NOBEL Valladolid Meeting TID ideas and contributions for D12

1. NOBEL Valladolid MeetingTID ideas and contributions for D12 Telefónica I+D NOBEL Valladolid meeting

2. Next generation Optical Networks for Broadband European Leadership NOBEL Deliverable D12 Clarification of objectives New business opportunities Socio-economic analysis Business models Requirements Identification of new business opportunities MUST be a result from NOBEL Social and economic analysis of InfoSoc in Europe MUST result in requirements for NOBEL New network technologies may enable new business models New markets may be created for new multimedia application and services demanded from users Standardization may result in unbundling of the value chain and new roles can be defined (i.e. horizontal vs. vertical integration of business) Incumbent operators and new entrants may face with different entry barriers in new businesses Regulatory issues shape the Telecom Operators competitive strategies in the global market Economic trends will determine the investment “momentum” in new network infrastructures and/or Research and Development. Regulatory issues may inhibit telecom operators from investing in developing new services. Existing network infrastructures must be amortized before migration to new technologies User behavior (services and applications usage trends) determine new traffic patterns to be consider. Benchmarking to USA and Asia may help to predict future trends NOBEL Valladolid meeting

3. Deliverable D12Economic trends • “The Economic Impact of ICT: Measurement, Evidence and Implications (PDF)” by OECD [2004] pointed to several factors affecting the diffusion of ICT, namely: • Factors related to the direct costs, e.g. the costs of ICT equipment, telecommunications or the installation of an e-commerce system. • Costs and implementation barriers related to enabling factors and the ability of the firm to absorb new technologies. These factors include the availability of know-how and qualified personnel, the scope for organizational change and the capability of a firm to innovate. • Factors related to risk and uncertainty, e.g. the security of doing business online or the uncertainty of payments, delivery and guarantees online. • Factors related to the nature of the businesses. ICT is a general purpose technology, but is more appropriate for some activities than for others. ICT may not fit in all contexts and specific technologies, such as electronic commerce, may not be suited to all business models. • Factors related to competition and the regulatory environment. 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. Excessive regulation in product and labor market may also make it more difficult for firms to draw benefits from investment in ICT and may thus hold back such spending. NOBEL Valladolid meeting

4. Deliverable D12Network Infrastructure trends • “Telecom Services Indicators, 2004” (PDF) by Ipsos produced for the EC/DG Info Society raises two salient trends: • Rapid take up of broadband Internet access by householdsAn average of 12% of households in the 15 pre-accession EU Member States has Broadband Internet access as against 5% in 2003. DSL accounts for around two third of the high speed connections at home. The highest penetration rates are observed in countries where there is competition between the DSL-public telephone network based infrastructure and cable TV network infrastructure: the Netherlands (36% of households), Belgium (32%), Denmark (30%) and Sweden (25%). • Continuing fixed to mobile substitutionThe proportion of EU 15 households with at least one fixed line has decreased by 3 percentage points over 2003 and now stands at 82%. At the same time the proportion of households with at least one mobile phone has increased from 77% in 2003 to 81% in 2004. Moreover, there is an increasing proportion of households having a mobile phone only, with 15% of EU households in 2004 as against 12% in 2003. This proportion reaches the highest level of 33% in Finland and Portugal. NOBEL Valladolid meeting

5. Deliverable D12 Internet Usage trends • “The Evolution of Broadband” (PDF) by IEC identifies some challenges for existing network infrastructures: • The Internet was never designed to handle the amount of traffic that we are seeing today. • The Internet continues to be prone to significant delays and congestion that frustrate all users, even those on broadband connections. • Speed and reliability are the two most common problems cited by Internet users. • Today's DSL networks offer only a slight improvement because they only affect the first- and last-mile bottlenecks, and not the router and server bottlenecks. These two other bottlenecks, router and server congestion, are being addressed by a number of service providers such as Akamai, Digital Island, and Cidera. • Despite the bottlenecks, the Internet and the increasing penetration of broadband access are quickening the spread of new applications and of new technologies. • Andy Odlyzko, in a recent paper titled "Content Is Not King," found that people are willing to pay a lot more for point-to-point communications than for anything else. • The increasing popularity of sharing pictures or videos and the cumbersome nature of e-mail in sharing these photographs will lead to an increasing use of peer-to-peer networks that will be specially designed for this. NOBEL Valladolid meeting

6. Deliverable D12Emerging applications trends • “Preliminary definition of drivers and requirements for core and metro networks supporting end-to-end broadband services for all” (D06) by NOBEL identifies some of the major drivers moving the evolution of current transport networks: • Optimization of the use of resources (reducing CAPEX) • Reduction of the operating costs (reducing OPEX) • Improve quality and efficiency in providing current and new services (new revenues) • The architectural studies of NOBEL (within WP1) are aimed at defining high-level requirements (technical and business oriented), technologies and solutions for the evolution of core and metro networks: • Emerging applications have been characterized (traffic classes), since they are expected to fuel data-traffic in next generation metro and core transport networks (e.g. Storage, Grid, Multi-media applications). • The first two categories (storage and grid computing) are expected to generate high levels of traffic volume, and are strongly related to business customers. Presently the market penetration of these applications is relatively small, but this market segment is continually growing. • The last category (multimedia applications) probably generate a level of traffic (traffic volume or bandwidth) lower than storage or Grid, on the other side, it is expected that it will have a granular penetration, since the applications of this group addresses SOHOs and residential customers. NOBEL Valladolid meeting

7. Deliverable D12NOBEL network services (1/2) • Different services may share network resources or can be provided by separate networks. • The Transport stratum is generalized to a resources stratum (including storage, computing, sensors and other HW/SW distributed resources) • The traditional Services stratum is divided in two: applications (services for the user) and Network services (provide connectivity to the user’s applications) NOBEL defines five main classes of network services (Public IP, Business IP, VPN@L1,L2&L3). The characteristics of each group are described in WP1-D06 along with their performance parameters. NOBEL Valladolid meeting

8. Deliverable D12NOBEL network services (2/2) • Storage applications will require VPN@L1&L3 but not L2. Permanent VPNs will be a good choice only if traffic is predictable and hi-availability may be required for mirroring and backup applications. • Grid applications may require connections in a fully meshed topology, so VPN@L2&L3 (on-demand) are most suitable to carry their traffic. Hi or Lo-availability will depend on the specific application. • Multimedia applications for residential users will be based mostly on Public IP services and Business IP only if greater bandwidth is required. Broadcast (video and TV) will benefit from VPN@L1&L2 and will require hi-availability network services. There is also in WP1-D06 a mapping between applications and network services: NOBEL Valladolid meeting

9. Deliverable D12Carrier Value Proposition • “The Direction of the Optical-Networking Market” (PDF) by IEC outlines a win-win scenario for both enterprises and carriers: • Carriers are introducing cost-effective high-speed protocol-transparent wavelength services via new low-initial-cost platforms—The affordability of the networking solutions that enable WDM services enables carriers to target market segments they could not previously support. Today, many carriers have stopped all efforts to sell dark fiber. Selling a service means winning a customer; selling dark fiber may mean feeding a competitor. • Carriers create new revenue streams today—From a single, flexible platform, carriers can lease protocol-transparent, high-speed LAN and storage-area network (SAN) services to Fortune 500 organizations, banks, governments, and financial institutions requiring up to hundreds of high-speed connections, as well as small- and medium-sized enterprises requiring token ring, FDDI, and Ethernet services. • Carriers future-proof their networks—Deployment of a sophisticated optical-networking platform lays the foundation for the all-optical network. A complete optical-network infrastructure will include DWDM systems, optical gateways, and optical cross-connects and permeate the entire network (i.e., the enterprise access, metropolitan, regional, and long-haul backbone segments). The carrier implementing an optical-networking services platform today positions itself to be at the forefront of this developing trend. NOBEL Valladolid meeting

10. Deliverable D12Deployment strategies • “The Direction of the Optical-Networking Market” (PDF) by IEC identifies different deployment strategies by carriers: • Point-to-point linksCarriers’ most advantageous option is adding high-speed, point-to-point optical links outside their existing core networks as large-customer opportunities arise, and, one day, these island links can be integrated with the core. • Rings & starsThe creation of star topologies or linear rings will be 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. • MeshesWith the introduction of metro optical cross-connects, optical metro networks will be transformed into fully flexible platforms. The transformation of the traditionally voice-based network to a data-centric infrastructure will be complete. NOBEL Valladolid meeting

11. Deliverable D12Value chain roles “Emerging Services for Transparent Networks” by Dr. Per O. Andersson (Ericsson) comments about business roles in all-optical networks and concludes that: • Large operators will most likely deploy all-optical networks and islands as part of their enterprise portfolio and as a basic infrastructure for their other connectivity networks. • Smaller operators are more likely to go for specialisation and integration, focusing on one special, attractive service where the revenue can support a highly integrated set of equipments giving low Capex and Opex. NOBEL Valladolid meeting