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The role of VoIP in Telecommunications

The role of VoIP in Telecommunications. 15 January, 2007. Kim, Geunhyung BcN Unit KT. I. II. IV. V. III. Value Changes in ICT. Current Comm. status in Korea. Re-consideration of Voice. Challenges for New Growth. Concluding Remarks. Value Changes in ICT. Value Flow Changes.

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The role of VoIP in Telecommunications

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  1. The role of VoIP in Telecommunications 15 January, 2007 Kim, Geunhyung BcN Unit KT

  2. I II IV V III Value Changes in ICT Current Comm. status in Korea Re-consideration of Voice Challenges for New Growth Concluding Remarks

  3. Value Changes in ICT Value Flow Changes Window /Service Providing Producing Packaging Delivery High Google (16.2) > 5.0 Ebay (9.5) Packaging or Window /Service Providing Yahoo (7.9) Microsoft (5.2) 5.0 4.0 Value in-flow 3.0 Market Value Sales Delivery (Traditional Comm. domain) Disney (2.0) 2.0 1.5 KT(1.4) KTF (1.4) Value dragging 1.0 0.5 Value out-flow Low 0.0 High Low Operating Profit Growth * Source: Mercer Value Migration Database

  4. Value Changes in ICT Close Look at Value Flow of Delivery Communications global value migration 100% Wireless 80% Share of overall value(in %) 60% WirelineTraditional Carriers 40% WirelineNon-Traditional Carriers ISPs 20% Cable / Satellite 0% * Source: Mercer Value Migration Database 1990 1995 2000 2005 • Exponential value in-flow in Wireless, Cable/Satellite and ISP industry • More 50% value out-flow in Wireline-traditional Carriers during recent 5 years

  5. 23,000 21,000 15,000 10,000 5,000 0 Current Comm. Status in Korea PSTN Voice Market Status Market saturated & threatened by Mobile & VoIP Subscribers & CAGR Market Share Ratio Subscribers(unit: 1,000) 23,099 21,930 Hanaro Telecom(6.6%) LG Dacom(0.2%) 3.62 3.37 0.74 0.22 KT(93.2%) -0.03 -2.61 2000 2001 2002 2003 2004 2005 2006.11 Num of Subscriber CAGR (Percentage) Source : MIC (Ministry of Information and Communication) 2006.11 • not a significant change regarding CAGR • despite great progress in FMS, not a noticeable migration witnessed in full swing

  6. Current Comm. Status in Korea Regulatory of VoIP in Korea VoIP operators need a permission or a registration to operate QoS requirement to grant using 070 number • R >= 70, end-to-end delay <= 150 ms, call success ratio >= 95% unbundling of the local loop • New entrants do not have to provide their own access network • However, they pay for the use of other operator’s access network MSO was authorized in last November to operate • It may accelerate the bundling

  7. Re-consideration of Voice Titanic clash in voice market Titanic clash btn. the Internet & the Telecom. industry • migration of voice ovier PSTN onto VoIP • (migration from PSTN to IP network) • Integration of voice onto Internet • (IM, Skype, Jajah, etc.) DVD Cover - Clash of the Titans Amazon DVD

  8. Re-consideration of Voice Threaten or Opportunity ? The Voice Long Tail • Substitutive Opportunity • Advanced VoIP (Value added VoIP) • Video telephony, High quality voice telephony, • FMC etc…….. • Threaten free basic voice service • New Opportunity • Web applications with voice • voice enabled E-commerce • vertical applications like Real Estate, etc… Frequency of Contact • Threaten free basic voice services PSTN Online Communications Potential Connections

  9. Re-consideration of Voice Consideration of Voice Voice is still the “Killer Application” Value of Voice • The needs for live communication are far deeper than other forms • Voice is still money-making commodity Q) Why is Voice ARPU dropping ? Customer’s behavior • If people can get the same service cheaper than elsewhere, they will. • Price fell, voice usage skyrocketed Increased competition • Fundamental shift in how “value” is realized If you can’t cheaper, you must be better.

  10. Re-consideration of Voice Evolution of Voice As VoIP offers enhanced features and becomes more widespread, • Customers’ usage pattern of VoIP will vary significantly • customers will be segmented The past : operator-centric The future : user-centric • voice in telephone • same services & phone for everyone • price-driven • separation of • communication, information, entertainment • voice in everything • customized services & GUIs • application-driven • convergence of • communication, information, entertainment

  11. Re-consideration of Voice The incumbent’s challenges retaining of subscribers • maintaining profitability and retaining customer loyalty Segmentation, Branding, & service bundles making rich services for ARPU increase • Voice applications • VoIP enabled IT applications • Integrated service of voice and the internet (web) Personalized Context-aware services • An enhanced interaction is established (user-to-user, user-to-machine, user-to-content) Context : any information that can be used to characterize the situation of an entity (person, place, object, …) [byDey, A.K., 2001]

  12. Challenges for New Growth QoS Broad BW Personalization BcN WiBro FTTH Security HomeNetwork RGW KT’s challenges for new growth Differentiated new services with managed function Personalized & Differentiated Services Convergence services with multi-Windows Managed Function /Platform Manged Network

  13. Challenges for New Growth Unified Communication Rich Communication VPN Needs more managed function U-Comm : unified communication Personalized Application & FMC Services Voice PBX, Audio Conferencing & Data IM, E-Mail, Web Conferencing Voice Video Personalization FMC Context PSTN Number E-mail Community, Blog Information, Entertainment Films, Music, Drama Education, Medical care, Security IM Web Entertainment • Personalized services : communication, application services, personal portal, etc.. • - linking PSTN customer with internet community, expansion from home to person • QoS : exclusive possession of service quality control and servicecontext

  14. Challenges for New Growth Needs more managed function WiBro : basis of mobile convergence A vision for personal broadband : m-TPS Old Digital Paradigm New Digital Paradigm Wired Internet Limit of Mobility & Real-time • Real-time Mobile Service • BB Multimedia Service • Affordable Price KT WiBro Wireless Internet High Cost , Low Speed Mobile-TPS Personal Broadband Wireless All-IP Media Communication Data • Broad BW : Higher data rate than 2.5G network • Personalized services : LBS & personalized information service (push & pull), etc • QoS : Packet scheduling for resource reservation

  15. Considerations of future voice services Concluding Remarks re-creation of the value of voice • something other than just voice : enhanced voice quality etc.. • network-based service which only the network operator can provide • user-centric convergence service – personality, simplicity, predictability Managed Broadband network • new authentication platform – basic platform for personalized service • Premium network (BcN and QoS manager) – premium & convergence service • new services strategy using BcN like U-Comm

  16. Thank You !

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