. In this chapter first three areas will
be studied and in next chapter the other one.




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                                                                                                       Formatted: Bullets and Numbering
 4.14.2 Impact of the socioeconomic evolution on NOBEL
       concepts

It is very important analyze socioeconomic evolution, since they can have a great impact in
a project like NOBEL. NOBEL tries to deploy concepts which affect society so a suitable
analysis can adjust NOBEL objectives and its deployment. NOBEL situation in this socio
economic environment could be the following:


                  Political                                   Economical
                   BB4all                                     Efficiency
                                                               New revenues




                                          NOBEL




                Technological                               Social
                 Legacy technology                          New services
                                                             Simple utilization


Figure 1 - NOBEL situation in current environment


As can be shown in figure above, several forces from different areas of society influence on
Nobel. These forces are not only related to one society area, but they have been place in
the area which they are more related to. Due to Nobel must try to cover these necessities,
influence of these areas on Nobel will be analyzed following.



       4.2.1 Economical conditions analysis

Economical conditions have a direct impact in all kind of businesses. Nobel is a new
solution which must be efficiency and create new revenues if it want to be deployed.


Propitious economical situation


If economy is in a favourable situation, a new solution will be easier introduced. NOBEL
partners think that economy world evolution is in a moderate growth. In next figure, it can




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be shown ICTs market evolution from 2002 to 20043 and a forecast with collected opinions
of NOBEL partners in questionnaire:



                                          Forecast ICTs Market Evolution

                               12

                               10
                                                                                      2002
                               8
                                                                                      2003
                  (%) Growth




                               6                                                      2004
                                                                                      2005
                               4                                                      2007
                               2                                                      2010
                                                                                      2015
                               0
                                    Western Europe Market     Eastern Europe Market
                               -2



Figure 2 - NOBEL partners opinion about ICTs market evolution


As it can be seen in Figure 2, it is hoped a growing evolution in Europe. In Eastern Europe
market there are more expectations, since it is an emerging market.
The rise of ICT market, often in line with the economic growth, may have positive impact on
the deployment of advanced communication networks. According to several informs from
consultants, investment in IT will increase in 2005, whereas two years ago situation was
very different. Investment in all areas(computers, network equipment, software, telecom
services…) was decreasing, but this tendency has changed. Therefore, not only partners
opinion but also consultants indicate next years situation could be a suitable time to
introduce a new technology.

This current economical situation step up expectations of increasing and generating new
revenues for ICTs companies. These revenues could be used into the deployment of
advanced metro and core networks proposed in NOBEL or to generate new services or
applications. This could hasten NOBEL concepts deployment.


Propitious time


Current core and metro networks can not support several new services, which society are
demanding, as it will be analysed in section 4.2.4. New applications and services will
appear in next years, so Nobel can offer a future broadband technology which can support
these new services and applications. Next figure shows S-Curves of both technologies:



3
    Source: EITO, 2004



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Figure 3 – S-Curves of current and Nobel technologies


As it can be seen in Figure 3 in next years current technologies will reach maturity point,
so Nobel will offer a solution which could cover future necessities. While current broadband
technologies will reach maturity point, next generation broadband technologies will be in a
growth phase which will allow Nobel solutions a good deployment. According everything
here exposed it is a propitious time for Nobel project.



       4.2.2 Technological conditions analysis

Economical situation determine the penetration of several important network infrastructure
(internet access, broadband access and terminals), economical situation was explained in
latter section. Propitious economical situation allow buy new computers and network
equipment which increase network use. These investments in technology provide a better
situation for NOBEL concepts deployment.


NOBEL partners view about evolution of these parameters is shown in the following figure:




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                                          Forecast network parameters evolution in UE

                           100,0

                           90,0

                           80,0

                           70,0

                           60,0                                                                                                   2004
                                                                                                                                  2007
                     (%)




                           50,0
                                                                                                                                  2010
                           40,0                                                                                                   2015

                           30,0

                           20,0

                            10,0

                             0,0
                                   Int ernet access   Broadband access Broadband access Mobile penet rat ion   PC penet rat ion
                                                        penet rat ion      penet rat ion
                                                                             (SMEs)

                                                                        Indicators


Figure 4 - NOBEL partners opinion about network parameters market evolution


According to partners opinion, internet access could be increased from 39%4 in 2004 to
67% in 2015. Moreover, increase in broadband access penetration will be higher. This
evolution will impact directly in Nobel deployment, since if nowadays NGN are needed due
to new necessities which must be covered and to improve core and metro network
management and control planes, more users will need several new requirements for their
applications.
Main Nobel customers are businesses, but a great penetration in residential segment could
allow apparition of new companies which will offer more services and applications to these
customers. To provide these new services and applications, companies will need a NGN
which will assure them QoS requirements.
A possible new situation could be following. A business could offer VoD. If it only offer a
reduce number of films, maybe it could store all films in few nodes next to the access
networks. Servers will need to upgrade their films catalog, but this traffic will not be very
critical. However, if this business want to offer a lot of films, nodes of the network will need
to communicate them in a flexible and automatic way, paying only for connections they
have used, not for dedicated circuits. That kind of new scenarios favors Nobel deployment
possibilities.
A similar analysis can be done about SMEs. Increase of broadband access in SMEs will be
greater than residential segment and this new situation will create new business scenarios.
New companies can offer services to these SMEs, and also, these SMEs can provide
services and applications to residential users or to other companies.


About terminals, mobile penetration is next to saturation point, this is the reason why
mobile penetration is not going to increase so quickly than other parameters. However, due


4
    EU Telecom Service indicators, 2004



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to next generation mobiles mobile industry will upgrade cellulars terminals. Furthermore,
new terminal will access to internet, so this will generate more data traffic.
Increase PC penetration is more complicated than mobiles. Due to difficult usability of PCs
and price, its penetration is not as high as mobile penetration, although mobiles had
appeared later than computers. Besides, a computer could be used by a family, while a
mobile is used by each person. However, children and young people know better and
better computers, so this evolution will generate more experienced users each day.
Notwithstanding, PC penetration is believed to increased from 53%4 in 2004 to 76% in
2015.
According to parameters analyzed, an important deployment of internet and terminals will
be produced, so these new terminals and Internet connections will favor implantation of
NOBEL concepts.



       4.2.3 Social conditions analysis

NOBEL is an European project in which there are involved partners from several countries.
When we try to analyze so different cultures, it have no sense to describe only similarities
but also differences. According to collect answers in questionnaire, residential applications
are used in many different ways in Europe. Furthermore, each person in the same country
uses Internet in his own way. While a Norwegian thinks videoconference will not use in his
country, a French thinks people will use videoconference ten hours in a week. Related to
P2P, there are not a common point of view, people thinks computer will be connected with
P2P programs from one hour per week to one hundred and twenty hours per week.
According to applications use, there are not a common point of view neither in Europe nor
in each country. Only about most residential application used, a common view is
generalized. It is thought video streaming will be the most residential application used
which is the same information that Yankee Group provide in section 3.3.1.


Residential segment influence must be taken into account, because it can influence greatly
in core network. For instance, P2P (mainly in households) is changing asymmetry of data
flux in core network. P2P philosophy join to better computers and better broadband access
can generate new applications in which users can provide services without any centralized
server. This acquisition of better broadband access will depend strongly on applications
and services offered. Current driver in residential segment is P2P, while medium term
drivers will be Videoconferencing, VoIP and Broadcast video, according to collected
information in questionnaire. In section 3.3.1, Yankee Group forecast a great evolution of
Multimedia streaming and a little decrease of P2P, like opinion of partners.


Main NOBEL customers will be businesses, because most important current traffic is due
to enterprises data and also because businesses have new necessities that actual
backbone can not cover, for instance VPNs. Currently dedicated circuits are rented and
they are better when traffic is constant and service requirements are immediate, but VPNs
are more flexible and they fulfill QoS and security in addition to the price. Businesses need
more flexible networks, so this necessity will accelerate migration to VPNs.
[To be completed]



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According to partners opinion main important drivers in businesses will be VoIP and
Videoconference. These new applications will change relations among employees, since
they will not need to have a meeting if they can have a videoconference. Besides, VoIP
audio conferences will be cheaper so you could speak with partners who are working in
another countries. In 2015, the main driver will be teleworking. Partners think that
teleworking will influence a lot of in European countries and it will accelerate NOBEL
concepts deployment, due to these applications will need a network which can provide
enough QoS every time and everywhere.


Other important points are grid applications. Grid applications need a high bandwidth, QoS
and security guaranties, so grids will need a network which provide them these
requirements. Grids are expected to be used not only for increasing computing capacity but
also for distributed data storage. Scientific centers compute a great amount of data, so they
require these applications. However, residential users doesn’t have these necessities so
grid applications won’t have an important impact for them, and maybe, neither in business.


There are several challenges for grid services evolution: development of standards,
interaction between user and grid, developing policies and building a business model.
Depending on evolution in these challenges, grid applications will have a greater or lower
development and they could accelerate NOBEL concepts or not.
[To be completed]




New applications and services, which are demanded by users, seem they will accelerate
NOBEL concepts implantation, but some requirements for this applications need to be
developed. Depending on solutions NOBEL will provide for these applications, NOBEL
deployment will be faster or slower.


[To be completed]



       4.2.4 Political evolution analysis

According to partners opinion, private companies will be main driving force, then citizens
and finally Public Administration. However, public administration role is very important;
since countries, which Information Society is developing quickly (like India or Korea), has
been supported by administration. [To be completed]
Public administration want to deploy broadband for all, so each initiative which tries to be
developed must cover this requirement. This administration impulse will help Nobel to be
developed.
European governments from different countries are developing initiatives in several areas:
educational actions, infrastructure (network and computers), applications and contents. But



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none of governments covers all areas. Sometimes local governments are quicker than
national to deploy initiatives, so national government should aim local initiatives. For
instance, a local Spanish government (Catalan government) will create a public network
infrastructure in areas which only there is an operator. This network will be rented to
companies which want offer broadband access. Similar initiatives has been deployed in
other European countries like Sweden, Ireland or Italy.
Legal regulatory aspects are very important in development of new technologies. For
instance, in United States, Federal Communications Commission has allowed telephone
carriers to refrain from sharing FTTC (Fiber to the curb) deployments with competitors, in
order to accelerate fiber rollout5. Not only infrastructure but also new services are
regulated. Also in United States, FCC has freed VoIP service from state regulation, so
VoIP service could be deployed faster in US6. A role which state government will have to
play with VoIP in protecting consumer from fraud, responding to complaints and enforcing
fair business practices.
Telecom sector currently is been regulated constantly, so not only initiatives from
government will be involved in Nobel development, but also laws and decisions which can
determine evolution of Nobel concepts.


                                                                                                           Formatted: Bullets and Numbering
    4.24.3 New opportunities generated by NOBEL in the Information
          Society

Although NOBEL project will be strongly influenced by information society, it can cover
necessities and create new opportunities. Next figure shows the solutions which Nobel
offer to the society. These solutions are main Nobel concepts. These concepts will not
influence only on one area but they will influence mostly on selected area. Transparency
and dynamic are two concepts of Nobel which will influence in all society areas, this is the
reason why they are around Nobel project.



                 Political                                         Economical
                  Multioperator                                    Multiservice
                                                                    Multivendor
                                           TRANSPARENCY
                                                                    Distributed
                                                                    Scalability
                                              NOBEL



                                               DYNAMIC


                   Technological                                Social
                    Optical technology                          e2e
5                   Multilayer
    Network Wordl Difusion (http://www.nwdifusion.com)              Broadband
6
    Network Wordl Difusion (http://www.nwdifusion.com/2004/1109fccfrees.html)
                   OPS,OBS                                         QoS
                                                                 Broadband

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Figure 5 - NOBEL influence in current environment



       4.3.1 Nobel influence on economy

There are two main forces that influence Nobel project by Economy: efficiency and new
revenues. In this section it will be analyzed which solutions Nobel concepts offer to
economical necessities and which opportunities can generate.
Multivendor concept will let buy equipments from different vendors to operators and
vendors to sell equipment to new customers.
Multiservice will create a similar situation than above, but actors will be other. Now Service
providers will be able to distribute their services from different networks. This will allow that
if new applications or services can be offered through a better network. This is current
situation of fixed telephony. Bell companies offer a voice service over an old and expensive
network. This situation has allowed that new companies have offered voice service over IP
networks cheaper. This situation has created not only new voice operators like Yahoo!
Japan but also applications like Skype.
The implant of a technology like NOBEL could on one side create new jobs with more
specific competences (the increase of the number of IT managers in the SMEs due to the
widespread diffusion of new services and applications inside the enterprises) on the other
side erase jobs like management network operators due to distributed control and
management planes. Operator will be substituted by the large deployment of intelligence
inside the network (oxc, traffic engineering, etc.)
According to answers collected in questionnaires, dynamic concept will change geographic
mobility due to VPNs and deployment of broadband, because every worker will not have to
be in office. Teleworking and a better communication in business trips will allow workers to
improve efficiency. Besides, business trips will decrease, because enterprises will not need
so much meetings, since new multi-user applications will communicate them.
Only one concept has not been analyzed: scalability. Nobel solution provide network
operators to increased their nodes and domains easier and consequently cheaper. Every
new solution needs to provide this feature if it want to be deployed.
Dynamic and scalability concepts provide a more flexible network to the necessities of
future environment and it will be able to adapt better than current network to future
changes.


All concepts will change current market situation and will create a more competitive market,
and logically it will increase efficiency of all companies. This efficiency was a force which
demand economical area. Besides, these new situations will generate new business
opportunities for ICTs market.



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According to partners opinion, more influence factors on companies by Nobel concepts will
be labour relations, the way of selling and management style. Labour relations changes
has been explained before. Way of selling will change because if customers will be
connected to the network more time, companies will be able to use new ways to contact
with customers (e-comerce, mailing lists, etc.)
[To be completed]



       4.3.2 Introduction of new applications and services

The introduction of new applications and services represent also a effective way to face the
hardened competition of the far-east countries. These countries like China, South Korea,
Taiwan, etc are challenging the western enterprises by manufacturing products similar to
the ones of the western competitors but with better prices, mainly due to the lower
manufacturing costs. The Europe enterprises have mainly three ways to face these new
competitors:
        To manufacture products with a visible better quality and, in this case, it is a
         matter of production rather than the deployment of new technologies.
        To locate the production sites in the new competitors’ countries so that the
         manufacturing costs are the same. This solution implies a massive deployment
         of e-business applications and the introduction of SAN and VPN solutions to
         manage and protect the big amount of data exchanged.
        To provide value added services to distributors. There are many cases in which
         distributors prefer western enterprises to the cheaper far-east companies
         because western enterprises give the opportunity of integrated applications
         (extranet or b2b) like, for instance, order tracking that allow distributors to
         provide their customers with value added services like a precise and a quicker
         delivery date. And it is well-known how these services are appreciated by
         customers and particularly to gain their loyalty.


NOBEL solutions will allow the provision of VPNs on demand by the user. There are
different kinds of VPNs, so each different business will choose the best for them. Large
companies won’t migrate to VPNs quickly because services over ATM are being improved
and they have dedicated circuits. Decreasing VPNs prices could allow a faster migration in
SMEs. This will impact significantly in network utilization because of the unpredictable
traffic.


VPNs evolution should improve scalability and resilience of current VPNs, where new
Ethernet extensions could be developed with this features. Opinion of partners is that
VPNs will be main driver for broadband access in business.
[To be completed]




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Currently, network reconfiguration (f.i to provide SANS at night) require manual work which
is very costly. New intelligent networks will favor the widespread of network applications (f.i
SANs) to SMEs.


New infrastructure will create massive multi-user applications such as teleconferences and
working groups. NOBEL concepts will contribute to develop sectors such as healthcare,
entertainment and advanced industry, which will influence common people.


[To be completed]



       4.3.3 Residential users

Main customers of NOBEL solutions will be business, but behaviours of residential users
are very important to analyze, because another companies (NOBEL customers) could
provided them new services which could influence on core data transport.


According to partners opinion, most important factor to deploy Information Society are
distribution of broadband, minimum connection and terminal cost. NOBEL will influence
highly in first and second topic. First topic is objective of NOBEL project. Besides, if you
increase network possibilities bandwidth cost will decrease although you could offer new
services which will be expensive for final user. NOBEL can offer what residential users are
looking for, better and cheaper internet connection.


Furthermore, according to collected opinions about people’s attitude to paying for Internet
access, main opinion where connection speed and persistence and interpersonal
communication services. NOBEL will provide this connection speed and persistence and
infrastructure to distribute new communication services.
Related to contents, most important parameter was price of products and services and
then quality of products and services for success of content companies.
A cheaper network management will influence in contents prices and network flexibility will
provide enough resources for quality in contents products.


[To be completed]



       4.3.4 New opportunities

NOBEL concepts will be useful for government, scientists and business sector, although
digital home and private IT business sector will need more time, because of recovery
economic situation. NOBEL is working on multi-domain, multi-provider and multi-layer




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networks. These features will provide networks which could adapt quickly to market
necessities.


Nowadays, network operators are offering connectivity and bandwidth, but if they want to
earn more money they need to give value added services. Therefore, new business
models for a network operator should integrate such aspect. Another important aspect will
be pricing schemes which can increase profits for network operator.


Network operator will have an access and a control of applications they transport so they
will provide bandwidth based on applications. Another new business models could be
content delivery, concentration on accounting and billing contents.


In this good situation, traditional customers of telecommunication services could act as
providers of services, applications or infrastructure (customer: P2P, enterprises: e-
commerce, public administration: e-government and dark fiber) This new providers will
generate new business which cost effective solutions are very important in NOBEL
concepts development. New opportunities will generate several competing actors in every
role.


[To be completed]




 5      Overview of new business opportunities
In previous chapters, social and economic trends of the Information Society in Europe have
been analyzed as they result in requirements for NOBEL. The main conclusions and future
trends described in Chapter 3 help us in the identification of new business opportunities
that will be generated through the accomplishment of NOBEL network and services vision.
New network technologies may enable new business models and opportunities for carriers
to create new revenue streams. New markets for network services will probably be created
to satisfy user needs for emerging multimedia application and services. Standardization
and introduction of cost-effective high-speed protocol-transparent wavelength services may
result in unbundling of the value chain. In this chapter we will describe the NOBEL vision of
innovative business models in broadband network services. Further detailed description of
business models will be addressed in deliverable D31, so a deep analysis is out of scope
of this document. However, here we will introduce new business opportunities to be taken
into account for further work to be done during next year in WP2.

 5.1    Broadband networks value chain and business roles
The telecommunications industry is undergoing a radical transformation, creating existing
new opportunities and new challenges for network and service providers. The established
value chain is increasingly being deconstructed, with the entry of powerful new players and
radical restructuring of the industry. Rapid technological developments and increasing
market turbulences have added new dimensions to an already complex scenario. Many



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tested business models have became obsolete and new ones have emerged. In this
section, we describe the evolution from the bundled to the unbundled value chain in
telecommunication services and a new reference model for definition of business roles.

         5.1.1 The evolving telecommunications value chain
The MUSE project (see deliverable “DA1.1–Towards multi-service business models”) have
already established the different business roles in an open network services model. They
described in that document the unbundled value chain and the definition of the roles that
can be taken by different major players in order to establish various business models in the
field of broadband telecommunication by offering multi-services.
The unbundled value chain as defined by MUSE identifies these roles: customer,
packager, connectivity provider, access network provider, regional network provider, loop
provider, network service provider, application service provider and content provider.
The important point here is that as a consequence of decoupling services and networks
(see Figure N), service providers will be able to deliver their services via different networks,
and more than one service can be delivered by each network.
The value chain is sometimes defined as “A vertical alliance of enterprises collaborating to
achieve a more rewarding position in the marketplace”. Because of the large diversity of
services that can be offered over access networks and players that could be involved, it is
not practical to consider every possible service delivery value chain separately. Instead, it
is more efficient to identify generic roles with a clear function and responsibility in the
service delivery process. In some cases, the same company can fulfill more than one role.


    Content      Content       Content      Content         Content       Content      Content       Content
    Provider     Provider      Provider     Provider        Provider      Provider     Provider      Provider




    Service      Service       Service      Service         Service       Service      Service       Service
    Provider     Provider      Provider     Provider        Provider      Provider     Provider      Provider




    Network      Network       Network      Network         Network       Network      Network       Network
    Provider     Provider      Provider     Provider        Provider      Provider     Provider      Provider




                       Customer                                                 Customer




               Bundled Value chain                                     Unbundled Value chain
Source: MUSE D1.1-Towards multi-service business models



To better understand the dynamics of the value chain, it is important to take into
consideration the interactions between the different players of the value chain and their
inclinations towards specialization (only one business role) or integration (playing two or



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more roles in the value chain). Thus, equipment vendors tend to be specialized since the
early stages of liberalization in telecommunications. However, network operators and
connectivity providers which experienced first specialization, turned later to integration and
finally seem to come back to specialization. Finally, there is a recent trend towards
integration by application service providers and content providers.


      Layers composing the                      Periods                                   Observed vertical
      telecommunications value chain                                                      structure
      Equipment suppliers layer and network     Period 1: before mid 1980s to mid 1990s   Diverse:
      providers layer
                                                                                          US: integration
                                                                                          EU: specialization
                                                                                          Japan: specialization
                                                Period 2: from mid 1990s                  specialization
      Network providers layer and Internet      Period 1: from early 1990s to mid 1990s   specialization
      connectivity providers layer
                                                Period 2: from mid 1990s to late 1990s    integration
                                                Period 3: from early 2000s                specialization
      Application service providers layer and   Period 1: from mid 1990s to early 2000s   specialization
      content providers layer
                                                Period 2: from early 2000s                integration
Source: Telecommunications Policy, 2003


         5.1.2 A reference model of business roles for broadband
               optical networks
The reference model described in MUSE presents the roles involved in today’s telecom
business and traces their relationships (see Figure N).




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                                                                  Applications delivered with an assured QoS
                    Application         Network                Application      Application      Content
                    Service             Service                Service          Service          Provider
                    Provider            Provider               Provider         Provider




       Customer                                               Packager
       consumer




                                                              Connectivity
                                                              Provider




                                        Access                Access                Regional
                                        Network               Network               Network
                                        Provider              Provider              Provider




                     Application Service / Content Provider

                     Customer

                     Packager

                     Network Provider


Source: MUSE D1.1- Towards multi-service business models



NOBEL preliminary definition of drivers and requirements for core and metro broadband
networks (see deliverable D06) help us to clarify the MUSE reference model because it
addresses the technical and business requirements involved in the above described
relationships between different roles. The interface requirements are vastly different
whether the two roles are played by the same organization or they are two different
enterprises.




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Source: Emerging services for transparent networks (Ericsson)



As an example (see Figure N), we may have a fibre (with underlying ducts and right-of-
way, RoW). The access to this dark fibre is then a Service (something to sell), and the
seller is known as a “Dark Fibre Provider”. The buyer puts some equipment to the fibre
(WDM, SDH, to IP and end-user services) and is known as a Network Operator (of some
kind). The blue boxes denotes the seller and the red boxes the buyer of the Service at that
interface.
However, the owner of the dark fibre may decide to self buy and operate the Layer 1
equipment (WDM, SDH…) and is then known as a “Leased Line Provider” whereas the
buyer in that case may be e.g. an Enterprise or - as here illustrated - a Mobile Network
Operator. Observe now that what was a Service Interface for the first example is now an
Internal Interface for the second example.
Further, the Leased Line Provider may decide to add a Layer 2 virtual connectivity layer
and sell VPNs to enterprises. Or The VPN Provider can add IP equipment and sell IP-
connectivity. Or the IP-Connectivity provider can add web and mail-servers and open an
Internet Café… Note all the time how a specific technical layer handover can be either
Internal or a Service Layer.
Filling out the bottom part of the figure, e.g. a landlord may only own the RoW and let a
Network Operator install and run all parts of the network, including the fibre. Or, finally,
some networks are completely self-contained and have no commercial interfaces at all
(e.g. a power utility’s internal data communication network) or only a final end-user
interface (e.g. classic POTS).
Of course, there may be more than one commercial handover in such a chain, even at
every single interface. That, however, is likely to draw too much Capex and Opex. There
must be some value-add in each layer to gain enough revenue to drive the business.
A strong trend today is now that Network Operators tend to split their operations or even
outsource the operation of the connectivity network (Communication Operator) in order to



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separate that from the development and delivery of Services (Service Operator). It is often
maintained that the former is a “commodity bitpipe” with low margins and therefore
unattractive business, whereas the service development is closer to the customer, adds the
value, and therefore will have higher margins.
With respect to all-optical networks, we may note that the question is if the cut between L1-
(optical) and L1+ (electrical) is a suitable business handover. We can already in this Figure
note that the competence area for operating the equipment does not match well between
the Dark Fibre Provider (RoW, ducts, passive networks) and the network Operator (active
equipment, network operations).
As a conclusion, any technical interface can be Internal or Open, the difference being if a
commercial Service is provided over the interface.
For an internal interface, the important parameters are technical, and have to do with
equipment interoperability, availability, Capex, Opex. One of the strongest points here is
that the Internal interface can be removed! That is, integrated and put on a chip. Take
away all interface verifications, testing, standards, stacks, ports, duplicated boxes, power
supplies, design time, programmers etc. Save Capex and sell the combined equipment
much cheaper. This approach utilises the entire strength of integration. However, once an
interface has been integrated across and put on a chip, it can no longer be sold.
Essentially, the integrator states that the business in question is uninteresting for him, and
he can therefore optimise the equipment Capex and Opex to obtain better total business
performance at other interfaces.
If the same technical interface is used as an Open Interface, all the technical parameters
must now be designed so as to support the business transaction that exist across the
interface. Here, many mistakes are made, as many interfaces are designed from a
technical point-of-view rather than from a business point-of-view. The purpose of the
interface is not to hanshake certain bits, but to provide a Service with effective Opex,
customer service, customer satisfaction, delivery times, reliability, cost-effectiveness and
SLAs. All this must be supported by the technical implementation and interface protocol
and ports.
If we now review the service/layer map considering the Internal/Open interfaces and
business requirements, we see that we have today some distinct groups of players, each
grouped around a special competence area. Some observations can be made:
The Network Operations is a highly qualified business that aims at delivering a set of
services at different layers to Enterprises and Service Operators. The fact that many
interfaces must be implemented, requiring a high investment in both Capex and Opex for
each Interface/Service, makes it a challenge. It is here, that the layered architecture is
advantageous, clearly illustrating the correspondence between the Open Interface and the
Telecom Service sold at that interface.
For all-optical networks, we note that it is unlikely from a competence point-of-view to be
driven from the owners/operators of passive networks – the competence set is quite
different, as are customer and vendor relations, customer processes, operations,
timescales etc. The all-optical equipment clearly belongs to the category of ”active
equipment” and has most of its traits in common with all other active telecom equipment in
all other layers.




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Therefore, all-optical networks and islands are most likely to develop as part of larger
operator’s enterprise portfolio and as basic infrastructure for their other connectivity
networks. Smaller operators are more likely to go for specialization and integration,
focusing on one special, attractive service where the revenue can support a highly
integrated set of equipments giving low Capex and Opex. We see this in many proposals
today in the area of Metro and Enterprise networking.
Alternatively, the all-optical interface is not Open but Internal, that is, it is used inside e.g. a
large Enterprise, but note then that it is probably more efficient to integrate it into the
equipment as no business transaction is made over it, and thus, the requirements can be
significantly simplified.

 5.2     Charging models
Charging models play important role within telecom business enabling for covering
expenses spent as CAPEX and OPEX and fostering development of new services.
Therefore, we analyze here the typical charging models currently used in
telecommunication services.

        5.2.1 Functional model of charging system (MK)
There are many processes involved from capturing the usage to creating a bill to be sent to
a customer. Figure 6 presents the main functional model for collecting and processing
information related to resource usage and billing of users.




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    charging events       account. protocol         price plan, tariffs         subscriber specification




              measuring                accounting                    charging                      billing




    time, volume, ...     connection                 accounting                    charging                  invoice, bill
                            record                     record                       record

  Figure 6. Activity chain in charging of telecom services on the basis of measurements.


In this model metering function tracks and records all data related to network resources’
consumption (e.g., volume of exchanged data). This function is performed by network
devices. The collected resource usage data are next sent to an accounting server for
further processing. To transfer the accounting data an appropriate accounting protocol
(e.g., TIPHON, RADIUS, DIAMETER, CRANE) is used. Accounting refers to the technical
process of collecting and storing usage records from network nodes, such as sender,
receiver or router. Accounting is also responsible for forwarding these records to other peer
entities in the case of roaming terminals. Charging derives charges from the accounting
records based on service specific charging and pricing schemes, which are specified by
charging policy. It means that technical values (i.e. measured resource reservation and
consumption) are translated into monetary units using a charging formula. As a result of
this process, a charging record is crated. Billing function deals with bill preparation and
presentation to the customer. The bill is based on collected charging information (given in
charging record) and used billing policy (e.g., possible discounts into a bill, addition of a
subscription charges, etc.).

        5.2.2 Classifications of charging schemes
A charging scheme is an algorithm for calculating the charge for network service. It
indicates a list of resources whose usage may be charged for in the course of usage of
particular service. In the case of telecommunication services, a user’s charge is calculated
based on accounting data that contain information regarding the resource consumption for
that user and prices from tariff tables published by the provider. It can also take into
consideration attributes, which further specify service- and context related parameters.
Examples of attributes are time of day, distance or even network-state related parameters
to indicate dependencies on the network of the charging scheme. The integral part of the
charging scheme is charging function which combines parameters, attributes and tariffs
into a formula that expresses the charge for service usage. In addition to the amount of
resources used, a user’s charge will depend also on other issues (e.g., economic,
regulatory, marketing). An important feature of a charging scheme must be its efficiency, in
terms of signalling and accounting overhead. Moreover, it must be based on parameters
and measurements that are easily understood by customers.
Common telecommunication pricing consists of three basic elements, i.e. access fees,
setup fees and usage fees. Combining these three leads to classification of pricing
mechanisms into some categories:




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   Static vs. dynamic charging
    Static charging relates to the situation in which prices are fixed. In the case of dynamic
    charging prices may vary from slowly to rapidly. In addition, prices may vary during the
    connection if the traffic contract is renegotiated
   Value-based vs. resource-based charging
    Charging schemes based on resources reflect the costs connected with resources,
    such as bandwidth and processing time. That kind of charging scheme is more
    technical than value-based charging scheme, in which either the value to the customer
    or the value dictated by a monopolist provider applies
   Usage-based vs. contract-based charging
    For usage-based charging scheme the charge is based on the amount of resources
    actually used. This can be for example bandwidth, buffers or processing time. Of
    course, these parameters have to be measured somehow. Contract-based charging, on
    the other hand, is based on the traffic contract parameters, which are known in
    advance.

       5.2.3 Charging schemes
During last 20 years many charging schemes were developed for evolving packet
networks, from very simple and easy to be implemented “flat rate” schemes to advanced
and complex, based on extensive research, e.g. effective bandwidth pricing. Below please
fin enclosed a brief overview of most popular concepts for packet networks’ charging.


Flat pricing
Under a flat pricing scheme the user is charged a fixed amount per time, irrespective of
usage. It is simple and convenient scheme. No measurements are required for billing and
accounting. However, this scheme does not allow the network to influence the user’s
transmission over short time frame, it is therefore unsuitable for congestion control or traffic
management.


Paris-metro pricing (PMP)
PMP-based network is a set of logical networks. The total bandwidth capacity is divided
into several subnetworks. Each logical network operates on a best-effort basis and is
priced differently. Users choose one of these logical networks based on the expected
network congestion and their budget. As a result of keeping prices stable over significant
periods of time, higher priced networks will experience lower utilization and hence be able
to provide a higher service level.


Priority pricing
Priority pricing requires a priority field in every packet header. Users are forced to indicate
the value of their traffic by selecting a priority level. During periods of congestion the
network can carry the traffic by indicated level. In this scheme measurements are required
for billing and accounting to keep track of the priority level of each transmitted packet for




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each user. Priority pricing assumes that resources will be scarce or running at high level of
utilization.


Smart-market pricing
This scheme focuses on capacity expansion and the social cost imposed on other users. In
addition to a fixed charge a usage charge when the network is congested was introduced.
This charge is determined through an auction. The user associates a price with each
packet, indicating his willingness to pay for transmission.


Edge pricing
The idea of edge pricing is to charge the user only by the first network provider along a
data path that might use also services from other providers. The user defines the maximal
total price she is willing to pay as a sender or a receiver of data, as well as an upper bound
for maximal number of hops.


Expected capacity pricing
This scheme is based on specified by user the required expected capacity. The user is
then charged according to the expected capacity that network provisions, based on long-
term contract with the network. This scheme supports congestion control or traffic
management by encouraging users to determine the service level and then charging
accordingly.


Effective bandwidth pricing
This pricing scheme is designed to induce the user to declare the true values for the mean
and the peak cell rates of general traffic sources during CAC. The functional form of the
effective bandwidth of the user’s traffic source is assumed to be known. The user is
charged according to a linear function placed tangent to the effective bandwidth curve of
the source.

       5.2.4 Requirements for charging scheme
There are several practical requirements that must be met by any workable scheme for
charging for network services. We may group these requirements under the three headings
of (a) the end-user who pays the charges, (b) the service provider who de.nes the charges,
and (c) the underlying technology that is used to produce the charge. Charge recipients
tend to favour charges that are predictable, transparent and auditable.
A charge is predictable if a user knows in advance what the total cost of using the service
will be. Transparent charges are ones that are explained through an itemized bill instead of
being bundled. Such a bill may explain the total amount spent and help a user decide if
particular services provide value for money. Auditability is a property of the charging
system of the provider. He must be able, when requested, to prove the validity of the
charges he produced by tracing their origin.
Service providers also impose important requirements on charging systems. Since service
provisioning often defines a complex value chain, in which many business entities



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contribute to the end service and so define and share the resulting charges, the charging
system must be flexible enough to allow the definition of rich business scenarios. New
tariffs and services must be easily programmed while the appropriate service usage
parameters must also be easy to access.

       5.2.5 Necessity of new charging scheme
The processes aiming at delivering the bill to costumer have been simple until now. Users
have been billed with a flat rate. The invoice consisted of access charge and mainly charge
depending on the duration of the connection. However, these schemes are altered soon as
a consequences from convergence of telecommunication network, offering the same high
quality for any user, and the Internet, where all users are in the best effort environment. So
there is a necessity to introduce new schemes for QoS provisioning, especially to support
real time services with a quality acceptable by the users. Together with these schemes a
newer billing policy should be used. These new mechanisms, taking into account QoS
differentiation, should collect all information concerning chargeable events. After
appropriate processing these information adequate charging schemes should be used.
One of the factors determining the choice of the charging scheme is metering record
granularity used to calculate usage charge. It is closely related to the types of signaling
used.

       5.2.6 Charging scheme function
A charging scheme is an instruction for calculating a charge. Usually, a charging scheme is
represented by a formula that consists of charging variables (e.g. volume, time, reserved
peak rate) and charging coefficients (e.g. price per time unit). The charging variables are
usually filled by information from accounting data.
There are many charging schemes, taking into account some kind of parameters, like
distance, volume, time, reservation parameters, effective bandwith, access line speed to
parameters like expected path and congestion cost or dynamic bid-prices per packet or
resource unit, to name but a few.
Pricing may be used for reasons of network efficiency, i.e. maximizing the utilization of
resources (bandwidth, buffer space), or of economical efficiency, i.e. value to the user.
Hence pricing maximizes either provider revenue (by efficient resource sharing and
accesss control) or user satisfaction.
The very important issue is the method of billing individual users. Associating a price with
individual packets may lead to enormous accounting and billing overhead. So, the next
problem arises if the charges are computed only at the user-network interface or every
network component charges a user. Multicasting and interconnection are two next
problems which have to be resolved when speaking about charging model. Finally, all the
information about charging parameters should be delivered to selected places. In order to
carry out the task network protocols have to be able to accommodate all these information.
The applied charging schemes for the provided services are one signifanct feature used by
providers to distinguish themeselves from competitors. Therefore, providers use different
charging schemes and may change the schemes in accordance with their business plan.
Providers can also offer different accounting services (e.g. standard, comprehensive, etc.)
in order to allow customers/users to choose one scheme that meets the customers/users
needs. Furthermore, it may be advantageous for a provider to outsource accounting
functionality to a third party. Users introduce various traffic profiles and may have individual



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preferences regarding accounting services (like itemized invoices, accounting indications,
spending limits etc.).

       5.2.7 Accounting issue
One further challenge for the configuration of accounting services are heterogeneous
metering and accounting infrastructures within provider domains. Also, the usage of
different accounting and metering solutions used in different provider networks complicates
the sharing of configuration parameters (e.g. in roaming scenarios). The configuration and
dynamic adaptation of the accounting process to the business model and specific user
demands requires a flexible configurable accounting infrastructure. The utilization of
standardized policies for the expression of conditions and related configuration actions also
allows the configuration of heterogeneous infrastructures.
For this purpose accounting policies should be used to configure the accounting
infrastructure and use the Authentication, Authorization and Accounting (AAA) architecture
to exchange and to deploy these policies.

       5.2.8 Charging scheme evaluation criteria
For a network service any charging scheme could be proposed. However, its
appropriatness depends on a number of charging criteria that can be stated [1]:
    measurement requirements for billing and accounting
    support for congestion control or traffic management
    provision of individual QoS guarantees
    complexity of the implementation of the charging scheme
    degree of network efficiency
    impact on network performance
    possibility to audit a corresponding bill
    degree of economic efficiency
    impact on social fairness
    pricing time frame


The importance of each criterion depends on the perspective. For network operators, user
complexity, predictability, and auditability may be less important than other criteria. The
criteria deemed most important by the users are user complexity, predictability, and
auditability.
The implementation of a charging scheme is partly an administrative task, which is grossly
independent of the charging scheme itself. The overall complexity may be prohibitive if
extensive measurements are necessary in the network. This may also introduce
inaccuracies. Ideally, a charging scheme would encourage customers to support effective
sharing of resources, but also provide the opportunity for the network operator to run a
profitable business in a competitive market.
The wide range of network services with associated bandwidths and QoS guarantees,
combined with the possible burstiness of the traffic may lead to surprises in the bill to the



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customer. This can be aggravated if pricing is based on network congestion. A customer,
whether domestic or industrial, generally does not wish to receive an unexpectedly high
bill. irrespective of the cost incurred by the network or value obtained.
Hence the issue of auditability. A customer may want to be able to analyze his monthly bill,
not only to assist in accounting and budgeting, but also to spot errors. Proper presentation
in manageable bills should support this.
To summarize, accounting has to be flexible, easy to be measured and understandable by
the user. Moreover, it should be closely connected to resource usage. The right metric will
also depend on the kind of user, that is, an enterprise or a residential user. So, the metric
must be simple, fair and compatible with the wishes of given user. Future charging
mechanisms will need to have knowledge of the application being used. So, both the
application use and QoS requirements would be important attributes which also have to be
taken into account in billing context. However, the final decision about used charging
scheme should be taken by the service provider according to his final customers and to his
business situation.

       5.2.9 Competition models
The market in which suppliers and customers interact can be very complex. Each of the
market players look for the method of maximizing his own surplus. Different actions,
information and market power are available to the different participants. Taking all these
components into account it is natural that a large number of complex games can take place
as they compete for profit and consumer surplus. Three basic models of market structure
and competitioncan be distinguish: monopoly, perfect competition and oligopoly.


    Monopoly case
When there is a monopoly from which a service can only be purchased, then the only way
to price that service is to determine the cost of delivering the service and permit a fair
return to investors on their money above the cost for delivering the service. That is great in
theory, but stinks in fact. The result is ever-increasing service costs, and little technical
innovation in services offered. In a monopoly situation, there is little incentive to behave
differently.
In a regulated industry, pricing is set based upon costs and testimony. There is little
incentive to innovate and reduce costs (there is some incentive, but it is not highly
compelling). The painful mechanism for correcting these bloated telephone service tariffs is
to promote competition, competition made possible by new telecommunications
technologies, and competition that results in lower prices and increased business activity.


    Perfect competition
Perfect competition is when there are many suppliers and consumers in the market, every
such participant in the market is small and so no individual consumer or supplier can
dictate prices. All participants are price takers. Consumers solve a problem of maximizing
net surplus, by choice of the amounts they buy. Suppliers solve a problem of maximizing
profit, by choice of the amounts they supply. Prices naturally tend towards a point where
demand equals supply.




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In perfect competition case the social surplus is maximized, just as it would be if there were
a regulator and prices were set equal to marginal cost. However, perfect competition is not
always easy to achieve.


    Oligopoly
Oligopoly is the name of market situation when there are only a few suppliers. In a practical
sense, prices in an oligopoly lie between two extremes: these imposed by a monopolist
and those obtained in a perfectly competitive market. The greater the number of producers
and consumers, the greater will be the degree of competition and hence the closer prices
will be to those that arise under perfect competition.

       5.2.10 Interconnection issues
An operator need to record and bill the traffic through its network correctly to maximize the
income from conveyances, and similarly be able to correctly keep track of the payment
requests, invoices, that other operators sent for the traffic they have carried. Earlier many
operators had agreements where they paid each other months ahead, according to traffic
measurements based on experience and qualified guesses. There were many different
kinds of billings, but in common they were not very sensitive to sudden changes in traffic.
Most common were long term agreements based on previous experience. Nowadays, most
operators charge for the amount of minutes routed for other operators. There are many
different ways of setting up a contract between operators. Many of these can be described
as a general function considering amount of minutes. One possible approximation is "pay
per minutes" where the price is a linear function of number of minutes served with the
possibility of limiting the total number of minutes.
The cost of a connected call can be computed in several different ways. One of them is a
weighted combination of quality of service and price.

       5.2.11 Multicasting
A multicasting service requires the network to provide transport between one or more
information sources and a group of receivers. Multicasting services can be used for
teleconferencing, software distribution and the transmission of audio and video. A key
characteristic of a multicasting service is that it its cost must be optimized for the particular
group of receivers to which it provides service. This poses important resource management
and control problems, which add new complexity to pricing issues.
Multicasting services enable a customer to share common cost with other customers. This
way he can access services that he would otherwise find too expensive. However, there is
also a negative feature, since a customer may not be able to choose the precise type and
quality of the service that he desires. His choices are restricted because other customers in
his multicast group value service differently or have different technological capabilities.
These issues make the pricing of multicasting services interesting, but complex. As for
unicast services, pricing plays an important role in controlling the way network resources
are shared. A pricing policy must provide the right incentives for customers to join or leave
a multicast session when it is economically justified from the viewpoint of the multicast
group as a whole.


To be completed…



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 5.3     Preliminary overview of new business models
In this section we can introduce the basic concepts of new business models for NOBEL
services and applications. Business cases will be further described and deep analyzed in
D15, here is only an overview.

       5.3.1 Static vs. dynamic routing and wavelength assignment
             (RWA) in broadband networks
The connection requests (traffic demand) can be either static or dynamic. In case of a
static traffic demand, connection requests are known a priori. The objective is to assign
routes and wavelengths to all the demands so as to minimize the number of wavelengths
used. Therefore, there is an infrequent need to traffic engineering and centralized
management works beautifully. Whereas in case of a dynamic traffic demand, connection
requests arrive to and depart from a network one by one in a random manner. There is a
need to accommodate service requests on a more dynamic basis and centralized network
management may not be able to respond rapidly enough, and is not scalable.
Very soon, new services and emerging applications will demand dynamic networking.
Some related issues to be addressed are: variable bandwidth on demand, storage area
networks (SAN), disaster recovery networks and high-speed Internet connectivity to ISPs
and ASPs.


Leased lines vs. bandwidth on-demand
To be completed…


IP/MPLS over static vs. dynamic
To be completed…


Multilayer resilience in an IP over Optical network
To be completed…



       5.3.2 Transport and grooming of IP/MPLS traffic
In the new paradigm for Intelligent Optical Networks (ION), bandwidth requests from IP
layer are serviced directly by the optical layer and routing within the optical network uses
IP-MPLS protocols: automatic discovery of neighbors (routing table), path selection
according to service parameters (bit rate, level of protection, etc), signaling to establish
path through the network.
With regard to network recovery and traffic engineering in an IP/MPLS-over-optical network
scenario, ION offer a whole range of advantages. The ION’s local reconfiguration multi-
layer recovery scheme is significantly better in cost-efficiency compared to approaches
with static optical transport networks.
The cost- efficiency of a network can also be increased by applying a grooming scheme.
Grooming tries to achieve a compromise between the efficient use of the node equipment



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                             IST IP NOBEL "Next generation
                                                                               Title of the document
                             Optical network for Broadband
                                  European Leadership"                    33c7fd02-08a2-491d-a19e-
                                                                                  5a9256d2fff6.doc




in the IP layer and the transmission equipment in the optical layer of the network. Applying
an appropriate grooming scheme also allows designing a logical IP topology best suited for
the envisaged traffic demand.
At first, carriers’ most advantageous option was adding high-speed, point-to-point optical
links outside their existing core networks as large-customer opportunities arise, and, one
day, these island links can be integrated with the core. Nowadays, the creation of star
topologies or linear rings is being undertaken gradually, with the simple connection of
separate point-to-point links as revenue opportunities dictate. As the number of customers
requesting high-speed services explodes and bandwidth-on-demand services begin to
appear, carriers with linear-ring topologies will evolve toward full rings based on optical
add-drop-multiplexer platforms. Eventually, optical metro networks will be transformed into
fully flexible platforms with the introduction of metro optical cross-connects.


Core network, mesh vs ring network topologies
To be completed…


Economical interest of the optical path (TDSC, LSC) through (opaque node) in the
core network
To be completed…


Influence of transparency on CAPEX and OPEX in transport network
To be completed…


Hybrid Network Elements
To be completed…


ION with Ethernet and/or MPLS edge (with ASON/GMPLS control plane) vs IP/MPLS
PSRs for providing L3/L2 VPN services
To be completed…


SLA in context of Point-to-Point vs. access based contracts (?)
To be completed…


The cost of provisioning of different QoS levels
To be completed…




                                       Page 71 of 73
                               IST IP NOBEL "Next generation
                                                                                    Title of the document
                               Optical network for Broadband
                                    European Leadership"                       33c7fd02-08a2-491d-a19e-
                                                                                       5a9256d2fff6.doc




       5.3.3 Metro issues
In a highly competitive telecommunications environment, next-generation optical metro
access technologies will enable service providers to limit capital investment while
leveraging existing optical assets more efficiently. The result will be the ability to deliver
voice and next-generation services more cost effectively and efficiently.
Competitive local exchange carriers (CLECs) face many access challenges, especially in
delivering direct access to unbundled local loops or bundled services to a multi-tenant
dwelling.
Internet service providers (ISPs), often delivering Internet access services in conjunction
with a CLEC or incumbent local exchange carrier (ILEC), require fast and reliable
interconnection of their IP/ATM and router-based networks to optical metro access
networks.
Incumbent local exchange carriers (ILECs) face strong competitive pressure from all sides.
Critical to their success is their ability to protect their established base of customers and
services while developing and delivering the next-generation voice and data services their
customers demand. To accomplish this transition successfully, they must find a means of
optimizing existing infrastructures as they utilize them to deliver new, competitive service
offerings.


The feeder/metro access segment case study (e.g. Ring vs Tree)
To be completed…


The metro core (Ring vs Mesh)
To be completed…


LEX CO reuse by upgrading to NGN architecture
To be completed…


Optimal SAN provisioning (?)
To be completed…


SLA in context of Point-to-Point vs. access based contracts (?)
To be completed…




 6       Conclusions and assessment for further work




                                         Page 72 of 73
IST IP NOBEL "Next generation
                                    Title of the document
Optical network for Broadband
     European Leadership"       33c7fd02-08a2-491d-a19e-
                                        5a9256d2fff6.doc




        Page 73 of 73

				
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