page 25 of his presentation

1June 2005 Richard Stastny

Assessing the Business Models

Vertical Multiplay „Stovepipes“vs.

the Horizontal Layered Model

Seizing the VoIP OpportunitiesRome, October 5th, 2005

Richard Stastny, ÖFEG*

* The opinions expressed here may or may not be that of my company

June 2005 Richard Stastny 2

Questions (I will try) to Answer

• What is the Impact of Voice and Everything over IP to the Telecom Industry?

• What is the future of Telcos?– Providing Services in a “multiplay” vertical stovepipe

– e.g. the IMS NGN Model?– Broadband access providers “only” in a horizontal

layered model enabling third party service providers– A combination of both?– Are new approaches needed?– What is the role of Viral and Peer 2 Peer Networks?– Trusted User Identities by Telcos or by Third Parties?


Assumptions

• (End-)users want connectivity via any device, anywhere, at anytime: – Global mobility– Personal Communication

• Which leads to – the Portable Internet– fixed-mobile convergence (FMC)– multi-play (everything over IP)


Some Clarifications first

• What are “stovepipes”?– from a regulatory perspective– from a technical perspective

• What is vertical vs horizontal?• What are Peer-to-Peer (P2P) and Viral

Networks?• What means “multiplay”?• What means Everything over IP (EoIP)?


Title I

DATA

InfoServices

Title II Title III Title III Title VI

VOICE

WirelineTelephony

VOICE

WirelessTelephony

VIDEO

CableTelevision

AUDIO /VIDEO

BroadcastRadio/TV

Regulatory Stovepipese.g.: US RegulationCurrently services (and its underlying technologies) are regulated in these vertical ‘Stove Pipes’


Telephony

A Change of Perspective

Data

Cable

Broadcast

Wireless

Traditional View

Kevin Werbach


Telephony

Data

Current ViewCable

Broadcast

Wireless


Kevin Werbach


DataVoice

Web

Email

Reality

Video

File Transfer

Content

Cable

Wire

less

Satellit

e

Fiber

Devices

Apps

Users


Kevin Werbach


Access

Transport

Services T E LCO

T E LCO

T E LCO

T E LCO

TISPAN3GPP ATISNGN

Regulatory boundaries

Telcos are vertically integrated

TISPAN3GPP ATISNGN


Access

Transport

Services

GlobalInternet

PSTN ISDN

GSMUMTS

xDSLCableFTTH

W-LAN

SIP MAIL IM WEB ...

...

Regulatory boundaries?

Internet: horizontal layering

Viral or Meshed Networks

P2P


What about regulation?

• New approaches are needed:– e.g. US Digital Age Communications Act (DACA)

• Proposals exist: e.g. from the DACA Regulatory Framework Working Group– Discussed Models:– the Antitrust Model– the Railroad Model– the „Layers“ Model– the IP-Migration Model– the EU-Model– the FTC Act Model– Proposal of the Regulatory Framework Working

Group, Release 1.0 • New: US Committee on Commerce and Energy:

Staff Draft on Broadband Legislation or Broadband Internet Transmission Services (BITS)


What is Peer 2 Peer?

• A peer-to-peer (or P2P) computer network relies on the computing power and bandwidth of the participants rather than concentrating it in a relatively few servers.

• P2P networks are typically used for connecting nodes via ad hoc connections.

• Such networks are useful for many purposes:– Sharing content files containing audio, video, data or anything in

digital format is very common, – and realtime data, such as voice, video, IM, Chat, etc. traffic, is

also passed using P2P technology.• A pure peer-to-peer network does not have the notion of

clients or servers, but only equal peer nodes that simultaneously function as both "clients" and "servers" to the other nodes on the network. – This model of network arrangement differs from the client-server

model where communication is usually to and from a central server.

• Some networks and channels use a client-server structure for some tasks (e.g., searching) and a peer-to-peer structure for others.

• There exist many different flavors and algorithms


Viral communications, organic networks, meshed networks

• Viral Communications Media Laboratory Research (Andrew Lippman, David P.Reed, A. Pentland)– Viral communications derives directly from the end-to-end

principle on which the Internet is based — the intelligence is in the end nodes, the network itself maintaining as little state as possible.

– Communications are poised to become personal, embedded features of the world around us. New technologies allow us to make wired and wireless devices that are ad hoc, incrementally installed and populous almost without limit.

– They need no backbone or infrastructure in order to work — instead, they use neighbors to bootstrap both bit delivery and geolocation.

– This re-distributes ownership of communications from a vertically integrated provider to the end-user or end-device and segregates bit delivery from services.

• Communications can become something you do rather than something you buy.


What is Multiplay?

• All types of communication– TV video and audio broadcast– fixed voice communication (telephony)– mobile voice communication– other real-time communications (video,

conferencing, instant messaging, presence, location-based services, white-board, …)

– other data transfer and access, telecontrol, etc. • integrated in one access and one device:

– cable companies add telephony (VoIP) and Internet access (need to integrate)

– mobile operators add video and web-access– Telcos add DSL Internet Access, move to VoIP and

add TV-Broadcast EoIP – IPoE and OnePhone


What is Convergence?

• Convergence is a very abused term• Voice – data convergence

– Backbone people say this is done since more then 20 years

• Fixed – mobile convergence (FMC)– IMS over Fixed Access (TISPAN, ATIS, …)

• OnePhone – GSM and WiFi access on one device– Seamless handover, one number

• Application convergence– e.g. using Outlook to establish calls, see presence

information in MS Word, etc.

• The convergence is with the customer


The hourglass model

Everything over IP

IP over Everything

IP to and from Everywhere


The Internet Model

Tim Denton


The Internet view on the network is:

• the Internet is the network. The next generation network (NGN) is IPv6,

• the Internet is transparent e2e or just "dumb"; it is application unaware,

• user consent and control resides in the endpoints,

• service availability is what matters to users and not QoS. QoS is good as long as network congestion is avoided and if so, voice quality is an endpoint capability.

• the Internet is the result of a continuous evolution and the architecture changes constantly over time.


The ITU-T & IMS NGN model

Tim Denton


The ITU-T view on the network is:

• the NGN will be derived from the PSTN but using IP technology; the IP Multimedia System (IMS),

• the NGN is application aware,• control resides in the network,• the NGN has ample QoS definitions and

guarantees for the network service.• all ITU-T NG networks, such as ISDN,

BISDN/ATM, IMS/NGN/IP are based on grand designs and are not based on a continuous evolution. The changes from TDM to ATM to IP are significant discontinuities in the ITU-T architectures.


VoIP over the Internet

• The Internet is (or is intended to be) a network without central intelligence –> The stupid network (David S. Isenberg)

• The Internet is based on the end-to-end principle– Every user may reach any other user via the IP address– All “services” may be offered anywhere and may be accessed

from everywhere– This is of course also valid for voice and other communication

“services”• VoIP is not necessarily a service, it is an application -

so no service must be provided– Jon Peterson at the ITU-T/IETF NGN workshop in Geneva May

2005• If there is no service provided, you do not need a

“service provider” either.


How does VoIP work?

• What is the difference between the IETF approach for SIP and the NGN (IMS) approach?


The IETF SIP Trapezoid

Outbound Proxy Server

User Agent B

Inbound Proxy Server

User Agent A

SIP

SIP

SIP

Media (RTP)

DNS Server

DNS

Location Server

SIP

Henry Sinnreich and Alan Johnston


VoIP and IP Communications on the Internet

sip:[email protected]

nic.at43.at fwd.pulver.com

SIP server

SIP server

sip:[email protected] sip:[email protected] sip:[email protected]


session

DNS SRV lookupfwd.pulver.com


Internet


Oth

er IP N

etwo

rks

IP Transport (Access and Core)

T-MGF

I-BGF

UPSF

P-CSCF

I/S-CSCF

BGCF

SLF

ChargingFunctions

IWF

PSTN Emulation (R2)

Mw

Mw/Mk/Mm

Mr

Mg

Mj

Mi

Mp Mn

Gm

Gq'

ISC

Cx Dx

DhSh

Ic

Rf/Ro

Rf/Ro

Ib

Iw

Gq'

PS

TN

/ISD

N

SGFMRFC MGCF

MRFP

e4

Ie

Mw

IBCF

Mk

Mk

Application ServersRf/Ro

AGCF

e2

P1

P2

P3

UE

CNG

MG

IMS /PSTN Simulation

Gq'

-

SPDF

A-RACF

Resource & AdmissionControl

Resource & AdmissionControl

SPDFNetwork

Attachment Subsystem

Re Ia

RCEF BGF

Ut

Ut

Overall ETSI TISPAN IMS Architecture – all subsystems


ITU-T NGN System Architecture

Session & Call Control

Application A - 2: A pplication Gateway F E

NNI

Other NGN

other IP MM Network

(e.g. IMS)

T - 6 : Traffic Measurement F E

T - 3 : T.Network Access Process FE

T - 13 : Access Relay FE

T - 1 6 : T. Authentication

&Authorization FE

T - 18 : T. User Profile FE

Transport T - 6 : Traffic

Measurement F E

T - 1 : Core Packet Transport Function s

T - 8 : Transport Resource &

Enforcement FE T - 9 :

Access Border

Gateway F E

PSTN/ISDN

T - 17 : T.Network Access Control FE

T - 21: I - TRCF

Scope of NGN

S - 5 : Media GW Control F E

Internet

gement functions

T - 12 : Edge Node FE

T - 5 : T runk Media

Gateway F E T - 1 1 : Access Packet Transport F unctions

T - 8: MBS - FE T - b: Multicast

M BS FE T - a: MM - FE

T - 8: MBS - FE T - b: Multicast

M BS FE T - a: MM - FE

T - 10 : Access Node FE

T - 4 : Access Media

Gateway F E

T - 2 : Packet

Gateway F E

T - 19: A - TRCF T - 20: C - TRCF

T - 8 : Transport Resource &

Enforcement FE

S - 3 : S. Authentication & Authorization F E S - 10 : Subscription

Locator FE

T - 15: PD FE

S - 9 : Breakout Gateway FE S - 8: Session Control

Proxy FE S - 7 : A ccess GW

Control F E

S - 1: Session Control FE

A - 1: Application Server F E (may include own Authentication, Authorization and Accounting)

S - 4 : Media Resource Control FE

UNI

Terminal Function s

IP address allocation Authentication Authorisation

Access net. config Location mgt.

NAAF IP address allocation

Authentication Authorisation


IP address allocation Authentication Authorisation


NAAF

T - 7 : Media

Resource Processing

FE

S - 2 : S. User Profile F E

Multimedia Service FE

T - 1 4 : S ignalling Gateway

F E

S - 6 : Packet GW Control F E

S - 11 : Interrogating Session Control FE


What is your conclusion?

• Which approach will succeed, if the end-user has the choice what to use?– The cheaper one?– The one which is available (everywhere)?– The one providing more features?– The one easier to use?– The one which will provide eventually more

QoS for additional cost?


Cost Models

Terminal A Terminal BAccess Access

Backbone

Old

Terminal A Terminal BAccess AccessBackbone

New

Line rentalLine rental

Distance and time dependent call charges

Carrier selectionFreephone

Line rental Line rental

Regulation is based on this!

?????Do you sell calls or connectivity?

John Horrocks


Transition from TDM to VoIP

BT 2015

DT 2019


“Broadband access has quietly grown faster than mobile phones in their early stages”

0

10

20

30

40

50

60

70

Year 1 Year 2 Year 3 Year 4

Broadband (1999-2002)

Mobile (1989-1992)

Broadband and mobile growth, millions, world

Source: ITU World Telecommunication Indicators Database

Broadband’s fast growth


Law and Policy Outmoded

Traditional Telecom Model

New Model

InfrastructureInfrastructure

BB Data ServiceBB Data Service

InfrastructureInfrastructure

Voice ServiceVoice Service

Data ServiceData Service

Value-AddedServices

Value-AddedServices

VoiceVoice

Value-Added ServicesValue-Added Services

IMIM BlogsBlogs

Vested interests live here!

Brough Turner


Mike Powells 4 Internet Freedoms

1. Freedom to Access Content: Consumers should have access to their choice of legal content;

2. Freedom to Use Applications: Consumers should be able to run applications of their choice;

3. Freedom to Attach Personal Devices: Consumers should be permitted to attach any devices they choose to the connection in their homes; and

4. Freedom to Obtain Service Plan Information: Consumers should receive meaningful information regarding their service plans.

add: Freedom to obtain your own location information

regulation to concentrate on bottlenecks


One Problem remains: Security

• Authentication, Authorization, Accounting, Non-repudiation, …

• In the vertical model you trust the network (the carrier) and they trust each other (circle of trust)– In the fixed network there is a “trust-by-wire”, – in mobile networks you have a SIM-Card from the provider

you trust (the only real asset of IMS)– So you trust a Calling Line Identification

• But do you trust the VoIP provider of the other user?– Especially if he is his own provider ;-)

• In the horizontal layered end-to-end model, also an end-to-end AAA is required.

• There is an additional requirement: – the end-user does not want to have too many identities, – ideally only one for all types of communication

-> digital identity

Trusted End-User Identity


End-to-End Trust

• This requires the introduction of an end-to-end trust model

• An end-to-end trust model requires the use of certificates aka digital identities

• This is theoretically no problem, the necessary tools and protocols are available

• The problem is the trust model:– Hierarchical (e.g. PKI, X.509) or P2P (e.g. PGP)– PGP does not scale– In the PKI model you need a trusted 3rd party– The problem: both ends need the same trusted 3rd party

• -> who is the root entity everybody trusts?• Some developments are on the way, but very slowly

and not very user-friendly (e.g. liberty alliance, eCards, etc. )


Two Global (IP-based) Networks

• heavily regulated• optimized for speech• end of lifetime

• accounting: cascading,termination fees

• vertically integrated• global connectivity• mobility via roaming

• (still) unregulated• multipurpose• regarding IP Comm. begin of lifetime• accounting: peering

• horizontally layered• global connectivity• mobility and nomadic

usage natively

Global Phone Network

Global Internet

NGN P2P


Scott Bradner at NGN Conference

• Bradner says – the ITU's model is designed to provide defined and

guaranteed QoS, – while the Internet is a best-effort model based on

bandwidth capacity. – He says both are applicable given the network

circumstances - if there's plenty of bandwidth, there's no need for QoS controls; if not, there is.

• the two models will not converge, but will interoperate.

Next Generation Networks Conference in Washington, D.C. last week


Some Conclusions: the next +5 years?

• Now lets assume the end-to-end Internet philosophy is taken seriously and the horizontal approach is followed up further

• The future developments will concentrate on:– EoIP – IPoE – IP Anywhere– Broadband as Universal Service– Multiplay, Computainment, rich and simple SW– Personal, mobile/nomadic, general purpose devices– Wireless communications– P2P serverless communication (also with SIP)– Meshed networks– Viral communications; ambient, organic networks

• Digital User Identities


The Impact?

• Based on these assumptions, what will be the impact of these developments on:– Regulation? – Universal Service Obligations?– Universal Service Funding?– Emergency Services?– Legal Intercept?– On the Telcos?

• Side Remark:The real „regulatory“ battle of the future:Digital Rights Management


Résumé

• What is the Impact of Voice and Everything over IP to the Telecom Industry?

• What is the future of Telcos?– Providing Services in a “multiplay” vertical stovepipe

– e.g. the IMS NGN Model?– Broadband access providers “only” in a horizontal

layered model enabling third party service providers– A combination of both?– Are new approaches needed?– What is the role of Viral and Peer 2 Peer Networks?– Trusted User Identities by Telcos or by Third Parties?


Telco Priority 1

• Provide local access, both for your own users and “roamers”:– Stick to the knitting– Go where the money is– Keep your customer– There is only local competition– Resale and wholesale– The killer app here is speed– Some nerds will have their own servers, but

they still will need access


E.g. overcome Access Bottleneck

InternetBackbone

VoiceVoice

E-MailE-Mail

ERPERP

SalesSales

FinanceFinance

VideoVideo

EthernetLAN

Switches

EthernetLAN

Switches

BroadbandModem

orAccess

Gateway

BroadbandModem

orAccess

Gateway

Gigabit Ethernet

10/100/1000 Mbps Ethernet, or WiFi

Enormous Long-Haul Bandwidth

Local Loop

1-2 Mbps ?

1000-to-1 disconnect !

Brough Turner


Telco Priority 2

• Provide services– OK, some nerds and large enterprises will have their

own servers, they will not need a provider at all,– but most end-users, SOHO and SME want their

services hosted or at least configured– Keep your customers– Provide digital identities (they only real asset of IMS

is the ISIM (SIM Card)– Provide accounting services– You may provide resale and wholesale also

• BUT, always keep in mind that the competition here will be global

• You have to compete against e.g. Skype, Google, eBay, Amazon, etc.

• You will need excellent products and excellent service


What happened in the last 4 weeks?

• eBay bought Skype for 4bn $• The Economist • Mobile operators announce

fixed line replacement• Mobile operators will block

VoIP• Google announces Secure

WiFi over VPN• Neustar & GSM Association

team up to create an alternate DNS root to lock in customers

• Google proposes free WiFi access in SFO and later the whole US


The War is on

Thank you

Richard StastnyÖFEG

+43 664 420 4100

[email protected]

http://voipandenum.blogspot.com

page 25 of his presentation

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