ip networks, technology and economics · broadband private circuits. • this change is due to: –...

IP Networks, Technology andEconomics

ICC2001 - June 2001BAS Session - Helsinki

Robert R. [email protected]

www.genuity.com

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IP Networks, Technology and Economics

Agenda

• Network Architectures– Access

– Backbone

– Service

• Implementing Technologies– Access

– Optical Platform

– Middle Layers (IP)

– Service Layers

• Economics– Myths and Today

– Interconnection

– Driving Forces

• Summary– Conclusions

3


Definition of Terms

• Telephony - Standard “PSTN” type services switched orpacket - voice, FAX

• Internet - Computer “ISP” type packet services - web, FTP,e-business

• IP Networks - Networks that carry data using the InternetProtocol

IP Backbone

PSTN

ISP

Gateway

Enterprise

Enterprise

IP??

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Network Architectures• Optical systems are key to

transport• IP is the primary routing

protocol• Internet and related

services are leading in theupper layers

The backbone architecture and related technologieswill be affected by what happens in access.

- Addressing, Capacity and QoS -

Service Layers

Middle Layers (IP)

Optical Layer Wir

eles

s

Wir

e L

ine

The Internet

• Technology for the backbone is focused,BUT• Technology for access still does not have a clear direction

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Network Architectures

Access• Wire Line

– Copper pair (xDSL) - still cannot serve all the subscribers.– Coaxial - developing, but many problems ahead.– Fiber - costly, especially to the home– Home and business premise equipment - market developing.– Many products on the market, but no clear winners.

• Wireless (Mobile)– Will data be as successful as voice?– Integration of IP into wireless systems.

• Wireless (Fixed Services)– Provides rapid access to new customers.– Multiple solutions - no clear winner yet.

BUT there still is no magical solution that works like the telephone(wire and wireless) for reaching all of the people.

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Backbone - A Changed Environment• Over the last two years the international and regional

network architecture has evolved:– from a national constrained one connected by international half

circuits,– to a multi-national or wide-geographic area meshed network using

broadband private circuits.

• This change is due to:– deregulation,– privatization,– technology advances.

• The capability to build low cost multi-national fiber opticnetworks in a deregulated environment:– began in switched networks, BUT– today, the IP architecture for Internet services is the driving force.

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Old International Architecture

International Gateway with 1/2 Circuits

New Global ArchitectureBackbone Router

International Gateway with 1/2 Circuits


Backbone - The Evolution• The conventional international architecture has each carrier:

– with its own international gateway interconnecting with the otherinternational gateways using half-circuits.

– responsible for the half-circuit to the other gateway.

• The global architecture using private circuits has each carrier:– with gateways in multiple regions and countries.– responsible for full “private” circuits between each of its nodes.

Ctry B

Ctry D

Ctry C

Ctry A

Net D

Ctry A

Net C

Net BC

B D

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Backbone - Types of Networks• Three basic types of networks - Access, Regional and Global• The regional networks are evolving into ones that can be

relatively self-sufficient - traffic interchange, hosting, etc.• Competition in transport (optical) is needed to produce a

strong IP market with reasonable costs.• Europe is a good case study of this network evolution.

Local AccessNetworks

Net 2

Net 3

Net 1 Net 2

Net 3

Net 1

RegionalNetworks

RegionalNetworks

Net 2

Net 3

Net 1



GlobalInterconnects

HostingHosting

Hosting

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Service Layer

• The service layer has now become the most important indriving the market economics:– e-business applications– web hosting– audio and video conferencing– real time voice and video services

• The IP layer has permitted the network to be flexible in itsoperation and types of services,

• BUT now it needs to find ways to better manage the data.– such as delays and packet loss (QoS).– the IST Projects TEQUILA, AQUILA and CADENUS are

addressing these QoS issues and the related SLAs.

The real value of a network is the services and informationto which it provides access.

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Implementing Technologies

Access

• Wire Line– No clear technology focus - many competing ones.– What will happen to the PSTN telephony (voice) service?– One IST Project that is addressing these issues is TORRENT.

• Wireless (mobile):– Service requirements definition not clear.– How to improve utilization of existing assets.– Integration of IP into mobile networks and services.

• Wireless (fixed):– Service requirements definition.– Cost reduction and smaller products.– QoS / reliability like fiber for IP services.

It directly affects customers reached and services delivered, butit lags the backbone in the deployment of technology.

We have built the auto-routes without the access ramps.

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Backbone - Optical Platform

• These facilities permit the building of low cost IP networks.

• Lots of potential capacity available.

• More ducts/conduits per route for future expansionand sale:– in the order of 12 per route

• More fibers per cable for future expansion and sale:– increase in terrestrial cables to 144 fibers– increase in underwater cables

• More wavelengths per fiber for future expansionand sale:– in the order of 80 wavelengths per fiber at OC-192 (10

Gbps)

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Implementing TechnologiesBackbone - Optical Platform

• IP requirements are behind many of the optical advances:– IP now carried directly on the optical wavelength.– Higher data rates - most major backbones will be at OC-192 (10

Gbps) in 2002.

• Higher data rates in backbones like OC-768 (40 Gbps):– puts pressure on the electronic router and switches– integration of router technology into optical platform.

• Optical wavelength cross-connect switching and translationbased on local routing tables.

• Leading to optical routers in the platform.

Optics provides a great reduction in transmission costs and thecost of IP services.

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Backbone - Middle Layer

• The Internet Protocol today:– operates directly on the optical wavelength.

– does network reconstitution at layer 3.

– relies less on SONET/SDH for reconstitution.

– operates in parallel with ATM networks over WDM systems.

• IP technology focus:– backbone port data rate limit today is OC-192 (10 Gbps).

– routing protocol choice - packet versus switched.

– all optical router platform.

– IP v.4 versus IP v.6

– QoS implementations - IST Projects AQUILA and TEQUILA.

(www-st.inf.tu-dresden.de/aquila/ and www.ist-tequila.org)

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Service Layer• Major technology expansion area.• Focused on web and e-business applications.• Customer-Subscriber Services:

– Delivery of Telephony and Data - IST Project TORRENT. (www.elec.qmul.ac.uk/torrent/)

• Quality control of services - Service Level Agreements.– Management of SLAs - IST Project CADENUS (www.cadenus.org)

• Edge servers are growing in size and complexity:– more services reside at the edge of the network.– higher access data rates - OC-12 going to OC-48 (OC-192).

• Security of information and services:– Encryption - End-to-end, Storage of files, E-commerce.– Hacker and virus protection.

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Economics• The forces of deregulation, privatization and technology

that caused architectural and technology changes also havechanged the economics of telecommunications.

• These forces affect all forms of telecommunications notjust IP.

• However, IP networks and services have:– had the greatest change on market economics,– led to the growth of the new market-based approach.

• Transport is becoming commodity based with services keyeconomic area.

It is important for industry and policy makers to understandthe changes that are occurring in the new global networks

and services and how to maximize their benefits.

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Economics

Myths• The concept of the market-based economic process too

often is based on old ideas of the Internet, where:– there were few peering or interchange locations– there was little hosting outside of the United States, and– the entire process was centered on the United States.

Today: It is rapidly becoming less US centric

EuropeISP

EuropeISP

Asia-PacISP

Asia-PacISP

Hosting

NAPNAPNAP

Hosting Old Model: Non-U.S. ISP paid Hosting

Hubbing through USHubbing through US

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Economics

Today• The market-based economic process today:

– is rapidly becoming less US centric - regional networks– has established non-US network access points and hosting,– is causing the cost of leased circuits to decline, and– results in more traffic staying in the regions.

EuropeISP

EuropeISP

Asia-PacISP

Asia-PacISP

Hosting

NAP

NAP HostingHosting Today: Backbone pays

Today: More traffic stays inregion - Local ISP pays

Today: Infrastructure &markets still developing

NAP

NAPUS ISP

NAP

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Economics

Interconnection - Market Based

• The traditional switched voice market assumes:– that the international circuits are shared and that the traffic on a

circuit is mostly symmetrical.

– each party that provides any part of the route typically shares in therevenue obtained from the calling customer.

• Today interconnection with another carrier is done by acontract between the two parties based on:– the perceived value of the entire network, and

– the services that each party provides.

A backbone service provider makes its business decisions ona case-by-case basis.

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Economics

Driving Forces

• The many networks are based at least in-part on leasedcircuits which means that:– high leased circuit costs can limit the growth of competitive

carriers and the growth of the Internet and Telephony services.– the cost of carrying traffic is closely related to the cost of the

private leased facilities facilities.– if prices are inflated by regulation it will produce unrealistic and

inefficient network routing causing areas to be bypassed.

• Charging for service in the competitive model is based on:– Peering - negotiated contracts between carriers, or

• provides access to the customers of the one carrier

– Transit - price schedule based on bandwidth and other parameters.• Provides access to the entire Internet

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Summary• It is important for industry and policy makers to understand

the changes that have and are occurring in the new global IPnetworks (and switched):– the architectural - move from half-circuits to global private circuits– technology - from SW narrow band to IP broad band optical links– economic - move from regulated to market based

• These changes, in particular, deregulation and privatization,have led to the growth of the Internet based on the newmarket-based approach.

• IP Networks are still evolving technically:– New access services (TORRENT)– Class of Service (QoS) over multiple networks (AQUILA, CADENUS

and TEQUILA)

• The economic factors have also changed and need to be betterdefined.

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Summary - Conclusion• The recent economic changes related to IP traffic

(Telephony and Internet) show even more dynamic shifts:– circuit costs are falling in most developed areas of the world– becoming cheaper to lease than buy or build– network capacity is now becoming a commodity– business models are shifting to services

• A lot more attention needs to be given to the economics ofthe Internet to better understand it and the effects it has ongovernments and businesses worldwide.

Both governments and businesses worldwide need a betterunderstanding of the economic impact of IP networks and

how best to use them and their services to stimulate growthand improve overall conditions.

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Summary - Conclusion• The industry is expending considerable effort on

understanding IP networks from a technology perspective:– these technology thrusts do not look back at the old ways, BUT– forward to new methods of building networks.

• The same approach should be taken in the economic area:– this new form of communication deserves to be better understood– it should not default to old regulatory and charging structures that will

limit its growth and worldwide benefits.

• New entrants in the IP market also may need the same help inunderstanding how to build their business. It cannot be builton the old model.

The economic models involved in building an IP networkand its services need to be addressed with same effort being

given to the related technology.

ip networks, technology and economics · broadband private circuits. • this change is due to: –...

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