A New Model for Interconnection ECC Report 75 John Horrocks DTI +44 1483 797807 john@horrocks.co.uk

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 The days of call charges are disappearing Running a service-aware backbone for multiple services will be organisationally complex

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

IP - the opportunity to change “Internet” approach separates transport and service provision Layering Interconnection has developed around carrier selection but this is no longer needed Are we stuck forever?

The goal 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)

……….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

The 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

Customers, access and services Customers pay separately for access and services Access payments may be subscription or usage based - where usage based would pay for access for incoming calls Access payments may be quality related Customers pay service providers for services, service payments may be subscription or usage based, but “connectivity” services are cheap.

Service payments Service provision works on sender keeps all within the new model - maximise connectivity (like email) Service providers will need gateways to the old model (like VoInternet with PSTN breakout) Separation from transport means easy to reach distant service providers Calls can be carried as far as possible on new model

Transport Interconnection Payments Capacity and quality based, not service based Capacity payments towards the centre Peering in the centre Same as the Internet

Inside the new model SP Sender keeps all SP Access Terminal A Access Retail subscription or usage SP Sender keeps all SP Access subscription or usage Access subscription or usage Access Terminal A Access Terminal B Capacity charge Capacity charge Transit Transit Transit Peering Peering

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

Retail for calls to call charge area Internet style platform A new model Option-4 No call charges Call charges Retail for calls to call charge area SP SP SP Gateway Internet style platform Terminal A Originating Transit Terminating Terminal B No call charges Access line Capacity charge

Principles Retail service charges from service provider remain a commercial matter Retail access from network operator may be subscription or volume (mobile) Create IP-based interconnect club with capacity payments, no call charges and open interconnection Membership and coverage of the club may grow Defined bearer services only to external gateways Gateways to call charge zone outside Originating service provider signals/pays gateway but not IP network operators (SP is independent of access operator = carrier selection) Saves need for session border controllers within club