IP Telephony: Challenges and Perspectives for Emerging Countries

1. IP Telephony: Challenges and Perspectives for Emerging Countries Jean-Marie Blanchard Business Development Director Souheil Marine Business Development Manager ITU/BDT Arab Regional Workshop on« IP Applications and Digital Divide » Tunis: June 17-19, 2003

2. Presentation Plan • “IP telephony” positioning…. in emerging countries • Key challenges and strategic issues • What is “IP Telephony” ? • Comparing the Telephony and Internet models • When can we speak about IP Telephony ? • Main “IP Telephony” usage patterns • LD inbound voice traffic • Local outbound voice traffic • NGN evolution of PSTN/PLMN networks • Conclusion

3. Today’s Challenges for Telecom Operators • Market growth • New value added services on voice lines and Mobile explosion • Broadband access and Internet/data services • Network evolution and voice-data convergence • High growth of data and Internettraffic • Maturing packet technology (with QoS) • (Unregulated) competition from Internet telephony • Cost reduction and new revenues • CAPEX and OPEX optimisation • Introduction of new services and applications • New business models (VNO, retail, hosting, etc.)

4. Traditional Voice Revenue are strongly threatened ! • International Voice Revenues • are sharply decreasing • Accounting rate, • Calling Card services, • Inbound Voice over Internet • National and Local Revenues • are disturbed • «Churn» to mobile, • Lack of profitable Internet services, • Outbound Voice over Internet Network modernization Service offer evolution Is IP Telephony a threat or an opportunity?

5. PSTN Winners and Losers International Voice Revenue Evolution 84c. 135c. Foreign Telco DC Telco Internet -82c DC ISP +44c +38c 135c. 40c. 2c. • Call from Abroad to Developing Country(cents per minute) • Accounting rate system • Telephone over Internet Source ITU

6. What is “IP Telephony”? • Voice over IP: sending voice streams over Internet … using IP protocol • IP : Internetworking Protocol • Introduced more than 30 years ago to interconnect data networks irrespective of any kind of application • Is a packet-based connectionless protocol • Best Effort is the a priori routing method • Not suitable for real-time applications • Voice is real-time • Ad-hoc protocols added on top of IP to ensure real-time properties: DiffServ, IntServ, MPLS,…. • Is IP Telephony just a streaming of voice over IP or real Telephony service?

7. Merged application control and transport planes Operator 2 Domain Operator 1 Domain • Three-Party model : call is a network service • Distinct user/network and network/network protocols • Quality of Service (QoS) guaranteed by resource reservation, state maintenance, and network design • Universal reach : interconnection agreements at service level and a universal naming for the telephony service • Charging related to the amount of used service and distance Telephony Model

8. Application Server (AS) Application Server (AS) Separate application control and transport planes User Equipment (UE) User Equipment (UE) Operator 1 Domain Operator 2 Domain • Two-Party model: applications hosted by end-users • Protocol per application: identical between UE and AS • QoS ensured upon explicit user requests • Interconnection at transport level: universal reach per application by proper naming and Server Interconnection • Charging related to amount of transported data Internet Model

9. When can we speak of IP Telephony? • PC to PC • VoIP is yet another Internet Application, “free” after… • Connecting through a phone line to the ISP premises • Not a Telephony service • PC-to-Phone • Implies a party that handles the interconnection with the PSTN/PLMN through a Gateway device • Is a service at least for the Telephony termination part • Voice quality depends on the traversed IP networks • Phone-to-Phone • IP as a replacement of legacy TDM circuit for costs savings but mainly for new services and revenues • Long-distance bypass orpart of the PLMN/PSTN operator NGN migration story

10. Presentation Plan • “IP telephony” positioning in emerging countries • Key challenges and strategic issues • What is “IP Telephony” ? • Comparing the Telephony and Internet models • When can we speak about IP Telephony ? • Main “IP Telephony” usage patterns • LD inbound voice traffic • Local outbound voice traffic • NGN evolution of PSTN/PLMN networks • Conclusion

11. PSTN Winners and Losers International Voice Revenue Evolution 84c. 135c. Foreign Telco DC Telco Internet -82c DC ISP +44c +38c 135c. 40c. 2c. • Call from Abroad to Developing Country(cents per minute) • Accounting rate system • Telephone over Internet Source ITU

12. 3 2 1 Expatriates calling their familly in originating country (1) E-banking Prepaid Application Server Call Control (Softswitch) Portal Emerging Country Cybercafé or Home PC PSTN VoIP GW Industrialised Country

13. 4 5 7 Expatriates calling their familly in originating country (2) E-banking Prepaid Application Server Portal Call Control (Softswitch) Emerging Country Cybercafé or Home PC Industrialised Country VoIP GW PSTN

14. Presentation Plan • “IP telephony” positioning in emerging countries • Key challenges and strategic issues • What is “IP Telephony” ? • Comparing the Telephony and Internet models • When can we speak about IP Telephony ? • Main “IP Telephony” usage patterns • LD inbound voice traffic • Local outbound voice traffic • NGN evolution of PSTN/PLMN networks • Conclusion

15. VoIP: the “Killer” IP application ? • Typical application:Telephone call from Cyber cafés • Lower cost for end-users • No guarantee for QoS • Physical access line is still needed (70% on Network cost) • Unauthorized access ? • Loss of revenue when outbound LD traffic leaves country from “unregulated” Internet outlets instead of regulated Telephone connection • Still an opportunity exist for operators to counter-attack • Lower cost alternative long distance IP Telephony service to some destinations (ex: SingTel) • Interest for general public and SME

16. SingTel’s International Long Distance Service

17. Presentation Plan • “IP telephony” positioning in emerging countries • Key challenges and strategic issues • What is “IP Telephony” ? • Comparing the Telephony and Internet models • When can we speak about IP Telephony ? • Main “IP Telephony” usage patterns • LD inbound voice traffic • Local outbound voice traffic • NGN evolution of PSTN/PLMN networks • Conclusion

18. CAPEX/OPEX optimisation New revenue generation SS7 Data (IP or ATM) PSTN (TDM-based) Inter- working NB access BB access POTS/ISDN POTS/ISDN xDSL Dial-up H.323/SIP Main Drivers for Network Evolution

19. CAPEX/OPEX optimisation New revenue generation NextGenerationNetwork SS7 Data (IP or ATM) PSTN (TDM-based) Inter- working NB access BB access POTS/ISDN POTS/ISDN xDSL Dial-up H.323/SIP Network Convergence

20. Traditional Circuit Switch NGN NGN Connection Control Softswitch Access Gateways Trunking Gateways Line Cards Trunk Cards IP or ATM + IP Terminals Switching Matrix NGN Architecture Principles (1)Distributed Architecture

21. Service Layer Control Layer PSTN/PLMN Media Layer IMS UMTS Access Access and Transport Layer LAN Fixed BB Access 3G mobile users Residential users Enterprise customers Remote office / SOHO NGN Architecture Principles (2)Layered Model

22. NGN Migration Rationale • Migration of current telephony networks (2 billion users worldwide) should preserve the existing investments • Key investments are in provisioning access for end-users to the network services (80% of the costs) • Technological changes become costlier when they get closer to end-users • Migration must be driven by basic principles • Continuity of services offered to end-users • Inter-working between new and old technologies • Cost control of the migration process • Migration must be driven by Economy not by Technology first • Network consolidation and optimization and/or • New revenues driven from new services

23. Multimedia Services Terminal interface Packetisation Offload Trunk Voice traffic Multiservices Multi-access Internet & Data Services Key Drivers for stepwise Migration to NGN NGN DISTRIBUTED MULTISERVICES CENTRALIZED VOICE PSTN

24. Parlay, JAIN, SIP WWW Servers ‘PINT’, ‘SPIRITS’ ApGW Internet SCP Application Servers INAP Transit STP ISDN/PRA Packet Network SS7 ISUP Transit NAS ISUP TDM BAS Local Local DSLAM Access Node DSL Modem Dial-up Modem Voice Data POTS, ISDN Signaling Converged Internet/Telephony services

25. INAP ISUP, BICC, SIP-T SCP Internet INAP STP H.248 ISUP SS7 ISUP Transit Packet Network TDM Softswitch or Switch with MGC function BICC Local or Transit Local or Transit Voice Integrated Gateway Data Voice/Packet Signaling Replacing TDM trunks with Voice over Packet

26. Voice Data Voice/ Packet Signaling Voice over Packet down to user’s access Switch with MGC function or Softswitch SCP Internet INAP ISUP STP ISUP SS7 H.248 Packet Network Transit TDM Voice/Packet Gateway Local Access Node AN DSLAM Multi-service Access Node with Integrated Access Gateway

27. Presentation Plan • “IP telephony” positioning in emerging countries • Key challenges and strategic issues • What is “IP Telephony” ? • Comparing the Telephony and Internet models • When can we speak about IP Telephony ? • Main “IP Telephony” usage patterns • LD inbound voice traffic • Local outbound voice traffic • NGN evolution of PSTN/PLMN networks • Conclusion

28. Conclusion • “IP Telephony” is more than technology replacement • It might reduce costs but quality has always a price • Moving to IP should above all be driven by new services • IP transport is the long term trend of networks evolution but… • It will take time to materialize at a large scale • Operators will sell services irrespective of technologies • IP Telephony services can be offered today by operators • LD voice service (inbound and outbound) • New lines for Broadband subscribers • NGN migration will gradually take place • Use of future-proof technologies is key to preserve investments

29. Thank you for your attention ! Questions ? www.alcatel.com for any further information, please contact: jean-marie.jb.blanchard@alcatel.fr souheil.marine@alcatel.fr