chintan vaishnav the end of coreweb.mit.edu/chintanv/www/presentations/chintan vaishnav...chintan...
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© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
The end of core:
Chintan Vaishnav, ESD, [email protected]
Should disruptive innovation in telecom invoke discontinuous regulatory response?
© Chintan Vaishnav, All Rights Reserved
2007 PhD ColloquiumBoston, USA
2© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
VoIP bridges PSTN and the Internet! Should we care?
Router
Router
Router
Router
VoIP
Switch Switch
The PSTN
END-DEVICES
CORE
Regulated
Unregulated
The broad regulatory question: Should VoIP be regulated like the PSTN,unregulated like the Internet or should there be a third approach?
3© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
What is the Current Regulatory Response to VoIP?
“Light Touch” Regulation: Traditional 911/E911 and CALEA regulationextended only to “interconnected” VoIP services
Modes of VoIP
“unmanaged” service(i.e. no PSTN interconnection)
Skype, Yahoo, IM,Google Chat
PC-to-PC“interconnected” serviceSkypeOut,Net2PhonePC-to-Phone
“interconnected” service(i.e. PSTN interconnection)
VoCable, VoDSL,Vonage, 8x8
Phone-to-Phone
Regulatory TermService ExampleMode
US Telecom Regulation
Economic Regulation
Social RegulationParadigm
CompetitionAccess Charges
Economic DevelopmentUniversal Service
Equal OpportunityDisability Access
Law Enforcement CapabilityWiretapping (CALEA)
Public Safety911/E911ObjectiveTraditional Regulation
4© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
Observation:Telecommunications regulation assumed a network core that…
- could be engineered to fulfill regulatory objectives- was controlled by an industry structure that could do the engineering
Argument:Disruptive trends such as VoIP erode assumed control in the core
Hypothesis:
With eroding control in the core meeting regulatory objectives willincreasingly require regulatory responses discontinuous from thepast
Observation and Hypothesis
5© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
e.g. Ciscoe.g. Dell, Palm,User-innovatore.g. municipal
broadband
e.g. earth link(Pkt-switching)
e.g.SkypeOut,User-innovator
Observing and Conceptualizing The End of Core
CoreEndDevice
END-DEVICEPROVIDER
APPLICATIONPROVIDER
SERVICEPROVIDER
ACCESSPROVIDER
EQUIPMENTPROVIDER
Communications Value Chain
VoIP
PSTN e.g. Lucente.g.AT&T, MCI, Sprint
(Circuit-switching) e.g. Uniden
1
Functions of a typical voice call
Setup & terminate the call (call signaling)2 Voice transport (bit transport)
3 Secure the channel4 Maintain user privacy
5 Billing forvoice service
1 2 3 4 5
12 3 45
6© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
The End of Core
Functionality is Dispersing to End-Device
+
The Ownership of the Core is Fragmenting
=
The End of Core
7© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
The implications of the End of Core for Regulation
The End of Core can cause…
Regulatory misalignment (Static Complexity):Between those who must meet the regulatory requirements versus thosewho control the functionality necessary to meet them
Regulatory Misalignment can cause… may require…• Inefficiency in achieving regulatory compliance• Regulatory capture by new players
Discontinuing access-centric regulatory thinking…and understanding the complexity of the value chain
8© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
The implications of the End of Core for Regulation
The End of Core can also cause…
Circum-innovation (Dynamic Complexity):By user-innovators (a customer with the necessary knowledge toinnovate) who can introduce innovations that might, intentionally orotherwise, circumvent regulatory objectives
Circum-innovation can cause… may require…• arms race between proponents of compliance and non-compliance
Discontinuing command-and-control regulatory thinking…and understanding a collaborative model of regulation
9© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
Research Method
System Dynamics Model and Field Research
• Build a system dynamics model
• Perform internal validity of the model using field research
• Perform construct validity by calibrating the model with real-world data
• Use the model and modeling insights to perform policyanalysis
10© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
Causal Structure of the System Dynamics Model
Compliance Gap
Actual Regulatory
Compliance
-
Desired
Regulatory
Compliance
+
Compliance GapRegulation
Actual Regulatory
Compliance
+
-
Desired
Regulatory
Compliance
+
Compliance GapRegulation
Actual Regulatory
Compliance
+
+
-
B1
Current Regulatory
Rationale
Desired
Regulatory
Compliance
+
Deployment ofCompliant
Technology+
Compliance GapRegulation
Actual Regulatory
Compliance
+
+
-
B1
Current Regulatory
Rationale
Desired
Regulatory
Compliance
+
Regulatory
Misalignment
Functionality
Dispersion to
End-Devices
+-
Ownership
Fragmentation of
the Core
+
Deployment ofCompliant
Technology+
Compliance GapRegulation
Actual Regulatory
Compliance
+
+
-
B1
Current Regulatory
Rationale
Cost of
Compliance
Desired
Regulatory
Compliance
+
Regulatory
Misalignment
Functionality
Dispersion to
End-Devices
+-
Ownership
Fragmentation of
the Core
+
Deployment ofCompliant
Technology+
+
Attractiveness of
"Interconnected"
VoIP
Compliance GapRegulation
Actual Regulatory
Compliance
+
+
-
B1
Current Regulatory
Rationale
Cost of
Compliance
-
Desired
Regulatory
Compliance
+
Attractiveness of
"Unmanaged" VoIP
+
Regulatory
Misalignment
Functionality
Dispersion to
End-Devices
+-
Ownership
Fragmentation of
the Core
+
Deployment ofCompliant
Technology+
+
Attractiveness of
"Interconnected"
VoIP
Compliance GapRegulation
Actual Regulatory
Compliance
+
+
-
B1
Current Regulatory
Rationale
Cost of
Compliance
-
Desired
Regulatory
Compliance
+
Attractiveness of
"Unmanaged" VoIP
+
Regulatory
Misalignment
Functionality
Dispersion to
End-Devices
+-
Ownership
Fragmentation of
the Core
+
Deployment ofCompliant
Technology+
+
innovation for
compliance cost
reduction
-
-
Compliance Cost
Reduction
B2
Attractiveness of
"Interconnected"
VoIP
Compliance GapRegulation
Actual Regulatory
Compliance
+
+
+
-
B1
Current Regulatory
Rationale
Cost of
Compliance R1
Loss of Compliance through
Disincentive for
"Interconnected" Service
-
Firms entering"interconnected"
VoIP market
Desired
Regulatory
Compliance
+
Attractiveness of
"Unmanaged" VoIP
+
Regulatory
Misalignment
Functionality
Dispersion to
End-Devices
+-
Ownership
Fragmentation of
the Core
+
"Interconnected"
VoIP Adoption
+
+
Deployment ofCompliant
Technology+
+
innovation for
compliance cost
reduction
-
-
Compliance Cost
Reduction
B2
Attractiveness of
"Interconnected"
VoIP
Compliance GapRegulation
Actual Regulatory
Compliance
+
+
+
-
B1
Current Regulatory
Rationale
Cost of
Compliance R1
Loss of Compliance through
Disincentive for
"Interconnected" Service
-
Firms entering"interconnected"
VoIP market
Desired
Regulatory
Compliance
+
Attractiveness of
"Unmanaged" VoIP
Firms entering"Unmanaged"VoIP market
+
+
R2
Loss of Compliance through
Incentive for "Unmanaged" Service
Regulatory
Misalignment
Functionality
Dispersion to
End-Devices
+-
Ownership
Fragmentation of
the Core
+
"Interconnected"
VoIP Adoption
+
+
"Unmanaged"
VoIP Adoption
+
-
Deployment ofCompliant
Technology+
+
innovation for
compliance cost
reduction
-
-
Compliance Cost
Reduction
B2
Attractiveness of
"Interconnected"
VoIP
Compliance GapRegulation
Actual Regulatory
Compliance
+
+
+
-B1
Current Regulatory
Rationale
Cost of
Compliance R1
Loss of Compliance through
Disincentive for
"Interconnected" Service
-Firms entering
"interconnected"VoIP market
Desired
Regulatory
Compliance
+
Attractiveness of
"Unmanaged" VoIP
Firms entering"Unmanaged"VoIP market
Innovation in
VoIP
++
R2
Loss of Compliance through
Incentive for "Unmanaged" Service
Regulatory
Misalignment
Functionality
Dispersion to
End-Devices
+-
Ownership
Fragmentation of
the Core
+
+
Circum-inn
ovation
Circum-innovation
Fraction
+
-
+
"Interconnected"
VoIP Adoption
+
+
"Unmanaged"
VoIP Adoption
+
-
R3
Loss of Compliancethrough
Circum-Innovation
Deployment ofCompliant
Technology+
+
+
innovation for
compliance cost
reduction
-
-
Compliance Cost
Reduction
B2
<Functionality
Dispersion to
End-Devices>
+
# - quantitative data
#
#
#
#
#
#
#
#
- Field Research
11© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
Summary of Field Research
Involving: Firms offering “interconnected” and “unmanaged” VoIP service
Investigate:1. How and why does the regulatory misalignment affect the deployment
of compliant technology?
2. How and why does the compliance cost affect the choice oftechnology to develop?
Field Study 1
Involving: Circum-innovations affecting 911/E911 and CALEA Compliance
Investigate:1. How and why circum-innovations impact the regulatory compliance?
Field Study 2
12© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
Description of Data Collection
Quant.Average Cost of a PSTNWiretap
Compliance Cost
Time SeriesTBDInnovation Rate
Time Series% Voice Traffic that is“interconnected” VoIP
Level of Compliant VoIP Use
Quant.Number of 911 andCALEA compliant“interconnected” Firms
Actual Regulatory Compliance
Time SeriesNumber of“interconnected” VoIPFirms
Desired RegulatoryCompliance
Time SeriesMarket share of PC-to-Phone + PC-to-PC VoIP
Ownership Fragmentation
Time Series% Voice Traffic that isPC-to-Phone + PC-to-PCVoIP
Functionality DispersionTypeProxyTheoretical Construct
Quantitative data from FCC, industry reports and trade magazines
13© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
Desired Contribution
ESD / Telecom Policy1. Explaining dynamic complexity involved in the regulation of VoIP2. Increasing the ability to communicate risks and opportunities in regulating
the emerging communications technologies from the perspective of socio-technical systems
Innovation Theory Literature
3. A framing paper on the dynamics of regulation and innovation
Internet Architecture Literature4. Extending the “tussle in cyberspace” work by one step with a paper on
“tussle for surveillance and its impact on the Internet architecture”
System Dynamics Literature5. A comprehensive paper on the system dynamics modeling of the
communications industry
© 2007 Chintan Vaishnav, Engineering Systems Division, Massachusetts Institute of Technology
The end of core:
Chintan Vaishnav, ESD, [email protected]
Should disruptive innovation in telecom invoke discontinuous regulatory response?
© Chintan Vaishnav, All Rights Reserved
Committee:Prof. Charles Fine (Chair)Dr. David ClarkProf. John Sterman
Thank You!