Docstoc

Document template for NOBEL

Document Sample
Document template for NOBEL Powered By Docstoc
					                                                                                 4f954760-b6c9-4a6d-8121-
                          IST IP NOBEL "Next generation
                                                                                          7f6f6fb8d64f.doc
                          Optical network for Broadband
                               European Leadership"




Work Package 2
Deliverable 12 “Overview of social impact and
economic opportunities generated by NOBEL
concepts”

IST Integrated Project:
NOBEL "Next generation Optical
network for Broadband European
Leadership"
Status and Version:              Final version
Date of issue:                   29.11.2004
Distribution: PP                 Restricted to other programme participants (including Commission Services).
Author(s):                       Name                                     Partner
                                 Jesús F. Lobo                           Telefónica I+D
                                 Juan Fernández-Palacios                 Telefónica I+D
                                 Antonio Elizondo                        Telefónica I+D
                                 Luis Fdo. Solórzano                     Telefónica I+D
                                 Víctor López                            Telefónica I+D
                                 Alberto Savoldelli                      AIP
                                 Raffaello Balocco                       AIP
                                 Roberto Cabrelli                        AIP
                                 Filippo Renga                           AIP
                                 Giovanni Ippolito                       AIP
                                 Miroslaw Kantor                         AGH
                                 Krzysztof Wajda                         AGH




                                       Page 1 of 126
                                                                        4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                 7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




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                                                                         6
    1.3   Document History                                                                    8
2   NOBEL Network & Services Vision                                                           9
3   Social and Economical Analysis                                                           11
    3.1    Environment                                                                       11
       3.1.1 Economy                                                                         11
       3.1.2 Employment. Need for qualified users.                                           13
       3.1.3 Legislation.                                                                    15
    3.2    Communication Infrastructures                                                     17
       3.2.1 Access Segment                                                                  18
       3.2.2 Data services                                                                   26
       3.2.3 Metro and Core Infrastructures                                                  27
    3.3    Services                                                                          30
       3.3.1 Citizens                                                                        30
       3.3.2 Companies                                                                       37
       3.3.3 Public Administration                                                           41
    3.4   Conclusions                                                                        46
4   NOBEL and the Information Society in Europe                                              48
    4.1    Impact of the socioeconomic evolution on NOBEL concepts                           48
       4.1.1 Economic analysis                                                               49
       4.1.2 Technological conditions analysis                                               50
       4.1.3 Social conditions analysis                                                      51
       4.1.4 Political/ Regulatory conditions analysis                                       56
    4.2    New opportunities generated by NOBEL in the Information Society                   57
       4.2.1 NOBEL influence on Economic area                                                57
       4.2.2 NOBEL influence on Social area                                                  60
       4.2.3 NOBEL influence on Political/ Regulatory area                                   62
       4.2.4 New opportunities                                                               62
5   Overview of new business opportunities                                                   63
    5.1    Broadband networks value chain and business roles                                 63
       5.1.1 The evolving telecommunications value chain                                     63
       5.1.2 A reference model of business roles for broadband optical networks              65
    5.2    Charging models                                                                   68
       5.2.2 Socioeconomic impact of charging communication services                         74
       5.2.3 Economic definitions for charging model context                                 75
       5.2.4 Competition models                                                              81
       5.2.5 Interconnection issues                                                          82




                                      Page 2 of 126
                                                                    4f954760-b6c9-4a6d-8121-
                           IST IP NOBEL "Next generation
                                                                             7f6f6fb8d64f.doc
                           Optical network for Broadband
                                European Leadership"




    5.3    Preliminary overview of new business models                                   83
       5.3.1 Static vs. dynamic routing and wavelength assignment (RWA) in broadband
       networks                                                                          83
       5.3.2 Transport and grooming of IP/MPLS traffic                                   83
       5.3.3 Metro issues                                                                85
6   Conclusions and assessment for further work                                          87
7   Annex A: Benchmarking between Europe, US and Japan                                   89
    7.1   United States                                                                  89
    7.2   Japan                                                                          92
    7.3   A comparison with Europe                                                       96
8   Annex B: Questionnaires answered by the partners and results                       100




                                     Page 3 of 126
                                                                            4f954760-b6c9-4a6d-8121-
                               IST IP NOBEL "Next generation
                                                                                     7f6f6fb8d64f.doc
                               Optical network for Broadband
                                    European Leadership"




 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 Commission, 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/)




                                         Page 4 of 126
                                                                      4f954760-b6c9-4a6d-8121-
                          IST IP NOBEL "Next generation
                                                                               7f6f6fb8d64f.doc
                          Optical network for Broadband
                               European Leadership"




[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. (http://www.dtc.umn.edu/~odlyzko/doc/recent.html)
[9]    N. Ben Azzouna, C. Fricker, F. Guillemin, “Modelling 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", March
                     2004. ISBN 9264021035.
[12]   Rainer Händel, " NGN Governance Issues". ITU-T "Worshop on Internet Governance"
[13]   Ipsos.            “Telecom               Services            Indicators,         2004”,
                        (http://europa.eu.int/information_society/topics/ecomm/doc/useful_infor
                        mation/library/studies_ext_consult/inra_year2004/report_telecom_2004
                        _final_reduced.pdf)
[14]   M. Falkner et. all, “An overview of pricing concepts for broadband IP networks”, IEEE
                         Comm. Surveys, Second Quarter 2000.
[15]   Luiz A. DaSilva, “Pricing for QoS-enabled Networks: A Survey”, IEEE Comm. Surveys,
                        Second Quarter 2000.
[16]   R. Cocchi et al., "Pricing in Computer Networks: Motivation, Formulation and Example,"
                         IEEE/ACM Trans. Net., Dec. 1993.
[17]   H. Jiang and S. Jordan, "A Pricing Model for High-Speed Networks with Guaranteed
                       QoS," Proc. IEEE INFOCOM, 1996.
[18]   M. Honig and K. Steiglitz, "Usage-based Pricing of Packet Data Generated by a
                     Heterogeneous User Population," Proc. IEEE INFOCOM, Apr. 1995.
[19]   J. M. Peha and F. A. Tobagi, "Cost-based Scheduling and Dropping Algorithms to
                     Support Integrated Services," IEEE Trans. Commun., Feb. 1996.
[20]   S. J. Shenker, "Fundamental Design Issues for the Future Internet," IEEE JSAC, Sept.
                        1995.
[21]   The Information for Development Program (infoDev) “Telecommunications Handbook
                       Regulation”, (http://www.infodev.org/projects/314regulationhandbook/)
[22]   Network World Diffusion, “FCC frees VoIP service from state regulation”, September,
                      2004; (http://www.nwfusion.com/edge/news/2004/1014fccexemp.html)
[23]   Network World Diffusion, “FCC exempts fiber-to-the-curb from sharing requirements”,
                      October, 2004 (http://www.nwdifusion.com/2004/1109fccfrees.html)
[24]   ESA Telecom Report “Executive Summary: Cost Benefit Analysis for Broadband
                    connectivity          in         Europe”, October        2004
                    (http://telecom.esa.int/click/?o=14863)




                                   Page 5 of 126
                                                                    4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                             7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




        1.2.2 Acronyms
3G        Third-Generation Cell-Phone Technology
AAA       Authentication, Authorization and Accounting
ADSL      Asymmetric Digital Line Subscriber
ASON      Automatic Switched Optical Network
ATM       Asynchronous Transfer Mode
CapEx     Capital Expenditure
CLEC      Competitive Local Exchange Carriers
CPE       Customer Premise(s) Equipment
CPU       Central Processing Unit
CSFB      Credit Suisse First Boston
DBORN     Dual Bus Optical Ring Network
DSL       Digital Subscriber Line
DSLAM     Digital Subscriber Line Access Multiplexer
DXC       Digital Cross Connect
EDI       Electronic Data Interchange
EITO      European Information Technological Observatory
FCC       Federal Communications Commission (USA)
FR        Frame Relay
FTTC      Fiber To The Curb
FTTH      Fiber To The Home
GDP       Gross Domestic Product
GMPLS     Generalized Multi Protocol Label Switching
GPRS      General Packet Radio Switching
GSM       Global System for Mobile communications
HFC       Hybrid Fiber-Coaxial
HDTV      High Definition TeleVision
ICT       Information and Communications Technologies
ILEC      Incumbent Local Exchange Carrier
IP        Internet Protocol
ISDN      Integrated Services Digital Network
ISP       Internet Service Provider
ITU-T     International Telecommunication Union Telecommunication standardisation section
L1        Transport Layer 1




                                       Page 6 of 126
                                                                 4f954760-b6c9-4a6d-8121-
                           IST IP NOBEL "Next generation
                                                                          7f6f6fb8d64f.doc
                           Optical network for Broadband
                                European Leadership"




L2      Transport Layer 2
L3      Transport Layer 3
LAN     Local Area Network
LMDS    Local Multipoint Distribution Service
MAN     Metropolitan Area Network
MPHPT   Ministry of Public Management, Home Affairs, Post and Telecommunications
MPLS    Multi Protocol Label Switching
MUSE    MUlti Service access Everywhere
NGN     Next Generation Network
OBS     Optical burst switching
OECD    Organization for Economic Co-operation and Development
OpEx    Operational Expenditure
OPS     Optical packet switching
P2P     Peer-to-Peer
PAYE    Pay-As-You-Earn
PLC     Power Line Communication
PLN     Polish Zloty New
PON     Passive Optical Network
POS     Packet Over SONET
PSTN    Public Switched Telephone Network
QoS     Quality of Service
RPR     Resilient Packet Rings
SAN     Storage Area Network
SDH     Synchronous Digital Hierarchy
SETI    Search for ExTraterrestial Intelligence
SLA     Service Level Agreement
SME     Small and Medium-sized Enterprise
SMS     Short Message Service
SOHO    Small Office / Home Office
SONET   Synchronous Optical NETwork
UMTS    Universal Mobile Telecommunications System
VAT     Value Added Tax
VoD     Video on Demand
VoIP    Voice over IP




                                     Page 7 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                                IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                                Optical network for Broadband
                                     European Leadership"




VPN         Virtual Private Network
WAN         Wide Area Network
WiFi        Wireless Fidelity
WiMAX       Worldwide Interoperability for Microwave Access
WP          Work Package



 1.3      Document History
Version                  Date                       Authors                    Comment
0.01                     7/07/2004                  Juan Fdez-Palacios         Initial     document
                                                                               template and TOC.
0.02                     30/07/2004                 Miroslaw       Kantor, AGH        sends    its
                                                    Krzysztof Wajda        contribution     about
                                                                           charging models.
0.1                      20/09/2004                 Alberto    Salvodelli,     Update     of      the
                                                    Roberto Cabrelli           document, including a
                                                                               benchmarking
                                                                               between    US     and
                                                                               Japan.
0.3                      15/11/2004                 Luis Fdo. Solórzano        Chapter 5 updated.
0.5                      15/11/2004                 Victor Lopez, Jesus F. First draft of chapter 4.
                                                    Lobo, Juan Fdez-
                                                    Palacios
0.6                      22/11/2004                 Victor Lopez, Jesus F. Chapter 3          and   4
                                                    Lobo, Juan Fdez- updated.
                                                    Palacios
0.7                      25/11/2004                 Giovanni      Ippolito, Comments                to
                                                    Krzysztof Wajda         deliverable.




                                        Page 8 of 126
                                                                                               4f954760-b6c9-4a6d-8121-
                                IST IP NOBEL "Next generation
                                                                                                        7f6f6fb8d64f.doc
                                Optical network for Broadband
                                     European Leadership"




 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 focusing on ASON/GMPLS
architectures. Figure 1 represents the technical approach adopted in WP1 for defining the
network core and metro scenario.



                       Applications




                                      matching          High-level Network
                                                          Requirements


                                                                                    Network
                         Network
                                                                                   Scenarios
                         Services

                                                    Functional modeling of the
                                                 Transport and Service Platforms


Figure 1: Methodology adopted in WP1
NOBEL’s vision about the network is spitted on two strata, Service and Transport. (see
Figure 2).
The Transport stratum is in charge of transporting digital information, it interconnects users
and/or service nodes. The Services stratum must hand over the users service, using
transport stratum for providing the services (e.g. connectivity) With regard to NOBEL
vision, there are two types of services:
        Applications: These services can be used by humans. Examples are web services,
         telephony, video conferencing, video on demand.
        Network services: These services provide connectivity to the user, for example a
         Layer 2 VPN. Over this service you can use different applications, like
         videoconferencing on your company.


                                                   APPLICATIONS




                                                  SERVICES LAYER




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

                                      MULTI-SERVICE NETWORK INFRASTRUCTURE




Figure 2: Functional model of the NOBEL network




                                             Page 9 of 126
                                                                                                                                                                                                                                                                                                                                                                    4f954760-b6c9-4a6d-8121-
                                    IST IP NOBEL "Next generation
                                                                                                                                                                                                                                                                                                                                                                             7f6f6fb8d64f.doc
                                    Optical network for Broadband
                                         European Leadership"




NOBEL defines five main classes of network services (Public IP, Business IP, VPNs L1, L2
and L3). All applications can not be provided over all network service. Next table shows a
relation between applications and services, describing over which service an application
can be handed over.




                                                                                                                                                                                                                                                                                                                     - 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

Table 1: Mapping applications into network services


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].




                                                                          Page 10 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




 3        Social and Economical Analysis
To analyze social and economical environment several indicators from important
organizations as well as consultants has been taken into account. Although these
indicators are current, data provided by them may be for previous years. An example is ITU
report that gives values from 2002, although report was published on May 2004. Each
figure indicates its source and its publication date.


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 in the next chapter.
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, access, metro&core) available in the EU.
        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.



 3.1      Environment
The number of factors, which can affect the communication networks development, may be
quite large, but for the purposes of this report they have been classified into three 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 (as exemplified in Annex A), a winning approach
policy could be the Japanese one, where the legislation implemented has always
warranted a wide and equal competition between incumbent and new entrants, thanks to
financial sustains to all competitors.
Particularly, the economic sustain to the telecom companies has been an important
movement as it has allowed many companies to face high investments in infrastructures
also without big revenues in the short term. In other words, the State has shared the risk
with the enterprises just to boost enterprises to invest in the best access technologies.




                                      Page 11 of 126
                                                                                                                   4f954760-b6c9-4a6d-8121-
                                                     IST IP NOBEL "Next generation
                                                                                                                            7f6f6fb8d64f.doc
                                                     Optical network for Broadband
                                                          European Leadership"




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 next figure:



                                         40000

                                         35000                                                         Denmark
                                                                           Ireland
                GDP per capita (Euros)




                                         30000                                                            Sweden
                                                                                            UK      Finland
                                         25000                                   France       Germany
                                                                                    Italy
                                         20000

                                         15000                    Spain
                                                        Greece
                                                                  Portugal
                                         10000
                                                                        Czech Republic
                                         5000                    Croatia      Estonia

                                            0
                                                 0   1000      2000       3000       4000       5000      6000   7000
                                                            Internet users per 10.000 inhabitants


Figure 3: Technology Penetration and Productivity (Source: ITU 2004, May.
Indicators: 2002. Exchange rates: 16th November 2004.)


The correlation is quite clear, the greater the GDP, the greater the Internet penetration.
However, it is not total, since Estonia and Czech Republic have a greater Internet
penetration than Spain, Portugal and Greece despite their GDP per capita is much more
lower. A similar situation occurs with Ireland, which has a similar GDP per capita than
Denmark although their Internet penetration is lower. There are therefore other factors that
determine the degree of final development of the Information Society (legislation,
promotion, employment, degree of specialization 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 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.




                                                                Page 12 of 126
                                                                                                    4f954760-b6c9-4a6d-8121-
                                         IST IP NOBEL "Next generation
                                                                                                             7f6f6fb8d64f.doc
                                         Optical network for Broadband
                                              European Leadership"




In spite of this, the market, both that of IT and communications is slowly recovering, as can
be observed in figure below.

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


Figure 4: Western European ICT market, 2002-2004 (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 it can be seen 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 worst
percentages correspond to countries such as Greece, Italy, Portugal or Spain where most
of active population is employed in SMEs.

                3,5

                   3

                2,5

                   2

                1,5

                   1

                0,5

                   0
                            en




                                                                y
                     nd




                                                                                               al
                                                                n

                                                                                 ly
                                     d




                                                               m
                                                     em rk

                                                                g




                                                              ce
                                                               m




                                                                                               e
                                                              ria

                                                            an
                                                             ur




                                                             ai
                                    n




                                                                                             ec
                                                                             Ita


                                                                                          g
                                                             a




                                                            iu
                                                           do
                          ed




                                                           an
                   la




                                 la




                                                           st



                                                         Sp




                                                                                      rtu
                                         m

                                                         bo




                                                         m
                                                          lg




                                                                                          re
                ol




                                n




                                                       Au
                                                        ng
                       Sw




                                                       Fr
                                        en




                                                      Be




                                                       er
                             Fi




                                                                                   Po

                                                                                         G
               H




                                                     Ki




                                                     G
                                     D

                                            x

                                                   d
                                         Lu

                                                te
                                             ni
                                              U




Figure 5: Percentage of working population employed in ICT (Source: OECD 2002)



                                                         Page 13 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                                  IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                                  Optical network for Broadband
                                       European Leadership"




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, figure below shows layoff announcements in telecommunication companies are
gradually decreasing.

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



                                                         c.
                  ce

                           o




                                            Ve l s




                                                        gy
                                                         g

                                              U il




                                                        re
                                            on a.




                                                        es
                                             ac s



                                                        a
                                                       e
                                                     rin
                        lc




                                                      a
                                                     ru
                                                   rm




                                                   su
                                                    et



                                        sp ner
                n




                                                    cl




                                                    iti
                       Te




                                                   et
                                                    e
             na




                                                 tu
                                                 st




                                                 til
                                                 hi



                                                 R
                            M




                                                ei
                                              ha



                                               M




                                              E
            Fi




                                             t/l
                                          or
                                          C




                                          uf
                                         al




                                       an
                             ic




                                     an
                                     m
                            m
                         he




                                  Tr
                                  er
                                th
                        C




                               O




Figure 6: Layoff announcements in Western Europe, thousands (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 reorganize
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. Next figure shows
percentage of people who has received training on IT:




                                          Page 14 of 126
                                                                                   4f954760-b6c9-4a6d-8121-
                                 IST IP NOBEL "Next generation
                                                                                            7f6f6fb8d64f.doc
                                 Optical network for Broadband
                                      European Leadership"




                 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
Figure 7: Percentage of population working on areas related to IT that has received
specific training. (Source: Eurobarometer 2002)



       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 that prevents unequal situations from developing in different
EU countries. By way of an example of practices to avoid was the concession of UMTS
licenses 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.


As described in Annex A, a winning approach policy could be the Japanese one, where the
legislation implemented has always warranted a wide and equal competition between
incumbent and new entrants, thanks to financial sustains to all competitors.


Particularly the economic sustain to the telecom companies has been an important
movement as it has allowed many companies to face high investments in infrastructures
also without big revenues in the short term. In other words, the State has shared the risk
with the enterprises just to boost enterprises to invest in the best access technologies.


From the beginning, the policy of the European Union on telecommunications has been
focused on the creation of a domestic market and liberalization 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.




                                          Page 15 of 126
                                                                              4f954760-b6c9-4a6d-8121-
                                IST IP NOBEL "Next generation
                                                                                       7f6f6fb8d64f.doc
                                Optical network for Broadband
                                     European Leadership"




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

Table 2: European legislation about Information Society


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
   Common Legislative Framework                  Extension of the scope of regulation to all the
                                                 electronic communications networks and 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).

Table 3: Directives proposed for a Telecom legal framework




                                         Page 16 of 126
                                                                                          4f954760-b6c9-4a6d-8121-
                                     IST IP NOBEL "Next generation
                                                                                                   7f6f6fb8d64f.doc
                                     Optical network for Broadband
                                          European Leadership"




Finally, a very important legislative endeavor, 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.


Related with NGN initiatives, in United States (October, 18th 2004), Federal
Communications Commission has allowed telephone carriers to refrain from sharing FTTC
(Fiber to the curb) deployments with competitors, in order to accelerate fiber rollout [22].
Services and applications are decisive drivers to increase broadband penetration in
business and residential customers, so they must have a proper legal framework. In United
States, FCC has freed VoIP service from state regulation, so VoIP service could be
deployed faster in US [23], because it won’t need to fulfill with governmental requirements.
However government will not disappear, it can protect consumer from fraud, respond to
complaints and enforce fair business practices.



    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.




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.”



                                               Page 17 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




Figure 8: Communication Infrastructures Model



       3.2.1 Access Segment
Metro and core networks addressed in NOBEL will facilitate the transparent transport of
any kind of broadband services. In this section, these infrastructures will be studied; they
will provide the aggregated traffic from the final users to the metro and core networks. In
that respect, the current situation of either user’s terminals or access networks will be
analyzed.


                      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
has maximum interactive capacity. Therefore, its level of implantation among users is a
fundamental indicator.
Figure 9 shows PC penetration in European countries. Sweden, Luxemburg, Denmark and
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
that has experienced growth of more than 30% since 2000.




                                       Page 18 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




              70

              60

              50

              40
                                                                          2000'
              30                                                          2002'

              20

              10

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



Figure 9: Penetration of personal computers per every 100 inhabitants (Source: ITU
2004, May)


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.



              120

              100

               80
                                                                          1996'
               60
                                                                          2000'
                                                                          2002'
               40

               20

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



Figure 10: Penetration of cellular telephones per every 100 inhabitants Source: ITU
2004.



                                     Page 19 of 126
                                                                                  4f954760-b6c9-4a6d-8121-
                                    IST IP NOBEL "Next generation
                                                                                           7f6f6fb8d64f.doc
                                    Optical network for Broadband
                                         European Leadership"




Currently, 3G mobile terminals still have 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.



                250

                200

                150                                                       Large corporations
      Million




                                                                          SMEs
                100
                                                                          Residential contract
                50
                                                                          Residential prepaid

                 0
                       2003     2004   2005    2006   2007     2008
Figure 11: 3G subscriber numbers in Western Europe by market segment (Source:
Analysis 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
as a consequence of the maturity of the fixed telephone service, the use of mobile
telephony and, to a lesser extent, VoIP (especially in the business environment).



                      80

                      70

                      60

                      50
                                                                                   1996'
                      40
                                                                                   2000'
                      30                                                           2002'

                      20

                      10

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



Figure 12: Penetration of main telephones lines per every 100 inhabitants (Source:
ITU 2004)



                                              Page 20 of 126
                                                                                            4f954760-b6c9-4a6d-8121-
                                              IST IP NOBEL "Next generation
                                                                                                     7f6f6fb8d64f.doc
                                              Optical network for Broadband
                                                   European Leadership"




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 are 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].
VoIP is getting an each time more important position on telephony market. This migration
to IP networks of the telephony service has reduced the price of calls and customers are
approaching to this new technology. Next figure shows current penetration of VoIP service
and an outlook of its evolution:

                                        100
                                         90
                                                      Total market
                                         80
                                         70           Broadband residential
                      Penetration (%)




                                         60           penetration

                                         50
                                         40
                                         30
                                         20
                                         10
                                          0
                                               2003        2006        2010   2015   2020


Figure 13: VoIP penetration and broadband residential penetration in Europe
(Source: EITO 2004)
According to previous figure, nowadays VoIP penetration in Europe has no repercussion
(VoIP penetration in 2003 was fewer to 1%), but it will increase in next years. However,
European traffic over world PSTN is very important as can be seen in the following figure,
so European traffic due to VoIP will have an important impact in core network.




Figure 14: International VoIP and PSTN Traffic Termination Summary, 2002 (Source:
TeleGeography research 2004.)


Mobile phone and VoIP are covering fixed telephony service, which has influenced in the
decrease of telephone lines.



                                                          Page 21 of 126
                                                                                4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                         7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




                     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.



                14                                              Jan. 2003
                12                                              Jan. 2004
                10
                 8
                 6
                 4
                 2
                 0
                     er rg




                             en
                               e




                     Au ds




                    Sw d
                      Ire e
                            nd




                     Fi al




                            15
                     Fr n




                              K
                     m ly
                     er k
                     G ny




                    Po tria
                   D ium
                   G ar




                             c
                           ec




                           an
                            ai




                            U
                  xe Ita




                            g
                  ed u
                           n
                         an
                           a




                        EU
                          la




                         ed
                        Sp




                        rtu
                         m




                          s
                N bo
                        la
                        re
                        m
                        lg




                        nl
                     en
                    Be




               Lu




Figure 15: Broadband take-up in the EU15 (percentage of population) (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 Communications    Fixed Telephony, dial up,   xDSL, Cable modem,
                                             ISDN…             Ethernet, PLC, WiMAX…
             Mobile Communications        GSM, SMS…            GPRS, UMTS, Wi-Fi

Table 4: Overview broadband access technologies


Among the new broadband technologies, the solution that is growing at the fastest rate is
DSL (ADSL, SHDSL, VDSL...) (Figure 16). 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.




                                       Page 22 of 126
                                                                                                     4f954760-b6c9-4a6d-8121-
                                 IST IP NOBEL "Next generation
                                                                                                              7f6f6fb8d64f.doc
                                 Optical network for Broadband
                                      European Leadership"




                   25000000


                   20000000

                                                                                Total broadband
                   15000000
                                                                                DSL
                                                                                Cable
                   10000000
                                                                                Other technologies

                    5000000


                          0
                                July 02   January   July 03   Jannuary
                                            03                   04



Figure 16: Broadband take-up by technology in the EU15 (Source: Commission
Services 2004)


The advantages of DSL 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          Consumer
                                 Business
                  40000


                  30000


                  20000


                  10000


                      0
                              2003          2004          2005           2006           2007




Figure 17: Broadband connections evolution in Western Europe 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.


Another technology, which offers broadband services, is the cable modem, normally
associated with optic fiber (a solution technically called HFC or Hybrid Fiber 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. As next figure shows, while DSL represented 74% of
total connections and cable reached 22%, in January 2004.



                                              Page 23 of 126
                                                                              4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                       7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




                     100

                      80

                      60                                              DSL

                      40                                              Cable


                      20

                       0
                              Urban       Suburban       Rural


Figure 18: DSL and cable modem coverage in the EU15 (percentage of population)
(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 fiber-
to-the-home have been built in Sweden and Italy, although mainly in urban areas.
A special mention must be made of the availability of a new technology called PLC ("Power
Line Communications"). PLC enables access to the Internet via the electrical grid, this
solution is now commercially available in some European countries. If this were 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
that 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. A report from ESA [24], on 6 October 2004, analyzes the potential role of satellite-
based solutions for broadband connectivity in areas that another broadband technologies
could not reach or their deployment would not be profitable.




                                       Page 24 of 126
                                                                                                4f954760-b6c9-4a6d-8121-
                                IST IP NOBEL "Next generation
                                                                                                         7f6f6fb8d64f.doc
                                Optical network for Broadband
                                     European Leadership"




Companies

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 access
connection. In general, the highest use of modern infrastructures, such as broadband, was
recorded in the Nordic countries (Denmark, Finland, Sweden and Norway).


               120

               100

                80

                60

                40

                20

                0
                     DK        EL   IT          LU        NL     AT         PT        FI   SE

                                         Modem (56k) + ISDN     xDSL    Other


Figure 19: Enterprises having access connections: proportion with selected types of
access (%) (Source: EuroStat, December 2003)


Most of enterprises, especially SOHO and SMEs are still using narrowband connections
(PSTN dial up and ISDN). These companies have a very limited access to network
services and applications (i.e. public IP and business IP).
Regarding the use of broadband access connections, while large companies usually have
leased lines over fiber or copper, 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.



                     80
                     70
                     60
                     50
                     40
                     30
                     20
                     10
                     0
                                           IE
                                   15




                                                                            FI
                                                IT
                                    E




                                                                       PT
                      BE




                                                                                 SE
                                                                L
                                                     LU
                           K




                                                                                       K
                                                               AT
                                  D




                                                           N
                           D




                                                                                      U
                                EU




Figure 20: Proportion of SMEs using broadband connections, 2003 (%) (Source:
eEurope 2004)




                                            Page 25 of 126
                                                                                                                          4f954760-b6c9-4a6d-8121-
                                                    IST IP NOBEL "Next generation
                                                                                                                                   7f6f6fb8d64f.doc
                                                    Optical network for Broadband
                                                         European Leadership"




         3.2.2 Data services
Most important market for European fixed networks operators are the business data
services, despite the fast growing of xDSL customers. However, data services are
changing and new technologies are replacing traditional services. Following table shows
revenues of this market separately by services:


                                                                                      2003      2004         2005       2006       2007     2008

                Business IP                       Dedicated Internet Access             1650      1900         2100        2500      2600     2800



                            VPN L1                   Leased/Private Line                9100      8100         7500        6800      6000     5500



  Business                                                     X.25                     1100       850           650         500      350      240
  Revenues
 in Mill Euro                                               Frame Relay                 3200      3150         3050        2900      2500     2200
                            VPN L2
                                                               ATM                      1700      1670         1680        1690      1630     1490

                                                     Wide-Area Ethernet                  620       960         1420        2010      2800     3700



                            VPN L3                            IP VPN                    1500      2500         3800        4900      6300     6700



                                                        Total revenues                 18870     19130        20200       21300     22180    22630


Table 5: Forecast of revenues of data services (Source: Yankee Group, 2003)


Revenues of this market are very important and the forecast gives an increasing evolution
of the market. Following figure shows evolution of revenues of main data services:



                                                             Revenues Growth of Data Services
                                    100,00

                                     80,00
                Growth Service(%)




                                     60,00

                                     40,00

                                     20,00

                                      0,00
                                                 2003-04              2004-05         2005-06          2006-07         2007-08
                                    -20,00

                                    -40,00
                                      X.25                              Frame Relay                    ATM
                                      Leased/Private Line               IP VPN                         Dedicated Internet Access
                                      Wide-Area Ethernet



Figure 21: Forecast evolution of revenues of data services (Source: Yankee Group,
2003)




                                                                   Page 26 of 126
                                                                                                                                     4f954760-b6c9-4a6d-8121-
                                          IST IP NOBEL "Next generation
                                                                                                                                              7f6f6fb8d64f.doc
                                          Optical network for Broadband
                                               European Leadership"




As it can be seen in Figure 21, revenues from old technologies (like X25, Frame Relay,
Leased Lines and ATM) will fall due to the high costs of these technologies and their
replacement by new technologies like Wide-Area Ethernet and IP VPN. It is important
noticed that VPN L2 is the service which gives the greatest revenues in data services.
Gradually large companies are migrating to connectivity optimized 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 than 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”).



       3.2.3 Metro and Core Infrastructures
Currently, different network layers and infrastructures provide different types of services
such as telephony, data or IP services. Figure below illustrates a typical carrier
infrastructure:


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




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




                                                                                         PSTN,                ATM/ FR
                Nodes
           Access                         SDH, DWDM Multiplexers          xDSL           ISDN    BS         Concentrators            MDF      BS
                                                                                         xDSL
                                                                                                                                       Cir    Cir
                                                                                                                                       cui    cui
         Services Routing                                                                                                              t      t
         and Switching                                                              IP                  FR/ATM              X 25              Sw
                                                                                                                                       Sw
                                                                                                                                       itc    itc
                                                                                                                                       hin    hin
                                                                                                                                       g      g
         BasicSwitching
                                                                                                  ATM


         Transmission
                                                                               DWDM /SDH



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




Figure 22: Current Network Scenario
The foundation of most carrier infrastructure is SDH optical transmission, which provides
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, are usually 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. Fiber Channel)
     IP services such as Internet IP VPN or VoIP are usually carried over ATM and
      SDH. However, Ethernet is gaining prominence as replacement solution.



                                                         Page 27 of 126
                                                                                                   4f954760-b6c9-4a6d-8121-
                                IST IP NOBEL "Next generation
                                                                                                            7f6f6fb8d64f.doc
                                Optical network for Broadband
                                     European Leadership"




                     3.2.3.1 Transmission networks


Metropolitan transmission networks for every service are usually 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).


                                 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



Figure 23: Example of Metropolitan Transmission Node


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.
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 are usually
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. Therefore, the provision of new connections require
days or even months.
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 operator’s 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.




                                                    Page 28 of 126
                                                                              4f954760-b6c9-4a6d-8121-
                                IST IP NOBEL "Next generation
                                                                                       7f6f6fb8d64f.doc
                                Optical network for Broadband
                                     European Leadership"




                       3.2.3.2 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.
       Voice networking is itself built on SDH with an architecture comprising access
        nodes, local switches and trunk switches.
       IP networks are usually 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, traditional circuit-switched services migrate to IP networks and
        data grows, therefore, networks must evolve to accommodate the traffic. However,
        IP may need to become more complex (maybe as ATM) to replace functionality of
        traditional circuits-switched services.
Access Nodes
Currently, traffic is introduced to core and metro network by different types of access
nodes:
       Access Networks Multiplexers: xDSL, HFC, PLC, PON, Wireless, Ethernet
       CPEs (Customer Premises Equipment)
             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

                     50000000
                     45000000
                     40000000
                     35000000
                     30000000
                     25000000
                     20000000
                     15000000
                     10000000                                   IP DSLAM
                                                                ATM
                      5000000
                            0
                            2004           2005          2006              2007


Figure 24: World Wide DSLAMDSL Port Shipments (Source: Infonectics Research,
May 2004)



                                        Page 29 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                                  IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                                  Optical network for Broadband
                                       European Leadership"




 3.3    Services
In this section, we will analyze services used and required from the point of view of
different types of users:
      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 organizations, which apply company management
       procedures in their management.
      Public Administration: this includes organizations that 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.



                   140000
                   120000
                   100000
                   80000                                                  2000'

                   60000                                                  2001'

                   40000                                                  2002'

                   20000                                                  2003'

                        0
                         -   15   DK   EL   FR    IT   NL    PT   SE
                      EU


Figure 25: Internet Users (thousands) (Source: ITU 2004, May.)


It illustrates how the greatest number of users is in Germany, with 39 million, followed by
the United Kingdom, which soon will surpass the barrier of 25 million. 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.




                                            Page 30 of 126
                                                                                                                                                            4f954760-b6c9-4a6d-8121-
                                                       IST IP NOBEL "Next generation
                                                                                                                                                                     7f6f6fb8d64f.doc
                                                       Optical network for Broadband
                                                            European Leadership"




                          6000

                          5000
                          4000

                          3000

                          2000
                          1000

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



Figure 26: Internet Users per 10,000 habitants (Source: ITU 2004, May.)
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 that may explain this
lower level of penetration and related to the lifestyle and way of distributing leisure time.


As it can be checked in the figure below Internet consumption is somewhat different among
the different countries of the EU. In some of them, majority of people use Internet several
times a week (like Ireland or Portugal) but in others majority of people uses Internet more
than once. These countries which most consumes the Internet are Holland, Denmark,
Belgium and Finland where more than 40% of users go on-line more than once a day.

             60


             50


             40                                                                                                                                                 Several Times
                                                                                                                                                                a week
             30                                                                                                                                                 Once a day

             20                                                                                                                                                 More than
                                                                                                                                                                once a day
             10


              0
                                                                                          y
                      m




                                            ny




                                                                                                                                                           UK
                                                                                                                                                     den
                                                                               nd




                                                                                                                                             nd
                                                                      ce




                                                                                                                             a


                                                                                                                                    gal
                                                              ain
                                                     ece
                            ark




                                                                                                                 s
                                                                                                    rg
                                                                                     Ital




                                                                                                               d


                                                                                                                        stri
                 lgiu




                                                                                                 bou
                                        rma




                                                                       n


                                                                                 a




                                                                                                           lan




                                                                                                                                              la
                                                           Sp




                                                                                                                                    rtu
                            nm




                                                                    Fra
                                                 Gre




                                                                                                                                                      e
                                                                            Irel




                                                                                                                                          Fin
                                                                                                                     Au




                                                                                                                                                   Sw
              Be




                                                                                                           der




                                                                                                                                 Po
                                                                                                 em
                                     Ge
                          Da




                                                                                                         Ne
                                                                                              Lux




Figure 27: Frequency of Internet Use (Households %) (Source: EU Telecoms
Services Indicators, May 2004.)




                                                                           Page 31 of 126
                                                                                             4f954760-b6c9-4a6d-8121-
                               IST IP NOBEL "Next generation
                                                                                                      7f6f6fb8d64f.doc
                               Optical network for Broadband
                                    European Leadership"




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 Portuguese 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.



  100
   90
   80
   70
   60
   50
   40
   30
   20
   10
    0

        lgiu
            m           any      ain               and               rg           stri
                                                                                         a            nd                   m
   Be                 rm      Sp           Ire
                                               l               bou           Au              Fin
                                                                                                 la
                                                                                                                  ing
                                                                                                                      do
                   Ge                                        em                                                dK
                                                         Lux                                             ite
                                                                                                       Un

   e-mail                     Banking                             New s                               Seek health info.
   Find Job aps.              Forums                              Training                            Seek Travels
   Videoconference            Games and Music dow nload

Figure 28: Proportion having undertaken specified activities for private purposes (%)
(Source: Eurobarometer-November 2002, EuroStat-December 2003)




                                         Page 32 of 126
                                                                                                                                                                                                         4f954760-b6c9-4a6d-8121-
                                                                      IST IP NOBEL "Next generation
                                                                                                                                                                                                                  7f6f6fb8d64f.doc
                                                                      Optical network for Broadband
                                                                           European Leadership"




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 are usually very
bandwidth consuming. In this respect, the figures below show the evolution of bandwidth
demand of ADSL user in Spain:

                                                             2002                                                                                                            2003
        Tráfico (bps)




                                                                                                                      Tráfico (bps)
                                                                           Download (netw. - user)                                                                                       Download (netw. - user)
                                                                           Upload (user - network)                                                                                       Upload (user - network)
                        0:00

                               2:00

                                      4:00

                                             6:00

                                                    8:00




                                                                                                                                      0:00
                                                                                                                                             2:00
                                                                                                                                                    4:00
                                                                                                                                                           6:00
                                                                                                                                                                  8:00
                                                           10:00

                                                                   12:00

                                                                             14:00

                                                                                     16:00

                                                                                             18:00

                                                                                                     20:00

                                                                                                              22:00




                                                                                                                                                                         10:00
                                                                                                                                                                                 12:00
                                                                                                                                                                                         14:00
                                                                                                                                                                                                 16:00
                                                                                                                                                                                                         18:00
                                                                                                                                                                                                                 20:00
                                                                                                                                                                                                                         22:00
                                                           Time                                                                                                          Time



Figure 29: Average bandwidth demand of ADSL users (2002 and 2003) (Source:
Telefonica, 2003)


As we can check in figures above ADSL users bandwidth demand is becoming more
symmetric. The main reason for this behavior 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). Nowadays, peer-to-peer (P2P)
file sharing has become the main source of traffic in the Internet, overcoming the web
traffic.



                                                                                                                                             P2P
                                                                                                                                             67,4%




                                                                                                             OTHER                           FTP                  email
                                                                             web                                                             0,3%
                                                                                                              23,3%                                               1,2%
                                                                             7,9%

Figure 30: Traffic observed in a transit router (2003)(Source: Telefonica, 2003)


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].




                                                                                                Page 33 of 126
                                                                                  4f954760-b6c9-4a6d-8121-
                                 IST IP NOBEL "Next generation
                                                                                           7f6f6fb8d64f.doc
                                 Optical network for Broadband
                                      European Leadership"




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.




                                                            •Peer to Peer
                                                            •Multimedia
                                                              Streaming


                                                            •Best-Effort Data
                                                            •Voice over IP



Figure 31: Evolution of core traffic from consumer applications (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. A
strategy could be paying an annual tax that allows you to play online through the server of
the console company (like Microsoft does with Xbox).


                          50


                          40
                                                             Optimistic

                          30
                   BUSD




                                                             Most likely
                          20


                          10                                Pessimistic


                          0
                          2002     2003     2004     2005      2006        2007

Figure 32: Online entertainment market evolution (Source RHK 2004)




                                          Page 34 of 126
                                                                              4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                       7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




An example: Situation in EU accessing countries – Poland

In countries entering EU just recently, situation within IT market is changing rapidly due to
permanent mismatching of demand and offer in this sector in the past, fast development of
SME sector and opening the market. During two years, 2001-2002 Poland has got 6
independent nationwide backbone data networks and incumbent operator,
Telekomunikacja Polska SA, has lost its dominant position in this sector. So currently there
is over provisioning of services in this market and it is very difficult to attract new corporate
customers.
In this subsection we would like to describe the problem of reliability of available data
concerning the IT and telecom market. Let us recall that population of Poland is 38 millions.
Internet access service is developing very dynamically, despite low density of access
infrastructure and high prices (relatively, when comparing with population incomes). At the
beginning of 2002 about 12,5% of population has the access to Internet (4,8 millions).
There is high penetration of this service in the sector of SME (about 85% of enterprises
had the access to Internet at the end of 2001, regardless localization).
Since there is quite strong competition on this market, prices has decreased significantly,
and typically they are (2004):
      300 to 500 PLN (70 to 117,5 Euro) installation fee,
      30 to 60 PLN (7 to 15 Euro) monthly fee, for low speed access (typically up to 128
       kbps).



                   35,00%
                                                                    29,10%
                   30,00%                              25,10%
                   25,00%
                                           19,60%
                   20,00%
                   15,00%     13,30%
                   10,00%
                    5,00%
                    0,00%
                                2001        2002         2003        2004


Figure 33: Internet access rate in Poland (current state and forecast) (Source: Polish
Market Review Ltd.: The telecommunications market in Poland, 2003.)


Real number of Internet users in Poland can be even higher since both ISP companies and
private customers (playing the role of local administrators) use the idea of leasing a line
from service provider with the capacity of 128 – 2,000 kbps and then sharing these
resources among many users, sometimes even 30. Such situation, especially for private
customer using dedicated access router and implementing masquerade (usually low cost
Linux-based solution), hides real number of users (even decreasing this number few times
in special situations). This is quite often situation for blocks of flats where 10 to 30 users




                                        Page 35 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




are sharing common bandwidth. What is more even in such, theoretically inconvenient
environment, available bandwidth is generally sufficient what can be admitted from real-
time measurements (see figure below).
It can be seen from presented traces that there is high variability of traffic manifesting on
different time scales and this observation helps administrator to combine (bundle) different
types of users in specific network.




Figure 34: Daily incoming/outgoing traffic traces from block of flats (Source: ISP
located in Kraków, Poland)




Figure 35: Weekly incoming/outgoing traffic traces from block of flats




Figure 36: Yearly incoming/outgoing traffic traces from block of flats




                                      Page 36 of 126
                                                                                        4f954760-b6c9-4a6d-8121-
                                      IST IP NOBEL "Next generation
                                                                                                 7f6f6fb8d64f.doc
                                      Optical network for Broadband
                                           European Leadership"




       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, eCommerce, etc).


Companies as consumers

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.

                        100

                        80

                        60

                        40

                        20

                         0
                                       Small         Medium           Large


Figure 37: Proportion of enterprises using Internet by size, EU15 (%) (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.



                   70

                   60

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

                    0
                              Small       Medium    Large



Figure 38: Enterprises using the Internet: proportion using selected Internet services
(as a customer), EU15 (%) (Source: EuroStat, December 2003)



                                               Page 37 of 126
                                                                                                                                                                            4f954760-b6c9-4a6d-8121-
                                     IST IP NOBEL "Next generation
                                                                                                                                                                                     7f6f6fb8d64f.doc
                                     Optical network for Broadband
                                          European Leadership"




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, reach 17 per cent.


                      16
                      14
                      12
                      10
                       8
                       6
                       4
                       2
                       0
                           Belgium




                                                                  Spain




                                                                                                                               Austria
                                                         Greece




                                                                                             Italy




                                                                                                                                                    Finland
                                                                                                     Luxembourg




                                                                                                                                                              Sweden

                                                                                                                                                                       UK
                                               Germany




                                                                                   Ireland
                                                                          France




                                                                                                                                         Portugal
                                                                                                                  Nederlands
                                     Denmark




Figure 39: Percentage of teleworking employees in the EU (Source: EITO 2002)


As it has been seen, there is a high degree of correlation between the use of teleworking
and the penetration of broadband, although social and climate 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 aim this
initiative. 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 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 actual option in the European Union, a labour
legislation is required. This law must protect 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.


According to next figure, VPNs are expected to be the business application introducing
more traffic in metro and core networks for approximately the next ten years. After that,
video over IP will replace VPNs.




                                                                  Page 38 of 126
                                                                                     4f954760-b6c9-4a6d-8121-
                                  IST IP NOBEL "Next generation
                                                                                              7f6f6fb8d64f.doc
                                  Optical network for Broadband
                                       European Leadership"




                                                                •Video over IP
                                                                •Private WAN Data

                                                                •Best-Effort Data

                                                                •Voice over IP




Figure 40: Evolution of business applications traffic growth2 (Source: Yankee Group
2004)




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.




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




Figure 41: Enterprises using the Internet: proportion having a web site or a
homepage, EU15 (%) (Source: EuroStat, December 2003)




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



                                             Page 39 of 126
                                                                                                                  4f954760-b6c9-4a6d-8121-
                                 IST IP NOBEL "Next generation
                                                                                                                           7f6f6fb8d64f.doc
                                 Optical network for Broadband
                                      European Leadership"




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



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



Figure 42: Proportion of enterprises having a web site or a homepage, 2002 (%)
(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 next figure 8.2.6).
Other uses are providing catalogues and price lists or after sales support.


                     90

                     80

                     70

                     60
                                                                                                         Small
                     50
                                                                                                         Medium

                     40                                                                                  Large


                     30

                     20

                     10

                      0
                            Market    Provide access Deliver digital    Provide after   Provide mobile
                           Products    to catalogues   products         sales support      Interner
                                      and price lists                                      services


Figure 43: Enterprises with a web site or homepage: proportion providing Internet
services by size, EU15 (%) (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.




                                               Page 40 of 126
                                                                            4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                     7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




       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
eGovernment 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

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
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
1eGovernment 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 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.




                                       Page 41 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




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 that 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
structures and citizens has been replaced by flexible people-centered 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:



                                       Page 42 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




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 citizens may also access it. The Italian Ministry of Justice has sponsored this.


             18,00%

             16,00%

             14,00%

             12,00%

             10,00%

              8,00%

              6,00%

              4,00%

              2,00%

              0,00%
                                                        s




                                                      er
                                                     ns
                                                     ch




                                                        t
                                          ist s




                                                       g
                                       ed tes
                                                       y




                                                       n




                                       ed on




                                                       s
                                                       s
                                                       n

                                                     ce
                                    de sion

                                                       n

                                   Ce ries




                                                     or
                                                   xe




                                                      t
                                                   rit




                                                  on
                                                  on




                                                   in
                                                  tio




                                                   io
                                                  tio
                                                 en




                                                  th
                                                tio
                                                 ar




                                               en

                                               sp
                                                   i




                                              ak
                                                 a
                                              cu




                                               at
                                               at
                                               ta




                                              O
                                              rs
                                             ra




                                Po ers
                              Pu lara

                                             ra
                                             m




                                            fic
                                             is
                                            se




                                           ec
                                           an
                                          sid
                                           uc
                                           uc




                                           m
                                          se




                                         pe
                  e




                                         lib
                                          m
                                         cu




                                         rti




                                         p
                  m




                                        El
                         b




                                       Tr
                                        c
                        Po per




                                       re




                                        y
                                     eg
                                      al

                                    do
                      Jo




                                      ic




                                    rly

                                    ed
               co




                                    lic
                                  ci




                                  bl
                                 rr




                                   g
                                 er
                                 er




                                de

                                 bl
             In




                                al




                                 g




                                in
                                 e
                              So




                               th
                             gh
                            Ca

                              in




                            sa
                             lic
                            on




                            ov




                            El
                            O
                          ild




                          Hi




                         Di
                         M
                         rs



                       Bu
                      Pe




Figure 44: Public eServices for citizens by category (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 indicates us
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

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



                                       Page 43 of 126
                                                                                                      4f954760-b6c9-4a6d-8121-
                                  IST IP NOBEL "Next generation
                                                                                                               7f6f6fb8d64f.doc
                                  Optical network for Broadband
                                       European Leadership"




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.
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, it is required 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, it can be seen in Figure 44 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%).
                        40,00%

                        35,00%

                        30,00%

                        25,00%

                        20,00%

                        15,00%

                        10,00%

                         5,00%

                         0,00%
                                            x




                                                                                        n




                                                                                                 er
                                           ns




                                                                                         t
                                                                                        n


                                                                                      ns


                                                                                      its
                                                   T




                                                                                     en
                                          ta




                                                                                    tio


                                                                                   sio
                                                 VA




                                                                                              th
                                                                                  m
                                        io




                                                                                   io




                                                                               em
                                       n




                                                                                 ra




                                                                                             O
                                      ut




                                                                                at
                                                                                is




                                                                               er
                                    tio




                                                                              st

                                                                           bm
                                  rib




                                                                             ar


                                                                           lp


                                                                            ur
                                 ra




                                                       gi




                                                                          cl




                                                                         oc
                                nt




                                                                         ta
                                                                        su
                                                     re
                              po




                                                                       de
                             co




                                                                      en


                                                                      pr
                                                   ny
                           or




                                                            a


                                                                    s

                                                                 nm
                                                          at




                                                                   ic
                          al


                         C




                                                                  m
                                                 pa




                                                                bl
                                                         D
                       ci




                                                               to


                                                              ro
                                                om




                                                           Pu
                     So




                                                          us


                                                           vi
                                            C




                                                        En
                                                         C




Figure 45: Public eServices for business by category (Source: eEurope, 2003)




                                                 Page 44 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




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. Some initiatives in this respect are following:
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.
Sometimes regional governments are quicker than national to deploy initiatives, so national
government should aim local and regional initiatives. For instance, a regional Spanish
government (Catalan government) will create a public network infrastructure in areas
where only there is a network operator. This network would be rented to companies that
want offer broadband access.




                                      Page 45 of 126
                                                                         4f954760-b6c9-4a6d-8121-
                            IST IP NOBEL "Next generation
                                                                                  7f6f6fb8d64f.doc
                            Optical network for Broadband
                                 European Leadership"




 3.4    Conclusions
In previous sections current socio economic situation has been analyzed. Now main
conclusions are stood out, because they will support ideas of next chapter:
    The growth of economy can allow enterprises to invest more money in new
     infrastructures, services and applications and, also, 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. This 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, a stable
     new regulatory framework for NGN will be required for the introduction of new metro
     and core solutions.
    More and more people want services whenever and wherever. This tend has done
     that mobile phone has so great penetration, whereas fixed telephone lines are
     decreasing their penetration. Nowadays mainly broadband access is carried out
     with a computer and a telephone line, but 3G mobile generation will provide this
     service soon.
    Current majority broadband links in Europe are DSL lines (74%), although cable
     modem connections have a considerable penetration (22%). Another technologies
     are being deployed like PLC, Wireless, etc; but they don’t have a great market
     penetration.
    Network convergence is growing importance. VoIP penetration and forecast is a
     proof of this network evolution.
    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
     wastes due to traditional data services.
    SOHO and SMEs are still using narrowband connections, which don’t let them to
     access to new broadband services and applications.
    Currently, different network layers and infrastructures provide different types of
     services such as telephony, data or IP services. The result is a complex network
     infrastructure and high cost due to number of network elements and different
     technologies.
    Nowadays, 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.
    A current trend in MAN and WAN network is migrating to Ethernet technologies like
     Gigabit Ethernet, because transition of protocols is avoided.



                                     Page 46 of 126
                                                                       4f954760-b6c9-4a6d-8121-
                         IST IP NOBEL "Next generation
                                                                                7f6f6fb8d64f.doc
                         Optical network for Broadband
                              European Leadership"




 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 sharing and
           downloading 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.
       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 eCommerce 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 eLearning, eHealth, etc)
           configuring what is called eGovernment. Furthermore, municipal wholesale
           networks potentially stimulate competition in services.




                                  Page 47 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                                IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                                Optical network for Broadband
                                     European Leadership"




 4       NOBEL and the Information Society in Europe
The impact on the Information Society development presented in this chapter is based on
the results from a survey of NOBEL partners and the conclusions of the previous chapter
and various research reports published by consultancy companies.
Two different questionnaires were sent and we received around 25 answers from people
working in NOBEL project. Participants were professionals working in operators, vendors
or research centers. Sixty six percent of participants were younger than 35 years old, which
could influence on a more optimistic point of view.
The objective of the first questionnaire was to comment their personal opinion (open
questions) about main issues of D12 (like VPNs, new opportunities for SMEs, scientists,
etc.) , whereas the second was a scoring card to be filled (quantitative data) in order to
provide a rating about the relevance of those issues. A more detailed description about
partner’s participation and results is explained in Annex B, where both questionnaires are
attached.



 4.1     Impact of the socioeconomic evolution on NOBEL concepts
A new technology is of no use without users, and this is why is so important for NOBEL to
determine the grade of acceptance we might expect from the Society, which is usually
reluctant to change without any good reason.


                    Political/Regulatory                    Economical
                     BB4all                                 Efficiency
                                                             New revenues



                                           NOBEL




                  Technological                        Social
                  Legacy technology                    New services




Figure 46: NOBEL situation in current environment


Our analysis will be split in four main areas: Political, Economical, Social and Technological
(PEST). The trends in these four areas will have an impact on NOBEL as well as NOBEL
will cause some changes in these four areas.




                                           Page 48 of 126
                                                                                            4f954760-b6c9-4a6d-8121-
                                         IST IP NOBEL "Next generation
                                                                                                     7f6f6fb8d64f.doc
                                         Optical network for Broadband
                                              European Leadership"




          4.1.1 Economic analysis
NOBEL proposes new network services that will be more efficient (less cost or more
performance for the same money) and/or create new revenues for network operators. No
matter how good are business growth opportunities; the economic situation must be
favourable for new investments.
According to results of questionnaire, around 75% of NOBEL partners think that world
economy evolution is in moderate growth. Next figure shows ICTs market evolution from
2002 to 20043 and a forecast with collected opinions from NOBEL partners’ answers to the
questionnaire:

                                 12


                                 10


                                  8
                                                                                            2002
                    (%) Growth




                                                                                            2003
                                  6                                                         2004
                                                                                            2005
                                  4                                                         2007
                                                                                            2010

                                  2                                                         2015



                                  0
                                      Western Europe Market         Eastern Europe Market

                                 -2




Figure 47: NOBEL partners’ opinion about ICTs market evolution


As it can be seen in Figure 47, it is expected a growing evolution in Europe. In Eastern
Europe market there are higher expectations, since it is an emerging market.
The rise of ICT market, often in line with the economic growth, may have a positive impact
on the deployment of advanced communication networks. According to several reports
from consultants, investment in IT will increase in 2005, whereas two years ago the
situation was very different. Investment in all areas (terminals, network equipment,
software, telecom services…) was decreasing, but now this trend has changed. Therefore,
not only partners’ opinion but also annalists’ reports suggest that next years could be a
suitable time to introduce a new technology.

This current economic situation grows up expectations of increasing and generating new
revenues for ICTs companies, mostly due to new services. 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.




3
    Source: EITO, 2004



                                                        Page 49 of 126
                                                                                                                                        4f954760-b6c9-4a6d-8121-
                                              IST IP NOBEL "Next generation
                                                                                                                                                 7f6f6fb8d64f.doc
                                              Optical network for Broadband
                                                   European Leadership"




           4.1.2 Technological conditions analysis
The following figure shows the NOBEL partners’ point of view about the evolution of
network infrastructures:



                             100,0
                                                           2004    2007
                              90,0
                                                           2010    2015

                              80,0


                              70,0


                              60,0
                       (%)




                              50,0


                              40,0


                              30,0


                              20,0


                              10,0


                               0,0
                                     Internet access (%   Broadband access   Broadband access     Mobile penetration   PC penetration
                                         households)         penetration     penetration (SMEs)




Figure 48: NOBEL partners’ opinion about network parameters market evolution in
EU


According to their opinion, Internet access penetration in households could be increased
from 39% 4 in 2004 to 67% in 2015. Moreover, the increase in broadband access
penetration will be higher. This evolution will impact directly on NOBEL deployment.
Despite the fact that NOBEL concept of “customers” are enterprises, we consider that a
great penetration in residential segment could allow more emerging companies which will
offer more services and applications to these customers. To provide these new services
and applications, companies will need a NGN that will assure them QoS requirements.
Let us imaging a company that could offer VoD services. If it only provides 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 wants to offer a lot of films, nodes of the network will need to
communicate in a flexible and automatic way, paying only for connections they have used,
not for dedicated circuits. NOBEL favors this kind of new scenarios.
A similar analysis can be done about SMEs. The increase of broadband access in SMEs
will be greater than in the residential segment and this new situation will create new
business opportunities. New companies can offer services to these SMEs, and also, these
SMEs can provide services and applications to residential users or to other companies.




4
    EU Telecom Service indicators, 2004



                                                                  Page 50 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




Broadband deployment will favour a traffic growing due to either the introduction of new
users and the use of high bandwidth demand by new applications. Network connection
speed evolution will be one of the most important factors affecting end users selection of
preferred applications and, therefore, their bandwidth needs. 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) (See Figure 31). On the other hand, business usage of broadband
services such as VPNs and VLANs is expected to grow steadily.
An expected widespread coverage of broadband access networks by a combination of
different access technologies (i.e. DSL, HFC, FFTH, PLC and wireless) will favor the
increase of nomadism as well as the introduction of network services in any kind of
environment. For example:
    Users (citizens, enterprises, schools, etc) located in rural environment or isolated
     areas will be able to use network services and applications proposed in NOBEL.
    Professionals 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 unpredictable traffic on metro and core
     networks.
With regard to terminals, mobile penetration is next to the saturation point, this is the
reason why mobile penetration is not going to increase so quickly. However, due to next
generation standards, mobile industry will upgrade cellulars terminals. Furthermore, new
terminals will provide easy access to Internet, so this can generate more data traffic and
from everywhere of the network.
To increase PC penetration is more complicated than mobile penetration. Due to difficult
use of PCs (learning curve) and price, its penetration is not as high as mobile penetration,
although mobiles have appeared later than computers. Besides, a family uses one
computer, while each person uses a mobile. 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 increase 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 the realization of
NOBEL concepts.



       4.1.3 Social conditions analysis

When a technology want to be deployed Social analysis must be done to know acceptance
of the new technology. As it can be seen in next figure, partners think that main factor,
which influence people attitude to pay for Internet access, is connection speed and
persistence, so NOBEL should provide a solution to improve this factor.




                                      Page 51 of 126
                                                                                                                4f954760-b6c9-4a6d-8121-
                                      IST IP NOBEL "Next generation
                                                                                                                         7f6f6fb8d64f.doc
                                      Optical network for Broadband
                                           European Leadership"




                                         24%
                                                                              Connection speed and
                                                                              persistence



                                                                              Communication security



                     25%                                            30%
                                                                              Availability of relevant and
                                                                              exclusive content



                                                                              Interpersonal communication
                                                                              services (Chats, e-mails, short
                                         21%
                                                                              messages to mobile phones...)



Figure 49: NOBEL partners’ opinion about which factors influence peoples’ attitude
to pay for Internet access


Another important factor to deploy networks are contents. According to answers collected,
most important parameter for success of content companies will be price of products and
services and then quality of products and services.

        Belonging to a group of well known prestige in the
                        traditional market

                  Specialization only in content production

    Belonging to a group that provides content, distribution
                        and networks

                     Personalization of products / services


            Fast incorporation of technological innovations


                           Exclusivity of products / services


                              Quality of products / services


                             Price of its products / services


                                          Established brand


                                          Customer service


                                                                0         2          4        6         8       10   12   14



Figure 50: NOBEL partners’ opinion about characteristics for the success of content
companies




                                                  Page 52 of 126
                                                                                  4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                           7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




NOBEL is a European project in which there are partners involved from several countries.
Several cultures are considered, so it have no sense to describe only similarities but also
differences. According to collected answers from the questionnaire, residential applications
are used in many different ways in each European country even into the same country.
While a Norwegian partner thinks videoconference will not be used, a French partner thinks
people will use videoconference ten hours in a week. Related to P2P, there is neither 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. Only, there is a general
consensus in that web surfing is and will be the most application used in their countries and
that video streaming will be the second one.
Residential segment influence must be taken into account, because it can influence greatly
in the core network. For instance, P2P (mainly in households) is changing the asymmetry
of data flow in the core network. P2P philosophy together with better computers and
broadband access can generate new applications in which users can provide services
without any centralized server. Acquisition of better broadband access will depend strongly
on applications and services offered. Current most important driver in residential segment
is P2P, while medium term drivers will be videoconferencing, VoIP and broadcast video,
according to collected information. In section 3.3.1, we described how Yankee Group
forecast a great evolution of multimedia streaming and a little decrease of P2P; NOBEL
partners defend this opinion. In long term, teleworking will be the most important driver as it
can be seen in next figure:



           6,00


           5,00

                                                                   Telemedicine
           4,00
                                                                   eGoverment
                                                                   eComerce
                                                                   eLearning
           3,00
                                                                   Chats, mesenger
                                                                   Videoconferencing and VoIP

           2,00                                                    Gaming
                                                                   P2P
                                                                   Teleworking
           1,00                                                    Broadcast Video




           0,00
                     2007            2010           2015


Figure 51: NOBEL partners’ opinion about residential drivers


However, main customers for NOBEL services will be enterprises, because they have
more necessities than residential segment and these necessities are not covered properly
by core network, for instance VPNs. In Figure 21 current data services in companies are
shown. However, to provide these services they have to spend a lot of time and they are
not flexible. Businesses need more flexible networks, so this need can accelerate their
migration to new VPNs.




                                       Page 53 of 126
                                                                                     4f954760-b6c9-4a6d-8121-
                                      IST IP NOBEL "Next generation
                                                                                              7f6f6fb8d64f.doc
                                      Optical network for Broadband
                                           European Leadership"




The main important drivers in companies will be VoIP and Videoconference, according to
partners’ opinion, which is shown in Figure 52. 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
more time with partners who are working in another countries. In this section, it was
explained that main driving application in residential segment in 2015 will be teleworking;
also it will be in business. Influence of teleworking could change deeply European
countries and this would accelerate NOBEL concepts deployment. Due to these
applications, a network, which can provide enough QoS every time and everywhere, will be
needed.

             6,00


             5,00

                                                                      Telemedicine
             4,00
                                                                      eGoverment
                                                                      eComerce
                                                                      eLearning
             3,00
                                                                      Chats, mesenger
                                                                      Videoconferencing and VoIP
             2,00                                                     Gaming
                                                                      P2P
                                                                      Teleworking
             1,00                                                     Broadcast Video


             0,00
                         2007               2010          2015



Figure 52: NOBEL partners’ opinion about business drivers


Although grid applications seem not to be main driver in business, if they were used
massively, they could have a great importance, so they must be analyzed. Grid
applications need a high bandwidth, QoS and security guaranties, therefore, grids need a
network, which satisfy 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 this kind of applications. Another
industries, like medical and pharmaceutics industry, work with a great amount of data and
they may create grid applications to compute their data.
Grid applications can provide several advantages to companies. A lot of computers in a
company are in idle mode for a long time and another computers of the company could use
them to do another jobs.
Most famous grid applications (like SETI5 project application or United Devices application,
against cancer) are based on using resources of computers (CPU cycles, memory, …)
from users, while screensaver is running. However, security in these applications is a great
problem, because user can’t know what kind of information is processing and, besides,
user could collect the data that is being processing in his computer.

5
    SETI: Search for ExTraterrestial Intelligence



                                                Page 54 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




In a company these problems are a major concern. They do not want to send important
information (i.e. salaries) across the network and need to control the computers of their
grid. According to this reasoning, grid applications will be deployed in a company, but these
applications will be run in an internal grid.
Another barrier is that most of the applications are not oriented to divide the work to be
processed on a Grid platform. Applications should be migrated to this new way of work. A
standard middleware is needed to migrate applications, some standards are being
improved (like Globus) but most of solutions are proprietary yet. An example of this
migration tendency is the commercial application Adobe After Effects Professional, which
will include in its next version a plug-in to compute their CPU operations in a grid.
A company could offer their CPUs to other companies when they need to use more
computers to simulate a model or to get the result of complex operations. Nowadays , this
service is provided by Sun.
Consequently, grid applications don’t seem to have a direct impact in core network
because of companies. However, many companies are developing new initiatives based on
grids (like data grids in Virtual Organizations) and if backbone networks cover their needs,
more grid applications could be deployed.
Nowadays, residential users doesn’t have companies or scientific necessities so grid
applications won’t have an important impact for them, unless a new application offer
something new to them.
There are several challenges for grid services evolution: development of standards,
interaction between user and grid, developing security 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.
The introduction of new applications and services is a demand from social and economical
environment and it represents also an 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
  eBusiness 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.




                                      Page 55 of 126
                                                                                  4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                           7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




       4.1.4 Political/ Regulatory conditions analysis

As it can be seen in Figure 53, partners think that private companies will be the main
driving force, then citizens and finally Public Administration. However, the role of
Government is very important; since we can observe there is a strong support by Public
Administrations in those countries where Information Society is developing quickly (like
India or Korea).



                        100%
                         90%
                         80%
                         70%
                         60%
                         50%
                         40%
                         30%
                         20%
                         10%
                          0%
                                      First place           Second place

                           Citizens   Private companies   Public Administration



Figure 53: NOBEL partners opinion about main driving forces for deployment of
Information Society


Broadband for All is a strategic objective for all of the European Union national
governments, so any new initiative to promote the usage of public networks will be
supported. As it has been seen in previous chapter, Public administration is developing
new initiatives on several fields (eLearning, eHealth, etc).


The regulation of the telecommunications market will also determine the deployment of
NOBEL concepts. The regulatory framework must encourage innovation, because without
ROI there are no incentives to new investments by network operators. Legal initiatives are
welcomed by ICT sector but a stable regulatory framework should be deployed to avoid
doubts in the sector.




                                        Page 56 of 126
                                                                         4f954760-b6c9-4a6d-8121-
                                 IST IP NOBEL "Next generation
                                                                                  7f6f6fb8d64f.doc
                                 Optical network for Broadband
                                      European Leadership"




 4.2    New opportunities generated by NOBEL in the Information
        Society

In previous chapter we have analyzed the impact of Information Society trends on NOBEL.
But the deployment of NOBEL concepts will also have an influence on the four areas
discussed earlier.
Transparency and dynamic are two concepts of NOBEL that will influence in all society
areas; this is the reason why they are all around NOBEL project. NOBEL influence is
divided in three deliverables: influence on technology is analyzed on D11, its economical
impact on D15 and it socio-economical influence on this deliverable. For a further read
about this topics see these deliverables.


              Political/ Regulatory                    Economical
               Multioperator                           Multiservice

                                      TRANSPARENCY
                                                        Multivendor
                                                        Distributed
                                                        Scalability
                                        NOBEL



                                         DYNAMIC


               Technological                         Social
                Optical technology                   e2e
                Multilayer                           Broadband
               OPS, OBS                              QoS
                                                      Broadband
Figure 54: NOBEL influence on current environment



       4.2.1 NOBEL influence on Economic area

NOBEL solutions will increase efficiency on network management and could generate new
revenues for networks operators. Multivendor and multiservice networks will help to
increase competition among equipment suppliers and service providers.
New applications and services could be offered over multiservice networks, which are more
efficient (less maintaining costs) than legacy network technologies. An example of that is
fixed telephony, which is rapidly moving into VoIP technologies. This situation has allowed
new companies to offer voice over IP service cheaper than POTS. This situation has
created not only new voice operators like Yahoo! Japan but also applications like Skype.
This evolution is shown in next figure:




                                           Page 57 of 126
                                                                                                                 4f954760-b6c9-4a6d-8121-
                                               IST IP NOBEL "Next generation
                                                                                                                          7f6f6fb8d64f.doc
                                               Optical network for Broadband
                                                    European Leadership"




                                120

                                100
                                                                                                         2003
                                 80
                                                                                                         2006
                                 60                                                                      2010
                                                                                                         2015
                                 40
                                                                                                         2020
                                 20

                                   0
                                          Enterprise               SME              Residential



Figure 55: Evolution of VoIP penetration in companies (Source: EITO, 2004)


As it was analyzed in previous chapter, current network infrastructure is very complex with
a lot of elements from different technologies. The migration to a unique, transparent and
dynamic network will reduce current costs due to maintain so many equipments and
different networks (PSTN and data network). The implementation of a technology like
NOBEL may create new jobs with more specific competences (the increase of the number
of IT/network specialists in the enterprises due to the widespread diffusion of new services
and applications). However, some jobs like management network operators can change
their functions due to distributed control and management planes (there will be a great
intelligence inside the network (OXC, traffic engineering, etc.)



    Grade of
   modification
     6,00                                                                                                           will be modified

                                                                                                                    Nobel influence
   greater




             5,00


             4,00


             3,00


             2,00


             1,00
   slower




             0,00
                     Required The length of    Working       The amount   The salary Work stability Geographic     Work       Time spent
                    professional the working     hours         of work                               mobility    efficiency   on traveling
                    qualification    day       flexibility




Figure 56: NOBEL partners’ opinion about modification of employment due to the
use of ICTs technologies




                                                             Page 58 of 126
                                                                                                                               4f954760-b6c9-4a6d-8121-
                                                      IST IP NOBEL "Next generation
                                                                                                                                        7f6f6fb8d64f.doc
                                                      Optical network for Broadband
                                                           European Leadership"




According to figure below, the feature, which will be most modified due to the use of ICTs
technologies, will be working hours flexibility. Most important reasons can be teleworking,
dynamic VPNs and deployment of broadband. These new features will allow every worker
not to be in office; due to everyone will be communicated wherever he was. Furthermore,
business trips could decrease, because new multi-user applications will communicate to
people. These changes could affect work efficiency because will reduce expenses on trips
as well as time spend to connect with a partner. However, NOBEL influence on
employment will not be very important. NOBEL will influence none of the main modified
employment features. Only time spend in travelling will be greatly modified due to
deployment of NOBEL concepts.


Adoption of technology by companies influences deeply on their characteristics. Due to
NOBEL solutions, the commercial relationships will change because if customers are
connected to the network, companies will be able to use new ways to contact with
customers (eCommerce, mailing lists, etc.). A similar reasoning can be done with labour
relations; VoIP and Videoconference applications will provide a new way to contact with
work partners.
         very substantial




                            6,00


                            5,00


                            4,00


                            3,00


                            2,00


                            1,00
         None




                            0,00
                                   Labor relations   The way of    The physical      The type of   The amount of   Supplying   Management
                                                       selling    structure of the   employment     employment                    style
                                                                     company



Figure 57: NOBEL partners’ opinion about influence of technologies on companies


Only one concept has not still been analyzed: scalability. NOBEL solutions provide network
operators to increase 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.


To sum up, NOBEL can change current market situation and will create a more competitive
market, as it will increase efficiency of all companies. Besides, these new situations could
generate new business opportunities for ICTs market.



                                                                     Page 59 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




       4.2.2 NOBEL influence on Social area

NOBEL network offers new features that can enable new services and applications. QoS,
broadband end-to-end joined to flexibility and transparency are features that improve core
network.
In section 4.1.2 a forecast about main infrastructure evolution was shown. Increase in
Internet penetration and terminals will make easy deployment of services requested by
Society. Main services requested by residential users and business where explained in
section 4.1.3.
Nowadays, provision of VPNs on demand is difficult because of long time for provision. As
it was seen on previous chapter and section 4.1, main customers of NOBEL are companies
and they use data services. There are different kinds of VPNs, so each different company
will choose the best for them. Large companies will not migrate to VPNs quickly because
services over ATM are being improved and also their workers know this technology.
Currently, network reconfiguration (f.i. to provide SANS at night or VPNs) requires manual
work, which is very costly. New intelligent networks will favor the widespread of network
applications (f.i. SANs) to SMEs. VPNs could be provided on demand and not only to large
enterprises but also to SMEs. Decreasing VPNs prices could allow a faster migration in
enterprises and it will let SMEs to assume the cost of VPNs. A widespread deployment of
VPNs will impact significantly in network utilization because of the unpredictable traffic. We
must remember that Yankee Group and partners think that VPNs will be main driver for
broadband access in business.
Multimedia applications, like videoconferencing, VoIP, and multimedia streaming, need
broadband between users not only in access network but also in backbone network.
NOBEL provides an end-to-end broadband solution. Critical requirements of these data
fluxes are jitter and delay. The network must assure QoS requirements to give these
services to users. As we analyzed in section 4.1.3, main requirements from Social area
were multimedia applications, so NOBEL will cover this social necessity.
New infrastructure and applications will create massive multi-user applications such as
teleconferences and working groups. NOBEL concepts can contribute to develop sectors
such as healthcare and entertainment, which will influence on common people.
As it was mentioned in section 4.1.1, new revenues in ICTs market are mainly due to new
services. Nowadays, residential users and companies need new applications and core
network must cover necessities of these applications. As it has been described in this
section, NOBEL provides a solution that can offer these services and applications and
cover their requirements.
Main customers of NOBEL solutions will be business, but behaviours of users are very
important to analyze, because another companies (NOBEL customers) could provide them
new services to residential users that could influence on core data transport. It is important
to know main barriers for users and analyze how NOBEL solution can help to go through
them.




                                       Page 60 of 126
                                                                                                                                                                        4f954760-b6c9-4a6d-8121-
                                                                            IST IP NOBEL "Next generation
                                                                                                                                                                                 7f6f6fb8d64f.doc
                                                                            Optical network for Broadband
                                                                                 European Leadership"



                      It will increase



                                          6,00

                                                            Obstacle evolution
                                          5,00
                                                            Nobel influence

                                          4,00


                                          3,00


                                          2,00
                      It will disappear




                                          1,00


                                          0,00
                                                      The           The        The price of a The price of               The lack of    The sensation Slowness in The resistance
                                                 reluctance to   complexity of   terminal    the connection              interesting     of insecurity downloading / to change the
                                                      pay           use                                                    content                     low navigating way of doing
                                                                                                                                                           speed         things



Figure 58: NOBEL partners’ opinion about obstacles for Internet users
Partners think that current obstacles to deploy Information Society won’t disappear or will
increase. Furthermore, NOBEL won’t influence on barriers that will increase. Only NOBEL
will have an important influence over connection speed and price of connection.

               6,00
  Decisive




                                                                                                                                                                 Importance of factors
               5,00                                                                                                                                              Nobel influence


               4,00




               3,00




               2,00
  Irrelevant




               1,00




               0,00
                                Awareness that Distribution of        Attractive     Availability of     Affordable       Minimum     Legislation that  Regulatory    Abundance of     Users training
                                it is essential to broadband         interactive       the latest      terminal cost   connection cost successfully guidelines that professionals
                                be a part of the    networks        content offers    generation                                       regulates the allow profitable specialized in
                                    information                                        terminals                                       social impact     business         ICT
                                       society                                                                                                           initiatives



Figure 59: NOBEL partners opinion about main factors to develop Information
Society
As it could be seen in figure above, most important factor for users to deploy Information
Society are distribution of broadband, minimum connection cost, attractive contents and
terminal cost. NOBEL will influence highly in first and second topic. First topic is one of the
objectives of NOBEL project, broadband for all. Besides, if network possibilities are
increased, bandwidth cost will decrease. NOBEL can offer what residential users are



                                                                                               Page 61 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




looking for, better and cheaper Internet connection. Besides, according to Figure 49,
people will pay for an Internet access, which have a high connection speed and
persistence. NOBEL network can provide these features. With regard to contents
(described in section 4.1.3) most important parameter was the price of products and
services and then quality of products and services. A cheaper network management (like
NOBEL network) will influence in contents prices and network flexibility will provide quality
in their products.
NOBEL doesn’t solve all necessities from users, like terminal cost, but it will help to deploy
Information Society. Public administration and business’ initiatives will help to solve these
problems.



       4.2.3 NOBEL influence on Political/ Regulatory area
A main strategic objective for politicians is “broadband for all” and this is also the first
objective of NOBEL project. But not only Public administration wants to deploy broadband.
Nowadays, companies are centralized to reduce costs and some rural areas are deserted.
Providing telecommunication connectivity cheaper can reduce geographical inequalities. A
company could open a center in a cheaper area and give a VPN connection reducing costs
of an office in a large city. Government initiatives to create MAN networks will be easier
deployed with a flexible backbone network.
NOBEL will provide an infrastructure that could be used by Public Administration not only
to connect their buildings but also to offer efficiently their services (like eGovernment,
eHealth, etc.)
Multioperator solution create an open market in which operators will be interconnected and
they will offer to the customer different services not only from on operator. This solution is
closer to current government tendency to avoid monopolies.



       4.2.4 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 economic
situation. NOBEL is working on multi-domain, multi-provider and multi-layer networks.
These features will provide networks that could adapt quickly to market needs.
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.
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:
eCommerce, public administration: eGovernment and dark fiber) This new providers will
generate new business players with cost effective solutions. New opportunities will
generate several competing actors in every role.




                                       Page 62 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




 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 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
tested business models have become 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”) has
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 60), 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.




                                      Page 63 of 126
                                                                                                                     4f954760-b6c9-4a6d-8121-
                                          IST IP NOBEL "Next generation
                                                                                                                              7f6f6fb8d64f.doc
                                          Optical network for Broadband
                                               European Leadership"




                   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

Figure 60: Types of value chain (Source: MUSE D1.1)


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
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


Table 6: Evolution of the layers in telecommunications value chain (Source:
Telecommunications Policy, 2003)




                                                         Page 64 of 126
                                                                                                                           4f954760-b6c9-4a6d-8121-
                                IST IP NOBEL "Next generation
                                                                                                                                    7f6f6fb8d64f.doc
                                Optical network for Broadband
                                     European Leadership"




      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 61).

                                                                              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




Figure 61: Roles involve in current telecom business (Source: MUSE D1.1)
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.




Figure 62: Telecom Network Services (Source: Emerging services for transparent
networks (Ericsson))



                                                      Page 65 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




As an example (see Figure 62), we may have a fiber (with underlying ducts and right-of-
way, RoW). The access to this dark fiber is then a Service (something to sell), and the
seller is known as a “Dark Fiber Provider”. The buyer puts some equipment to the fiber
(WDM, SDH, to IP and end-user services) and is known as a Network Operator (of some
kind). The blue boxes denote the seller and the red boxes the buyer of the Service at that
interface.
However, the owner of the dark fiber 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 fiber. 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 that Network Operators tend to split their operations or even
outsource the operation of the connectivity network (Communication Operator) in order to
separate that from the development and delivery of Services (Service Operator). It is often
maintained that the former is a “commodity bit pipe” 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 Fiber 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 utilizes 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 optimize the equipment CapEx and OpEx to obtain better total business
performance at other interfaces.



                                       Page 66 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




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 handshake certain bits, but to provide a Service with effective OpEx,
customer service, customer satisfaction, delivery times, reliability, cost-effectiveness and
SLAs. The technical implementation and interface protocol and ports must be supported all
these features.
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, which 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.




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




                                      Page 67 of 126
                                                                                                   4f954760-b6c9-4a6d-8121-
                                   IST IP NOBEL "Next generation
                                                                                                            7f6f6fb8d64f.doc
                                   Optical network for Broadband
                                        European Leadership"




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.
There are many processes involved from capturing the usage to creating a bill to be sent to
a customer. Figure 63 presents the main functional model for collecting and processing
information related to resource usage and billing of users.


    charging events       account. protocol         price plan, tariffs         subscriber specification




              measuring                accounting                    charging                      billing




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

Figure 63: 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). Network devices perform this function. 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.).




                                              Page 68 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




                      5.2.1.1 Classifications of charging schemes


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:
   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.
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 call
start time, distance, and number of calls, volume, time, reservation parameters, effective
bandwidth, access line speed to parameters like expected path and congestion cost or
dynamic bid-prices per packet or resource unit, service type (e.g., through the use of
different price curves for different grades of service), to name but a few. More often than
not, price is a combination of several of these factors. 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 find 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. While flat pricing is very convenient in that it simplifies accounting issues,
certain economic properties may make it less than optimal. First, the flat price does not
induce users to take into account the congestion costs (an externality) that they impose on
other users during peak periods, which can lead to further network congestion. Second, the
flat price cannot discriminate between "high" and "low" priority applications, leading to
cases in which those who value services the most are not receiving them.




                                       Page 69 of 126
                                                                            4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                     7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




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. There would be no formal guarantees of quality of service. 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
each user. Priority pricing assumes that resources will be scarce or running at high level of
utilization. The priority pricing improves the performance significantly as compared to free
access (or no usage base pricing) and flat pricing.


Smart-market pricing
Mackie-Mason and Varian suggested that, in case of congestion, requests be prioritized on
the value that the user puts on getting the request through quickly, and that an auction
would then ensure to chose those requests that would pass. To do this, each user assigns
to his request a bid measuring his willingness to pay for immediate servicing. Then, at
congested routers, requests are prioritized based on bids. In order to make the scheme
incentive, users are not charged the price they bid, but rather are charged the bid of the
lowest request that is admitted to the network. The most obvious disadvantage of the smart
market and of dynamic pricing, in general, is that in the real world, the computational
burden of updating prices can be quite high.


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.




                                       Page 70 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




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.

                      5.2.1.2 Requirements for charging schemes
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 denies the charges,
and (c) the underlying technology that is used to produce the charge. Charge recipients
tend to favor 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
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.



                      5.2.1.3 Charging scheme evaluation criteria
For a network service any charging scheme could be proposed. However, its
appropriateness 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




                                      Page 71 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




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 business of the traffic may lead to surprises in the bill to the
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 that 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.



                      5.2.1.4 Necessity of new charging scheme
The processes aiming at delivering the bill to customer 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.




                                       Page 72 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




                      5.2.1.5 Additional charging, billing and accounting issues
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 bandwidth, 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. Some of them were showed in one of the former
sections.
Pricing may be used for reasons of network efficiency, i.e. maximizing the utilization of
resources (bandwidth, buffer space), or of economical effectiveness, i.e. value to the user.
Hence pricing maximizes both provider revenue (by efficient resource sharing and access
control) and user satisfaction, and so revenues.
We can identify two possible scenarios: in the first one the reduction of costs is followed by
a reduction of the prices. In that way the mark up remains steady but the number of users
increases, raising the revenue. On the other hand, although in the second scenario the
costs decreases, the prices remain stable. The number of users does not vary, the mark up
per user is larger and as a consequence the income is larger.

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 significant feature used by
providers to distinguish themselves 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
preferences regarding accounting services (like itemized invoices, accounting indications,
spending limits etc.).
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.



                                       Page 73 of 126
                                                                              4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                       7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




       5.2.2 Socioeconomic impact of charging communication
             services
Recent technology advances, together with the deregulation of the communication market
and the development of the Internet, have created a new and highly competitive
environment for communication service providers. Both technology and economy play a
major role in this new environment. The business success of a developed communication
services is not guaranteed only by the fact of using new technology. An important part of
any business plans for offering and selling communications services are also pricing and
competition issues. However, technology can pose severe restrictions on how this can be
done.
Communication services can be seen as valuable economic commodities, therefore have
to be priced suitably. The prices for which they can be sold are in real situation decided by
trade-off between demands and possible offers, and, additionally, how the market
operates. The key players in the market for communications services are suppliers,
consumers, and regulators. The demand for a service is determined by the value users
place upon it, and the price they are willing to pay to obtain it. On the other hand the
quantity of the service that is supplied in the market depends on how much suppliers can
expect to charge for it and on their real costs. These costs depend upon the efficiency of
network operations. The nature of competition amongst suppliers, the manner the suppliers
interact with customers, and also the way of market regulation influence on the pricing of
network services.
Competition is very important factor in price set up because it tends to increase economic
efficiency, that is, it increases the aggregate value of the services that are produced and
consumed in the economy. When competition does not occur naturally, regulation by a
government agency can increase economic efficiency. By imposing regulations on the
types of tariffs, or on the frequency with which they may change, a regulator can arrange
for there to be a greater aggregate welfare than if a dominant supplier were allowed to
produce services and charge for them however he likes. Telecommunications is always
considered as very important market, so also there are tendencies to regulate it, at least
during preliminary, not matured development phase.
Competition can be greatly influenced by the architecture of a networks and the ability of
few players to control bottleneck resources in parts of the network, such as the access.
New networks should be designed in such a way that they provide an open competition
environment in all parts of the supply chain for services.
Price determination depends on who sets the price, and with what objective. There are
some different answers and the rationales that they give for consideration about prices.
The first answer is that sometimes the market sets the price, and the objective is to match
supply and demand. Supply and demand at given prices depend upon the supplier’s
technological capacities, the costs of supply, and the how consumers value the service. If
prices are set too low then there will be insufficient incentive to supply and there is likely to
be unsatisfied demand. If prices are set too high then suppliers may over-supply the
market and find there is insufficient demand at that price. So, the price should be set at the
level at which demand exactly equals supply.
The next reason for setting prices comes about when it is the producer who sets prices and
his objective is to deter potential competitors. It is a kind of a game in which a supplier
wishes to protect itself against competitors who might enter the market. This game takes




                                        Page 74 of 126
                                                                               4f954760-b6c9-4a6d-8121-
                               IST IP NOBEL "Next generation
                                                                                        7f6f6fb8d64f.doc
                               Optical network for Broadband
                                    European Leadership"




place under certain assumptions about both the incumbent’s and entrants’ production
capabilities and costs.
One more rationale for setting prices comes about when the prices are used as a
mechanism to induce an agent to take certain actions. The supplier cannot dictate directly
the actions he wishes the agent to take, but he can use prices to reward or penalize the
agent for actions that are or are not desired
These three possible rationales for setting prices not necessarily lead to the same prices.
There is no single recipe for setting prices that takes precedence over all others. Pricing
can depend on the underlying context, or contexts, and on contradictory factors. This
means that the practical task of pricing is very complex and complicated task. It requires a
good understanding of the particular circumstances and intricacies of the market.



       5.2.3 Economic definitions for charging model context
                       5.2.3.1 Utility function
Utility functions, showing network users' preferences, describe how sensitive users are to
changes in QoS [15]. It is sometimes useful to think of utility as the amount of money a
user is willing to pay for certain QoS guarantees. Ideally, utility should be expressed as a
function of actual QoS parameters, such as delay or packet losses. In most real networks,
however, such quality measures are virtually impossible to predict in advance and are
closely dependent upon factors such as traffic models, scheduling disciplines and network
topology. Therefore, utility is often expressed as a function of the amount of a resource
made available to a user by the network. Applications exhibit varying degrees of sensitivity
to QoS parameters. For instance, real-time voice and video are very sensitive to delay and
jitter, while traditional data applications are more sensitive to losses. In order to
characterize user behavior under a given pricing policy, it is often necessary to capture the
performance sensitivity of various applications into utility functions. In [16], utility functions
are proposed for four application types: e-mail, file transfer, remote login, and real-time
voice. Another method to show utility is to express user benefit for real-time applications as
a function of pre-transmission loss [17] (quality degradation that may result from user
decisions prior to transmission), while benefit for non-real time service is a function of
completion time. There are some more suggestion for expressing utility function as a
continuous, monotonically decreasing function of delay to represent each user's utility [18]
or to quantify users' performance objectives through a cost function, a function of queuing
delay [19]. Instead of characterizing utility as a function of actual predicted QoS, another
possibility is to use a function of resources allocated to the flow or the call, which serve as
an indication of expected performance. In this case, it is useful to consider both elastic and
inelastic applications [20]. Real-time voice and video applications that employ constant bit
rate coding require a fixed amount of bandwidth for adequate QoS. These applications are
inelastic in their demand for bandwidth and therefore it is reasonable to model their utility
as a step function, as in Figure 64a.




                                        Page 75 of 126
                                                                                                                4f954760-b6c9-4a6d-8121-
                                      IST IP NOBEL "Next generation
                                                                                                                         7f6f6fb8d64f.doc
                                      Optical network for Broadband
                                           European Leadership"




             Utility




                                                                                          Utility
                                                  Utility
                       Bandwidth                                   Bandwidth                        Bandwidth

                         (a)                                          (b)                              (c)


Figure 64: Utility functions [20]: a) inelastic applications; b) perfectly elastic
application; and c) partially elastic application.


On the other hand, traditional data applications such as e-mail are elastic: they tend to be
tolerant of variations in delay and can take advantage of even minimal amounts of
bandwidth. The utility function in this case may be represented as in Figure 64b. There are
numerous ways in which real-time applications can be made tolerant of changes in
available bandwidth through adaptive coding; however, some minimum bandwidth is
nevertheless required. For these partially elastic applications, utility functions may take a
shape such as in Figure 64c. We should note that the assumption that users' utility
functions are known a priori, while not uncommon, is somewhat controversial. The precise
modeling of customer behavior can be, after all, the most critical part of the pricing
problem, and by assuming a given utility function we run the risk of oversimplifying the
complexities of customer choices and sensitivity to price.



                         5.2.3.2 Consumer surplus
When analyzing changes to a consumer optimum given changes in the market price of a
particular commodity, the ability to quantify changes in individual satisfaction due to these
price changes should be taken into account. One method used to measure these welfare
changes is through the use of a concept known as consumer surplus. This method
compares the value of each unit of a commodity consumed against the price of that
commodity. Stated differently, consumer surplus measures the difference between what
person is willing to pay for a commodity and the amount he/she actually is required to pay.
It is known that consumers often value each additional unit consumed less that previous
units (i.e., the concept of diminishing marginal utility). This explains the shape of the
demand curve on Figure 65, which is downward sloping.

                                   Price
                                                                               Supply




                                           Consumer
                                            surplus
                                      p




                                                                                   Demand

                                                            x(p)                        Quantity


Figure 65: The consumer surplus.



                                                        Page 76 of 126
                                                                                          4f954760-b6c9-4a6d-8121-
                                 IST IP NOBEL "Next generation
                                                                                                   7f6f6fb8d64f.doc
                                 Optical network for Broadband
                                      European Leadership"




To explain the consumer surplus concept consider the market in which customer can buy k
services. The quantity of these services forms a vector x  ( x1 ,...., x k ) for the overall
payment of p(x) . Total price for the purchased services can be calculated according to
following formula p( x)  p T x     p x
                                       j
                                           j   j   for a given vector of prices p  ( p1 ,...., p k ) .

Customer would like to maximize his profit. It means that he solves the problem

                                           x
                                               
                                x( p)  max u ( x)  p T x                                           Eq.1

In the above formula function u (x) is the utility to customer of having the vector quantities
of services x. This function can be considered as the amount of money customer is willing
to pay to receive the bundle that consists of these services in quantities x1 ,....., x k . This
willingness depends on many factors, for example on customer’s net income (say in
dollars). The above relations are summarized in Figure 66.



                                                                           utility u(x)


                                                                                  px




                                                          maximized net benefit
                                                            =max[u(x) - px]




                                                   x(p)                           x


Figure 66: Consumer surplus concept


The vector x( p) on Figure 66 is called the demand function for customer. It gives the
quantities x  ( x1 ,...., x k ) of services that customer will buy if the price vector is p.

Considering consumer surplus it was assumed above that the (per unit) prices charged in
the market are the same for all units purchased by the customer. However, this assumption
not always is fulfilled. There are more general pricing mechanisms in which the charge paid
by the customer for purchasing a quantity x is a more general function r (x) , not of the form
p T x . For instance, prices may depend on the total amount bought by a customer, as part
of nonlinear tariffs. In the simple case, assuming that customer’s income is large enough,
his utility function is a quasilinear. It is valid to assume a quasilinear utility function when
the customer’s demand for services is not very sensitive to his income, i.e. expenditure is a
small proportion of his total income, and this is the case for most known communications
services.




                                           Page 77 of 126
                                                                                4f954760-b6c9-4a6d-8121-
                                  IST IP NOBEL "Next generation
                                                                                         7f6f6fb8d64f.doc
                                  Optical network for Broadband
                                       European Leadership"




                       5.2.3.3 Producer surplus
Suppose that a supplier delivers a communication service. To deliver the service he had to
bear costs. Selling the service he wants first of all to recover these costs and, of course, to
maximize his profit. Producer surplus is just the difference between the revenue that is
obtained from selling that service r ( y) and the cost of its ‘production’ c( y) (see Figure 67).


                          Price
                                                            Supply




                            p
                                  Producer's
                                   surplus




                                                                Demand

                                                y(p)                 Quantity


Figure 67: The producer surplus.


Producer surplus exists when actual price exceeds the minimum price seller will accept.
Producer surplus can appear as profit, but usually it takes a different form. It is usually
captured by resource owners rather than by producers.
In the case of linear prices, when r ( y )  p T y for some price vector p, the profit is simply a
function of p, say  ( p ) . The supply function y( p) is also optimized. This function gives
the quantities of the various services that the supplier will produce if the prices at which
they can be sold are p. The way in which prices are determined depends upon the
prevailing market mechanism. Three important market cases can be distinguished:
monopoly case, oligopoly case and perfect competition.


                       5.2.3.4 Social welfare
Social welfare (which is also called social surplus) is defined as the sum of all users’ net
benefits, i.e. the sum of all consumer and producer surpluses. Note that weighted sums of
consumer and producer surpluses can be considered, reflecting the reality that a social
planner/regulator/politician may attach more weight to one sector of the economy than to
another. The key idea is that, under certain assumptions about the concavity and convexity
of utility and cost functions, the social welfare can be maximized by setting an appropriate
price and then allowing producers and consumers to choose their optimal levels of
production and consumption. The social welfare (or surplus) is the total utility of the
services consumed minus their cost of production. The concept of social welfare is shown
in Figure 68.




                                               Page 78 of 126
                                                                            4f954760-b6c9-4a6d-8121-
                                 IST IP NOBEL "Next generation
                                                                                     7f6f6fb8d64f.doc
                                 Optical network for Broadband
                                      European Leadership"




                       Price
                                                        Supply




                               Customer
                                surplus

                               Producer's
                                surplus




                                                              Demand


                                                                 Quantity


Figure 68: The social welfare.


Under certain assumptions about the concavity and convexity of utility and cost functions,
the social welfare can be maximized by setting an appropriate price and then allowing
producers and consumers to choose their optimal levels of production and consumption.
Suppliers and consumers see these prices and then optimally choose their levels of
production and demand. They do this on the basis of information they know. A supplier
sets his level of production knowing only his own cost function, not the consumers’ utility
functions. A consumer sets his level of demand knowing only his own utility function, not
the producers’ cost functions or other customers’ utility functions. Individual consumer’s
utility functions are private information, but aggregate demand is commonly known. The
social welfare maximizing prices can be set by a supervising authority, such as a regulator
of the market. The prices at which social welfare is maximized can be found in two ways. If
the utilities and the cost functions of the consumers and the producers are known it is
simply maximization of their difference. On the other hand, if these functions are not known
the method is to use a scheme of iterative price adjustment. In steps, the social planner
adjusts prices in directions that reduce the mismatch between demand and supply. This
does not require any knowledge about the utilities and cost functions of the market
participants.


                      5.2.3.5 Marginal Cost pricing
Marginal cost formally is defined as the derivative of total production costs with respect to
the level of output:
                                                   C
                                            MC                                         Eq.2
                                                   Q


Q stands for (quantity of) output and C for cost, so Q stands for the change in output,
while C stands for the change in cost. As usual, marginal cost can be interpreted as the
additional cost of producing just one more ("marginal") unit of output.




                                             Page 79 of 126
                                                                               4f954760-b6c9-4a6d-8121-
                               IST IP NOBEL "Next generation
                                                                                        7f6f6fb8d64f.doc
                               Optical network for Broadband
                                    European Leadership"




A proper definition of marginal cost should take account of the time frame over which the
network expands. The network can be considered to be continuously expanding (by
averaging the expansion that occurs in discrete steps), and the marginal cost of a circuit is
then the average cost of adding a circuit within this continuously expanding network. Thus
marginal cost could be interpreted as long-run marginal cost.


A marginal cost pricing maximizes economic efficiency. It is easy to understand and is
firmly based on costs. However, there can be some problems. First, marginal cost prices
can be difficult to compute. Secondly, they can be close to either zero or infinity. This is a
problem since communication networks typically have fixed costs, which must somehow be
recovered. Another difficulty in basing charges on marginal cost is that even if we know the
marginal cost and use it as a price, it can be difficult to predict the demand and to
dimension the network accordingly. There is a risk that we will build a network that is either
too big or too small. A pragmatic approach is to start conservatively and then expand the
network only as demand justifies it. Prices are used to signal the need to expand the
network. One starts with a small network and adjusts prices so that demand equals the
available capacity. If the prices required to do this exceed the marginal cost of expanding
the network, then additional capacity should be built. Ideally, this process converges to a
point, at which charges equal marginal cost and the network is dimensioned optimally.



                       5.2.3.6 Market efficiency
Two important notions of market are equilibrium and efficiency. The Walrasian equilibrium
and Pareto efficiency are examples of it.


Suppose that initially each participant in the market is endowed with some amount of each
of k goods. Walrasian equilibrium describes the market state with an allocation vector pair
(x, p), where x are the quantities of each good held by each agent, and p is a vector of
prices for each good. It is assumed that there is no excess demand for any good when
each participant buys the bundle that is optimal for him given his budget constraint. It can
be proved that for any initial endowments there always exists a Walrasian equilibrium for
some price vector p. That is, there is some price vector p at which markets clear. The
Walrasian equilibrium is also called a competitive equilibrium, since it is reached as
participants compete for goods, which become allocated to those participants who value
them most.


The idea of Walrasian equilibrium is closely related to another solution concept, that of
Pareto efficiency. It is said that a solution point (an allocation of goods to participants) is
Pareto efficient if there is no other point for which all participants are at least as well off and
at least one participant is strictly better off, for the same total amounts of the goods. In
other words, it is not possible to make one participant better off without making at least one
other participant worse off. It can be proved that every social welfare optimum is Pareto
efficient.




                                         Page 80 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                            IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                            Optical network for Broadband
                                 European Leadership"




       5.2.4 Competition models
The market in which suppliers and customers interact can be very complex. Each of the
market players looks 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 competition can be distinguish: monopoly, perfect competition and oligopoly.

                     5.2.4.1 Monopoly case
   In monopoly market situation there is a sole supplier who is free to set whatever prices
   he wants. His choice is constrained only by the fact that as he increases the prices of
   services the customers are likely to buy less of them.
   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.

                     5.2.4.2 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.
   This is a common scenario in practice. In such a scenario, the supplier sells at given
   linear prices, which are independent of the quantities sold. This is also the case for a
   regulated monopoly, in which the price vector p is fixed by the regulator, and the
   supplier simply supplies the services that the market demands at the given price p.
   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.

                     5.2.4.3 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.
   In oligopoly situation supplier has partial influence over price p because he is in
   competition with just a few others. In such an economy suppliers compete for
   customers through their choices of price p and service y. In this case it is assumed that
   suppliers do not collude or form a cartel. They compete against one another and the
   market prices of services emerge as the solution to some no cooperative game.




                                     Page 81 of 126
                                                                              4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                       7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




       5.2.5 Interconnection issues
Interconnection is a specific type of access implemented between public network
operators. Commercial, technical and operational arrangements must be made to facilitate
interconnection between network operators. With the liberalization of telecommunications
markets over the last few decades, effective interconnection arrangements have become
key to the operations of an increasingly wide range of services. It is also a critical factor for
the viability of competition. Interconnection is an important consumer issue.
Telecommunications user cannot communicate with each other or connect with services
they demand unless necessary interconnection arrangements are in place. Increasing
network interconnection will continue to improve the convenience and utility of
telecommunications service for users around the world.


In last years 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.
Interconnection charges often account for a very significant part of the costs of new
telecommunications operators. The level and structure of interconnection charges are
major determinants of the viability of operators in a competitive telecommunications
market.
As a general principle, interconnection charges should reflect the difference between fixed
and variable costs of interconnection. Fixed costs are best recovered through a fixed
charge. On the other hand, where the costs of network components are traffic sensitive,
they are best recovered through usage charges. In the case of interconnection of Internet
backbone operators and Internet Service Providers, charges are often based on capacity.
Interconnection charges should be cost-based (ideally based on long-run average
incremental costs, including cost of capital, plus a reasonable markup to cover forward-
looking joint and common costs) [21]. Moreover, they should be sufficiently unbundled so
that an operator seeking interconnection need only pay for the components or services it
actually requests. Charges should not also include hidden cross-subsidies, particularly of
an anti-competitive nature (e.g., charges for monopoly-supplied network components
should not be inflated to a level well above costs in order to fund below-cost provision of
competitive components). Finally, the structure of interconnection charges should reflect
underlying costs. Thus fixed costs should be covered by fixed charges, variable costs by
variable charges. Peak and off-peak charges should be set where there is a significant
difference in costs.




                                        Page 82 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




 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.
Some issue cases will be studied on D15 deeply:
    Leased lines vs. bandwidth on-demand.
    IP/MPLS over static vs. dynamic.
    Multilayer resilience in an IP over Optical network.



       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 offers 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
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




                                      Page 83 of 126
                                                                              4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                       7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




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
Most of carriers have deployed many optical rings in their core network. Moreover,
protection of connections and links has become more and more important with the growth
of optical fiber bandwidth. Indeed, a single failure impacts more and more users. Recovery
mechanisms based on control plane functionality can bring fast mesh protection/restoration
(distributed/centralized) close to characteristics of ring protection (i.e. time of restoration).
We will perform a quantitative comparison between ring and mesh core network. This case
study will determine an economically viable and homogeneous core network solution.


Influence of transparency on CAPEX and OPEX in transport network

It is still a question in dispute, if transparent optical networks will really be more cost
effective than “traditional” opaque networks. Most studies about this topic in the past did
not take into account the increasing complexity of transparent networks, which result from
physical constraints.
Within the NOBEL-consortium there is the expertise, for cost modelling as well as for
physical constraints. This rare opportunity should be used to establish, for the first time, a
complex cost model for transparent optical networks, which includes best effort estimations
of consequential expenditure due to components enabling optical transparency and
dynamics.
This cost comparison should not only comprise the CapEx, but also give a reasonable
overview of the OPEX range for the different levels of transparency. This is important in
order to have mirror of the overall costs and therefore, to obtain a fair comparison.
This study will be done in collaboration with WP5 where the transparency is under study.
First some dimensional computations on different network alternatives have to be
performed and then cost-based evaluation should be performed.


Another case studies will analyze on D15:
    Economical interest of the optical path (TDSC, LSC) through (opaque node) in the
     core network.
    Hybrid Network Elements.
    ION with Ethernet and/or MPLS edge (with ASON/GMPLS control plane) vs.
     IP/MPLS PSRs for providing L3/L2 VPN services.
    SLA in context of Point-to-Point vs. access based contracts.
    The cost of provisioning of different QoS levels.




                                        Page 84 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




       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.
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)

Different network architectures can be used to transport the traffic from metro-access-
nodes to the metro-core node. We will evaluate some well-known network architectures
and a more innovative one, introduced recently in a previous IST project (IST-DAVID).
Optical passive technologies may represent a good alternative to classical solutions thanks
to the relative simplicity of the metro-access network. The “hub-and-spoke” nature of the
traffic in this region, allows avoiding the implementation of a meshed architecture, and
simple passive add/drop nodes may be sufficient. Due to the burstiness of the traffic
coming from access networks, packet solutions will be preferred. Finally, being a packet
architecture close to access networks, Ethernet frames will be logically considered. As a
result, the innovative solution we want to analyze is a passive Optical Ethernet network
architecture, also known as DBORN (Dual Bus Optical Ring Network) in the literature.
For this study case, we will first dimension each network architecture with respect to the
reference network of the metro-access, and make a first comparison in terms of equipment
volume (number of transponders, size of nodes, …) Later on, we will make a cost
comparison of these architectures using the NOBEL CaPex cost model.


LEX CO reuse by upgrading to NGN architecture

This case study will be defined to analyze new business opportunities and benefits, not
only for a network operator but also for their customers, when the network operator
upgrades their old equipment with the new one recommended for implementing a Next
Generation Network.




                                       Page 85 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




Network operator owns a lot of physical space in buildings, which can be used profitably.
Therefore, these free spaces could generate profits and/or new business opportunities,
such as estate agent, while they are updating their equipment, too. This profits and new
business opportunities will be evaluated in this case study.
This case study will provide a migration plan, which can evaluate viability of LEX CO
evolution. It must examine different options and their related costs in comparison to their
economical profits. Furthermore, difficulties, which can slow down LEX CO modernization,
will be studied and solutions and real alternatives will be proposed.


Optimal SAN provisioning

Two main aspects about the techno economic evaluation will be tackled: a first issue
focused on network and storage equipment cost and a second issue concerning the
optimal way to provide storage services. We will describe a service and network model for
a SAN in a metropolitan environment and propose some design procedures and
economical evaluations.
In the evaluation part of the SAN case study, numerical data will be analyzed, such as:
volumes of traffic transferred between the matrix and hosts, capacity of storages or
frequency of data update. This can lead us to the estimation of a cost of the SAN
installation. Another task will be finding the critical SAN elements having strong influence
on the installation cost.


Another related issue case will be developed on D15: SLA in context of Point-to-Point vs.
access based contracts.




                                      Page 86 of 126
                                                                         4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                  7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




 6      Conclusions and assessment for further work
One main goal of D12 has been the identification of new social and economic opportunities
generated by the breakthrough of NOBEL concepts as well as relevant aspects related to
the evolution of the Information Society in Europe which can impact on the implementation
of the NOBEL networks and services vision.
Main lessons learned from this socio-economic analysis can be summarized as follows:


1.- Core and metro networks and services evolution will be influenced by several social and
technical, social and economic conditions:


 Economic conditions. NOBEL concepts deployment could be hasten by the rise of
  ICT market. Furthermore, there are expectations of increasing and generating new
  revenues for ICTs companies, mostly due to new services. These revenues and the
  need of reducing OPEX may favor the deployment of advanced and efficient metro and
  core networks.
 Technical conditions. The increase in broadband access penetration in the residential
  segment and SMEs will impact directly on NOBEL deployment. Despite the fact that
  NOBEL concept of "direct customers” are large enterprises and operators, a great
  penetration in residential and SME segment will favor the increase of unpredictable
  traffic in core and metro networks as well as the appearance of emerging companies
  offering more services and applications to these customers. To provide these new
  services and applications, companies will need advanced core and metro networks that
  will assure them QoS requirements. Besides these increase in traffic and new services,
  the expected increase of mobile access penetration (3G, Wi-Fi, etc) and the
  widespread coverage of broadband access networks will also favor the increase of
  users mobility as well as the introduction of network services in any kind of
  environment. Therefore, flexible core and metro networks, which can manage high
  amounts of unpredictable traffic and provide enough QoS every time and everywhere,
  will be needed.
 Social conditions. Residential segment can influence greatly in the core network. For
  instance, P2P (mainly in households) is changing the asymmetry of data flow in the
  core network. However, enterprises will be direct customers for NOBEL services. In this
  respect, businesses require fast provisioning of flexible services and applications such
  as VPNs with bandwidth on demand that current backbone networks cannot cover.
  Regarding grid applications, they are expected to be used not only for increasing
  computing capacity but also for distributed data storage. However, grid applications are
  not expected to have a direct impact in core networks because of several reasons
  described in 4.1.3.
 Political conditions. New public initiatives promoting the usage of telecommunications
  networks and services as well as a stable regulation of the telecommunications market
  will favor new investments by network operators and the deployment of NOBEL
  concepts.




                                     Page 87 of 126
                                                                        4f954760-b6c9-4a6d-8121-
                            IST IP NOBEL "Next generation
                                                                                 7f6f6fb8d64f.doc
                            Optical network for Broadband
                                 European Leadership"




2.-NOBEL solutions will impact on important social and economic aspects:


 Price of network services. Multivendor and multiservice solutions, as proposed in
  NOBEL, will increase networks efficiency and scalability allowing operators to reduce
  the costs of providing new services and updating their networks. Consequently, a
  reduction of provisioning and maintenance costs will also impact on the price of
  network services and favor their use by an increasing number of customers. For
  example, NOBEL solutions will facilitate the widespread use of services such as VPNs
  with bandwidth on demand not only to large enterprises but also to SMEs.
 Employment. A widespread use of NOBEL services and applications may facilitate the
  creation of new jobs with more specific competences (e.g IT/network specialists in the
  enterprises). However, some jobs related to the operation, maintenance and
  management of network operators will change their functions due to the introduction of
  optical networks with a distributed control plane.
 Labour tendencies. NOBEL services and applications such as dynamic VPNs from
  everywhere (see 4.1.2) and teleworking will improve the working flexibility. A
  widespread use of VoIP and Videoconference applications may also change labor
  relations. These changes could affect work efficiency because will reduce expenses on
  offices, trips as well as time spend to connect with a partner.
 Commercial relationships. NOBEL solutions may also change the commercial
  relationships because if customers are connected to the network, companies will be
  able to use new ways to contact with them (e-Commerce, mailing lists, etc.).
 Geographical inequalities. Providing cheaper telecommunication connectivity can
  reduce geographical inequalities. For example, a company could open a center in a
  small town and give a VPN connection reducing costs of an office in a large city. On the
  other hand, teleworking may also favor the development of rural areas because, in
  some cases, workers will not require to live near the office.
 Public services. NOBEL will provide an infrastructure that could be used by Public
  Administration not only to connect their buildings but also to offer efficiently their
  services (like e-Government, e-Health, etc.). For example, multi-user applications such
  as teleconferences and working groups will contribute to develop sectors such as
  healthcare and education, which will influence on common people.
 Broadband development. The main factor, which influence residential users attitude
  to pay for broadband is connection speed and persistence a well as the price and
  quality of contents. In this respect, NOBEL can offer what users are looking for, better
  and cheaper broadband connections. A cheaper network management will influence in
  contents prices and network flexibility will provide enough resources for quality in
  contents products.


Another main goal of D12 is the description of a new vision for innovative business models
and charging models for broadband network services. This general vision is based on a
new reference model for definition of business roles and the evolution to an unbundled
value chain in telecommunication services. Further detailed description of business cases
and business models for NOBEL services will be addressed in deliverables D15 and D31
respectively.




                                     Page 88 of 126
                                                                         4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                  7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




 7      Annex A: Benchmarking between Europe, US and Japan
European countries, United States and Japan are following different routes to broadband,
mainly due to different regulations, policies, infrastructures and cultures.
Europe, still a fragmented country, has shown, as we’ve seen in the chapters before, many
local realities, sometimes very different each other; for instance, we’ve seen how the
broadband penetration is higher in the northern countries than in the southern ones,
especially in the Latin ones, even though in countries like Italy or Spain things have
changed a lot during the last few months. Often broadband’s legislation and promotion by
the different governments of the European countries have followed very different ways,
sometimes almost opposite routes.
On the other side, Japan has a single telecom infrastructure, a homogenous language and
culture and a dense population, and there has been significant government encouragement
of broadband deployment.
United States, instead, are also a single country but with a complicated infrastructure,
strong competition and limited government support.
After a first overview on the situation in the USA and Japan, we’ll compare Europe with the
two countries analyzed.



 7.1    United States

United States has had the opportunity of experimenting a quicker and wider diffusion of
broadband compared to other countries, mainly thanks to the presence of an already
existing infrastructure. So we may say that the US started their journey towards broadband
in a better environment compared to other countries as they have exploited the wide
diffusion of cable technology, already used for television broadcasting. All that also
explains the big difference between on one side US and on the other side Japan and
Europe about the broadband technologies used: cable in the States and DSL or fiber optic
in Japan and Europe.
This situation has affected also the broadband value chain. In fact while in Europe and
Japan, telecom companies (often incumbents, but there are also success cases in which
new telecommunications enterprises have reached important market shares) represent the
main actors within the broadband value chain, in the States, instead, the main roles are
played by cable vendors who are the real owners of the more important broadband
infrastructure. Today, even though big cable vendors like AT&T are still the main players,
telecom companies are reacting, and technology like DSL are gaining day-by-day new
market shares.
But now telecom companies to overcome or, at least, to equal the market power of the
cable vendors must face the new challenge launched by cable vendors: triple play. So the
next step for telecom companies must be the introduction of the fiber optic technology, the
only way to provide high level services to their customers.
Anyway, as we will explain later, the situation in the United States is not so good as we
could expect.



                                     Page 89 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                               IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                               Optical network for Broadband
                                    European Leadership"




The diffusion of broadband in the US

According to a recent study by Pew, broadband users have reached the share of 48
million. Over the last year, more than 52% of new users have chosen a DSL connection
rather than a cable one. Anyway users with a cable connection still represent a clear
majority: 6 million users more than DSL users and over 54% of the entire market, even
though DSL technologies are increasing their subscribers in the last few months.



                 30            26
                 25       21                     20
                 20

                 15                                                          2003
                                          9                                  2004
                 10

                  5                                       1,4   1,6

                  0
                       Cable Modem         DSL           Wireless


Figure 69: Composition of Home Broadband Market Source: Pew Internet, 2004


Development of electronic commerce in the USA

In a news bulletin from March 2003 (cf. E-Stats, 19th March 2003), the Census Bureau of
the US Department of Commerce (DoC) summarizes the situation of eCommerce in the
USA in 2001 as follows:
      eCommerce outperformed total economic activity in three of four major economic
       sectors measured between 2000 and 2001.
      Business-to-Business activity, which depends critically on Electronic Data
       Interchange (EDI), dominates eCommerce.
      All industry groups in each sector participate in eCommerce.

In a release from May 2003, the Census Bureau presents figures for U.S. retail
eCommerce sales for the first quarter of 2003. Not adjusted for seasonal, holiday, and
trading-day differences, the total volume is estimated at US$ 11.921 billion, which means
an increase of 25.9% from the first quarter of 2002. Total retail sales for the first quarter of
2003 were estimated at $772.2 billion, an increase of 4.4%. According to this estimate,
eCommerce sales in the first quarter of 2003 accounted for 1.5% of total sales, while in the
first quarter of 2002 eCommerce sales were 1.3% of total sales. In the fourth quarter of
2002 eCommerce sales were 1.6% of total sales.




                                       Page 90 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




             16
             14
             12
             10
              8                                                       Billions of US$
              6
              4
              2
              0
                    1999        2000       2001         2002


Figure 70: Estimated U.S. retail eCommerce sales (1999-2002) (Source: US
Department of Commerce, 2003)


Based on data from the 2001 Annual Survey of Manufactures, the DoC also provides
statistics about eCommerce as a percentage of the total value of shipments from
manufacturing companies. The sectors where eCommerce has reached the highest shares
are the transportation equipment sector (48% of total shipment value in 2001), the food and
beverages sector (38%) and the electrical equipment sector (25%). In total, eCommerce is
estimated at 18.3% of shipment value in the manufacturing sectors (18.0% in 2000).
Transportation equipment alone accounted for more than 36% of the eCommerce based
shipments in 2001.
The same statistics are available for merchant wholesale trade sales, where eCommerce is
found to account for 10% of total sales in 2001 (8.8% in 2000). 86% of eCommerce in
merchant wholesale trade sales is EDI based. The report points out that eSales by
Merchant Wholesalers grew strongly from 2000 to 2001 while total sales declined. eSales
were up by 12%, compared to a 1% decline in total sales. More than half of the growth in
eSales came from Drugs and Druggists’ Sundries, where eSales grew by US$19 billion
and sales grew by $33 billion.
In Selected Services Sectors, the share of eCommerce based revenues is reported to be
much lower than in manufacturing and wholesale trade, namely less than 1% of total
revenues. The only sector within the services sectors where eCommerce has reached a
significant share is travel arrangement and reservation services, where nearly a quarter of
all revenues (24%) stem from eCommerce, according to the 2001 Service Annual Survey.
Four groups account for 49% of total Selected Service eRevenues. Travel Arrangement
and Reservation Services account for 17%, Publishing, including newspaper, periodical,
book, and software publishers, for 13%. Securities and Commodity Contracts
Intermediation and Brokerage and Computer Systems Design and Related Services are
each 10% of total eRevenues.


The broadband problem in the US

Broadband technology is critical to economic performance, national welfare and also to
face the war against terrorism (on September 11, 2001, President Bush conferred with his
advisors over a secure videoconferencing link, a technology that will be critical to managing
future national crises ranging from terrorist attacks to energy supply interruptions). Yet the



                                       Page 91 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




United States now ranks approximately 20th worldwide in broadband deployment, and is
further falling because broadband services are hostage to the self-interest and inefficiency
of powerful incumbent firms, and Federal policy has failed to create a modern, competitive,
open architecture local broadband industry.
While the United States has one third of the world's computers, it has only 14% of the
world's DSL lines. As of year-end 2003, the United States had 4.8 DSL lines per 100
telephones, versus for example 5.1 for China, 9.6 for France, 10.9 for Canada, 12.3 for
Israel, 14.4 for Japan, and 21.4 for Taiwan. China and Japan both now have more DSL
lines than the United States. World broadband deployment is growing 78% per year, while
U.S. broadband deployment is growing only 35% per year. On a price-performance basis,
U.S. broadband service is twice as expensive as China, eight times as expensive as South
Korea, and thirty times more expensive than in Japan.
The real problem in the United States is that the dominant providers of local
telecommunications have blocked true competition and the development of a modern,
open-architecture industry. This is rational on their part: competition and technical progress
in broadband services would undercut local telephone companies' traditional voice and
data businesses, and threatens the video distribution monopolies of the cable industry. Yet
Federal policy has been ineffective or even counterproductive. As a result, the industry
remains insufficiently competitive. In the residential broadband market, only two thirds of
users have any choice at all, and even then they face at best a duopoly of one Telecom
Company and one cable provider. These residential broadband services are also designed
to impede, rather than promote, Internet telephony, advanced video delivery, and
videoconferencing. A single incumbent dominates most other local telecommunications
markets, including much of the business broadband market. And despite many public
statements by the incumbent telephone companies implying that it would be rational for
them to invade each other's territories, not a single incumbent has ever competed against
another, in any market.
However, the nations like Japan now leading the world in broadband deployment all share
two characteristics: a strong national policy, and enforcement of truly competitive industry
conditions based on unbundling and open access to local facilities. Some nations also
have subsidies, which however are designed to reward deployment, competition, and
technical progress, rather than simply handing money to inefficient incumbents.



 7.2     Japan

In Japan the situation is very different compared to the United States one because of the
crucial role-played by the Japanese government in the wide broadband adoption all over
the country. In fact the Japanese government has always considered broadband as an
important opportunity for the future of business system: the legislation implemented has
always warranted a wide and equal competition between incumbent and new entries with
financial sustains to all competitors.
Particularly the economic sustain to the telecom companies has been an important
movement as it has allowed many companies to face high investments in infrastructures
also without big revenues in the short term. In other words, the State has shared the risk
with the enterprises just to boost enterprises to invest in the best access technologies.




                                       Page 92 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




As a result of this government promotion of broadband, in a few years Japan is moving
from a wide DSL diffusion to a massive implementation of new fiber optic technologies,
essentials to ensure the future success of new applications and services.


The diffusion of broadband in Japan

The diffusion of broadband in Japan has grown at a high rate in the last few years.

           25

           20

           15                                                           Dial Up

           10                                                           Broadband


            5

            0
                    2000        2001         2002        2003


Figure 71: Number of Broadband and Dial-up contracts (millions) (Source: MPHPT,
2004)


From 2001 to 2002, broadband access service played a leading role in the Japanese
communications market, which activated commercial transactions. This activation was
triggered by competition among carriers that included service price reductions, port speed
enhancements and the availability of ADSL ports, which directly reflected the 7.8 million
users of the total broadband access by the end of 2002. In 2003, this trend continued
because the number of ports increased to 12 million broadband access users. The result is
that at least 27 percent of Japanese households are using broadband access.

                8

                7

                6

                5
                                                                         Cable
                4                                                        ADSL
                                                                         FTTH
                3

                2

                1

                0
                     2000        2001          2002       2003



Figure 72: Broadband subscribers by technologies (millions) (Source: MPHPT, 2004)




                                        Page 93 of 126
                                                                                4f954760-b6c9-4a6d-8121-
                                  IST IP NOBEL "Next generation
                                                                                         7f6f6fb8d64f.doc
                                  Optical network for Broadband
                                       European Leadership"




Recently, thanks to the e-Japan plan promoted by the government, Japan has known an
important diffusion of the FTTH. In fact as the e-Japan plan supports a local self-governing
body, pulling high-speed network access into schools or local communities, the expansion
of the number of general users has affected the country. The Japanese government
believes that it should solve the digital divide for network access as a means of reinforcing
Japan's economic power.

               900.000
               800.000
               700.000
               600.000
               500.000
               400.000                                                   Subscribers
               300.000
               200.000
               100.000
                     0
                         Jan-02     Jul-02    Jan-03   Jul-03   Jan-04



Figure 73: Subscribers Trends of FTTH in Japan (Source: MPHPT 2004)


Development of electronic commerce in Japan

The Establishment and Enterprise Census26 from October 2001 found that 10.5% of
enterprises in Japan had introduced eCommerce. 8.4% used the Internet for their
eCommerce activities, 2.6% networks other than the Internet. 8% of enterprises said they
sold goods or services online to other businesses, 4% to consumers (Kitada, 2002).
Regarding the volumes of goods and services traded online; business-to-business
eCommerce is believed to account for the largest part of online commerce. The
eCommerce Survey 2001 finds that the scale of the B2B market expanded to around 34
trillion yen in 2001, including the service-related segments added into the survey. That was
an increase of about 58% compared to 21.6 trillion yen for 2000. Even when limiting the
scope to the segments that were included in the previous surveys, it was an amount of
33.6 trillion yen (56% increase). This almost satisfied the target growth rate of 60% that
was set by the "e-Japan Strategy".
Particularly noteworthy sectors in the 2001 survey were the automotive industry and the
industrial machines manufacturing sector, but also the paper and office goods and the
service-related segments transport and travel services. In the automotive industry,
manufactures of the finished goods were found to migrate from EDI to Internet for the
procurement of supply goods. Both suppliers and manufacturers of the final goods seemed
to benefit from e-procurement by cutting costs and improving administrative efficiency.
The same study reports that the volume of business to consumer (B2C) eCommerce
market increased steadily and largely since 1998, when the first survey was conducted,
from 64.5 billion Yen (1998) to 336 billion (1999), 824 billion (2000) and to 1,484 billion in
2001. From a sectoral perspective, the typical eCommerce segments such as computers
and related products, books and music showed a smaller growth rate than in previous
years, while clothing, travel, entertainment and real estate showed remarkable growth rates
and contributed to a rapid expansion of the B2C market.



                                             Page 94 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




The business to government (B2G) segment amounted to about 6 billion yen in 2001 and
was expected to grow rapidly for the years to come and to surpass 6 trillion yen in 2006. A
main driver in that segment is seen in the fact that the Ministry of Land and Transport
decided to complete an electronic bidding system by 2004, which will be used for almost all
of the public works, which the ministry will commission. In the construction segment in
particular, it is expected that the online bidding amount for public works held by the central
government agencies as well as the local governments will rapidly increase from around
2003 with the progress of the e-Japan strategy. The Ministry of Land and Transport plans
to utilize on-line bidding system for almost all of the public works for which it is responsible
for placing an order.


National strategy for the information society: e-Japan Strategy

Japan, as we said, regards broadband networks as critical for its future development. To
enable rapid and focused policy implementation related to establishing advanced
information society, the Government of Japan has established the Cabinet-level Head
Quarter on IT Strategy and enforced the Basic Law on the Formation of an Advanced
Information and Telecommunications Network Society in January 2001. The headquarters
announced the “e-Japan Strategy” in January 2001. The Strategy sets an ambitious target
to be the most advanced IT state in the world within five years.
It sets five policy areas that Japan should focus on infrastructure, human resource,
ecommerce, eGovernment, and network security


One major contrast among countries is who takes the initiative in infrastructure
development. The Program states that, “the private sector is to play a leading role in the
area of IT”.
The Strategy would see that at least 30 million households are within reach of high-speed
Internet access (e.g. via DSL, CATV and Fixed Wireless Access) and at least 10 million are
within reach of ultra-high-speed Internet access (e.g. via Fiber -To the Home, or FTTH) by
the end of 2005. The review of the Priority Plan in June 2002, estimates that 34 million
households are within reach of ADSL services, about 23 million of cable modem service
and about 14 million households within reach of FTTH. Headquarters concluded that the
missions to establish ultra/high-speed networks is succeeding. How to tackle to access to
these networks may be the next policy target.
Concerning human resources development, head quarters issued the “IT Human Resource
Development Plan” in March 2002. This Plan aims to
      Enhance ICT education in schools,
      Offer people chances to study ICTs for using them in their daily life
      Create human resources with special ICT knowledge, skills and creativity.




                                       Page 95 of 126
                                                                        4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                 7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




 7.3    A comparison with Europe

ICT market
The general term ICT market includes both all ICT equipment (hardware, network,
terminals, etc) and all ICT software and services.
Europe represents almost one third of the worldwide ICT market that is lead by US. Japan,
instead, is the third market.



                           24,80%
                                                               30,50%




                     12,30%
                                                 32,40%

                               Europe    US   Japan   Rest of World


Figure 74: Worldwide ICT market (Source: EITO, 2004)
Anyway in 2004 the three leading countries are expected to loose part of their market
share in favor of countries like China, South Korea, Singapore and Taiwan.


ICT penetration
According to a study conducted by OECD, Europe has shown an ICT penetration growing
but still behind US and Japan. Anyway in Europe there are many different realities as, for
instance, Sweden that has an ICT penetration nearly equal to the US and Greece that
shows a low ICT penetration, just better than that of the third-world countries. Generally
IT/GDP and IT per capita are stronger in the Northern European countries than in the
Southern European countries even though things are changing a lot in the last period and
countries like Spain and Italy are taking great strides.


            IT spending/       IT spending Number of business Number of PCs
                               per capita € PCs per 100 white- per        100
            GDP %
                                            collar workers     population
Western           3,26                  745                   85             29
Europe
EU                3,22                  723                   83             28
US                4,77              1.362                    141             83
Japan             3,48                  903                   49             39

Table 7: Comparative among EU, US, Japan and Western Erurope about ICT
penetration (Source: IDC-OEDC, 2003)




                                         Page 96 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                                 IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                                 Optical network for Broadband
                                      European Leadership"




eBusiness

This section undertakes a brief assessment of the use of electronic business both at an
infrastructural and at an application level in the EU, United States and Japan.


ICT infrastructure in companies

There is not a relevant difference between Europe, the USA and Japan in the utilization of
ICT infrastructures in the enterprises. Differences exist, however, as regards the preferred
method of Internet connection, as we explained before, because while EU and Japan show
a widespread diffusion of ISDN and DSL technologies, United States are more oriented
towards other technologies like cable. On the whole, there is a migration towards higher
bandwidth connection methods, and it is to be expected that the average bandwidth
available to companies will also reach a similar level in the more advanced countries.



                     100%

                      80%                        91%             92%
                                   91%
                      60%

                      40%

                      20%

                       0%
                                   UE            USA            Japan



Figure 75: Enterprises with access to the Internet (Source: eBusiness W@tch, 2003)


              100%
                            26
               80%                          44             43
                                                                             Other
               60%          23
                                                                             xDSL
                                                           16
                                            22                               ISDN
               40%
                            34                                               Dial-up
                                            10             25
               20%
                            17              24
                                                           16
                0%
                            UE             USA            Japan


Figure 76: Method of connection to the Internet Source: eBusiness W@tch, 2003


The diffusion of LANs is similar in the USA and in Japan while in Europe the diffusion is not
at the same level, even though in the last years European enterprises has shown an
encouraging growing trend in the adoption of this technology.



                                         Page 97 of 126
                                                                         4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                  7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




       100%

        80%
                                         75%                  75%
        60%
                    66%
        40%

        20%

         0%
                     UE                 USA                  Japan



Figure 77: Enterprises using a Local Area Network (Source: eBusiness W@tch, 2003)
Anyway, statistics show a slightly better situation in the EU compared with US and
Japan in the adoption of Intranet, while the US leads in the implementation of
Extranet.

       60%
       50%
                    51%                 50%
       40%                                                   45%
       30%
       20%
       10%
        0%
                    UE                  USA                  Japan



Figure 78: Enterprises using an intranet (Source: eBusiness W@tch, 2003)

       40%

       30%

       20%                              24%
                    20%
                                                             16%
       10%

        0%
                    UE                  USA                  Japan



Figure 79: Enterprises using an extranet (Source: eBusiness W@tch, 2003)
A general conclusion from these observations may be that a mere benchmarking of ICT
diffusion, at least on the basic level, does not show significant differences between the
more advanced regions any more. Differences, if any, are to be found in the nature of their
application and the level of eActivities.
Even advanced regions and sectors differ in the intensity and sophistication with which
their companies use ICT to support business processes.




                                     Page 98 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




The B2B market: electronic procurement

In the business-to-business area, statistics suggest that electronic procurement activity is
highest in the USA. The International Benchmarking Study 2002 by the UK DTI finds that
56% of US companies purchase supplies goods or services online, compared to only 28%
in Japan and 42% in the EU-15. Those Japanese companies, however, that buy online,
seem to use e-procurement more intensively than their US, and particularly than their
European, counterparts. More than 50% of Japanese companies that buy online say the
share of their online purchases is more than 10% of total purchases, compared to 43% in
the USA and 30% in Europe.

        60%
        50%                              56%
        40%
                    42%
        30%
        20%                                                  28%

        10%
        0%
                    UE                  USA                  Japan



Figure 80: Enterprises purchasing supply goods / services online (Source:
eBusiness W@tch, 2003)



        100%          5                   8
         90%                                                  22
         80%          25
                                          35
         70%
                                                              30                      50+%
         60%
                                                                                      11-50%
         50%
         40%                                                                          0-10%
                      70
         30%                              57
                                                              48
         20%
         10%
          0%
                     UE                  USA                 Japan




Figure 81: Percentage of the total value of goods and services ordered using online
technologies (%)(Source: eBusiness W@tch, 2003)




                                      Page 99 of 126
                                                                            4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                     7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




 8       Annex B: Questionnaires answered by the partners and
         results
In this deliverable, we have tried not only to give opinion of WP2 but also to collect opinions
from all partners involved in NOBEL project. We thought that a useful way to receive
opinions from the partners was questionnaires. Two questionnaires were carried out one of
them with open questions and another one with a scoring card to be filled in order to
provide a rating about the relevance of those questions.


First questionnaire

We received thirteen answer of the first questionnaire sent to the partners. Following
questionnaire is shown as well as the answers received:


                                   QUESTIONNAIRE

NOBEL project tries to join ideas and objectives of all partners, in order to give a common
vision about Information Society. We aim you to answer following questions about that
subject. Answers should be pragmatic, after a personal reflection. Remember that NOBEL
project is focused on 2007 to 2015 period, so try to give an answer in this period. Please
don’t use more than seven lines in each question.

                                    A. APPLICATIONS


Q.1    In your opinion, what do you think will be the evolution of grid
       applications? How do you think enterprises will change dedicated
       circuit s to VPNs?


I think it will be yet another “flash in the pan” like many previous ideas that are good in
theory but do not work in practice. In the case of grid, it requires a much higher degree of
cooperation between different organizations than it is realistic to expect. It will not be
remembered in 2015




Grid computing is today a major application or Research and Educational Networks
interconnected through Géant. These networks are generally IP based also on the
transport layer, but still often requires QoS and real-time properties. If these networks
converge with ordinary telecom networks the transition to High QoS GbE metro and
transport networks might come earlier than without them.




                                      Page 100 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




First, Grid architecture will be structured in order to give a common view to the different
users: the three components
            Transport Infrastructure
            Middleware
            Applications
Applications and their interfaces will be accessible to external customers. The interfaces,
middleware and transport infrastructure will be standardized.
The Grid applications will evolve more to end-user needs such as bank, medical cares,
multi-media, etc. Then powerful transport infrastructure will have to be deployed integrating
resilience properties and security.




Hopefully they will evolve. This is the best mean of statistical multiplexing to achieve very
high computational performance for low money. All you need is an excellent network with
software that distributes the processes to the grid nodes. Grids are expected to be used
not only for increasing the computational capacity but also for distributed data storage for
both, reliability and security purposes.




I am not convinced that there will be a lot of needs for grid applications other than from
scientific institutions. In that perspective, it is difficult to believe the investment in these
applications will become profitable. They typically need a high bandwidth with insignificant
price.
Grid will serve as the enabling technology for a broad set of applications in science,
business, entertainment, health and other areas.
There exists some challenges for the successful evolution of grid services:
   a. Development of key standards is critical for the successful management of the grid
      complexity
   b. Development of models of interaction between users and grid: Grid Computing
      environments and portals
   c. Policies: grid resources are in different domains. Developing policies is a challenge
Building a business model around it is another interesting challenge




My view on grid is that is more like a middleware supporting applications on top of that. In
that sense grid technology is an important approach especially for super-computing, to
some extent maybe also for storage networking. I will take very long time until it might get a
broader scope.




                                        Page 101 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




Grid applications will be important in the scientific environment to evaluate a lot of data or
to distribute processing over a network of “processors”. In the business environment,
security and confidentiality is a pre-dominant issue, so maybe outsourced IT infrastructure
may get realized by a grid, if and only if the security is guaranteed. In the private area, grid
will not be important.




Grid applications are expected to have a great diffusion in the future. They will need an
adequate communication infrastructure. in particular, bandwidth, connection services and
security should be adequate.




Grids will become service-driven with lightweight clients accessing computing resources
over the Internet. Data centers will be safe, reliable, and available from anywhere in the
world. Applications will be part of a wide spectrum of network-delivered services that
include compute cycles, data processing tools, accounting and monitoring, and more.




I believe GRID applications will have an important growth.




Grid applications will remain highly bandwidth consuming scientific applications. And the
higher the bandwidth, the cheaper the prices consumers (institutions like CERN, etc.) will
try to get. So, I don’t see grid services as something which will become very wide spread,
even for businesses. Very few customers will ask for a lot of bandwidth with specific
requirements.


Q.2    How do you think enterprises will change dedicated circuit s to VPNs?
The motivation will be of course the lower cost due to better utilization and flexibility of
VPNs once operators start offering better prices. It will start with those that have less
security concerns, need to reach multiple locations and have higher sensitivity to cost. It
will spread as tariffs come down when operators decide that the earnings can come from
widespread usage rather than the present day high prices.




VPN’s will be probably based on an extension of Ethernet switching capabilities to integrate
carrier grade features such as scalability and resilience. These extensions will have to
combine uniform control framework such as GMPLS and conserve the Ethernet switching
capabilities and framing.




                                       Page 102 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




Provided that AAA functionality and dynamic QoS can be met the pricing should be the
driving force.




There are two types of VPNs: those that use IPsec tunnels (VPN1) but have no QoS and
those that allocate capacities (VPN2). Both seem to be promising. For larger companies
with multiple branches VPN2 is of particular interest, while both, small and large companies
will use VPN1 to offer their employees with access from their homes, or while traveling.




Enterprises motivate to saving the cost. If they think the VPN will save more money they
migrate to the VPN. Indeed, the VPN fulfils QoS and security requirements in addition to
the price.




Large and Midsize companies are gradually migrating from leased lines to L3 and L2 VPNs
due to cost savings. In the next years the low cost of VPNs will allow SMEs to start using
this services to link different locations within a town or between different countries.




It will depend on the size of the enterprise. Large enterprises with large networks could
remain to use dedicated circuits (i.e. point to point). These circuits can be CO-CS (e.g.
current SDH leased line) or CO-PS (e.g. based on MPLS), the interface will be Packet
based (Ethernet and/or MPLS).
For small enterprises it will be more attractive to buy a VPN (i.e. multipoint connectivity)
instead of a couple of lines. The interesting question is where is the boundary between a
small and large enterprise?




What is your interpretation of “dedicated circuits”: owned fibers, leased fibers, leased
wavelengths, OTN connections, HO SDH connections, LO SDH connections, ATM VCs?
There will be a smooth migration towards Ethernet based on carrier-class Ethernet nodes
with transport capability (e.g. enhanced protection features).




VPNs will be important for enterprises when 2 conditions are fulfilled:
   -   VPNs must be cheaper than dedicated or leased lines offering at least the same
       QoS
   -   VPNs must be secure (i.e. IPSec should be used).




                                      Page 103 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




We expect that enterprises will prefer VPNs instead of dedicated circuits and they will
progressively move to L1, L2 or L3 VPNs in the future. Sophisticated, economically
convenient and versatile offering of VPNs are expected from the market.




Transition will happen slowly, and not until IP can be shown to meet fully all the QoS needs
of data traffic, including real time applications. Meanwhile, many providers will continue to
support and indeed enhance services based on technologies such as ATM. However,
these trends do mean that enterprises should soon, if they have not already, adopt a
strategy for migrating to IP VPN services, without leaving existing services that are still
performing well




I think this will take very long, as big enterprises don’t like to change. I believe 2007 is too
early for this.




Dedicated lines are best when traffic is constant and service requirements are immediate.
On the other hand, VPNs are more flexible and might be better suited for businesses. So
as long as the VPN solution is cheaper, I would expect companies to move to VPNs.


                               B. INFORMATION SOCIETY


Q.3    What kind of initiatives will your government develop in order to help
       information society? What kind of initiatives do you think could be
       interesting for developing information society?


I hear plans to subsidize the building of broadband access networks outside major cities,
which is essential to reach high penetration of Internet access. There are also programs
expediting the use of IT in public services and by the IRS (electronic submission of tax
forms is already is widespread use).
I think that the target of most initiatives should be directed to schools and young people.




There has already been a large investment in Broadband infrastructure. Now the focus has
turned to services using this infrastructure. Public services through the web and other
initiatives in healthcare for instance are currently discussed.




                                       Page 104 of 126
                                                                            4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                     7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




Mainly focus on employment and security i.e. what are the network infrastructure that allow
to define constructive business models and preserving a consistent level of security.




Hungarian government has various possibilities to apply for money for developing
applications for e.g., eGovernment; for filling the web with contents; and there were opened
some places where the citizens can access some useful government homepages for fee.
To decrease the prices of access is definitively the most important initiative. (It is very
expensive compared to other European countries while the incomes are still low in
Hungary.)




Cost to ownership and access to service are critical point for developing information
society. For instance, if there is no cheap enough computer in the market, one should
facilitate to get a computer (or other devices) and to provide a cheap high bit-rate internet
access for everybody. For instance, French government is currently setting a credit to allow
student to get a computer with 1€/month. Promote a culture to use the internet at the local
community base.
It is in addition necessary to develop killer applications that are needed for everyday life.
But what ?
Remember that we can still live (not alive) without Internet access.




Government may deploy access infrastructures around the country to facilitate the a
Universal Service including broadband




Stimulate the development of the infrastructure (e.g. fibers). Once the infrastructure
evolves, application will be developed. It is hard to develop/think of application before there
is an infrastructure you can run them on.




I am not aware of any planned government initiatives (except some continuation of existing
research programs with probably reduced budget...). But there might be some especially in
the access domain (e.g. regarding broadband access for schools).




In Germany there are a lot of actions initiated by our research ministry (BMBF) concerning
the IT infrastructure for the future. These initiatives are managed in different programs
similar to the EU commission. They focus normally on special topics (e.g. transfer of video
data) and often expect practical demonstrations of the solutions.



                                      Page 105 of 126
                                                                             4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                      7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




Italian government has created a ministry of Technological Innovation. Projects for
technological innovation, especially for introducing more ICT in public administration, have
been announced but the lack of founds does not allow significant results by now. No other
significant initiatives are expected for the near future. Local administrations are often faster
and more effective in experimenting very innovative information and communications
technologies than the central administration. We think that experiments carried out by small
public or mixed (public-private) subjects are very interesting also for the future.




We think could be interesting for developing information society to consider the transition to
the Information Society to be a strategic priority. Therefore, the following initiatives should
be considered:
      1) Encouraging cooperation and links among all participants (firms, financial markets,
         universities, non-profit organizations, workers, citizens, government);
      2) Supporting research, education and promotion using flexible, existing tools
         (minimum use of laws, enhancement of coordination, promotional and co-financing
         arrangements);
      3) Fostering competition in the Information and Communication Technologies sector




In this regard, the EU study “Telecoms services indicators 2004” gives some hints. First,
more people should have a computer at home. Then, broadband services should address
the rural area too. And last, many end-users still lack some necessary skills to use a
computer (but it is less widespread for new generations).
The French government is setting up a partnership with some famous constructors in order
for students to get a laptop at the price of 1€. And there is also some pressure on Telcos to
cover rural areas.


Q.4      In your opinion, how do you think socioeconomic evolution will impact
         on NOBEL concepts? And how could NOBEL concepts impact in
         socioeconomic evolution? (i.e. If construction sector develop a great growth,
         digital home could be developed faster.)


All networking specifications stem from socioeconomic evolution since they constitute an
infrastructure that serves exclusively human society. The preferences of people and their
willingness to pay for broadband services will determine how fast the need for NOBEL-like
networks will arise. Higher economic growth will hasten deployment of NOBEL while slow
growth may even close the window of opportunity going directly to new concepts at a later
time.
On the other hand the deployment of NOBEL-like networks will improve economic growth
and social development but it is very hard to solve this chicken-egg problem without a
crystal ball.




                                       Page 106 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




Socioeconomic evolution requirements will put requirement on price effective broadband
interconnectivity between users which impacts NOBEL. At the same time a price effective
transport and metro solution will help the evolution.




With a large development of Grid education services, more and more eLearning and
Universities will be developed. A scalable and resilient infrastructure can create /develop
massive multi-user applications: such as users, teleconferences, training, working groups.




There are three main objectives. Not only the prices have to decrease, but people must
learn how to use the networks (not to be afraid of it – and to achieve their goals easier than
in conventional way). Third is that there must be easily available useful contents (Powerful
search engines and very fast access (no waiting)). Fast access and capacity or increased
volume of traffic are most important as well as support for new popular bandwidth hungry
applications.




Needs for a particular application could have an impact on the network architecture and
operation mode (or business model). For instance, a development of geographic
localization applications will induce needs for the transport of wireless or satellite signals
with low latency time.




Nobel solutions will allow to extend services such as SANs or VPNs, which currently are
only used by large companies, to every company in Europe.
Public Administration could use a powerful communication infrastructure based on VPNs
interconnecting different locations ( town halls, public hospitals, schools, etc ) which will
facilitate the provision of services such as eHealth, eGovernment or eLearning all around
Europe


On the other hand the socioeconomic evolution may impact on NOBEL in many ways:


      Traditional consumers of telecommunication services are starting to act also as
       providers of services and applications based on IP and thus increasing the traffic
       volume and typology (citizens:P2P, Public administration: eGovernment,
       Enterprises: eCommerce)
      There are many socioeconomic factors favoring the deployment of broadband : the
       economy recovery, liberalization, promotional programs from governments, etc
      Users’ preferred applications require more and more bandwidth




                                      Page 107 of 126
                                                                         4f954760-b6c9-4a6d-8121-
                             IST IP NOBEL "Next generation
                                                                                  7f6f6fb8d64f.doc
                             Optical network for Broadband
                                  European Leadership"




In general the revenues for operators tend to go down, although services offered become
richer, the amount of money spent per household does not increase as much as the
service richness (at least this is true for myself and a lot of friends). This implies that
service provider have less money to spent on equipment. In other words cost effective
solutions are very important.




NOBEL concepts will first be useful in the government, scientific and business sector (more
work at home?). Digital home and the private IT business sector will need more time till a
“breakthrough” in optical networking and corresponding applications than many experts
expect, simply because of the economic situation of people.




The increasing demand for advanced applications will require the development of high
performance network that will take advantage of the new technologies currently studied in
Nobel.
On the other hand, Nobel concepts enabling a new generation of telecommunications
services will contribute to the development of sectors such as healthcare, entertainment
and advanced industry, thus impacting also the life of common people.




The main impact will be on the topics of the WP3 (Optical Burst/Packet Switching
technologies). The socioeconomic evolution may change the foreseen term of introduction
of these technologies, and consequently NOBEL WP3 working plan would be impacted by
this fact. In the other way round, WP3 NOBEL results could impact in the socioeconomic
view of optical long term technologies.




General availability of internet access in important, together with more knowledge on
information technology for the entire population. In Belgium, computers are being used in
primary schools. This is the right direction.




I think the stronger impact will come from end-users since not even half of the households
have internet access yet and this rate is increasing quickly and steadily. And I think
entertainment, which is at the moment provided by TV, radio, video games, etc. will
converge to be carried only one single media. This will put high requirements on networks
regarding QoS parameters and efficiency of provisioning, which matches the targets of
Nobel concepts. So both will evolve in synergy.




                                     Page 108 of 126
                                                                            4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                     7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




I believe that widely available internet access has a big impact on the entire society. It will
bring more knowledge to especially young people. However, the distance between the
younger and the older generation may become bigger.




I think the stronger impact will come from end-users since not even half of the households
have internet access yet and this rate is increasing quickly and steadily. And I think
entertainment, which is at the moment provided by TV, radio, video games, etc. will
converge to be carried only one single media. This will put high requirements on networks
regarding QoS parameters and efficiency of provisioning, which matches the targets of
Nobel concepts. So both will evolve in synergy.


Q.5    Which new opportunities will NOBEL generate for citizens, SMEs and
       scientific community? (i.e. If a small business has three shops in a country they
       could be connected as if they where in the same building.)
The benefits are the same as from the broadband infrastructure i.e. quicker market
penetration, faster eCommerce deployment, new services and products, lower travel or
more output for same travel, easier access to knowledge and remote training etc




Distance will loose its importance. If tele-presence can be solved at reasonable costs many
types of remote working environment will be created.




The network infrastructure is going to be more than just a bandwidth provider to access a
given service i.e. the infrastructure will be able to provide storage, and computational
resource or others without the necessity to see who is the details of the service.




Less traveling, loosing less time. Working from home. New services, new applications.
Increased ratio of population doing research.




If Nobel could demonstrate very cost effective solutions that satisfy QoS and security
requirements, Nobel could boost home (citizens) and SMEs applications.
Clearly having ubiquitous access to network connections creates lots of opportunities. It
may remove the requirement for physical presence/co-location. However it is hard to
predict how this feature will be used, it is like the quest for the killer application. I can’t
predict it, but once there is this connectivity, people will make use of it.




                                      Page 109 of 126
                                                                           4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                    7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




Continuous development of ASTN technology will bring new opportunities for research
networking (see MUPPET project). Beyond that I think optical networks development
currently mainly targets at cost-efficient bandwidth delivery, i.e. there might be only an
indirect impact on the above mentioned groups (high bandwidth at a cheaper price). That
means existing services like WWW or music download will work better. In the long-term
there will also be new services like storage networking even for end customers or more
generally moving IT functionality from the end user location into the network.




      Scientific: grid computing and optical networking with high bandwidth offers a lot of
       new and outstanding possibilities for many scientific evaluations and studies.
       NOBEL results may be very important for medical applications!
      SMEs: optimization of business processes, interconnection of sites and business
       sectors (development, production, purchasing etc.), saving of traveling costs and
       needs
      Citizens: not sure, broadband for all – but for which applications? Gaming may be
       important for the kids (if parents can and want to pay for it ;-))




Nobel should demonstrate that innovation and evolution towards a more integrated and
intelligent network give to people, industry and scientific community more opportunity to
work effectively. For instance, demonstrating that it is possible and convenient to use
connections of very high capacity for a short period of time to exchange a big amount of
data and demonstrate (theoretically but also practically with concrete experiments in the
test bed) that many human and business activities (like exchange medical data, make grid
computing, store data, deliver entertainment) could benefit from that.




NOBEL has low chances to generate new business opportunities for citizens in general
and SMEs. Where NOBEL can generate major opportunities is within the scientific
community, the network operators and the equipment providers.




In principle communication (phone, exchange of files, multimedia contents) will be cheaper,
secure and faster for all. So Nobel concepts will mainly help regarding logistics. But, at the
moment many citizens and SMEs lack IT knowledge/support in order to use computers
efficiently.




                                      Page 110 of 126
                                                                              4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                       7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




Q.6    What kind of new business models could NOBEL generate for a
       network operator? Which business models do you think will continue?
       (i.e. There are companies like electrical and railway which could rent their
       infrastructures to network operators.)
I believe that it opens the opportunity for content distribution services at the metro level
with SAN applications, movie distribution, virtual communities etc.




We will see more open business models with several competing actors in every role
including the network operators. Service agreements between them will come as an
alternative to competition. See also the MUSE deliverable on business roles.




New business for operators will be based on the fact that they will have an access and a
control of the applications they transport. This means that the bandwidth can be allocated
on a service application basis.




We study Multi-Provider, Multi-Domain, Multi-Layer networks with focus on optimization of
resource usage, QoS, reliability aspects, and particularly on making statically provisioned
networks automatically and adaptively switched.




A business model only relies on the supply of connectivity is not profitable for an operator.
In order to increase the revenue the operator has to combine value added services with the
connectivity service. New business models Nobel could generate should integrate such
aspect.




Either the physical layer, the network resources or the contents may be under control of
different entities but network operators will always need to have control over the network
resources in order to guarantee QoS. Network operators could provide transport with QoS,
resilience or capacity in a per service basis.




Currently services and infrastructure are still sold together a lot of times. Regulatory
changes force operators to separate these. A clear NOBEL network vision with different
roles can facilitate this separation. As described earlier, at the end of the day the bill has to
be paid, and there is not much that will be paid. If there are a lot of parties involved in
delivering the service, they all have to earn something, which makes it more expensive
than one operator delivering ‘everything’.




                                       Page 111 of 126
                                                                                4f954760-b6c9-4a6d-8121-
                               IST IP NOBEL "Next generation
                                                                                         7f6f6fb8d64f.doc
                               Optical network for Broadband
                                    European Leadership"




A useful answer to this question would require quite some time for developing such
business models...




“New” business for operators: content delivery, concentration on accounting and billing
contents




We think that in the future the dominant business model will be based on a number of
actors with very well defined and distinct roles: Network Provider, Service Provider,
Content Provider, .... The contribution of NOBEL is mainly focused on network aspects. It
should help Network Provider in building very flexible network infrastructure that can rapidly
adapt to the market needs




NOBEL may contribute to the introduction of new networking services such as Grid
Computing and Storage Area Networks, which are creating a new business model for the
network operators.




I believe the main improvements needed are in the pricing strategies. New pricing
strategies should make sure that revenue grows with growing traffic




Bandwidth is becoming a utility. As for every other utility, the only way to make it profitable
will be to provide value-added services or sell it at high volumes.
A business model which could re-emerge is the bandwidth broker model.


Q.7    What do you think could e relation between roles in this new situation?
       (i.e. A network operator could have a contract with a content provider in order to distribute
       its contents only to its subscribers)


The operators would have to team with content owners and reach special interest groups.




I do not believe in looked in and oligopolistic models and roles. There will be open
competition with QoS and price as drivers.




                                        Page 112 of 126
                                                                            4f954760-b6c9-4a6d-8121-
                              IST IP NOBEL "Next generation
                                                                                     7f6f6fb8d64f.doc
                              Optical network for Broadband
                                   European Leadership"




There will be multiple network operators supporting multiple service providers trading with
various contents and services. There will be no more strict territorial division but
overlapping of various networks, with service brokers, and routing that adapts not only to
network and traffic conditions but also to pricing.




I do not think it is relevant to distribute the content only to its subscriber. It should allow
others to access the content directly or indirectly via dealers.




The Public Administration could be the owner of the physical layer




What may change in the next ten years from the user’s point of view is that the main effort
to be paid in IT is no longer the network transmission or the provision of the Internet
access, but the provision of content and information.




This situation will require strong partnerships between different actors (for example content
provider on one side and infrastructure owner on the other). However a single company
could play different roles in the telecommunications business through a number of
Business Unit each of one specialized in a distinct vertical segment of activity.




I think that there will be more and more service provider depending on one network
operator. I don’t think that there will be much new operators rolling out completely new
infrastructure. Wholesale operators will in this respect probably become more important.




I don’t think a network operator should directly distribute contents or restrict usage in any
way.




                                      Page 113 of 126
                                                                          4f954760-b6c9-4a6d-8121-
                               IST IP NOBEL "Next generation
                                                                                   7f6f6fb8d64f.doc
                               Optical network for Broadband
                                    European Leadership"




Q.8       NOBEL will develop new technological advances. In your opinion,
          could this change structural organization in enterprise?


      -   Telcos

It will be disruptive forcing them to adapt to the data-centric networking away from
traditional circuit-switching (This is anyway happening and a NOBEL-like evolution will
speed this up). They will need to team with content providers instead of just connecting
their customers.
      -   Vendors

Once no single technology becomes (like SDH was in recent years) the market adaptations
will be critical and dangers to overturn business models and business relations (like the
penetration of computer manufacturers into telecoms) and maintain a very fluid situation.
Once technology settles down (if this ever happens) some stability will be restored.
      -   Customers

To customer only benefits can come out of this with the only danger is to pay a high cost
for services




      -   Telcos

Network operation will be more and more automated leading to less necessary manpower
and faster provisioning
      -   Vendors

Vendors will have to implement new solutions, but I don’t think this will lead to any
structural change for them.
      -   Customers

The physical media carrying information (paper, video tape, etc.) will tend to disappear,
information will be reachable from any place in the network, so geographical distance
between people and information won’t matter anymore. Thus, interactions between people
will be re-shaped and depend more on common interest than on closeness.




      -   Telcos: Yes

      -   Vendors: No

      -   Customers: Mainly to business customers, no to residential customers.




                                       Page 114 of 126
                                                                                 4f954760-b6c9-4a6d-8121-
                                IST IP NOBEL "Next generation
                                                                                          7f6f6fb8d64f.doc
                                Optical network for Broadband
                                     European Leadership"




    -   Telcos

Yes, especially the part related to the network management and to the marketing of the
new services enabled by the new network technologies studied in NOBEL.
    -   Vendors

Not significantly from the structural point of view, but they will need wider competences (or
strong partnership) in order to offer on the market a new generation of integrated and
intelligent network nodes.
    -   Customers

    Yes, when new services will be available.




It will lead to an even more global enterprise structure than today, at least for the large
companies. Employees would be able to work more flexible from any place. This would
lead to better distribution of road traffic and daily life. But these possibilities are restricted, a
framework for working and private time must continue. But flexibility in working and time
planning for employees will increase. Business processes will be optimized globally.




How much are structural changes driven by technology advances? It would be interesting
to look into history, what the relation has been? I don’t have a clue, but I guess there is
only a weak relation. For example if there is ubiquitous access, this can be used both for
decentralized organizations as well as centralized organizations, i.e. it can be used to give
everyone the information needed to make a decision himself, or it can be used to give one
(wo)man all the information to make all decisions.




    -   Telcos
    If an operator adopts fully automated solutions, there will be changes in the need for
    OAM and these will modify the distribution of tasks among workers and probably a
    decrease in their number.
    -   Customers
    The customers (citizens) could appreciate these advances by an improvement of
    services supplied. As a function of service, they can organize better their planning of
    everyday life or vacations.
Probably yes… Even telcos, vendors and customers can be service or content providers…
Telcos and vendors will have to meet better the customer requirements.




                                         Page 115 of 126
                                                                       4f954760-b6c9-4a6d-8121-
                          IST IP NOBEL "Next generation
                                                                                7f6f6fb8d64f.doc
                          Optical network for Broadband
                               European Leadership"




-   Telcos: Automatization will reduce the manual configuration work
-   Customers: Nobel solutions may facilitate the widespread of services such as
    teleworking or eCommerce which can directly impact on the structural organization
    of enterprises. On the other hand enterprises will need qualified staff.




-   Telcos: will have the capabilities to rely more on the network infrastructure and to
    upgrade it seamlessly.
-   Vendors: to provide a network infrastructure that will be service aware including the
    requirements of the different service applications such as protection, recovery and
    security.
-   Customers: probably will have access to a more efficient services and more quality
    (QoS).




-   Telcos: State monopolies will disappear (if they have not done so yet). Agreements
    between telcos and new operators to provide a network infrastructure.
-   Vendors: Open interfaces will be required to allow for the open business model
-   Customers: Lower prices. More aggressive market offers. More broadband services
    earlier.




                                  Page 116 of 126
                                                                      4f954760-b6c9-4a6d-8121-
                           IST IP NOBEL "Next generation
                                                                               7f6f6fb8d64f.doc
                           Optical network for Broadband
                                European Leadership"




Second questionnaire

Second questionnaire was a scoring card, because it provided us a numeric answer, which
was a complement to opinions received from the first questionnaire. This questionnaire
was sent to the colleagues of WP2 as well as other WPs:




                                   Page 117 of 126
                                4f954760-b6c9-4a6d-8121-
IST IP NOBEL "Next generation
                                         7f6f6fb8d64f.doc
Optical network for Broadband
     European Leadership"




       Page 118 of 126
                                4f954760-b6c9-4a6d-8121-
IST IP NOBEL "Next generation
                                         7f6f6fb8d64f.doc
Optical network for Broadband
     European Leadership"




       Page 119 of 126
                                4f954760-b6c9-4a6d-8121-
IST IP NOBEL "Next generation
                                         7f6f6fb8d64f.doc
Optical network for Broadband
     European Leadership"




       Page 120 of 126
                                                                                                                                                                                                                                                                                                                                                  4f954760-b6c9-4a6d-8121-
                                                 IST IP NOBEL "Next generation
                                                                                                                                                                                                                                                                                                                                                           7f6f6fb8d64f.doc
                                                 Optical network for Broadband
                                                      European Leadership"




Results of second questionnaire

We received answers from 23 partners from nine European countries. Most of them (66%)
were younger than 35 years old. These answers helped us to analyse NOBEL’s influence
on Information Society and following results are shown:




                                                                                                                                                                                                                                                                                                                                                                    Equipment Man.
                                                                                                                  Research Center

                                                                                                                                    Hungary Research Center

                                                                                                                                                              Research Center




                                                                                                                                                                                                                                         Research Center




                                                                                                                                                                                                                                                                                                                                                                                                                     Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                           Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                             Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Research Center
                                                                        Germany Equipment Man.

                                                                                                 Equipment Man.




                                                                                                                                                                                                  Equipment Man.




                                                                                                                                                                                                                                                               Germany Equipment Man.
                                                        Network Op.




                                                                                                                                                                                Network Op.



                                                                                                                                                                                                                       Network Op.




                                                                                                                                                                                                                                                                                            Network Op.

                                                                                                                                                                                                                                                                                                              Network Op.

                                                                                                                                                                                                                                                                                                                                Network Op.

                                                                                                                                                                                                                                                                                                                                                  Network Op.



                                                                                                                                                                                                                                                                                                                                                                                     Network Op.

                                                                                                                                                                                                                                                                                                                                                                                                       Network Op.
                                            Company:




                                                                                                                                                                                                                                                                                                                                                                     Germany



                                                                                                                                                                                                                                                                                                                                                                                                       Germany



                                                                                                                                                                                                                                                                                                                                                                                                                                           Belgium
                                                        Norway



                                                                                                 France




                                                                                                                                                                                France

                                                                                                                                                                                                  France
                                                                                                                                                              Poland




                                                                                                                                                                                                                                                                                                                                                                                                                     Poland
                                                                                                                  Spain




                                                                                                                                                                                                                                                                                            Spain

                                                                                                                                                                                                                                                                                                              Spain

                                                                                                                                                                                                                                                                                                                                Spain

                                                                                                                                                                                                                                                                                                                                                  Spain



                                                                                                                                                                                                                                                                                                                                                                                     Spain




                                                                                                                                                                                                                                                                                                                                                                                                                                                             Spain
                                                                                                                                                                                                                       Italy

                                                                                                                                                                                                                                         Italy




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Italy

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Italy
                                             Country:
                                                                                    25-35

                                                                                                        25-35

                                                                                                                          36-45

                                                                                                                                                36-45



                                                                                                                                                                                      25-35

                                                                                                                                                                                                         25-35

                                                                                                                                                                                                                             36-45

                                                                                                                                                                                                                                                 25-35

                                                                                                                                                                                                                                                                           36-45

                                                                                                                                                                                                                                                                                                  25-35




                                                                                                                                                                                                                                                                                                                                                                                           25-35




                                                                                                                                                                                                                                                                                                                                                                                                                                                   25-35



                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           25-35

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  25-35
                                                              >46




                                                                                                                                                                      >46




                                                                                                                                                                                                                                                                                                                    <25

                                                                                                                                                                                                                                                                                                                                      <25

                                                                                                                                                                                                                                                                                                                                                        <25

                                                                                                                                                                                                                                                                                                                                                                     <25




                                                                                                                                                                                                                                                                                                                                                                                                                                                                     >46
                                                Age:


Q.1                                             2007         50                 50                    50               46                                          60               45                 40                  42                  50                      42                       50                40                43                45            45                   50                50              44                   50                 50                    45                     46
                                 In UE          2010         60                 70                    60               52                                          80               55                 45                  55                  65                      45                       70                43                46                60            50                   60                70              50                   60                 60                    51                     57
                                                2015         70                 80                    70               59                                          85               70                 50                  65                  80                      50                       80                45                50                80            55                   80                95              55                                      70                    64                     67
      .... Internet access
                                                2007         80                 50                    40               32                                          45               50                 70                  40                  59                      40                       40                32                35                40            45                   45                25              50                   20                 30                    32                     30
                                 Your
                                 country        2010         90                 70                    50               41                                          60               60                 80                  52                  70                      45                       60                40                44                55            50                   50                50              55                   60                 40                    40                     35
                                                2015         96                 80                    60               55                                          80               75                 85                  60                  90                      48                       75                48                55                75            55                   60                60              60                                      50                    60                     60
                                                2007         20                 20                    10               10                   20                     20               15             8,1                     10                  10                      10                       25                          8       10                15            15                   19                10              10                   10                 10                                9          12
                                 In UE          2010         40                 60                    30               13                   40                     70               25                 15                  15                  15                      20                       50                10                20                30            30                   25                20              15                   15                 15                    20                     24
      .... broadband access                     2015         60                 75                    50               18                   78                     90               35                 20                  25                  30                      40                       75                18                40                50            40                   40                70              31                   20                 20                    25                     45
      penetration
                                                2007         58                 15                    10                        7           15                     70               15                                               9         10                      10                       35             7,9                                    10            10                   19                      5    7,5                       10                             7                     8          10
                                 Your
                                 country        2010         84                 50                    30               11                   40                     85               25                                     12                  20                      25                       50                10                                  25            16                   25                25              12                   15                 10                    20                     35
                                                2015         92                 60                    50               17                   78                     90               35                                     22                  35                      50                       70                15                                  45            25                   40                40              20                   20                 15                    42                     50
                                                2007         60                 70                    70               52                                          70               60                                     60                  80                      55                       70                35                55                60                                 60                60              60                   60                                       60                     60
                                 In UE          2010         75                 80                    80               63                                          85               75                                     70                  90                      60                       80                37                65                65                                 70                80              70                   75                                       65                     65
      .... broadband access                     2015         85                 90                    90               65                                          90               90                                     80 100                                      65                       90                40                80                85                                 80                95              75 100                                                        74                     70
      penetration (SMEs)
                                                2007         70                 50                    50               41                                          50               60                                     58                  80                      50                       50                25                                  55                                 30                30              50                   60                                       38                     10
                                 Your
                                                2010         82                 60                    60               48                                          70               75                                     65                  90                      55                       65                35                                  60                                 40                50              60                   75                                       45                     25
                                 country
                                                2015         98                 70                    70               52                                          90               80                                     73 100                                      60                       80                50                                  80                                 60                70              65 100                                                        55                     50
                                                2007         85                 85                    83               88                   87                     90               85                 90                  90                  87                      83                       85                83                85                85            83                   90                85              85                   85 100                                   90                     93
                                 In UE          2010         89                 90                    84               89                   93                     95               90                                     92                  93                      85                       90                85                89                90            86 100                                 87              88                   90 100                                   95                     98
                                                2015         93                 92                    85               92                   99                     98               90                                     95                  99                      87                       95                88                93                98            90 110                                 88              90 100 100 100 100
      .... mobile penetration
                                                2007         88                 80                    75               85                   88                     60               80                                     92                  90                      70                       90                85                87                85                                 90                80              70                   85 100 100 100
                                 Your
                                                2010         94                 83                    78               88                   94                     70               85                                     95                  95                      75                       95                90                91                90                             100                   81              75                   90 100 100 100
                                 country
                                                2015         96                 88                    82               90                   99                     80               85                                     97 100                                      80                       97                91                95                98                             110                   82              80 100 100 100 100
                                                2007         63                 60                    65               55                   66                     70               60                 60                  60                  60                      60                       60                55                57                57            60                   60                60              55                   60                 70                    60                     62
                                 In UE          2010         78                 65                    70               58                   78                     80               65                 70                  65                  72                      63                       70                58                60                72            65                   70                65              60                   65                 80                    68                     69
                                                2015         85                 70                    80               62                   90                     90               70                 80                  70                  85                      65                       75                61                64                90            70                   80                70              65                                      90                    74                     77
      .... PC penetration
                                                2007         84                 60                    55               50                   50                     30               60                                     55                  50                      55                       58                53                53                52            55                   40                40              55                   60                 40                    55                     67
                                 Your
                                 country        2010         90                 65                    65               53                   70                     50               70                                     60                  65                      60                       65                58                56                67            60                   50                45              60                   65                 50                    70                     70
                                                2015         93                 70                    75               55                   80                     70               80                                     65                  80                      65                       70                65                60                87            65                   60                55              65                                      70                    75                     75

Q.2                                             2004     0,5 0,1                                              1                 2                         0                 4       21                                               6                     2                            0                 0                 0                 0                 0                                  0   0,5            0,1                       15                             0    0,5                                    0
      Video streaming(VoD, video  Your          2007                  2 0,2                                   4                 4           10                              5       21                                               7                     4                            0                 5                 2                 5                 2                                  2             1    0,5                       15                             2         10                                3
      braodcast, IP-TV)          Country        2010                  3 0,2                                   6                 7           20                              5       21                                     10                              7                            2       10                          3       10                          4                                  4       15                          1        15                             4         15                     20
                                                2015                  3 0,2                           10                        9           20                              5       21                                     12                  10                                       5       20                          4       10                          4                        10                30                          2        15                             6         20                     20
                                                2004                  0 0,1                                   0                 0                         0                 0                 4                    1                 2                     0                            0                 0    0,1                            0                 0                                  2   0,1                             0 0,2                                   0                     0                     0
                                   Your         2007                  0 0,2                                   1                 1                         0                 1                 6                    5                 3                     1                            0    0,5               0,3                            2                 1                                  8   0,3            0,1 0,3                                                  2                     0                     0
      Video Conference
                                  Country       2010                  0 0,5                                   2                 3                         1                 1                 8                    8                 4                     4     0,5                                      1    0,4                            5                 2                        12            0,4            0,5 0,4                                                  3                     2                     1
                                                2015                  0 0,5                                   4                 5                         1                 1       10                 10                            4                     8                            1                 2    0,5                  10             2,5                                   16            0,5            0,7 0,5                                                  3                     5                     2
                                                2004     0,5 0,1                                              4                 7                         1                 2                 3        10                            6                     3     0,5                                      2    0,5                            5                 1                                  7             7    0,5                                1                     2         10                                3
      Interpersonal                             2007                  1 0,5                                   6        12                                 2                 2                 8        20                            6                     5                            1    2,5               0,7                  10                          2                        10                      9    0,7                                1                     4                     8                     4
                                   Your
      communication services
                                  Country       2010
      (chats, messenger, mail)                                        2 0,5                                   7        17                                 3                 2       10                 20                            6                     7     1,5                                      3    0,9                            5                 3                        15                12                          1                 1                     4                     6                     5
                                                2015                  2 0,5                                   8        22                                 4                 2       12                 20                            6         10                                       2                 3                 1                 2                 3                        20                14         1,5                                1                     4                     2                     6




                                                                                                 Page 121 of 126
                                                                                                                                                                                                                                                                                                                                                         4f954760-b6c9-4a6d-8121-
                                                      IST IP NOBEL "Next generation
                                                                                                                                                                                                                                                                                                                                                                  7f6f6fb8d64f.doc
                                                      Optical network for Broadband
                                                           European Leadership"




                                                                                                                                                                                                                                                                                                                                                                           Equipment Man.
                                                                                                                                                                                                                                                Research Center
                                                                                                                         Research Center

                                                                                                                                           Hungary Research Center

                                                                                                                                                                     Research Center




                                                                                                                                                                                                                                                                                                                                                                                                                            Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                  Belgium Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        Research Center
                                                                               Germany Equipment Man.

                                                                                                        Equipment Man.




                                                                                                                                                                                                         Equipment Man.




                                                                                                                                                                                                                                                                      Germany Equipment Man.
                                                             Network Op.




                                                                                                                                                                                       Network Op.



                                                                                                                                                                                                                              Network Op.




                                                                                                                                                                                                                                                                                                   Network Op.

                                                                                                                                                                                                                                                                                                                     Network Op.

                                                                                                                                                                                                                                                                                                                                       Network Op.

                                                                                                                                                                                                                                                                                                                                                         Network Op.



                                                                                                                                                                                                                                                                                                                                                                                            Network Op.

                                                                                                                                                                                                                                                                                                                                                                                                              Network Op.
                                                 Company:




                                                                                                                                                                                                                                                                                                                                                                            Germany



                                                                                                                                                                                                                                                                                                                                                                                                              Germany
                                                             Norway




                                                                                                                                                                                                         France
                                                                                                        France




                                                                                                                                                                                       France
                                                                                                                                                                     Poland




                                                                                                                                                                                                                                                                                                                                                                                                                            Poland
                                                                                                                         Spain




                                                                                                                                                                                                                                                                                                   Spain

                                                                                                                                                                                                                                                                                                                     Spain

                                                                                                                                                                                                                                                                                                                                       Spain

                                                                                                                                                                                                                                                                                                                                                         Spain



                                                                                                                                                                                                                                                                                                                                                                                            Spain




                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Spain
                                                                                                                                                                                                                              Italy

                                                                                                                                                                                                                                                Italy




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Italy

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        Italy
                                                  Country:
                                                     2004                  0                        0                1                 2                         0                 2                 1                    5                 2                     0                            0                 0                 1                 1                 0                                  2             3                     0 0,2                                           6                     0                     0
                                        Your         2007     0,5 0,1                                                2                 5                         1                 3                 3        10                            3                     1                            0                 1    1,5                            2                 2                                  4             6    0,1 0,3                                                          6                     1     0,5
        e-learning
                                       Country       2010     0,5 0,5                                                3                 7                         4                 5                 5                                      4                     2                            1                 5    1,8                            4                 4                                  6       10         0,2 0,4                                                          6                     1     0,5
                                                     2015                  1 0,5                                     3        15                   10                              5                 6                                      4                     4                            2       10             2,2                            8                 6                                  8       15         0,2 0,5                                                          6                     2                     1
                                                     2004                  0 0,2                         0,3                           1                         1                 2                 1        10                            2    0,5                                           0    0,5                                              1                 0                                  0             4                     0 0,2                                           1                     1     0,5
                                        Your         2007     0,5 0,5                                    0,5                           7                         2                 2                 2        20                            3    1,5                    0,5                                      2                                   2                 1                                  1             5    0,2 0,4                                                          2                     2                     1
        e-comerce
                                       Country       2010     0,5 0,5                                                1        12                                 3                 3                 4                                      5                     3                            1                 2                                   5                 2                                  2             6    0,4 0,7                                                          4                     2                     2
                                                     2015                  1 0,5                                     1        20                                 4                 3                 4                                      6                     5                            2                 2                                   5                 3                                  3             7    0,5                                        1                     6                     3                     2
                                                     2004     0,5                                   1                0                 3                         0                 1                 4        20                            1                     1     0,5                                      3                                   1    0,5                                             1       20                          0                         2                     2                     2                     1
                                        Your         2007                  1                        1                2                 8                         1                 2                 6        30                            1                     3                            2                 4                                   2                 1                                  2       22         0,1                                        3                     3                     3                     1
        Gaming
                                       Country       2010                  2                        1                3        16                                 1                 2                 8        32                            1                     5                            3                 5                                   2                 2                                  4       25         0,1                                        4                     4                     3                     1
                                                     2015                  2                        1                4        25                                 1                 2       10                 35                            1                     8                            4                 6                                   3                 3                                  6       28         0,1                                        5                     4                     4                     1
                                                     2004                  1                        1                4                 9                         1                 3                 5        15                            7                     7                            3                 8                                   5                 2                                  4       14         1,5                                        7                     2         15                     10
                                        Your         2007                  3                        2                6        12                                 2                 5       10                 20                            8         10                                       5                 9                                   5                 4                                  8       20                          2                         8                     2         15                     12
        Web surfing
                                       Country       2010                  5                        3                7        17                                 3                 7       15                 20                            8         15                                       6       10                                            5                 5                        12                30         2,2                                        9                     2         18                     15
                                                     2015                  8                        4                8        27                                 3                 7       15                 25                            9         25                                       6       12                                            5                 6                        16                35         2,5                          10                                  2         22                     20
                                                     2004     0,5                                   1                                  6                         1        10                                                                1         30                      10                       40                                            2                 8                        40                14                          0                                               3         12                     10
                                        Your         2007                  1                        1                         13                                 2        20                                                                1         35                      20                       60                                            3       10                                 50                12                          0                                               3         13                     10
        p2p (background)
                                       Country       2010                  1                        1                         19                                 4        20                                                                1         42                      25                       80                                            4       12                                 60                      1                     0                                               3         15                     15
                                                     2015                  1                        1                         21                                 4        25                                                                1         50                      30 120                                                                 5       14                                 50                      1    0,1                                                              3         20                     16

Q.3.1                                                2007                  4                        1                1                 2                         1                 3                 2                                      2                     2                            1                 4                                   1                 3         1                        3                                   1                                                                     1                     1
                                        Your
                                       Country       2010                  4                        1                1                 3                         1                 4                 3                                      2                     2                            1                 3                                   1                 4         1                        4                                   2                                                                     1                     1
                                                     2015                  4                        1                1                 5                         1                 5                 3                                      2                     2                            1                 2                                   1                 4         1                        4                                   2                                                                     2                     1
        .... e-banking
                                                     2007                  4                        1                1                 3                         1                 3                 2                                      2                     2                                              4                 3                 1                 3         1                        3                                   1                                                                     1                     1
                                        In UE        2010                  4                        1                1                 4                         1                 3                 3                                      2                     2                                              3                                   1                 4         1                        4                                   1                                                                     1                     1
                                                     2015                  4                        1                1                 5                         1                 3                 3                                      2                     2                                              2                                   1                 4         1                        4                                   2                                                                     2                     1

        .... Interpersonal                           2007                  6                        1                4                 4                         5                 1                 1                                      2                     2                            3                 3                                   3                 2         1                        4             1                     2                         4                                           1                     1
                                        Your
        communication services                       2010                  6                        1                4                 5                         5                 1                 1                                      2                     2                            3                 4                                   2                 2                                  5             1                     2                                                                     1                     1
                                       Country
        (chats, messenger)
                                                     2015                  6                        1                4                 6                         5                 1                 1                                      2                     2                            3                 5                                   1                 2                                  6             1                     2                                                                     1                     1
        .... Interpersonal                           2007                  6                        1                4                 5                         5                 3                 1                                      2                     2                                              3                 2                 2                 2         1                        4             1                     2                                                                     1                     1
        communication services          In UE        2010                  6                        1                4                 5                         5                 3                 1                                      2                     2                                              4                                   2                 2                                  5             1                     2                                                                     1                     1
        (chats, messenger)                           2015                  6                        1                4                 6                         5                 3                 1                                      3                     2                                              5                                   1                 2                                  6             1                     2                                                                     1                     1
                                                     2007                  6                        3                2                 2                         2                 2                 6                                      4                     5                            5                 4                                   2                 4         5                        2             2                     5                         4                                           4                     3
                                        Your
                                       Country       2010                  6                        4                4                 3                         2                 2                 6                                      5                     5                            5                 5                                   4                 4         5                        3             3                     6                                                                     5                     5
                                                     2015                  6                        5                6                 4                         2                 3                 6                                      5                     4                            5                 6                                   6                 4         5                        4             4                     6                                                                     5                     5
        .... VPNs
                                                     2007                  6                        3                2                 3                         2                 4                 6                                      5                     6                                              4                 6                 2                 5         5                        3             2                     6                                                                     4                     4
                                        In UE        2010                  6                        4                4                 3                         2                 5                 6                                      6                     5                                              5                                   4                 6         5                        4             4                     6                                                                     5                     5
                                                     2015                  6                        5                6                 5                         2                 5                 6                                      6                     4                                              6                                   6                 6         5                        4             6                     6                                                                     5                     5
                                                     2007                  1                        2                2                 2                         2                 3                 2                                      3                     5                            5                 5                                   3                 4         6                        3             2                     3                                                                     3                     5
                                        Your
                                       Country       2010                  1                        3                4                 2                         2                 4                 3                                      4                     6                            5                 5                                   3                 4                                  4             3                     4                                                                     4                     5
                                                     2015                  1                        4                4                 3                         2                 4                 3                                      5                     5                            5                 5                                   2                 4                                  5             4                     5                                                                     5                     6
        .... eBusiness (B2C, B2B,..)
                                                     2007                  1                        2                2                 3                         2                 3                 2                                      4                     6                                              5                 3                 4                 4         6                        3             3                     3                                                                     4                     5
                                        In UE        2010                  1                        3                4                 3                         2                 4                 3                                      3                     6                                              5                                   3                 4                                  4             5                     4                                                                     5                     5
                                                     2015                  1                        4                4                 9                         2                 4                 3                                      3                     5                                              5                                   3                 4                                  5             6                     5                                                                     6                     6
                                                     2007                  6                        2                2                 2                         5                 3                 2                                      5                     5                            4                 4                                   6                 6         6                        6             3                     2                         6                                           1                     1
                                        Your
                                       Country       2010                  6                        3                4                 3                         5                 3                 3                                      6                     6                            4                 3                                   5                 6                                  5             6                     3                                                                     3                     3
        .... Videoconferencing and                   2015                  6                        4                6                 3                         5                 3                 3                                      6                     5                            4                 3                                   4                 6                                  4             6                     3                                                                     4                     4
        VoIP                                         2007                  6                        2                2                 3                         5                 3                 2                                      6                     6                                              4                 4                 6                 6         6                        6             3                     2                                                                     2                     2
                                        In UE        2010                  6                        3                4                 4                         5                 4                 3                                      6                     6                                              3                                   5                 6                                  5             6                     2                                                                     4                     4
                                                     2015                  6                        4                6                 5                         5                 4                 3                                      6                     5                                              3                                   4                 6                                  4             6                     3                                                                     4                     4
                                                     2007                  1                        2                1                 4                         3                 4                 3                                      3                     2                            2                 5                                   2                 2         2                        3             1                     1                                                                     1                     1
                                        Your
        .... Grid applications                       2010                  1                        2                3                 4                         3                 5                 4                                      5                     3                            3                 6                                   6                 3                                  3             1                     1                                                                     4                     1
                                       Country
                                                     2015                  1                        2                3                 5                         3                 5                 5                                      6                     5                            4                 6                                   6                 4                                  4             1                     2                                                                     6                     6




                                                                                                        Page 122 of 126
                                                                                                                                                                                                                                                                                                                                                   4f954760-b6c9-4a6d-8121-
                                                    IST IP NOBEL "Next generation
                                                                                                                                                                                                                                                                                                                                                            7f6f6fb8d64f.doc
                                                    Optical network for Broadband
                                                         European Leadership"




                                                                                                                                                                                                                                                                                                                                                                     Equipment Man.
                                                                                                                       Research Center

                                                                                                                                         Hungary Research Center

                                                                                                                                                                   Research Center




                                                                                                                                                                                                                                          Research Center




                                                                                                                                                                                                                                                                                                                                                                                                                      Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                            Belgium Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Research Center
                                                                             Germany Equipment Man.

                                                                                                      Equipment Man.




                                                                                                                                                                                                       Equipment Man.




                                                                                                                                                                                                                                                                Germany Equipment Man.
                                                           Network Op.




                                                                                                                                                                                     Network Op.



                                                                                                                                                                                                                        Network Op.




                                                                                                                                                                                                                                                                                             Network Op.

                                                                                                                                                                                                                                                                                                               Network Op.

                                                                                                                                                                                                                                                                                                                                 Network Op.

                                                                                                                                                                                                                                                                                                                                                   Network Op.



                                                                                                                                                                                                                                                                                                                                                                                      Network Op.

                                                                                                                                                                                                                                                                                                                                                                                                        Network Op.
                                               Company:




                                                                                                                                                                                                                                                                                                                                                                      Germany



                                                                                                                                                                                                                                                                                                                                                                                                        Germany
                                                           Norway



                                                                                                      France




                                                                                                                                                                                     France

                                                                                                                                                                                                       France
                                                                                                                                                                   Poland




                                                                                                                                                                                                                                                                                                                                                                                                                      Poland
                                                                                                                       Spain




                                                                                                                                                                                                                                                                                             Spain

                                                                                                                                                                                                                                                                                                               Spain

                                                                                                                                                                                                                                                                                                                                 Spain

                                                                                                                                                                                                                                                                                                                                                   Spain



                                                                                                                                                                                                                                                                                                                                                                                      Spain




                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Spain
                                                                                                                                                                                                                        Italy

                                                                                                                                                                                                                                          Italy




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        Italy

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Italy
                                                Country:
                                                  2007                   1                        2                1                 3                         3                 4                 3                                  6                     3                                              5                 6                 3                 2         2                        3             1                     2                                                                 2                     2
        .... Grid applications        In UE        2010                  1                        2                3                 5                         3                 5                 4                                  6                     4                                              6                                   6                 3                                  4             2                     2                                                                 2                     3
                                                   2015                  1                        2                3                 5                         3                 5                 5                                  6                     6                                              6                                   6                 4                                  5             3                     2                                                                 5                     6
                                                   2007                  4                        2                1                 2                         3                 3                 5                                  5                     3                            4                 4                                   3                 2         5                        4             1                     6                         6                                       3                     1
                                      Your
                                     Country       2010                  4                        4                3                 2                         3                 4                 5                                  6                     4                            5                 5                                   4                 4                                  3             1                     6                                                                 4                     1
                                                   2015                  4                        5                5                 3                         3                 4                 5                                  6                     6                            5                 5                                   5                 5                                  3             2                     6                                                                 6                     5
        .... Backup applications
                                                   2007                  4                        2                1                 3                         3                 3                 5                                  5                     3                                              4                 6                 3                 2         5                        4             1                     6                                                                 2                     2
                                      In UE        2010                  4                        4                3                 3                         3                 4                 5                                  6                     4                                              5                                   4                 4                                  3             2                     6                                                                 3                     2
                                                   2015                  4                        5                5                 4                         3                 4                 5                                  6                     6                                              5                                   5                 5                                  3             3                     6                                                                 5                     6
                                                   2007                  3                        4                1                 3                         6                 3                 1                                  3                     2                            3                 2                                   1                 1         3                        5             1                     2                                                                 2                     2
                                      Your
                                     Country       2010                  3                        5                3                 4                         6                 3                 1                                  4                     3                            5                 4                                   3                 4                                  6             2                     3                                                                 4                     4
                                                   2015                  3                        6                6                 4                         6                 3                 1                                  5                     4                            5                 6                                   6                 5                                  5             3                     5                                                                 6                     6
        .... Teleworking
                                                   2007                  3                        4                1                 4                         6                 3                 1                                  4                     3                                              2                 5                 1                 1         3                        4             2                     2                                                                 3                     3
                                      In UE        2010                  3                        5                3                 4                         6                 4                 1                                  4                     4                                              4                                   3                 4                                  5             4                     3                                                                 5                     5
                                                   2015                  3                        6                6                 5                         6                 4                 1                                  5                     4                                              6                                   6                 6                                  6             6                     3                                                                 6                     6

Q.3.2                                              2007                  2                                         1                 2                         2                 4                                                    3                     3                            4                 3                                   2                 1         1                        3             1                     1                                                                 1                     1
                                      Your
        .... Telemedicine                          2010                  3                                         3                 3                         2                 5                                                    4                     4                            5                 4                                   4                 4         3                        4             1                     2                                                                 2                     1
                                     Country
                                                   2015                  4                                         5                 3                         2                 5                                                    5                     6                            5                 5                                   6                 5         3                        5             1                     2                                                                 3                     4
                                                   2007                  2                                         1                 4                         2                 4                                                    4                     4                                              3                 2                 2                 1         1                        3             1                     1                                                                 1                     1
        .... Telemedicine             In UE        2010                  3                                         3                 4                         2                 5                                                    5                     5                                              4                                   4                 4         3                        4             1                     1                                                                 2                     2
                                                   2015                  4                                         5                 5                         2                 5                                                    6                     6                                              5                                   6                 5         3                        5             2                     2                                                                 5                     5
                                                   2007                  2                                         2                 1                         2                 4                                                    2                     3                            3                 4                                   1                 2         1                        4             1                     1                                                                 1                     1
                                      Your
                                     Country       2010                  2                                         2                 1                         2                 4                                                    3                     4                            3                 3                                   2                 3         1                        5             1                     2                                                                 2                     1
                                                   2015                  2                                         2                 2                         2                 4                                                    4                     6                            3                 2                                   3                 4         1                        6             1                     3                                                                 4                     4
        .... e-goverment
                                                   2007                  2                                         2                 2                         2                 3                                                    3                     4                                              4                 2                 2                 2         1                        4             1                     1                                                                 2                     2
                                      In UE        2010                  2                                         2                 3                         2                 4                                                    5                     5                                              3                                   2                 3         1                        5             1                     1                                                                 3                     2
                                                   2015                  2                                         2                 3                         2                 4                                                    6                     6                                              2                                   3                 4         1                        6             2                     2                                                                 5                     5
                                                   2007                  3                                         2                 2                         4                 3                                                    3                     1                            2                 3                                   1                 1         2                        4             1                     2                                                                 2                     2
                                      Your
                                     Country       2010                  3                                         3                 3                         4                 5                                                    3                     3                            3                 2                                   2                 2         3                        4             2                     3                                                                 2                     2
                                                   2015                  3                                         4                 3                         4                 5                                                    4                     5                            3                 2                                   3                 3         3                        4             3                     4                                                                 3                     3
        .... e-comerce
                                                   2007                  3                                         2                 4                         4                 4                                                    3                     1                                              3                 2                 2                 2         2                        4             2                     2                                                                 2                     2
                                      In UE        2010                  3                                         3                 4                         4                 5                                                    4                     3                                              2                                   2                 3         3                        4             3                     2                                                                 3                     3
                                                   2015                  3                                         4                 5                         4                 5                                                    5                     5                                              2                                   3                 4         3                        4             4                     3                                                                 4                     4
                                                   2007                  1                                         1                 4                         4                 2                                                    3                     1                            2                 2                                   2                 1         2                        3             1                     1                                                                 1                     1
                                      Your
                                     Country       2010                  1                                         2                 5                         4                 3                                                    4                     2                            3                 4                                   4                 3         3                        3             2                     1                                                                 1                     2
                                                   2015                  1                                         3                 5                         4                 3                                                    5                     3                            3                 6                                   6                 4         3                        4             4                     2                                                                 4                     2
        .... e-learning
                                                   2007                  1                                         1                 5                         4                 3                                                    3                     2                                              2                 3                 4                 2         2                        4             2                     1                                                                 1                     1
                                      In UE        2010                  1                                         2                 5                         4                 4                                                    4                     3                                              4                                   6                 4         3                        4             4                     1                                                                 2                     2
                                                   2015                  1                                         3                 6                         4                 4                                                    5                     4                                              6                                   6                 5         3                        4             5                     1                                                                 4                     2
                                                   2007                  6                                         3                 4                         5                 1                                                    3                     2                            2                 4                                   1                 3         3                        4             3                     1                                                                 1                     1
                                      Your
                                     Country       2010                  6                                         4                 4                         5                 1                                                    3                     3                            3                 3                                   1                 3         4                        5             3                     1                                                                 1                     1
        .... Interpersonal
                                                   2015                  6                                         4                 4                         5                 2                                                    3                     3                            3                 3                                   1                 3         4                        6             4                     2                                                                 1                     1
        communication services
        (chats, messenger)                         2007                  6                                         3                 4                         5                 2                                                    3                     2                                              4                 2                 1                 3         3                        4             3                     1                                                                 1                     1
                                      In UE        2010                  6                                         4                 4                         5                 3                                                    3                     3                                              3                                   1                 3         4                        5             4                     1                                                                 1                     1
                                                   2015                  6                                         4                 4                         5                 3                                                    3                     3                                              3                                   1                 3         4                        6             5                     1                                                                 1                     1
                                                   2007                  6                                         2                 4                         5                 1                                                    3                     4                            1                 6                                   3                 4         4                        6             2                     1                         1                                       1                     1
                                      Your
                                     Country       2010                  6                                         4                 5                         5                 2                                                    4                     5                            1                 5                                   2                 6         5                        5             2                     1                         4                                       2                     4
        .... Videoconferencing and                 2015                  6                                         6                 5                         5                 2                                                    4                     6                            1                 5                                   1                 6         5                        4             2                     2                                                                 4                     6
        VoIP                                       2007                  6                                         2                 5                         5                 2                                                    4                     4                                              6                 3                 3                 4         4                        6             3                     1                                                                 2                     1
                                      In UE        2010                  6                                         4                 5                         5                 4                                                    5                     5                                              5                                   3                 6         5                        5             3                     1                                                                 4                     4
                                                   2015                  6                                         6                 6                         5                 4                                                    5                     6                                              5                                   2                 6         5                        4             4                     1                                                                 5                     6
                                                   2007                  2                                         2                 2                         2                 2                                                    3                     2                            2                 4                                   2                 3         6                        4             6                     1                                                                 3                     1
                                      Your
        .... Gaming                                2010                  3                                         4                 3                         2                 2                                                    4                     3                            3                 5                                   3                 4         6                        5             6                     1                                                                 4                     2
                                     Country
                                                   2015                  4                                         4                 5                         2                 2                                                    4                     4                            3                 6                                   2                 5         6                        5             6                     2                                                                 5                     5




                                                                                                      Page 123 of 126
                                                                                                                                                                                                                                                                                                                                                          4f954760-b6c9-4a6d-8121-
                                                       IST IP NOBEL "Next generation
                                                                                                                                                                                                                                                                                                                                                                   7f6f6fb8d64f.doc
                                                       Optical network for Broadband
                                                            European Leadership"




                                                                                                                                                                                                                                                                                                                                                                            Equipment Man.
                                                                                                                          Research Center

                                                                                                                                            Hungary Research Center

                                                                                                                                                                      Research Center




                                                                                                                                                                                                                                                 Research Center




                                                                                                                                                                                                                                                                                                                                                                                                                             Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                   Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Research Center
                                                                                Germany Equipment Man.

                                                                                                         Equipment Man.




                                                                                                                                                                                                          Equipment Man.




                                                                                                                                                                                                                                                                       Germany Equipment Man.
                                                              Network Op.




                                                                                                                                                                                        Network Op.



                                                                                                                                                                                                                               Network Op.




                                                                                                                                                                                                                                                                                                    Network Op.

                                                                                                                                                                                                                                                                                                                      Network Op.

                                                                                                                                                                                                                                                                                                                                        Network Op.

                                                                                                                                                                                                                                                                                                                                                          Network Op.



                                                                                                                                                                                                                                                                                                                                                                                             Network Op.

                                                                                                                                                                                                                                                                                                                                                                                                               Network Op.
                                                 Company:




                                                                                                                                                                                                                                                                                                                                                                             Germany



                                                                                                                                                                                                                                                                                                                                                                                                               Germany



                                                                                                                                                                                                                                                                                                                                                                                                                                                   Belgium
                                                              Norway



                                                                                                         France




                                                                                                                                                                                        France

                                                                                                                                                                                                          France
                                                                                                                                                                      Poland




                                                                                                                                                                                                                                                                                                                                                                                                                             Poland
                                                                                                                          Spain




                                                                                                                                                                                                                                                                                                    Spain

                                                                                                                                                                                                                                                                                                                      Spain

                                                                                                                                                                                                                                                                                                                                        Spain

                                                                                                                                                                                                                                                                                                                                                          Spain



                                                                                                                                                                                                                                                                                                                                                                                             Spain




                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Spain
                                                                                                                                                                                                                               Italy

                                                                                                                                                                                                                                                 Italy




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Italy

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Italy
                                                   Country:
                                                     2007                   2                                         2                 3                         2                 2                                                        3                     2                                              4                 2                 2                 3         6                        4             4                     1                                                             3                     1
      .... Gaming                       In UE         2010                  3                                         4                 4                         2                 2                                                        4                     3                                              5                                   3                 4         6                        4             5                     1                                                             3                     2
                                                      2015                  4                                         4                 3                         2                 2                                                        5                     4                                              6                                   2                 5         6                        4             6                     1                                                             6                     5
                                                      2007                  3                                         6                 3                         4                 2                                                        3                     6                            3                 2                                   6                 4         6                        6             5                     2                 3                                           3                     2
                                        Your
      .... p2p                                        2010                  2                                         4                 3                         4                 2                                                        3                     6                            4                 2                                   3                 4         6                        5             5                     2                 4                                           4                     3
                                       Country
                                                      2015                  1                                         2                 5                         4                 2                                                        3                     6                            4                 2                                   1                 4         6                        4             4                     3                                                             6                     6
                                                      2007                  3                                         6                 4                         4                 2                                                        3                     6                                              2                 6                 6                 4         6                        6             3                     1                                                             4                     2
      .... p2p                          In UE         2010                  2                                         4                 4                         4                 3                                                        3                     6                                              2                                   3                 4         6                        5             2                     2                                                             4                     2
                                                      2015                  1                                         2                 5                         4                 3                                                        4                     6                                              2                                   1                 4         6                        4             1                     3                                                             6                     5
                                                      2007                  6                                         1                 3                         5                 2                                                        3                     2                            4                 2                                   2                 1         3                        6             2                     6                                                             1                     1
                                        Your
                                       Country        2010                  6                                         3                 4                         5                 3                                                        4                     3                            5                 4                                   4                 4         3                        5             2                     6                 6                                           1                     2
                                                      2015                  6                                         6                 4                         5                 2                                                        4                     5                            5                 6                                   6                 5         3                        5             3                     6                                                             3                     4
      .... Teleworking
                                                      2007                  6                                         1                 5                         5                 2                                                        4                     3                                              1                 4                 4                 1         3                        5             3                     5                                                             2                     2
                                        In UE         2010                  6                                         3                 5                         5                 3                                                        4                     4                                              3                                   4                 4         3                        6             4                     5                                                             3                     3
                                                      2015                  6                                         6                 5                         5                 3                                                        5                     6                                              5                                   6                 6         3                        5             5                     6                                                             4                     5
                                                      2007                  3                                         2                 3                         6                 2                                                        5                     3                            4                 6                                   4                 2         4                        3             2                     2                 2                                           2                     2
                                        Your
                                       Country        2010                  5                                         4                 4                         6                 3                                                        6                     4                            4                 6                                   2                 3         6                        4             3                     3                 6                                           1                     1
                                                      2015                  6                                         6                 4                         6                 3                                                        6                     5                            4                 6                                   2                 3         6                        5             6                     3                                                             1                     1
      .... Broadcast video
                                                      2007                  3                                         2                 5                         6                 3                                                        5                     3                                              6                 5                 2                 2         4                        3             4                     2                                                             1                     1
                                        In UE         2010                  5                                         4                 5                         6                 4                                                        6                     4                                              6                                   6                 3         6                        4             5                     2                                                             1                     1
                                                      2015                  6                                         6                 5                         6                 4                                                        6                     5                                              6                                   2                 3         6                        5             6                     3                                                             1                     1
Q.4   Citizens                                                          2                            2                                  2                                           3                 3                    2                 2                                                                    3                                   1                 2         1                        3             2                     1                                       2                     1                     1
      Private companies                                                 1                            1                                  1                                           1                 1                    1                 1                                                                    2                                   2                 1         2                        1             1                     2                                       1                     2                     2
      Public Administration                                             3                            3                                  3                                           2                 2                    3                 3                                                                    1                                   3                 3         3                        2             3                     3                                       3                     3                     3
      Awareness that it is
Q.5   essential to be a part of the Importance                          4                                             5                 2                                           4                                                                              3                            2                 4                 3                 2                 5                                  4             2                     4                                                             5                     5
      information society           NOBEL                               2                                             5                 3                         5                 2                                                        3                     4                            2                 2                 5                 1                 2         1                        6             6                                                             6                     3                     4
      Distribution of broadband       Importance                        4                                             6                 3                                           4                 4                                                            6                            4                 6                 4                 5                 3                                  5             5                     5                 6                                           4                     6
      networks
                                      NOBEL                             6                                             4                 4                         4                 5                 5                                      6                     6                            4                 5                 5                 6                 4         6                        6             2                     4                                       5                     6                     6
      Attractive interactive          Importance                        4                                             6                 2                                           5                 4                                                            5                            6                 6                 5                 2                 2                                  5             4                     5                                                             6                     5
      content offers
                                      NOBEL                             6                                             2                 3                         6                 2                                                        5                     6                            4                 2                 4                 4                 2         5                        5             1                     1                                       5                     4                     4
      Availability of the latest      Importance                        2                                             4                 2                                           3                 3                                                            4                            4                 6                 2                 2                 5                                  4             3                     3                 3                                           2                     2
      generation terminals
                                      NOBEL                             6                                             4                 3                         3                 1                                                        5                     2                            1                 1                 3                 2                 4         3                        3             1                     3                                       2                     2                     1

      Affordable terminal cost        Importance                        6                                             5                 3                                           5                 5                                                            4                            5                 5                 5                 4                 6                                  6             6                     3                 3                                           3                     3
                                      NOBEL                             6                                             2                 4                         6                 1                                                        4                     2                            1                 1                 2                 2                 3         6                        2             1                     2                                       4                     3                     1

      Minimum connection cost         Importance                        6                                             5                 3                                           5                 5                                                            6                            6                 5                 6                 4                 5                                  6             6                     5                 4                                           4                     4
                                      NOBEL                             6                                             2                 4                         6                 5                 4                                      4                     6                            2                 4                 3                 4                 5         6                        5             1                     4                                       6                     5                     5

                                      Importance                        3                                             4                 4                                           3                 4                                                            5                            3                 5                 3                 3                 4                                  6             1                     3                                                             4                     6
      Legislation that successfully
      regulates the social impact
                                      NOBEL                             2                                             2                 5                         1                 3                                                        5                     4                            3                 4                 3                 4                 3         4                        1             2                                                             6                     2                     3
      Regulatory guidelines that Importance                             6                                             4                 3                                           4                 4                                                            5                            4                 5                 2                 5                 5                                  6             6                     5                                                             4                     3
      allow profitable business
      initiatives
                                 NOBEL                                  2                                             2                 4                         3                 4                                                        4                     4                            2                 4                 3                 6                 5         3                        1             2                                                             4                     3                     2

                                      Importance                        3                                             2                 4                                           4                 3                                                            4                            3                 4                 3                 5                 5                                  5             4                     3                 1                                           5                     4
      Abundance of professionals
      specialized in ICT
                                      NOBEL                             3                                             3                 5                         1                 2                                                        5                     4                            3                 2                 4                 2                 4         1                        4             5                                                             4                     1                     1
                                      Importance                        3                                             3                 5                                           3                 5                                                            5                            4                 3                 4                 3                 6                                  5             2                     3                                                             5
      Users training
                                NOBEL                                   1                                             2                 5                         1                 2                                                        3                     4                            3                 1                 2                 2                 2         6                        1             5                                                             6                     2                     2
Q.6   Connection speed and persistence                                  6                            6                5                 2                         3                 4                 5                    6                 4                     6                            5                 4                 6                 6                 5         3                        4             5                     5                 6                     6                     5                     5
      Communication security                                            4                            2                3                 3                         2                 5                 4                                      3                     5                            6                 5                 5                 2                 2         1                        6             4                     5                 1                     6                     4                     5
      Availability of relevant and exclusive content                    6                            2                6                 2                         5                 5                 5                                      3                     6                            6                 6                 3                 2                 2         6                        4             6                     5                 4                     4                     4                     4
      Interpersonal communication services (Chats, e-
      mails, short messages to mobile phones...)                        6                            5                4                 4                         6                 2                 3                                      5                     4                            3                 2                 4                 6                 5         5                        3             5                     4                 4                     5                     4                     2
Q.7                                   Importance                        2                                             3                                           3                 2                                                                              1                            2                 3                 2                 4                 3         3                        1             3                     2                 2                                           1                     2
      The reluctance to pay
                                      NOBEL                             1                                             2                 1                                           2                                                        2                     5                            2                 1                 1                 2                 1                                  4             1                     1                                       3                     2                     1




                                                                                                         Page 124 of 126
                                                                                                                                                                                                                                                                                                                                                      4f954760-b6c9-4a6d-8121-
                                                       IST IP NOBEL "Next generation
                                                                                                                                                                                                                                                                                                                                                               7f6f6fb8d64f.doc
                                                       Optical network for Broadband
                                                            European Leadership"




                                                                                                                                                                                                                                                                                                                                                                        Equipment Man.
                                                                                                                                        Hungary Research Center




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Research Center
                                                                                                                      Research Center



                                                                                                                                                                  Research Center




                                                                                                                                                                                                                                             Research Center




                                                                                                                                                                                                                                                                                                                                                                                                                         Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                               Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Research Center
                                                                            Germany Equipment Man.

                                                                                                     Equipment Man.




                                                                                                                                                                                                      Equipment Man.




                                                                                                                                                                                                                                                                   Germany Equipment Man.
                                                              Network Op.




                                                                                                                                                                                    Network Op.



                                                                                                                                                                                                                           Network Op.




                                                                                                                                                                                                                                                                                                Network Op.

                                                                                                                                                                                                                                                                                                                  Network Op.

                                                                                                                                                                                                                                                                                                                                    Network Op.

                                                                                                                                                                                                                                                                                                                                                      Network Op.



                                                                                                                                                                                                                                                                                                                                                                                         Network Op.

                                                                                                                                                                                                                                                                                                                                                                                                           Network Op.
                                                Company:




                                                                                                                                                                                                                                                                                                                                                                         Germany



                                                                                                                                                                                                                                                                                                                                                                                                           Germany



                                                                                                                                                                                                                                                                                                                                                                                                                                               Belgium
                                                              Norway



                                                                                                     France




                                                                                                                                                                                    France

                                                                                                                                                                                                      France
                                                                                                                                                                  Poland




                                                                                                                                                                                                                                                                                                                                                                                                                         Poland
                                                                                                                      Spain




                                                                                                                                                                                                                                                                                                Spain

                                                                                                                                                                                                                                                                                                                  Spain

                                                                                                                                                                                                                                                                                                                                    Spain

                                                                                                                                                                                                                                                                                                                                                      Spain



                                                                                                                                                                                                                                                                                                                                                                                         Spain




                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Spain
                                                                                                                                                                                                                           Italy

                                                                                                                                                                                                                                             Italy




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Italy

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Italy
                                                   Country:
                                      Importance                        2                                         2                 2                         3                 1                 2                                                            1                            2                 2                 2                 1                 2         2                        2             1                     4                 1                                           4                     2
       The complexity of use
                                      NOBEL                             1                                         2                 2                                           2                 1                                      3                     4                            3                 1                 3                 2                 1                                  5             1                     2                                       2                     4                     2
                                      Importance                        2                                         3                 2                         3                 2                 2                                                            2                            2                 3                 2                 2                 2         2                        2             2                     2                 2                                           2                     3
       The price of a terminal
                                      NOBEL                             3                                         2                 1                                           2                 1                                      2                     2                            2                 1                 3                 2                 3                                  2             1                     1                                       2                     2                     1

       The price of the connection Importance                           2                                         3                 2                         3                 2                 2                                                            1                            3                 2                 2                 2                 3         2                        2             2                     2                 2                                           2                     2
                                   NOBEL                                6                                         3                 2                                           5                 4                                      2                     4                            3                 4                 3                 5                 5                                  5             3                     4                                       2                     6                     6
       The lack of interesting        Importance                        2                                         4                 3                         2                 2                 3                                                            2                            2                 4                 2                 3                 3         1                        2             1                     1                 1                                           2                     1
       content
                                      NOBEL                             6                                         2                 2                                           2                 1                                      3                     5                            3                 1                 5                 1                 1                                  2             1                     1                                       2                     5                     4

       The sensation of insecurity Importance                           2                                         3                 1                         4                 3                 3                                                            2                            4                 3                 2                 2                 3         3                        2             2                     4                 2                                           2                     2
                                   NOBEL                                4                                         3                 6                                           2                 3                                      2                     6                            1                 4                 5                 1                 2                                  6             1                     2                                       4                     1                     2

                                      Importance                        2                                         4                 2                         2                 1                 2                                                            1                            2                 3                 2                 4                 2         1                        1             1                     2                 4                                           1                     1
       Slowness in downloading /
       low navigating speed
                                      NOBEL                             6                                         5                 4                                           5                 3                                      2                     6                            5                 4                 5                 6                 4                                  6             1                     5                                       2                     6                     6

                                      Importance                        2                                         3                 3                         3                 2                 2                                                            2                            2                 2                 3                 3                 3         1                        3             2                     3                 4                                           2                     2
       The resistance to change
       the way of doing things
                                      NOBEL                             1                                         2                 4                                           2                 1                                      2                     5                            4                 1                 2                 2                 4                                  2             1                     1                                       2                     2                     4
Q.8    … labor relations will be                                        5                        5                4                 3                         3                 2                 6                                      4                     6                            5                 5                 5                 5                 5         3                        4             4                     2                 6                                           4                     5
       … the way of selling will be                                     4                        3                4                 4                         4                 4                 5                                      4                     5                            4                 5                 4                 5                 4         6                        5             4                     5                 6                                           4                     4
       … the physical structure of the company will be                  3                        3                5                 2                         2                 2                 4                                      5                     5                            4                 5                 3                 5                 4         3                        3             4                     3                 6                                           5                     6
       … the type of employment will be                                 3                        4                2                 3                         4                 3                 5                                      5                     4                            5                 5                 2                 4                 4         2                        3             4                     4                 6                                           4                     5
       … the amount of employment will be                               3                        3                3                 1                         1                 4                 4                                      4                     4                            2                 5                 2                 3                 1         1                        3             3                     5                 6                                           5                     3
       … supplying will be                                              4                        5                3                 2                         2                 2                 3                                      3                     5                            4                 5                 3                 5                 3         1                        5             5                     4                 6                                           4                     6
       … management style will be                                       4                        6                5                 5                         2                 5                 3                                      3                     4                            4                 5                 3                 3                 5         3                        4             5                     4                 6                                           3                     4

Q.9    Required professional          Importance                        4                                         3                 4                         6                 5                 4                                      4                     5                            4                 3                 5                 6                 5         3                        4             5                     5                 6                                           5                     4
       qualification will be
                                      NOBEL                             1                                                           2                                           2                 1                                      1                     5                            3                 1                 5                 5                 4                                  4             4                     2                                       5                     4                     2
       The length of the working      Importance                        2                                         4                 3                         4                 3                 3                    2                 3                     3                            5                 3                 3                 3                 3         3                        3             3                     4                 6                                           3                     5
       day will be
                                      NOBEL                             3                                                           2                                           2                 1                                      1                     3                            2                 1                 1                 1                 4                                  4             3                     1                                       3                     2                     3
       Working hours flexibility will Importance                        6                                         5                 5                         5                 5                 4                    5                 5                     3                            5                 5                 3                 5                 4         5                        5             4                     5                 6                                           5                     5
       be
                                      NOBEL                             3                                                           2                                           5                 1                                      1                     4                            2                 1                 1                 1                 4                                  5             3                     3                                       4                     2                     5

       The amount of work will be Importance                            3                                         4                 5                         4                 5                 3                    5                 3                     3                            5                 4                 2                 5                 5         3                        3             3                     5                 6                                           3                     5
                                  NOBEL                                 3                                                           2                                           2                 1                                      1                     3                            1                 1                 3                 5                 1                                  3             2                     1                                       6                     3                     5
                                      Importance                        3                                         3                 2                         4                 5                 4                    5                 3                     3                            2                 4                 3                 3                 2         3                        3             4                     4                 6                                           4                     5
       The salary will be
                                      NOBEL                             1                                                           2                                           2                 1                                      1                     3                            1                 1                 1                 1                 3                                  2             1                     1                                       4                     2                     4
                                      Importance                        2                                         3                 2                         3                 3                 3                    2                 2                     3                            3                 3                 3                 5                 3         3                        3             3                     2                 1                                           3                     2
       Work stability will be
                                      NOBEL                             3                                                           2                                           2                 1                                      1                     3                            1                 1                 1                 1                 1                                  2             1                     1                                       3                     3                     2

       Geographic mobility will be Importance                           3                                         2                 1                         5                 2                 5                    2                 5                                                  4                 4                 2                 5                 5         5                        2             5                     5                 6                                           2                     5
                                   NOBEL                                6                                                           2                                           5                 1                                      1                                                  1                 4                 3                 2                 6                                  4             5                     2                                       5                     6                     4
                                      Importance                        6                                         4                 4                         3                 5                 5                    5                 4                     6                            4                 4                 4                 3                 5         3                        5             4                     4                 4                                           5                     4
       Work efficiency will be
                                      NOBEL                             3                                                           2                                           4                 1                                      1                     6                            3                 4                 4                 4                 5                                  4             3                     2                                       5                     6                     4
       Time spent on traveling will Importance                          1                                         2                 1                         3                 2                 5                    1                 3                     1                            2                 2                 2                 5                 2         2                        3             4                     3                 6                                           1                     4
       be
                                    NOBEL                               6                                                           2                                           5                 1                                      1                     6                            2                 4                 4                 4                 5                                  5             5                     2                                       4                     6                     1
Q.10   Customer service                                                                                                                                                                                                                  1                                                  1                                                                                 1                        1                                                     1
       Established brand                                                1                                                                                                                                                                                                                                     1                                                               1                                                            1                                                             1                     1
       Price of its products / services                                 1                                                           1                                           1                 1                                      1                                                  1                                   1                 1                 1         1                                                            1                 1
       Quality of products / services                                   1                                                           1                                                             1                                                                                         1                 1                 1                 1                                                                                                                                                      1                     1
       Exclusivity of products / services                                                                                                                                                                                                                      1                                                                                                                                                                                             1                                           1                     1
       Fast incorporation of technological innovations
                                                                                                                                                                                1                                                        1                                                                    1                                                                                        1             1
       Personalization of products / services                                                                                       1                                           1                                                                              1                                                                                                    1                                                1                     1                                       1
       Belonging to a group that provides content,
       distribution and networks                                                                                                                                                                  1                                                            1                                                                                                    1                                                1
       Specialization only in content production                                                                                                                                                                                                                                                                                                                                                       1
       Belonging to a group of well known prestige in
       the traditional market
                                                                                                                                                                                                                                                                                                                                1                 1




                                                                                                     Page 125 of 126
                                                                                                                                                                                                                                                                                                                                                   4f954760-b6c9-4a6d-8121-
                                                IST IP NOBEL "Next generation
                                                                                                                                                                                                                                                                                                                                                            7f6f6fb8d64f.doc
                                                Optical network for Broadband
                                                     European Leadership"




                                                                                                                                                                                                                                                                                                                                                                     Equipment Man.
                                                                                                                                                                                                                                          Research Center
                                                                                                                   Research Center

                                                                                                                                     Hungary Research Center

                                                                                                                                                               Research Center




                                                                                                                                                                                                                                                                                                                                                                                                                      Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                            Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                              Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Research Center

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Research Center
                                                                         Germany Equipment Man.

                                                                                                  Equipment Man.




                                                                                                                                                                                                   Equipment Man.




                                                                                                                                                                                                                                                                Germany Equipment Man.
                                                       Network Op.




                                                                                                                                                                                 Network Op.



                                                                                                                                                                                                                        Network Op.




                                                                                                                                                                                                                                                                                             Network Op.

                                                                                                                                                                                                                                                                                                               Network Op.

                                                                                                                                                                                                                                                                                                                                 Network Op.

                                                                                                                                                                                                                                                                                                                                                   Network Op.



                                                                                                                                                                                                                                                                                                                                                                                      Network Op.

                                                                                                                                                                                                                                                                                                                                                                                                        Network Op.
                                           Company:




                                                                                                                                                                                                                                                                                                                                                                      Germany



                                                                                                                                                                                                                                                                                                                                                                                                        Germany



                                                                                                                                                                                                                                                                                                                                                                                                                                            Belgium
                                                       Norway



                                                                                                  France




                                                                                                                                                                                 France

                                                                                                                                                                                                   France
                                                                                                                                                               Poland




                                                                                                                                                                                                                                                                                                                                                                                                                      Poland
                                                                                                                   Spain




                                                                                                                                                                                                                                                                                             Spain

                                                                                                                                                                                                                                                                                                               Spain

                                                                                                                                                                                                                                                                                                                                 Spain

                                                                                                                                                                                                                                                                                                                                                   Spain



                                                                                                                                                                                                                                                                                                                                                                                      Spain




                                                                                                                                                                                                                                                                                                                                                                                                                                                              Spain
                                                                                                                                                                                                                        Italy

                                                                                                                                                                                                                                          Italy




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Italy

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Italy
                                            Country:
Q.11   World economy                                             3                            3                3                 3                         3                 3                 3                    3                 3                     2                            2                 3                 3                 3                 3         2                        3             3                     2                 4                     2                     3                     3
Q.12                                           2007                  3                        5                6    6,2                                    5                 7                 5                                      5                     6                            2                 6    4,6                            6    4,8                                             6             5                     4                 5                     5    4,8                    4,5
       Western Europe Market Growth (%)        2010                  3 5,5                                     5        11                                 1                 7                 5                                      5                     9                                              8    4,8                            7    4,8                                             7             6    3,5                                5                     6                     3     0,5
                                               2015                  3                        6                4        12                                 3                 6                 4                                      5         10                                                         9    5,2                            8                 5                                  6             6                     2                 5                     7                     2                     2
                                               2007                  8                        9                8    8,3                                    7        10               10                                     10                              9                            3                 9    7,1                            7    8,2                                   10                      8                     7        10                             7                     8                     9
       Eastern and Central Europe Market
       Growth (%)                              2010                  5           11                    10           8,6                                    1                 7       15                                     10                  11                                               10             7,5               7,5               7,5                                             8       10                          6                 8                     6                     7                     4
                                               2015                  3           13                    10           8,9                                    3                 7       10                                     10                  11                                                         8    8,1                            8                 6                                  7       15                          4                 5                     6                     3                     3




                                                                                                  Page 126 of 126

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:2
posted:9/10/2012
language:Unknown
pages:126