regulating voip interconnection singapore iir
DESCRIPTION
The Telcos are converging from TDM to NGN environment requiring inteconnection on IP, which has its own set of challenges. The presentation made by Ahmad Nadeem Syed at IIR forum in Singapore discusses such challenges with respect to Asian market.TRANSCRIPT
Regulating VoIP
Interconnection
In AsiaIIR’s VoIP Asia Congress 2006
Singapore
July 11 – 13, 2006
Ahmad Nadeem Syed
Director Interconnect Mobilink
Pakistan
2
VOIP - A Reality with Challenges
VOIP is a reality
And
Interconnection on IP
So is
3
Typical VoIP Services
PSTN phone to PSTN phone
PSTN PSTNIP Network
IP device to PSTN phone
IP device to IP device (Internet Telephony)
IP Network
IP Phone
3G phone
IP Phone
3G phone
IP Network PSTN
IP phone
3G phone
GatewayGateway
GatewayGatewayGatewayGateway
4
Internet Telephony From Asia’s Perspective
● Growth for Internet Telephony may continue in some
countries for some time where
o Tariff differential persists and
o Broadband network is growing substantially
● In other countries; conventional telecom services
are the focus because of:o New entrants in conventional voice (as a result of deregulation)
o Substantial tariff reduction for Fixed and Cellular
o Tremendous growth of cellular sector
5
Cellular Growth -Tip of the Iceberg
3
0.40 0.93 1.8
8
20
27
39
0
5
10
15
20
25
30
35
40
45
20
00
20
01
20
02
20
03
20
04
20
05
Ap
ril-
06
20
06
Cellula
r custo
mers
in P
akis
tan (
Million)
Pakistan Market
CPP
Introduced
Mobilink (an Orascom
Company) Shares 56%
6
Worries and Hopes for Telcos
Telcos are worried because● Consumer in saturated markets require versatility of services through
single access point
● EBIDTA margins are squeezing particularly in growing markets because of declining tariffs and penetration to low end consumer
As a result● They are looking for more avenues where
o Multiple services could be offered on single platform
o Operating cost is reduced
o Call delivery could be done more efficiently
The advent of Next Generation Network (NGN) has become the future hope
7
NGN According to ITU
● A Next Generation Network in general is ao Packet based network which can provide telecomm. services
o make use of multiple broadband access technologies
o QoS-enabled transport technologies
● Offers unrestricted access by users to different service providers
● In terms of technical characteristicso A single IP-based core network handling full range of services
o Is multi service access node supporting full range of access services
o Distributed switching, routing and network intelligence enabling remote control and access
8
IP Avenue
NGNs On The Go!
Services
Telephone Services
Data Services (WWW, e-mail, etc)
Video Services (MMS, Movie, IPTVetc)
NGN
9
Key Indicators For Some Asian Countries
Source : The World fact Book 2005 : www.cia.gov/cia/publications/factbook
GDP/Capita Less than US$ 12 KGDP/Capita above US$ 30 K
SaturatedClosin
g
InOn the Run
Market Saturation
10
Regulating
VoIP Interconnection
11
Widely Accepted Regulatory Objectives
● Protecting consumer rights and interest
● Ensuring fair competition to promoteo efficient supply of telecom services
o good quality of service
o efficient prices
● Optimize use of scarce resource such radio
spectrum
12
Major Regulatory Challenges in IP
Environment
● Implementation of standardized networks
(Ensuring implementation of internationally accepted interoperable standards being technology neutral)
● Interconnect Agreements (redraft) to take into accounto Determination of call termination charge
o Service Level Agreement (SLA)
● Ensuring QoS
● Minimizing cost of termination
(Establishment of Interconnect Exchange or Peering House)
13
VoIP Interconnection – Multiple Networks
IP Network
BSC/BTS
BTS
BSC
BTS
MSC / BSC
HLR/VLR
BTS
PSTN DTE
MSC / BSC
BTS
BSC/BTS
MSC / BSC
MGW
MGW
MGW
14
Interconnect Rate in IP Environment
● No benchmarks are available
● FAC or LRIC may become obsolete
● Interconnect rate in IP environment will take into account the following factors:o Network elements
(Core network and transmission network to continue)
o Minutes of usage (disregarding distance)
(IPCDRs can mention start and end time)
o QoS (Delay, Packet loss etc.)
(IPCDRs hold QoS info: )
o High risk on NGN investments may result in higher WACC because of
- Higher Market Risk will cause higher cost of equity
- High cost of debt – Banks are likely to provide financing on higher rate
Cost Of Equity: Re = Rf + β (Beta) * (Rm - Rf)
• Re Return on Equity
• Rf Risk free return
• Rm Market Risk
• β Systematic Risk factor (The relative risk of
stock with respect to the reference market
WACC = Rd D/V * (1-Tc) + Re * E/V
• Rd Cost of Debt
• Re Return on Equity
• D Value of Debt
• E Value of Equity
• V Total Value of the company, D+E
• Tc Corporate Tax Rate
15
QoS and SLA
● QoS of VoIP may remain a question mark for some time
Thus
● SLA must be part of interconnect agreements as o acceptable QoS parameters to be defined
(Max. packet loss and delay)
o Implementation of QoS and fixing responsibility for failure is possible
(based on IPCDRs which hold QoS info)
16
Interconnect Exchange and Clearing House
Given that the cost of establishing a bilateral VoIP-
peering arrangement is too high
● The IP based Interconnect Exchange (IE) is the
natural outcome in IP environment
In Turn
● Interconnect Billing Clearing House (IBCH)
becomes a reality by adding gateway feature to IE (thus reducing billing reconciliation issues among the
operators)
17
Stakeholders Readiness
Network Operators
● Operators of Japan, Hong Kong, Singapore and
China are quite advanced in NGN deployment
● PTCL the incumbent Fixed line operator in Pakistan
has announced an ambitious FTH rollout plan
Regulators
● IDA of Singapore, OFTA of Hong Kong and TRAI of
India are pursuing consultation process quite
aggressively
● Not much activity in other countries
18
Thank You !
Open for Discussion