1. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Future of Voice - Framing the Debate Dr. Abdelfattah ABUQAYYAS ICT/HRD Consultant

2. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Session Description: For more than 100 years, voice traffic has been the mainstay of the telecommunications sector, in terms of customers, revenues and traffic. But the gradual migration to an all-IP network environment is having a significant impact on the provision of voice service over the public switched telecommunication network (PSTN). In this respect, the concept of voice, as a universal service, is also evolving rapidly. The purpose of this session is to outline the background and to frame the debate from different perspectives, in particular drawing attention to the main trends in technologies, markets, regulation and policies that are likely to have an impact upon the traditional paradigm of the communication business. Framing the Debate 2

3. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Voice and Data Data was first (telegraph) Voice came second (telephone) Data had a spectacular rebirth (Internet); Voice got a second wind (mobile) They now begin to work together (convergence) Competitors or Complementors? Data often displaces voice Email, chat for fixed calls SMS for mobile calls Voice can complement data, and vice versa Telemedicine, distance learning Customer service Why Should We Care? Affects the pace and direction of innovation in communications services. Could open new or underserved markets, especially in less developed economies. Could help close the digital divide. Should impact regulatory policy. The Future of Voice: a view from the past 3

4. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 4 Factors Underlying Traffic Trends? Overall expansion of user base The pressure of competition and market liberalisation Emerging alternative communication platforms (e.g., mobile, VoIP) Influence of the Internet, esp. Voice over Internet Protocol and peering Peer-to-peer technologies (e.g., Skype) Overall migration to the all-IP environment Do people communicate more now?

5. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Broadband price trends International survey of broadband prices Based on 133 economies that had broadband as early as 2004 Methodology Based on price in US$ per 100 kbit/s Price trends Median price has fallen by 41% p.a. Median speed has risen by 66% p.a. The trend towards flat-rate pricing Broadband pricing Flat-rate is now preferred to both time-based and data capped Similar trends towards bundling and flat-rate in voice market too Voice offered free with internet and premium TV services Broadband Pricing Trend 5 133 145 166 0 20 40 60 80 100 120 140 160 180 200420052006 Number of economies DataTime BothFlat-rate 75% 68% 81%

6. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 6 Questions for Discussion Will voice remain a trillion dollar business or will the business model collapse under pressure from VoIP? How can voice service be profitably extended (e.g., premium quality, chat, integration with other services, universal access, etc) Will voice drive NGNs? (just like it drove ISDN, freephone, 3G etc) Is the price per minute business model sustainable?

7. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Voice telecommunications in the Internet era How important is voice? Access growth 1997-2005

8. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 The Telecom Industry is Still Voice Voice Voice is at least 79% of total telecom revenues in all OECD countries Of Verizons USD 75 billion in revenues - only 14% were from data Mobile OECD mobile revenues alone were 40% of total telecom revenues in 2005 Mobile over of 50% of total revenues in 12 countries Mobile revenue in Japan or US is larger than the GDP of 125 out of 213 countries covered by the World Bank

9. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Big change -1: growth of mobile

10. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Traditional mobile vs 3G growth

11. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Big change - 2: Shift to VoIP Proportion of VoIP revenues to total revenues declines 10/month for 1 Mbit/s wholesale transit = 4 continuous phone conversations at 256 kbit/s (high quality). France: Unlimited phone calls to France and 25 countries VoIP is technically only authorization and directory There is practically no marginal cost for a call.

12. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Policy issue Numbering We dont call numbers. We call people (with a name) There is no geography in the network. A call to an Orange VoIP-customer in The Netherlands is routed through Paris. (No more switches) Name PSTN-number IP-number Network identifier (seems redundant) Numbers == billing? Number portability and VoIP? Then what is a number worth? Interconnection From RPP to CPP to NPP (No Party Pays) Interconnection is guaranteed money for all involved There is essentially a terminating monopoly Low impetus for change: Everybody gets their cut. Why would participants be against it? Unclear to end-user. Why does it cost 15 cents to connect to mobile and 0 cent to fixed? Same general idea, similar technology Universal service Regulating voice over the PSTN and voice over IP differently is not a long-term solution Countries where VoIP has been regulated like PSTN voice have struggled with voice development (e.g. Korea) At what point will universal service move from being a voice line to a data line?

13. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Conclusions Voice is still extremely important to telecommunication operators but they need to wean themselves off it There are big changes in the industry Mobile growth VoIP Consumers/operators/regulators are still figuring out how this will work 10 years from now my children will laugh when I tell them I used to pay for phone calls

14. ITU/BDT Arab Regional Workshop on Future of Voice Salalah – Oman, 2-4 August 2008 Future of Voice - Framing the Debate Future of Voice - Framing the Debate THANK YOU Dr. Abdelfattah ABUQAYYAS ICT/HRD Consultant