Services over Internet Protocol: Voice is just the beginning… - WITSA

Top Ten Technology Trends1. IP Will Eat Everything!2. Broadband Will Be Common3. Wireless Internet Will Be Big – Driving Mobility4. Sensor Networks Will Be Everywhere5. Convergence of Communications &Computers Will Become a Reality6. Death of Locality7. Security Is Critical8. NexGen Distributed Computing Is Growing9. Home LANs Will Proliferate10. Data Mining Information Mining3Copyright 2004 AT&T

IP Will Eat Everything

From:The Communications Industry is Undergoing MassiveTransformationto One MPLS/IP NetworkLegacy NetworksTo:Common IP/MPLS BackboneVoiceNetworkFrame/ATM4ESS5ESS5ESSFrame/ATM/Voice/IP-VPNThe InternetBX9000BX9000BX9000Private LineNetworkMSERoute ServersRoute ServersGlobal IPNetworkMSEMPLS CoreFrame/ATM/Voice/IP-VPNIP BackboneMPLS: MultiProtocol Label Switching5Copyright 2004 AT&T

IP is the the Bridge to the FutureTeleworkerWirelessInternetPrivateNetworks(WAN/VPN)•Secure•High Performance•Predictable•Reliable•Non-RegulatedCorporateIntranetSupplierCorporateExtranetPublic VoiceNetworks(PSTN)•Scalable•Ubiquitous•VariablePerformance•Seamless•Flexible•RegulatedLANSupplierTeleworkerSupplierISPCustomer6Copyright 2004 AT&T

IP Enables the Next Generation of ApplicationsCOMMUNICATION LAYERSContent Layer(movies, books, papers,information, etc.)Application Layer(voice, video, web, chat,e-mail, etc.)Logical Layer(IP addressing, wirelesshandoffs, etc.Physical Layer(electric, co-axial, copper,wireless, fiber)Open standard datanetworks, such as IP,operate in layers thatallow applications to beseparated from theinfrastructure– Enables multipleplayers to enter themarket at differentlayers and compete,stimulating innovation– The type of the network(electric, co-axial,copper, wireless, fiber)no longer dictates theapplication or servicesConcept compliments of Kevin Werbach7Copyright 2004 AT&T

IP PhoneTelephoneIP Makes the Vision of Any Device to Any Deviceover Any Network PossibleDSLModemVoIPRouterCableModemInternet/IPNetworks(178,000+ networks)3GCellphoneLaptopLANConnectionVoIPGatewayPhoneLineCordlessPhoneWifiPDADSLLineISPGatewayPBXGatewayCable ModemWiFi Access PointDesktopTelephonePhoneLineiPBX(Gateway)IP SoftphoneVoIPCustom DialerPBXTelephoneIP Phone8Copyright 2004 AT&T

VoIP

VoIP Technology Will Challenge Traditional Assumptionsand Traditional Regulatory Models• “VoIP” is more than “Voice”– The Voice/ Data dichotomy is eroding rapidly– VoIP is not simple voice, but rather a converged multimediaapplication that supports voice, data and video• Innovation and investment by fixed and wireless operators in IPnetworks will have an economic impact• IP communications have the potential to disrupt the status quoin service provider environment, elevating applications• Revolutionary opportunity for consumers; evolutionary forbusinesses• VoIP development and regulation should follow a cellular modelrather than a traditional fixed voice model – services willimprove over time, not overnight, to meet customer demand10Copyright 2004 AT&T

The Eras of VoIPEmergingApplicationsConvergence& ConsolidationArbitrage11Copyright 2004 AT&T

IP Enabled Voice Services – The Early DaysNCPNCPPSTNLocalLocal NetworkLECADJEdge-to-Edge CircuitEdge SwitchEdge SwitchUpchainADJ4ESS4ESSReal Time Network RoutingPBXInt’lCarrierNGBENGBECCEIP/Internet CoreNGBEPNBEInt’lCarrierLocal CLEC/ILECCustomer Router/Gateway12Advanced Voice Features Across TDMVoIP transport with hop-on/hop-offCopyright 2004 AT&TPBXDefinitions• BE – Border Element• CCE – Call Control Element• ING – Integrated Network Gateway• NCP – Network Control Point• NGBE – Network Gateway BorderElement• PNBE – Peer Network BorderElement

IP Enabled Voice Services – Today’s Build-outLECLEC - TDMWholesaleCustomerIP PBXEVPNCarrierES-INGIP-Enabled Edge ℡SIPCPENGBEPNBEIP ResidenceDSLCableEtc.LocalBE App SrvrCCEIP/MPLS/Internet CoreLocal INGAppSrvr AppSrvrIP - ApplicationsMediaSrvrIP-Enabled Local NetworkSIPPNBENGBEES-INGInt’lCarrierIP-Enabled EdgePBX - TDMLECInterconnect local, toll & international switches with IP.Replace Adjuncts with Media Servers to reduce capex.Interconnect private VPNs with public VoIP services.13Copyright 2004 AT&TDefinitions•BE – Border Element•CCE – Call Control Element•ING – Integrated Network Gateway•NGBE – Network Gateway Border Element•PNBE – Peer Network Border Element•BS - Business

IP Changes Investment – New Investment Essential toEnable Real time IP ApplicationsBillions ofDollars ofEquipmentExpenditure$70$60$50$40$30$20$10$02002Data/Communication NetworksWorldwide Equipment Investment Estimate2003(E)2004(E)2005(E)2006(E)2007(E)CORE Carrier andEnterprise Backbones(DWDM, Routers,Switches - optical, WAN,& converged)ACCESS (CPE,Concentrators, DWDMMetro, Firewall, VPN,Wireless LAN, EthernetSwitches)END POINT EnterpriseCPE (IP PBXs & phones)Source: Based on data from Prudential SecuritiesNote: Software, network integration, consulting and product support expenditures areexpected to match and eventually surpass total equipment expenditures per year.14Copyright 2004 AT&T

TraditionalTelecomServicesVoice Becomes Another Data ApplicationOn an IP Network IP/Internet ApplicationsInternet Protocol (IP) separatesapplications from the network:– Voice is not longerrestricted to telephonenetworks– Voice becomes another IPdata applicationCircuit Switched VoiceEnhanced/InformationServicesPublic Phone NetworkVoiceVideoSIP.. H.323..IPDomainName ServiceE-mailSatellite, Wireless, Cable,Phone, Electric NetworksWWWSMTPPOP3.. DNS.. HTTPTCP…UDP...RTP…(InternetProtocol)Packet Routed DataPhysical Layer Logical LayerApplication Layer15Copyright 2004 AT&T

MediaNew Models of Governance NeededCurrent NormTelecomDEVICESCONTENTAPPLICATIONSNETWORKSComputing“Stovepipe” regulation byindustry and sectorsbut INTERNETPROTOCOLchanges everything• Vertical convergence• Horizontal convergenceNew Questions:• Jurisdiction• Accountability• Liability• Industry/Gov’tCooperation16Copyright 2004 AT&T

Definitions• Internet Telephony: “In the beginning, Internet telephony simplymeant the technology and techniques to let you make voice phone calls –local, long distance, and international – over the Internet using yourPC…the definition of Internet telephony is broadening day by day toinclude all forms of media (voice, video, image), and all forms ofmessaging and all variations of speed from real-time to time-delayed.”• IP Telephony: (As defined by Microsoft) “IP Telephony is an emergingset of technologies that enables voice, data, and video collaboration overexisting IP-based LANs, WANs and the Internet. Specifically, IP Telephonyuses open IETF and ITU standards to move multimedia traffic over anynetwork that uses IP (the Internet Protocol).”• Voice over IP (VoIP): “The technology used to transmit voiceconversations over a data network using the Internet Protocol. Such datanetwork may be the Internet or a corporate Intranet, or managednetworks typically used by long and local service traditional providers andISPs that use VoIP.”Source: Newton’s Telecom Dictionary, 18 th edition17Copyright 2004 AT&T

VoIP:An information service that delivers voicecommunications and enables voice convergence withother data applications and devices.WHAT THE FUTURE HOLDS:• Presence (Instant Messenger, Follow me)• One Number / “Follow Me” Services• IP Call Centers• Universal Messaging• Virtual Meetings / Collaboration (likeNetMeeting)• Real time language translation• IP Centrex• Multi-Point Videoconferencing• Desktop Multimedia• Push to Talk Cellular• Voice Chat18Copyright 2004 AT&T

The Evolution of Residential VoIPComputerTelephoneBroadbandWWW2004VoIPGatewayDSL or CableModemPSTNComputerDSL or CableModemBroadbandWWWTelephonePhoneLinePSTNTelephoneWWWComputer14.4 – 56k ModemPhoneLinePSTNTelephonePhoneLinePSTN 199219Copyright AT&T 2004 AT&T 2003

Snapshot: U.S. Domestic VOIP Market Just BeginningSubs (M)10.08.06.04.0U.S. POTS Lines ~ 100MDomstic IP AdoptionGoldman SachsIn-Stat/MDRMorgan Stanley2004 2004 Snapshot Snapshot 2 nd line penetration is 18%Only 25M homes have a highspeed internet connection40 M households don’t have aPC2.00.02003 2004 2005 2006 2007 2008Domestic IP Telephony Subscribers (in millions)2003 2004 2005 2006 2007 2008Goldman Sachs 0.1 0.9 2.2 3.8 5.7 7.7Morgan Stanley 0.1 0.8 1.4 1.9 2.1 2.5In-Stat/MDR * 1.3 1.7 2.2 3.2 5.2 7.2* includes PC-to-PhoneTraditional phone service has168 M lines; wireless 170 Mnumbers# of Domestic VOIP players stillemergingCable: Cablevision, Cox, Time WarnerISP: Earthlink, Yahoo BBLEC/IXC: Qwest, AT&TVirtual: Vonage, Voiceglo, Voicepulse,!connecthere, Packet8PC: Net2Phone, Free World Dialup20Copyright 2004 AT&T

Emerging VoIP Revenues (hardware and services)are also Dwarfed by Global Voice Revenues• Global voice telecom revenues and network usage continue to grow driven by technology options• Communications is cumulative• Applications are shifting from wireline voice to a mix of voice, mobile, e-mail, chat and instant messagingREVENUE (Billions of Dollars)1200110010009008007006005004003002001000Voice Telecom Services were $856Billion in 2000; expected to reach $1.4Trillion by 2005 – compared to less than$7 Billion for VoIP revenues by 20052000 2001 2002 2003 2004 2005 2006REVENUE (Billions of Dollars65432102002 2003 2004 2005 200621VoIP Technology (Equipment)VoIP Service Provider (ISP)VoIP Wholesale (Network)Worldwide Voice Telecom Svcs.Copyright 2004 AT&TVoIP Technology (Equipment)VoIP Wholesale (Network)VoIP Service Provider (ISP)Sources: RADICATI Group, Inc., Voice Over IP Market Trends 2002-2006, IDC, Worldwide Telecommunications Services Revenue Forecastand Analysis, 2000-2005

VoIP’s Challenges: Operational,Standards, Policy/Regulatory

Who Should Set Policy for Global IP Networks and VoIP?• FCC?• FTC?•Congress?•StateLegislatures?•NationalParliaments/Governments/Courts?•European Union?• ITU?• WTO?• WIPO?• IETF?• ETSI?•APEC?•NationalParliaments?•NationalParliaments?23Copyright 2004 AT&T

International VoIP Policy Activity• ITU Survey on Implementation of IPTelephony in Developing Countries:Countries vary in their treatment reregulation:– Include VoIP/all forms in regulatorysystem– Prohibit implementation -Not planning to regulate– Some have not yet addresses theseissues– 35 respondents to ITU survey: OnlySpain, Sudan, Singapore, Lituania,Denmark said : should not beregulated.• OECD Report:• More Recent Proceedings Considering VoIP/ VoB Regulatory Framework– US, UK, EC, Canada, Germany• Anticipated Proceedings:– Hong Kong, India, Australia,Singapore, Sweden• Issues Arising in Proceedings andDiscussions with Policy Makers– Different issues emphasized outsideUS– US focusing on “regulatoryframework” primarily as it impactslegacy inter-carrier compensation andUSO considerations– Outside US, focus on “regulatoryframework” in light of specific rightsand obligations that impact customerdemand, economic development, andpublic safety (e.g numberingresources, entry barriers, lawenforcement assistance)• Multilateral Interests : ITU and OECD24Copyright 2004 AT&T

International VoIP: Where it’s Growing• Japan• Korea• China• Philippines• India• Hong Kong• Poland• Russia• Bulgaria• Ukraine• Turkey• Senegal• Nigeria• Kenya• Mexico• Colombia• Brazil• Peru25Copyright 2004 AT&T

VoIP’s General Challenges:Much Work to do to Compete with PSTN and DevelopRight Regulatory EnvironmentOPERATIONAL• Physical and logical interconnection• Infrastructure availability• Infrastructure affordability• Quality of service• Security• Billing• Customer care• Fulfillment and device support• Coexistence with legacy equipmentand networks increasing architecturalcomplexityPOLICY• Regulatory classification• Licensing restrictions• Number Resource Allocation• Interconnection Charges• Law Enforcement Assistance• Access to Emergency Services• Emergency Service• QoS/Power Supply• Tariff/Price Controls• Universal Service26Copyright 2004 AT&T

What WITSA Might Do to Ensure VoIP’s Success• Backgrounder Paper helps to frame VoIP’s story• Education and Briefings essential for policy makers across rangeof governmental agencies, NOT just regulatory agencies• Be aware that legislation is underway in many countries andmay limit who and how VoIP can be provided; work with othersto influence legislation.• Sometimes telecom legislation included VoIP; be aware thatincumbents often seek to prevent anyone else from providingVoIP• Business Associations and allies, such as ISP Associations,others could join together to “tell VoIP’s story”, of economicinvestment, productivity, new consumer services, etc.• A “picture” is worth a thousand words approach: work withequipment providers, or VoIP Services providers to show thetechnology and tell the policy story at the same time27Copyright 2004 AT&T

Questions and DiscussionMarilyn Cademcade@att.com202-360-1196