ETP‘S VIEW ON THE FUTURE OF VOICE Margit Brandl January 2007, Geneva - ITU

2 About ETP The ETP is a forum for the exchange of views with European Institutions as well as international working groups. ETP works by consensus to prepare codes of practice, guidelines and reports. Membership is open to all sectors of industry involved in the European communications market and the global information society. Members represent a wide range of industry and private sector interest groups, manufacturers and operators (both incumbents and new entrants).

3 I. Market trends

4 Several types of convergence are all happening at same time Industry Convergence fixed – mobile telecom – media/TV digital devices Network convergence Fixed-mobile, multi-access, common core service machinery, OSS and BSS Device convergence Multiradio terminals, smartphones, music devices, cameras, game decks, PDAs Service and application convergence VoIP, digital content, messaging, push-to-talk, interactive gaming, video sharing, video telephony Fixed-Mobile Convergence

5 For the industry this means Business outlook Very sharp decline in the number of and percentage of voice minutes originating in the traditional fixed network. Competitive pressures on operators will increase (e.g. mobile, VoIP, market entry of Skype, Google, Yahoo, etc.) … established providers might focus on access services + decision on which and how many services in addition to offer. World wide market instead of national or European market. Technological changes Voice is only a “ data package ” as part of broadband data exchange, mostly IP based. In the core network, the boundaries between fixed and mobile technologies will largely disappear by From the business point of view, FMC offers seamless services for both mobile and fixed users, and helps to reduce both CAPEX and OPEX.

6 How will fixed, mobile and internet- based phone services converge? Fixed Mobile Convergence (FMC) is a key element. Operators can deliver a seamless and access-independent user experience to their customers Competition will increase. Due to regulatory constraints and uncertainty, fully converged services are slowly emerging: first steps: fixed- mobile (home zone, one handset), fixed-internet (ADSL/cable + POTS or VoIP) and mobile-internet (3G, data cards) Future services will increasingly be based on IMS-like platforms. Distinct mobile or fixed services are likely to exist in parallel with converged services for some time.

7 Mobile and broadband growing Mobile phone subscriptions globally, millions Source: EMC, Nokia August Current global penetration 34 % billion by billion by e e Mobile PSTN voice Broadband

8 Voice goes Mobile and IP minutes, billion e e 50/50 split by /50 split by e -08 e Mobile voice traffic PSTN voice traffic VoIP traffic -10 e Source: Nokia August 2006 Rapid growth Rapid growth VoIP – Rapid growth in fixed domain VoIP – Rapid growth in fixed domain Fixed to Mobile Substitution Fixed to Mobile Substitution

9 How does messaging, gaming, multimedia fit in? Classical services like are based on the IP layer, new services like interactive multimedia including instant messaging and gaming and will be IMS based. Some services such as gaming and other interactive services will probably be based on dedicated service platforms The telecom Triple-play (voice, data and video) turning into Quadruple play, that includes high-speed data, telephony, TV, and mobility Market research indicates strong latent demand and early rapid take-up of services in some markets that show the potential to translate this into high take-up and usage. Mobile broadcast TV combines - TVs and mobile phones

10 Are voice services of the future most likely to be billed by the minute, by volume, or on a flat rate basis? Unlimited flat rate already almost generalized for voice (VoIP) and Internet connectivity on fixed networks and increasingly being adopted on mobile networks for voice and data The transition to a flat rate is facilitated by the huge capacity made available on networks by recent technology improvements and by the aggressive drive of some players seeking to build market share. Trend towards flat-rate charging expected to continue at a moderate pace and include national/local voice services, internet (broadband) access and usage and multimedia/IPTV most likely to be billed on a flat rate basis. Billing by minute for international calls (many different international termination rates) and by minute or by event billing for value added services likely to continue for some time.

11 New business models and revenue streams? Customers buy a “communication package” (convergent communication solution) instead of voice minutes, access or TV. Focus will be on convergent services, triple and quadruple play / bundles with packaged prices. With service integration including presence management, multimedia etc. + guaranteed QoS. “Classic” voice revenue steady declining but will remain to be a revenue stream due to increased efficiency/lower costs.

12 II. Regulation

13 Convergence: Regulatory issues Substitute services o Replacing traditional industry boundaries and legislation Technology complexity o No clear vision on future services and their business impact o Technology development outpaces regulator competencies Market entry o New entrants o Competition as a driver for industry innovation and growth Cross-border business activity o Global characteristics of communications industry Technology Convergence Market Regulation Policy Implications New legislation o Spectrum o competition Intellectual property o Digital content Roaming and interconnection prices o Consumption of communications

14 Regulatory freedom … Is regulatory freedom necessary to bundle voice with other services (e.g. multiple play)? Level playing field- respect principle of technology neutrality …voice shows a strong trend towards becoming an element of other services like internet access or video/TV. Throughout Europe retail markets show a clear trend to competitiveness and increasing infrastructure competition (LLU, cable, mobile..). Thus no operator should be hindered to offer valuable bundles to the consumer’s advantage. Customers should be allow to benefit from economies of scope Regulation should not prevent service development and integration. Product packages (including e.g. fixed and mobile voice or VoIP, broadband access, TV, …) are and will increasingly be offered by nearly all operators.

15 Regulatory threat … Threat – insufficient return on investment Next generation high speed fixed and mobile broadband networks capable of supporting triple and quadruple play offerings may involve significant up front investments with a high degree of risk for the involved stakeholders. Regulation must not hamper growth and should encourage rollout of new infrastructure.

16 Licensing What form of licensing, if any, will be necessary for voice service providers? The current EU licensing regime with a “general license” for all services and separate licensing for scarce resources like frequency spectrum is sufficient and should not be changed.

17 VoIP Will the VoIP service (provided on public IP network) be regulated? Current regulatory decisions within the EU show a tendency to regulate only VoB services (VoIP = VoB and VoI) and especially those provided by established operators. This prevailing praxis shows a biased regulation towards European network operators who face intervention and thus a competitive disadvantage whilst international large VOIP providers remain unregulated and out of the scope of the European legal framework. This is clearly a wrong regulatory development as VoIP services are based on another business model than traditional voice. VoIP for end-users is billed/integrated in access to broadband and download volume (volume based instead of minute based charging). o retail (price/service) regulation of voice services is unnecessary irrespective of the technology or business model o Regulatory discrimination has to be avoided but general rules (e.g. emergency calls) and quality of service obligations for all VoIP providers are necessary

18 Numbering Will and if yes to what extend will national numbering plans be changed? Is the creation of new international agreements on uniform numbering feasible (beyond e.g. the European number 112)? In the medium term there should not be the necessity to change national numbering plans, except to add some additional numbering ranges for new services. Numbering resources and functionality is sufficient, also in an E-NUM environment. Creation of further new international agreements on uniform numbering could be advantageous especially for shared cost services. On the long term geographical numbering will make little sense and at point in time it may also be less relevant to maintain certain number series for certain services if convergence takes place. This may not impact on international numbering plans Non-geographical numbers should be negotiated to try to come to uniform numbering in this field.

19 III. Technology

20 Will new security requirements limit development of new voice technologies? Development of voice services, rather than voice technology, may be impacted by security requirements. Any review of network integrity requirements should start with a consideration of the state of the communications sector as is and the technical characteristics of different networks, rather than assuming that public switched telephone network (PSTN) requirements can be rolled onto new networks: Privacy of communications to remain basic right: new technologies used to offer public voice services should offer same or better grade of privacy as current PSTN, ISDN and mobile networks Lawful interception requirements should apply any technology used to offer public voice services Network integrity requirements in IP networks requires further discussion

21 Will PSTN be used to provide new services (e.g. Voice over packet)? If no, when do you estimate it will be phased out? Exploitation of stable, and high quality PSTN technology happens today and will continue at least for the next years Meanwhile, operators are transforming their networks to new technologies (NGN) which offer additional features

22 Can you describe details of emergency call solutions in NGNs? The question assumes that emergency calls are an inherent part of voice services (PATS). The basic ingredient of emergency calls is the reachability of the emergency centre responsible for location. NGN in our opinion refers to a packet based voice application. The main question in this context is the management of the distinction of service and transport (or in other words the management of mobility). As long as a voice service can only be used from one location, the database can be static (as it is today in the PSTN/ISDN). If mobility has to be taken into account (mobility is a basic part of an NGN as stated in the ITU-T definition), means to determine location of the user are needed ( IETF and ETSI (ECRIT).

23 What will be the requirements for future voice terminal equipment? Depends on definition of voice terminal equipment: wide selection of equipment with voice capabilities (e.g. embedded in games). Requirements on voice equipment will depend on the application or service it is intended for. We will see different types of terminal equipment: very universal with possibility to process voice and data services of different types and volumes. On the other side as simple as possible (from user’s point of view) for those who don’t want to use it for anything else than for calling. Equipment incorporating different technologies (fixed line, wireless, mobile Open standards are key for interoperability of terminal equipment and services on an European and worldwide basis.

24 THANK YOU! Dr. Margit Brandl Chair European Telecommunications Platform