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Services over Internet Protocol: Voice is just the beginning…
Marilyn Cade. DirectorIP Networking, Internet and E-Commerce
AT&Tand
Chair, Positively Broadband Campaign
2Copyright 2004 AT&T
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.
• What Industry can do to ensure VoIP’s Success
3Copyright 2004 AT&T
Top Ten Technology Trends
1.1. IP Will Eat Everything! IP Will Eat Everything! 2.2. Broadband Will Be CommonBroadband Will Be Common3.3. Wireless Internet Will Be Big Wireless Internet Will Be Big –– Driving MobilityDriving Mobility4.4. Sensor Networks Will Be Everywhere Sensor Networks Will Be Everywhere 5.5. Convergence of Communications & Convergence of Communications &
Computers Will Become a RealityComputers Will Become a Reality6.6. Death of LocalityDeath of Locality7.7. Security Is CriticalSecurity Is Critical8.8. NexGenNexGen Distributed Computing Is GrowingDistributed Computing Is Growing9.9. Home LANs Will ProliferateHome LANs Will Proliferate10.10. Data Mining Data Mining Information MiningInformation Mining
IP Will Eat Everything
5Copyright 2004 AT&T
The Communications Industry is Undergoing Massive Transformation
to One MPLS/IP Network
BX9000 BX9000BX9000
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
4ESS5ESS
5ESS
Voice Network
Frame/ATM/Voice/IP-VPN
Private LineNetwork
MPLS: MultiProtocol Label Switching
6Copyright 2004 AT&T
IP is the the Bridge to the Future
PrivateNetworks
(WAN/VPN)
•Secure•High Performance•Predictable•Reliable•Non-Regulated
LAN
Supplier
Supplier
Teleworker
CorporateIntranet
Public Voice Networks(PSTN)
•Scalable•Ubiquitous•VariablePerformance
•Seamless•Flexible•Regulated
WirelessInternet
Corporate Extranet
SupplierCustomer
ISP
Teleworker
7Copyright 2004 AT&T
IP Enables the Next Generation of ApplicationsCOMMUNICATION LAYERS
Physical LayerPhysical Layer(electric, co(electric, co--axial, copper, axial, copper,
wireless, fiber)wireless, fiber)
Logical LayerLogical Layer(IP addressing, wireless (IP addressing, wireless
handoffs, etc.handoffs, etc.
Application LayerApplication Layer(voice, video, web, chat, (voice, video, web, chat,
ee--mail, etc.)mail, etc.)
Content LayerContent Layer(movies, books, papers, (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.)
Concept compliments of Kevin Werbach
8Copyright 2004 AT&T
IP Makes the Vision of Any Device to Any Device over Any Network Possible
Internet/IPNetworks
(178,000+ networks)
IP Phone
VoIPGateway
PBX Gateway Cable Modem
Cable Modem
VoIP Router
DSLLine
PhoneLine
WiFi Access Point
WifiPDA
DSL Modem
Cordless Phone
PBX
iPBX(Gateway)
IP Phone
Cellphone
3G
Telephone
ISPGateway
VoIP Custom Dialer
Telephone
PhoneLineDesktop
Laptop
LANConnection
IP SoftphoneTelephone
VoIP
10Copyright 2004 AT&T
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 improve over time, not overnight, to meet customer demand
11Copyright 2004 AT&T
The Eras of VoIP
Arbitrage
Convergence& Consolidation
EmergingApplications
12Copyright 2004 AT&T
IP Enabled Voice Services – The Early Days
IP/Internet CoreIP/Internet Core
CCENGBE
Int’lCarrier
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
LocalLocal Network
LEC Int’lCarrierReal Time Network Routing
Edge-to-Edge Circuit
Upchain
NCP NCP
ADJ
ADJ
NGBE
Local CLEC/ILEC
Advanced Voice Features Across TDMVoIP transport with hop-on/hop-off
PBX
PSTN
13Copyright 2004 AT&T
IP Enabled Voice Services – Today’s Build-out
CCE
SIPSIP
Local ING
LEC
LEC
Int’lCarrier
PNBE
NGBEIP/MPLS/IP/MPLS/
Internet CoreInternet CoreES-ING ES-ING
IP-Enabled Edge IP-Enabled Edge
AppSrvr
IP - Applications
AppSrvr Media
Srvr
IP Residence
DSLCableEtc.
LocalApp Srvr
NGBE
CarrierPNBE
WholesaleCustomer
CPE
BE
℡EVPNIP PBX
LEC - TDM PBX - TDMIP-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.
14Copyright 2004 AT&T
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 andEnterprise Backbones(DWDM, Routers,Switches - optical, WAN,& converged)ACCESS (CPE,Concentrators, DWDMMetro, Firewall, VPN,Wireless LAN, EthernetSwitches)END POINT EnterpriseCPE (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
15Copyright 2004 AT&T
Satellite, Wireless, Cable, Phone, Electric Networks
WWWE-mail
DomainName Service
SIP..SMTPPOP3.. DNS.. HTTP
IP
TCP…UDP...RTP…
(InternetProtocol)
Packet Routed Data
Public Phone Network
Circuit Switched Voice
Voice
Ph
ysic
al L
ayer
Ph
ysic
al L
ayer
App
licat
ion
Lay
erA
pplic
atio
n L
ayer
Logi
cal L
ayer
Lo
gica
l Lay
er
Enhanced/Information
Services
TraditionalTelecomServices
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 data application
16Copyright 2004 AT&T
New Models of Governance Needed
Med
ia
Co m
p utin
g
Tele
com
APPLICATIONSAPPLICATIONS
DEVICESDEVICES
NETWORKSNETWORKS
CONTENTCONTENT
Current NormCurrent Norm“Stovepipe” regulation by
industry and sectorsbutbut INTERNET INTERNET
PROTOCOL PROTOCOL changes everythingchanges everything• Vertical convergence• Horizontal convergence
New Questions:• Jurisdiction• Accountability• Liability• Industry/Gov’t Cooperation
17Copyright 2004 AT&T
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.”
Source: Newton’s Telecom Dictionary, 18th edition
18Copyright 2004 AT&T
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• Voice Chat
19Copyright 2004 AT&T
The Evolution of Residential VoIP
DSL or Cable Modem
Computer
PSTNPhoneLine
VoIP Gateway
Telephone
Computer
DSL or Cable Modem
Broad-band
Broad-band
Broad-band
Broad-band
WWW
WWW
PSTN
2004
Telephone
WWWTelephone
ComputerPSTN
PhoneLine
14.4 – 56k Modem
PhoneLine
PSTN 1992Telephone
Copyright AT&T 2003
20Copyright 2004 AT&T
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 BBLEC/IXC: Qwest, AT&TVirtual: Vonage, Voiceglo, Voicepulse, !connecthere, Packet8
PC: Net2Phone, Free World Dialup
2004 Snapshot
21Copyright 2004 AT&T
Emerging VoIP Revenues (hardware and services)are also Dwarfed by Global Voice Revenues
0100200300400500600700800900100011001200
2000 2001 2002 2003 2004 2005 2006
RE
VE
NU
E (
Bill
ions
of
Dol
lars
)
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
0123456
2002 2003 2004 2005 2006
RE
VE
NU
E (
Bill
ions
of D
olla
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 $7 Billion for VoIP revenues by 2005
VoIP’s Challenges: Operational, Standards, Policy/Regulatory
23Copyright 2004 AT&T
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?
24Copyright 2004 AT&T
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.
• OECD Report:
25Copyright 2004 AT&T
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
26Copyright 2004 AT&T
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• Universal Service
27Copyright 2004 AT&T
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
