VoIP: Challenges and Opportunities
Telecom 03
Dr. Rajiv R. Shah Vice President Research & Network Strategy Plano, Texas
Agenda
VoIP
What is VoIP
Network and Service Models for VoIP
Standards Issues with regard to VoIP
Market Drivers for VoIP
VoIP and NGN
Regulatory Issues with regard to VoIP
Vonage Ruling
Outlook
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October 2003 - 2
What is VoIP?
Technical Answer:
“The ability to make phone calls over IP-based data network”
Commercial Answer:
”The multi-billion revenue opportunity for the 21st century”
VoIP > IP Telephony
Typically “IP Telephony” indicates using IP terminals Most VoIP is between normal telephones
VoIP < “Voice over Packet”
Includes Voice over Frame Relay, ATM
October 2003 - 3
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What is VoIP, Specifically?
Is It. . .
A Technology or Set of Technologies?
E.g., G.723, RTP, SIP, VXML
An Application?
Transmission of voice as applied over IP technology Internet telephony, international bypass
Next generation signaling and multimedia connectivity
A Service?
A Network?
“VoIP” is a buzz-word and acronym that has all
these meanings depending on the context.
October 2003 - 4
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Circuit Switching Served Voice Well For 100 Years!
Signal System 7 Data link
Trunk Group Signal Transfer Point
Loop
User - A
Class 5 Switching System Central Transit Central Office - A Office Office - B Connection Through Class 4 Switching Fabric Switching System
User - B
Transmission circuits and switch path assigned during call setup for the duration of the call Call is blocked if not enough network resources available
Essentially one class of service: 3.5 kHz, 64 kb/s Poorly matched for bursty data transmission
October 2003 - 5
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Packet Switching Well-Matched for Data Transmission
Packet Payload Header Input Buffer
Hdr. Trans
Routing Fabric
Output Buffer
Hdr. Trans
Great fit for bursty data transmission Packets sent at full rate of transmission facility Supports variable information transfer rates Resources not consumed when nothing to send Potential to eliminate call setup phase
But …
Transmission capacity used for header Buffering introduces varying delays
October 2003 - 6
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VoIP - Basics
Application Server
VoIP Endpoint (terminal or gateway)
Call Server
Signaling Path Peer-to-peer Or client/server SIP, H.323, or H.248 …/UDP/IP or TCP/IP
IP
Analog Voice Analog Voice
Bearer Path IP-end to IP-end Encoded voice Packetized Real Time Protocol (RTP) RTP/UDP/IP
October 2003 - 7
Control Path Statistics on performance of bearer “channel” RTP Control Protocol (RTCP) RTCP/UDP/IP
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Packet Voice Over IP
Migration from VoFR and VoATM to the Use of VoIP by MultiSite Enterprises IP PBX
Emergence of IP PBX based on a softswitch model
Use of H.323 initially and more recently SIP
Use of a converged LAN Ethernet infrastructure to deploy telephony and data services
Single wiring infrastructure based on fast Ethernet Common data infrastructure and single operational group
Intrasite and Intersite
Voice Over the Internet
VoIP clients (NetMeeting and Messenger on PCs) and VoIP Gateways enabled voice calls over the public Internet Kazaa founders have recently launched a peer-to-peer service (Skype)
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October 2003 - 8
PSTN versus VoIP Network Costs
Network costs (transmission and switching costs) contribute only 1015% of overall cost of a voice call terminated by an ILEC or a PTT, and 20-30% of overall costs for calls not terminated by a ILEC or a PTT. Of the network costs, switching costs range between 50% of network costs for domestic calls to 15% of network costs for international calls, transmission costs contributing the rest. Negligible savings in transmission costs through the use of VoIP: lower bandwidth for VoIP offset by need for over-provisioning bandwidth to ensure quality. TDM Switch costs in traditional PSTN replaced by cost of Router plus cost of Gateway [GW] plus cost of Gateway Controller [GWC] plus cost of new OSS/NMS/Billing /Provisioning.
No network cost savings, and very likely a cost penalty, in the initial years, in going from PSTN voice to VoIP for public networks.
October 2003 - 9
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PSTN versus VoIP
Today’s PSTN VoIP
Underlying Technology
QoS Guarantees Network Resource Reserved at Call Setup Network Elements
TDM circuit switching
Yes
Packet switching
No
Yes
Class 4, Class 5 switching systems
No
Gateways, gateway controllers, routers
Call Processing Intelligence
Bandwidth per call Signaling Transport
Mostly integrated in switching system
64 kb/s DTMF, SS7 TDM in access, edge, core
In separate gateway controllers
Variable 8 – 32 kb/s SIP, H.323
ATM, FR, native IP in access; ATM native IP in core
Redundant routes through network
How Reliability Achieved
Redundancy within each network element
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October 2003 - 10
Circuit-Switched and Packet-Based Telephony Compared
Circuit-Switched Transport Limited M2E Delay Propagation Switching
Packet-Based Transport More M2E Delay
Packetization Serialization Queuing Propagation Dejittering …
Practically NO Distortion
More Distortion
Codec compression Packet loss
64 kbit/s are reserved for the duration of the call
Less Resources Needed
Compression can be used Silence suppression can be exploited Additional flexibility
October 2003 - 11
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VoIP Network and Service Model
Application Server Application Server
Call Server Call Server
IP PBX
Business
Access Border Gateway
VoIP Network #1
Access Gateway
Border Gateway
VoIP Network #2
Trunk Gateway
PSTN/ ISDN
GW
Home
Home
Home
Home
October 2003 - 12
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Some Example Service Models
CALEA
E911 Toll Bypass Computer* to Computer* Over the Internet Computer* to PSTN Phone Computer* to POTS Phone Over IP POTS Phone to POTS Phone Over IP
*IP End Terminal, either Computer with software client or IP Phone
October 2003 - 13
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Market Drivers - Cost and Revenue
Cost
Avoidance of regulated fees
International and national International and national
Avoidance of carrier charges
End of life issues for older circuit switch technologies
High cost of maintenance Lack of spares
Single network based on IP techniques Both operational and capital
Efficiencies
Revenue
Beyond simple voice services Bundling as a means to reduce churn Integrated services
Telephony, IM, email, integrated directories (“buddy lists”)
Videotelephony, unified messaging, presence, mobility, IP Centrex
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Enhanced services
October 2003 - 14
VoIP and NGN - Why Not Yet?
There Have Been a Number of Hurdles in Both the Carriers Networks and Enterprises
Network
Lack of capital Competitive environment Reduction in number of lines of the ILECs (cable, CLECs, wireless) Less need for new infrastructure Border gateways CALEA
Enterprise
Existing TDM cheaper than new VoIP New build environments provide a more compelling business case than complete replacement of existing infrastructure Hybrid models are more favoured Future operational savings versus immediate capital expenditure
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October 2003 - 15
VoIP and NGN - What Next?
Why Will Carriers Move to NGN and VoIP Networks?
Toll and tandem bypass remains a key cost driver
Incumbent local carriers, interexchange carriers and wireless carriers alike
Competitive providers utilize the Internet to provide Voice service Enterprises are continue migrating towards IP PBX
NGN for interworking and IP Centrex as the network service
End users begin to actually use native VoIP services
Why will end-users move to VoIP?
Because they can…(and cost) VoIP client bundled with most Instant Messenger clients Broadband Access breaks major quality hurdles
Greater deployment of broadband access in all forms will lead to a greater use of VoIP services.
October 2003 - 16
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Regulatory Issues
1998 Report to Congress - Impact on Universal Service (USF)
Intercarrier Compensation - Access and International Settlements
Access and Settlement Chagres
Law Enforcement - CALEA and Encryption
Jurisdiction - Borderless Nature of IP versus Traditional State Regulation of Intrastate Services
Pending AT&T and Pulver Petitions E-911
Network Separation Requirements on ILECs Numbering Issues - The Role of ENUM and LNP and the NANP
Regulation impacts demand for, and development of, VoIP products, services and networks.
October 2003 - 17
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Outlook: VoIP is a Reality
Technology Reality
The technology exists
Commercial Reality In the Enterprise Markets
IP PBX VoIP Call Center IP Centrex, serious RFP activity
Commercial Potential - Carrier Markets Maturing
Over 1.2 M VoIP Business Users, About 12% of Business Lines (WSJ 10/10/03) VoIP Carriers: Vonage, FWD, Net2Phone, Voicepulse, Skype, and a Few Others, in Addition to AT&T, MCI and Others
Successful Broadband Deployment Policy Will Accelerate VoIP Industry Needs Clarity on VoIP !!
October 2003 - 18
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Fixed & Mobile Services: Challenges and Opportunities
Telecom 03
Communications Networks: The Three Planes
Applications & Services Presence Enablement & Management
Generate Revenue & Value
Messaging Voice
Video
Storage Networks
Interactive Video
Reduce Opex Increase Capex Efficiency Policy Mgmt. Session Mgmt. Call Control AAA Security
Reduce Opex Increase Capex Efficiency
Networking & Connectivity
Core
Metro & Edge Access Mobile
Premise
October 2003 - 20
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The Three Planes: Defined
The infrastructure can be abstracted into three planes
• •
Ne tw ork Se rvi ce pr
Ap p. Se rvi ce pr ovi
Application & Services Plane
–
Core of value proposition of service providers to end-users (OSI>L4)
Enablement & Management Plane (“the invisible work force”)
–
–
Provide various back-end services, common to various end-user services (e.g. payment, content security, content delivery, SIP connectivity, charging, E2E QoS assurance …) This function is provided by network service provider & access provider
Ne tw ork Ac ce ss pro
•
Networking & Connectivity Plane: telecommunications infrastructure networks
–
–
Network infrastructure provided by network service provider and network access provider (L0 to L3 of the OSI stack) Includes end-user premise network in the enterprise and in the home
Bro adb and end use
October 2003 - 21
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Applications - One Network View
IP-Centrex Multi-Media Conferencing Video Conferencing Instant Messaging
Text-tospeech, speech recognition Network based contact-centers
Unified Messaging
Application Server
Video Mgmt.
October 2003 - 22
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Same Set of Services Across Fixed & Mobile, Home & Business: Voice, IM, Rich Presence……….
Interactive Presence
Security
Location info Voice QOS Bandwidth Capability
Fixed Wireline/WiFi
Application - John
Sean@
John@
Application - Sean
Sean@ John@
John Enterprise
John: Chance to look at the doc? Sean: Yes.
James@
James@
John: Chance to look at the doc? Sean: Yes.
ICE
Cellular or PCS WAN /WiFi
Sean Mobile/Wireless Worker
Interactive Communication Environment
James
SOHO/ Remote Worker
Enablers: SIP, Web Services, SOAP, J2EE, .net, VXML
Fixed Wireline/WiFi
October 2003 - 23
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VoIP: Challenges and Opportunities
Telecom 03
Backup
Regulatory Issues: Vonage Ruling, 10/07/03: 1
In ruling from the bench late Tuesday,October 7, 2003, Minneapolis, Minnesota, Federal Judge Michael J. Davis permanently barred Minnesota from applying traditional telephone rules to Vonage, a pioneer in technology that lets consumers bypass the traditional phone network by making voice calls over a broadband connection.
Tuesday's ruling for now frees Vonage to sell its Internet phone service in Minnesota without obtaining a telephone operator's license or paying fees to support 911 services. More importantly, the order is the first to address the authority of a state to oversee socalled voice over Internet Protocol (VoIP) providers, and could thus impact efforts by other states to regulate VoIP providers.
October 2003 - 25
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Regulatory Issues: Vonage Ruling, 10/07/03: 2
State regulators had threatened to stall VoIP's growth by forcing providers to follow the same rules as do traditional phone companies. As a result, the Minnesota suit was being closely watched by VoIP industry executives, consumers and traditional phone companies. Vonage filed suit against Minnesota's Public Utilities Commission (PUC) after the agency in August became the first in the United States to claim authority over VoIP. Since Minnesota's order, Wisconsin and California have asserted authority over VoIP providers, and other states say they are reviewing their policies. Six VoIP companies have until Oct. 22nd to get a California telephone license or face disciplinary action. "This ruling is a significant victory for Vonage and (VoIP) technology," Vonage said in a statement. ” The ruling could also have a significant impact on other states across the country, including California."
October 2003 - 26
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Regulatory Issues: Vonage Ruling, 10/07/03: 3
A California PUC representative indicated on Tuesday that the state would continue its own efforts to regulate VoIP providers. "While the Minnesota (PUC's) decision was something we took notice of, our decision was based on California law," the representative said. A Minnesota PUC representative did not return calls seeking comment late Tuesday. In addition to the state suit, at least two petitions have been filed with the Federal Communications Commission seeking to exempt VoIP and related services from traditional phone regulations, although the agency has yet to rule on those filings.
October 2003 - 27
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Regulatory Issues: Vonage Ruling, 10/07/03: 4
Among other things, the state rules reflect a time when all voice calls created a dedicated, end-to-end channel between two speakers and relied on geographic hints such as a telephone number area code, to do so. As a result, geography now plays a central role in current telephone regulations. But on the Internet, geography doesn't exist. The only address that matters is the Internet Protocol (IP) address that devices needs to go online using any broadband connection anywhere in the world.
"On the Net, you are dialing a person, not a location," VoIP service Free World Dialup founder Jeff Pulver said. That creates a quandary for states trying to make even the most basic decisions about a VoIP service, for example, what constitutes a long-distance call. Under the current telephone rules, regulators could just track what telephone network switches the calls bounced between. But using VoIP, calls travel in anonymous data packets, leaving regulators in the dark about which of the trillions of bits on the Internet at any time are actually voice calls.
October 2003 - 28
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Regulatory Issues: Vonage Ruling, 10/07/03: 5
Voice over IP (VoIP) is a rapidly growing and, at present, largely unregulated part of the telecom services market. However, VoIP occupies a prominent place on the 2004 FCC agenda. After its start as a low-quality, niche technology, it appears that VoIP is becoming ready for prime time. While there are only about 100,000 VoIP subscribers on services such as Vonage and Free World Dialup, it has been estimated that between 1% and 5% of interstate voice traffic is carried as VoIP. Further, MCI announced at Supercomm 2003 that it would move 100% of its voice traffic to a core IP network by 2005. AT&T also believes that it's time for a new rulebook for VoIP, a company representative said before Tuesday's ruling. Among the biggest users of Internet telephony in its network, the carrier is now asking the FCC to exempt these calls from its rules. "We're making investments in VoIP technology to allow phone-to-phone communications," the representative said. "Before we spend the money it takes to get the technology up and running, we want to understand what the rules are."
October 2003 - 29
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