Regulation of NGN New Approaches to Interconnection

1. Regulation of NGNNew Approaches to Interconnection John Horrocks ECC TRIS Chairman, Consultant to DTI +44 1483 797807 john@horrocks.co.uk

2. Regulatory concepts • Technology independence • Cost based termination • Only regulate where there is significant market power • BUT………..

3. The regulatory problems are… • Costs are technology dependent so cost based termination conflicts with technology independence • The significant market power doctrine is too hard to apply as there are many micro-markets like termination • No theoretical justification for cost based termination • Current approaches are inevitably technology based eg emergency access • New wine in old bottles?

4. Where is the market now? • Confused - crossing a discontinuity - conflicting and different models • Internet has separated services and connectivity and so leapfrogged developments by 20 years • Users can self-provide services - peering • Telcos want to preserve service revenue and are fighting a rear-guard action

5. Why do we need a new model? • We need to accommodate new services • We need to simplify interconnection • We need to reduce charging costs • The cost basis has changed and the existing model was designed for expensive core networks • The retail market is changing with subscriptions and bundled calls and is now out of line with interconnection • Running a service-aware backbone for multiple services will be organisationally complex It is time to change!

6. Line rental Line rental Line rental Terminal A Terminal B Terminal A Terminal B Costs old and new Distance and time dependent call charges Old Carrier selection Freephone Regulation is based on this! Backbone Access Access Line rental New Access Backbone Access

7. Three questions • How should the telco world change now? • Where should the telcos go? • What are the telcos thinking about now?

8. Three answers • The case for zero/low rate termination • ECC Ideas on a new model for interconnection - ECC Report 75 • Current NGN options/intentions

9. Zero/low termination rates • Maximises competition - all revenue from own subscribers • Regulators no longer need to control the market - they can withdraw • Interconnection becomes simpler • Promotes fixed-mobile convergence and portability • More incentives to invest in new technology as full benefit from cost reductions • Achieves technology neutrality • ….but need to adjust call origination (~*2)

10. Three answers • The case for zero/low rate termination • ECC Ideas on a new model for interconnection - ECC Report 75 • Current NGN options/intentions

11. ECC Report 75: A long term model • High quality interconnected service platform - a new utility • Full separation of transport and services • Transport consists of access and backbone • Interconnection charging based on capacity and quality - not service • Uncontrolled service creation from the normal customer interface (friendly to 3rd parties and innovation)

12. Access Transit Transit Transit Terminal A Terminal B The new model Retail subscription or usage SP Sender keeps all SP Access subscription or usage Access subscription or usage Access Capacity charge Capacity charge Peering Peering

13. ……….but • There are still some very expensive calls, eg premium rate, non-liberalised countries and mobile • We need a smooth migration for any changes • So we cannot avoid a system of parallel running

14. The Migration Concept • A growing area with the new interconnection model • Operators can join at any time • Gateways to the old model • Allows parallel operation of old and new models and overlays • The old model will continue but diminish indefinitely

15. Transit Transit Transit Terminal A Calls to the old model Interconnection Call charge Retail subscription or usage Retail subscription or usage SP Access subscription or usage Gateway Old model Access Capacity charge Capacity charge Peering Peering

16. Three answers • The case for zero/low rate termination • ECC Ideas on a new model for interconnection - ECC Report 75 • Current NGN options

17. NGN Interconnection parameters

18. NGN Interconnection options • Circuit switched only • All walled gardens • Private IP domain with own DNS/ENUM (GSMA IPX) • Private IP domain with public DNS/ENUM • Add service hubbing (GSMA)

19. DNS (ENUM) DNS (ENUM) DNS (ENUM) DNS (ENUM) Walled gardens - copying PSTN Public (User ENUM) DNS (ENUM) Public Internet NAT LAN Call Server Call Server Call Server Call Server Private IP NGN-1 NGN-2 NGN-3 NGN-4 Private IP Private IP Private IP Private IP Network termination point (Gateway) Session BorderControllers

20. DNS (ENUM) DNS (ENUM) GSMA - IPX (private IP) Public (User ENUM) Public Internet NAT LAN Call Server Call Server Backbone Private IP NGN-1 NGN-4 Public IP Private IP Private IP NGN (Carrier ENUM) Network termination point (Gateway) Number  SIP of serving network server SIP  public IP NB: Preliminary option only, not confirmed

21. GSMA - IPX (private IP) + public DNS/ENUM Public (Carrier ENUM) DNS (ENUM) Number  SIP of serving network server SIP  public IP Public Internet NAT Call Server (with barrier) Call Server (with barrier) LAN Backbone Private IP NGN-1 NGN-4 Private IP Public IP Private IP SIP:<E164>@<servingnetwork server> Network termination point (Gateway)

22. DNS (ENUM) DNS (ENUM) GSMA - IPX (private IP) + Hubs Public (User ENUM) Public Internet NAT Hub Hub LAN Call Server Call Server Backbone Private IP NGN-1 NGN-4 Public IP Private IP Private IP SIP:<E164>@<servingnetwork server> NGN (Carrier ENUM) Network termination point (Gateway) Number  SIP of serving network server SIP  public IP NB: Preliminary option only, not confirmed

23. Intermediate thoughts • No clear direction yet, telcos only doing "PSTN on IP" + TV delivery • Beyond E.164, relationship to Internet needs much thought as the Internet controls user names • Users only need connectivity + software + DNS/ENUM, they do not really need service providers, service provision is in decline • If users self provide, NGN becomes "Internet overflow network" • Telcos cannot compete with their customers