1. 12 March 2007 PT 2 TRIS Copenhagen Meeting 22-23 March 2007
IP Interconnection
12 March 2007
PT 2 TRIS Copenhagen Meeting March 2007
Restricted - Confidential Information
Access to and distribution of this document is restricted to the persons listed under the heading Security Classification Category*. This document is confidential to the Association and is subject to copyright protection. This document is to be used only for the purposes for which it has been supplied and information contained in it must not be disclosed or in any other way made available, in whole or in part, to persons other than those listed under Security Classification Category* without the prior written approval of the Association. The GSM MoU Association (“Association”) makes no representation, warranty or undertaking (express or implied) with respect to and does not accept any responsibility for, and hereby disclaims liability for the accuracy or completeness or timeliness of the information contained in this document. The information contained in this document may be subject to change without prior notice.
© Copyright of the GSM MoU Association 2007
* All GSM Association meetings are conducted in full compliance with the GSM Association’s anti-trust compliance policy

2. IP Interconnection Key activities in 2007:
GSME response to ERG consultation on IP Interconnection
GSME response to BNetzA consultation on IP Interconnection
GSMA participation in ITU-T GSR
Economic study on IP Interworking by CRA/G+T will be released to public on 26/03/07
Continued engagement with stakeholders
© Copyright of the GSM

3. Economic Study on IP Interconnection
Migration to IP-based networks has raised a regulatory debate about appropriate IP interconnection charging models
Key areas discussed:
Potential for efficiency and welfare gains exist
IP interconnect can help these gains be captured
What are the policy implications
© Copyright of the GSM

4. Key conclusions
Current IP interconnection is burdened with inefficiency, and NGNs create the opportunity for large efficiency and welfare gains
Efficient interconnect models will be determined by both efficient retail pricing, and the distribution of network costs
To best capture potential NGN gains, interconnect pricing must be commercially flexible
There is no single interconnect model that is universally superior. Multiple models will be required to capture efficiencies
A “one-size-fits-all” interconnect model (as is contemplated with bill-and-keep (BAK)) would fail to capture potential gains, harming NGN investment incentives, and hindering the development of NGN services (including QoS-based services)
Regulators should proceed cautiously and seek to provide regulatory certainty by offering assessment frameworks rather than prescribing solutions
© Copyright of the GSM

5. Current vs. future IP Interconnect
Future NGN interconnect enables economic efficiency improvements over current arrangements
Today’s IP interconnect
Future NGN interconnect
Priority assigned by packet
Quality of service (QoS) can be guaranteed, with different quality for different services
Differential charging by priority
Single party could provide virtual tunnel “QoS path” (e.g. IPX) for quality-critical services
Best efforts quality
Packets transported along multiple blind routes without regard for contents
Packets can only be counted at network handoff points
Interconnect pricing negotiated bilaterally at handoff, in isolation of retail pricing
LARGE ECONOMIC EFFICIENCY GAINS POSSIBLE
VERDICT: INEFFICIENT
© Copyright of the GSM

6. Future IP interconnection will depend on establishing quality of service paths
Labelling acts in same way as signalling
Path QoS parameters in terms of latency, jitter and packet loss appropriate to the messages being exchanged
Labelling produces QoS path for carriage across networks
Access
Network
Access
Network
CPE adds and
respects labels
Customer
Premises
Equipment
Customer
Premises
Equipment
© Copyright of the GSM

7. Regulatory Implications
Proceed cautiously
No justification to propose remedies such as mandating a single IP interconnection model
Too early to tell what model or models will prevail commercially
Don’t prescribe a single charging model
Multiple retail and wholesale models to support different services
Industry developing appropriate IP interconnection models without the need for ex ante regulatory intervention
Evolution to IP-based services will enhance competition
Deployment of NGNs has the potential to change the way many services are delivered
Regulators should not assume existing economic bottlenecks will be replicated
Use existing regulatory frameworks
Based on an objective analysis of the market, market reviews assessment of market power and general competition law
© Copyright of the GSM

8. Contact Details Robindhra Mangtani Director GSM Association
Mob:
© Copyright of the GSM