Services over Internet Protocol: Voice is just the beginning

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Services over Internet Protocol:

Voice is just the beginning…

Marilyn Cade. Director IP Networking, Internet and E-Commerce AT&T and Chair, Positively Broadband Campaign

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Topics: Services Over IP: VoIP is Just the Beginning

• Top Ten Technology Trends

• The Rise of IP Communications

• VoIP: Voice is Just the Beginning

– A family of services that are just beginning

– New Thinking Needed on Models of Governance

– Revolutionary for Consumers

– Evolutionary for Enterprises

– A driver for Broadband for Consumers/Productivity and Cost savings to Enterprises, and Network Investment by Services Providers

• VoIP: Many Challenges: We Can’t Take VoIP’s Success for

Granted.

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Top Ten Technology Trends

1.

1. IP Will Eat Everything!

IP Will Eat Everything!

2.

2. Broadband Will Be Common

Broadband Will Be Common

3.

3. Wireless Internet Will Be Big

Wireless Internet Will Be Big

–

Driving Mobility

4.

4. Sensor Networks Will Be Everywhere

Sensor Networks Will Be Everywhere

5.

5. Convergence of Communications &

Convergence of Communications &

Computers Will Become a Reality

6.

6. Death of Locality

Death of Locality

7.

7. Security Is Critical

Security Is Critical

8.

8. NexGen

NexGen

Distributed Computing Is Growing

9.

9. Home LANs Will Proliferate

Home LANs Will Proliferate

10.

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The Communications Industry is Undergoing Massive

Transformation

to One MPLS/IP Network

BX9000 BX9000 BX9000 Frame/ATM IP Backbone Global IP Network From: Legacy Networks To:

Common IP/MPLS Backbone

Frame/ATM/Voice/IP-VPN MSE MSE The Internet Route Servers MPLS Core Route Servers 4ESS 5ESS 5ESS Voice Network Frame/ATM/Voice/IP-VPN Private Line Network

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IP is the the Bridge to the Future

Private Networks (WAN/VPN) •Secure •High Performance •Predictable •Reliable •Non-Regulated LAN Supplier Supplier Teleworker Corporate Intranet Public Voice Networks (PSTN) •Scalable •Ubiquitous •Variable Performance •Seamless •Flexible •Regulated Wireless Internet Corporate Extranet Supplier Customer ISP Teleworker

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IP Enables the Next Generation of Applications

COMMUNICATION LAYERS

Physical Layer

(electric, co

(electric, co--axial, copper, axial, copper, wireless, fiber)

wireless, fiber)

Logical Layer

(IP addressing, wireless

handoffs, etc.

Application Layer

(voice, video, web, chat,

e

e--mail, etc.)mail, etc.)

Content Layer

(movies, books, papers,

information, etc.)

Open standard data networks, such as IP, operate in layers that allow applications to be separated from the

infrastructure

– Enables multiple players to enter the market at different layers and compete, stimulating innovation – The type of the network

(electric, co-axial,

copper, wireless, fiber) no longer dictates the application or services

information, etc.)

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IP Makes the Vision of Any Device to Any Device

over Any Network Possible

Internet/IP

Networks

(178,000+ networks) IP Phone VoIP Gateway PBX

Gateway Cable Modem

Cable Modem VoIP Router DSL Line Phone Line

WiFi Access Point Wifi PDA DSL Modem Cordless Phone PBX iPBX (Gateway) IP Phone Cell phone 3G Telephone ISP Gateway VoIP Custom Dialer Telephone Phone Line Desktop Laptop LAN Connection IP Softphone Telephone

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VoIP Technology Will Challenge Traditional Assumptions

and Traditional Regulatory Models

• “VoIP” is more than “Voice”

– The Voice/ Data dichotomy is eroding rapidly

– VoIP is not simple voice, but rather a converged multimedia application that supports voice, data and video

• Innovation and investment by fixed and wireless operators in IP

networks will have an economic impact

• IP communications have the potential to disrupt the status quo

in service provider environment, elevating applications

• Revolutionary opportunity for consumers; evolutionary for

businesses

• VoIP development and regulation should follow a cellular model

rather than a traditional fixed voice model – services will

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The Eras of VoIP

Arbitrage

Convergence & Consolidation

Emerging Applications

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IP Enabled Voice Services – The Early Days

IP/Internet Core IP/Internet Core CCE NGBE Int’l Carrier Customer Router/Gateway NGBE PBX Definitions • BE – Border Element

• CCE – Call Control Element

• ING – Integrated Network Gateway • NCP – Network Control Point • NGBE – Network Gateway Border

Element

• PNBE – Peer Network Border Element

PNBE

4ESS

Edge Switch Edge Switch

4ESS Local

Local Network

LEC Int’l

Carrier Real Time Network Routing

Edge-to-Edge Circuit Upchain NCP NCP ADJ ADJ NGBE Local CLEC/ILEC

Advanced Voice Features Across TDM VoIP transport with hop-on/hop-off

PBX

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IP Enabled Voice Services – Today’s Build-out

CCE SIP SIP Local ING LEC LEC Int’l Carrier PNBE NGBE IP/MPLS/ IP/MPLS/ Internet Core Internet Core ES-ING ES-ING

IP-Enabled Edge IP-Enabled Edge

App Srvr IP - Applications App Srvr Media Srvr IP Residence DSL Cable Etc. Local App Srvr NGBE Carrier PNBE Wholesale Customer CPE BE

¡

℡ EVPN IP PBX LEC - TDM PBX - TDM

IP-Enabled Local Network

Definitions

•BE – Border Element

•CCE – Call Control Element

•ING – Integrated Network Gateway

•NGBE – Network Gateway Border Element •PNBE – Peer Network Border Element •BS - Business

Interconnect local, toll & international switches with IP. Replace Adjuncts with Media Servers to reduce capex. Interconnect private VPNs with public VoIP services.

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IP Changes Investment – New Investment Essential to

Enable Real time IP Applications

$0 $10 $20 $30 $40 $50 $60 $70 2002 2003 (E) 2004 (E) 2005 (E) 2006 (E) 2007 (E) Billions of Dollars of Equipment Expenditure

CORE Carrier and Enterprise Backbones (DWDM, Routers,

Switches - optical, WAN, & converged)

ACCESS (CPE,

Concentrators, DWDM Metro, Firewall, VPN, Wireless LAN, Ethernet Switches)

END POINT Enterprise CPE (IP PBXs & phones)

Source: Based on data from Prudential Securities

Note: Software, network integration, consulting and product support expenditures are expected to match and eventually surpass total equipment expenditures per year.

Data/Communication Networks Worldwide Equipment Investment Estimate

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Satellite, Wireless, Cable, Phone, Electric Networks

WWW E-mail Domain Name Service SIP.. SMTP POP3.. DNS.. HTTP

IP

TCP…UDP...RTP…

(Internet Protocol)

Packet Routed Data Public Phone Network

Circuit Switched Voice

Voice

Physical LayerPhysical Layer

Application LayerApplication Layer

Logical Layer Logical Layer

Enhanced/ Information Services Traditional Telecom Services H.323.. Video

Voice Becomes Another Data Application

On an IP Network

IP/Internet Applications

Internet Protocol (IP) separates applications from the network:

– Voice is not longer

restricted to telephone networks

– Voice becomes another IP

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New Models of Governance Needed

M e d ia C o m p u ti n g Telecom

APPLICATIONS

DEVICES

NETWORKS

CONTENT

Current Norm

“Stovepipe” regulation by industry and sectors

but

INTERNET

PROTOCOL

changes everything

• Vertical convergence • Horizontal convergence

New Questions:

• Jurisdiction • Accountability • Liability • Industry/Gov’t Cooperation

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Definitions

• Internet Telephony: “In the beginning, Internet telephony simply meant the technology and techniques to let you make voice phone calls – local, long distance, and international – over the Internet using your

PC…the definition of Internet telephony is broadening day by day to include all forms of media (voice, video, image), and all forms of

messaging and all variations of speed from real-time to time-delayed.”

• IP Telephony: (As defined by Microsoft) “IP Telephony is an emerging set of technologies that enables voice, data, and video collaboration over existing IP-based LANs, WANs and the Internet. Specifically, IP Telephony uses open IETF and ITU standards to move multimedia traffic over any network that uses IP (the Internet Protocol).”

• Voice over IP (VoIP): “The technology used to transmit voice

conversations over a data network using the Internet Protocol. Such data network may be the Internet or a corporate Intranet, or managed

networks typically used by long and local service traditional providers and ISPs that use VoIP.”

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VoIP:

An information service that delivers voice

communications and enables voice convergence with

other 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 (like NetMeeting)

• Real time language translation

• IP Centrex

• Multi-Point Videoconferencing

• Desktop Multimedia

• Push to Talk Cellular

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The Evolution of Residential VoIP

DSL or Cable Modem Computer PSTN Phone Line VoIP Gateway Telephone Computer DSL or Cable Modem Broad-band Broad-band Broad-band Broad-band WWW WWW PSTN 2004 Telephone WWW Telephone Computer PSTN Phone Line 14.4 – 56k Modem Phone Line PSTN 1992 Telephone Copyright AT&T 2003

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Snapshot: U.S. Domestic VOIP Market Just Beginning

2004 Snapshot

Domestic IP Telephony Subscribers (in millions)

2003 2004 2005 2006 2007 2008 Goldman Sachs 0.1 0.9 2.2 3.8 5.7 7.7 Morgan Stanley 0.1 0.8 1.4 1.9 2.1 2.5 In-Stat/MDR * 1.3 1.7 2.2 3.2 5.2 7.2 * includes PC-to-Phone 0.0 2.0 4.0 6.0 8.0 10.0 2003 2004 2005 2006 2007 2008 Subs (M) Goldman Sachs In-Stat/MDR Morgan Stanley

U.S. POTS Lines ~ 100M

Domstic IP Adoption

2nd _{line penetration is 18%}

Only 25M homes have a high

speed internet connection

40 M households don’t have a

PC

Traditional phone service has 168 M lines; wireless 170 M numbers

# of Domestic VOIP players still emerging

Cable: Cablevision, Cox, Time Warner ISP: Earthlink, Yahoo BB

LEC/IXC: Qwest, AT&T

Virtual: Vonage, Voiceglo, Voicepulse, !connecthere, Packet8

PC: Net2Phone, Free World Dialup

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Emerging VoIP Revenues (hardware and services)

are also Dwarfed by Global Voice Revenues

0 100 200 300 400 500 600 700 800 900 1000 1100 1200 2000 2001 2002 2003 2004 2005 2006 R E V E N U E (B il lio n s o f D o lla rs )

VoIP Technology (Equipment) VoIP Service Provider (ISP) VoIP Wholesale (Network) Worldwide Voice Telecom Svcs.

• 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 messaging

Sources: RADICATI Group, Inc., Voice Over IP Market Trends 2002-2006, IDC, Worldwide Telecommunications Services Revenue Forecast and Analysis, 2000-2005 0 1 2 3 4 5 6 2002 2003 2004 2005 2006 R E V E N U E ( B illio n s o f D o lla rs

VoIP Technology (Equipment) VoIP Service Provider (ISP) VoIP Wholesale (Network)

Voice Telecom Services were $856 Billion in 2000; expected to reach $1.4 Trillion by 2005 – compared to less than

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VoIP’s Challenges: Operational,

Standards, Policy/Regulatory

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Who Should Set Policy for Global IP Networks and VoIP?

• FCC? • FTC? •Congress? •State Legislatures? • ITU? • WTO? • WIPO? • IETF? • ETSI? •National Parliaments? •APEC? •National Parliaments? •National Parliaments/ Governments/ Courts? •European Union?

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International VoIP Policy Activity

• 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 and Discussions with Policy Makers

– Different issues emphasized outside US

– US focusing on “regulatory

framework” primarily as it impacts legacy inter-carrier compensation and USO considerations

– Outside US, focus on “regulatory framework” in light of specific rights and obligations that impact customer demand, economic development, and public safety (e.g numbering

resources, entry barriers, law enforcement assistance)

• Multilateral Interests : ITU and OECD

• ITU Survey on Implementation of IP Telephony in Developing Countries: Countries vary in their treatment re regulation:

– Include VoIP/all forms in regulatory system

– Prohibit implementation -Not planning to regulate

– Some have not yet addresses these issues

– 35 respondents to ITU survey: Only Spain, Sudan, Singapore, Lituania, Denmark said : should not be regulated.

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International VoIP: Where it’s Growing

• Turkey • Senegal • Nigeria • Kenya • Mexico • Colombia • Brazil • Peru • Japan • Korea • China • Philippines • India • Hong Kong • Poland • Russia • Bulgaria • Ukraine

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VoIP’s General Challenges:

Much Work to do to Compete with PSTN and Develop

Right Regulatory Environment

OPERATIONAL

• Physical and logical interconnection

• Infrastructure availability • Infrastructure affordability • Quality of service • Security • Billing • Customer care

• Fulfillment and device support

• Coexistence with legacy equipment and networks increasing architectural complexity

POLICY

• Regulatory classification

• Licensing restrictions

• Number Resource Allocation

• Interconnection Charges

• Law Enforcement Assistance

• Access to Emergency Services

• Emergency Service

• QoS/Power Supply

• Tariff/Price Controls

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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 range

of governmental agencies, NOT just regulatory agencies

• Be aware that legislation is underway in many countries and

may limit who and how VoIP can be provided; work with others to influence legislation.

• Sometimes telecom legislation included VoIP; be aware that

incumbents often seek to prevent anyone else from providing VoIP

• Business Associations and allies, such as ISP Associations,

others could join together to “tell VoIP’s story”, of economic investment, productivity, new consumer services, etc.

• A “picture” is worth a thousand words approach: work with

equipment providers, or VoIP Services providers to show the technology and tell the policy story at the same time

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