voip_telecom 03_shah.ppt

VoIP: Challenges and Opportunities

Dr. Rajiv R. ShahVice President

Research & Network Strategy

Plano, Texas

Telecom 03

October 2003 - 2 All rights reserved © 2003, Alcatel

Agenda

VoIP What is VoIP

Network and Service Models for VoIP Standards Issues with regard to VoIP

Market Drivers for VoIP VoIP and NGN

Regulatory Issues with regard to VoIP Vonage Ruling

Outlook


What is VoIP?

Technical Answer: “The ability to make phone calls

over IP-based data network”

Commercial Answer: ”The multi-billion revenue opportunity

for the 21st century”

VoIP > IP Telephony Typically “IP Telephony” indicates using IP terminals Most VoIP is between normal telephones

VoIP < “Voice over Packet” Includes Voice over Frame Relay, ATM


What is VoIP, Specifically?

Is It. . .

A Technology or Set of Technologies? E.g., G.723, RTP, SIP, VXML

An Application? Transmission of voice as applied over IP technology

A Service? Internet telephony, international bypass

A Network? Next generation signaling and multimedia

connectivity“VoIP” is a buzz-word and acronym that

has all these meanings depending on the context.

“VoIP” is a buzz-word and acronym that has all these meanings

depending on the context.


Circuit Switching Served Voice WellFor 100 Years!

Transmission circuits and switch path assigned during call setup for the duration of the call

Call is blocked if not enough network resources available

Essentially one class of service: 3.5 kHz, 64 kb/s

Poorly matched for bursty data transmission

User - A User - B

LoopTrunkGroup

CentralOffice - A

CentralOffice - B

Signal System 7Data link

Signal TransferPoint

TransitOfficeClass 5

Switching System Connection ThroughSwitching Fabric

Class 4Switching System


Packet SwitchingWell-Matched for Data Transmission

Great fit for bursty data transmission Packets sent at full rate of transmission

facility Supports variable information transfer rates Resources not consumed when nothing to

send Potential to eliminate call setup phase

HeaderPacketPayload

Input BufferOutput Buffer

Hdr. Trans

Hdr. Trans

RoutingFabric

But … Transmission capacity used for

header Buffering introduces varying

delays


VoIP - Basics

AnalogVoice

AnalogVoice

Signaling Path Peer-to-peer Or client/server SIP, H.323, or H.248 …/UDP/IP or TCP/IP

Bearer Path IP-end to IP-end Encoded voice Packetized Real Time Protocol (RTP) RTP/UDP/IP

Control Path Statistics on performance

of bearer “channel” RTP Control Protocol (RTCP) RTCP/UDP/IP

Call Server

ApplicationServer

VoIP Endpoint(terminal or gateway)

IP


Packet Voice Over IP

Migration from VoFR and VoATM to the Use of VoIP by Multi-Site Enterprises

IP PBX Emergence of IP PBX based on a softswitch model

Use of H.323 initially and more recently SIP Use of a converged LAN Ethernet infrastructure to deploy

telephony and data services Single wiring infrastructure based on fast Ethernet Common data infrastructure and single operational group

Intrasite and Intersite

Voice Over the Internet VoIP clients (NetMeeting and Messenger on PCs) and VoIP

Gateways enabled voice calls over the public Internet Kazaa founders have recently launched a peer-to-peer service

(Skype)


PSTN versus VoIP Network Costs

Network costs (transmission and switching costs) contribute only 10-15% of overall cost of a voice call terminated by an ILEC or a PTT, and 20-30% of overall costs for calls not terminated by a ILEC or a PTT.

Of the network costs, switching costs range between 50% of network costs for domestic calls to 15% of network costs for international calls, transmission costs contributing the rest.

Negligible savings in transmission costs through the use of VoIP: lower bandwidth for VoIP offset by need for over-provisioning bandwidth to ensure quality.

TDM Switch costs in traditional PSTN replaced by cost of Router plus cost of Gateway [GW] plus cost of Gateway Controller [GWC] plus cost of new OSS/NMS/Billing /Provisioning.No network cost savings, and very likely a cost penalty, in

the initial years, in going from PSTN voice to VoIP for public networks.


PSTN versus VoIP

Redundant routes through network

Redundancy within each network element

How Reliability Achieved

In separate gateway controllers

Mostly integrated in switching system

Call Processing Intelligence

ATM, FR, native IP in access; ATM native IP

in core

TDM in access, edge, coreTransport

SIP, H.323DTMF, SS7Signaling

Variable 8 – 32 kb/s64 kb/sBandwidth per call

Gateways, gateway controllers, routers

Class 4, Class 5 switching systems Network Elements

NoYesNetwork Resource Reserved at Call Setup

NoYesQoS Guarantees

Packet switchingTDM circuit switchingUnderlying Technology

VoIPToday’s PSTN


Circuit-Switched and Packet-Based Telephony Compared

Circuit-Switched Transport Limited M2E Delay

Propagation Switching

Practically NO Distortion

64 kbit/s are reserved for the duration of the call

Packet-Based Transport More M2E Delay

Packetization Serialization Queuing Propagation Dejittering …

More Distortion Codec compression Packet loss

Less Resources Needed Compression can be used Silence suppression can be

exploited Additional flexibility


VoIPNetwork #2

VoIPNetwork #2

VoIPNetwork #1

VoIPNetwork #1

VoIP Network and Service Model

PSTN/ISDN

TrunkGateway

Call ServerCall

Server

ApplicationServer

Business

IPPBX

AccessGateway

GWHome

HomeHomeHome

AccessBorder

Gateway

BorderGateway

Call ServerCall

Server

ApplicationServer


Some Example Service Models

CALEA

E911

Toll Bypass

Computer* to Computer* Over the Internet

Computer* to PSTN Phone

Computer* to POTS Phone Over IP

POTS Phone to POTS Phone Over IP

*IP End Terminal, either Computer with software client or IP Phone


Market Drivers - Cost and Revenue

Cost Avoidance of regulated fees

International and national Avoidance of carrier charges

International and national End of life issues for older circuit switch technologies

High cost of maintenance Lack of spares

Efficiencies Single network based on IP techniques Both operational and capital

Revenue Beyond simple voice services Bundling as a means to reduce churn Integrated services

Telephony, IM, email, integrated directories (“buddy lists”) Enhanced services

Videotelephony, unified messaging, presence, mobility, IP Centrex


VoIP and NGN - Why Not Yet?

There Have Been a Number of Hurdles in Both the Carriers Networks and Enterprises

Network Lack of capital Competitive environment

Reduction in number of lines of the ILECs (cable, CLECs, wireless) Less need for new infrastructure

Border gateways CALEA

Enterprise Existing TDM cheaper than new VoIP New build environments provide a more compelling business case than

complete replacement of existing infrastructure Hybrid models are more favoured

Future operational savings versus immediate capital expenditure


VoIP and NGN - What Next?

Why Will Carriers Move to NGN and VoIP Networks? Toll and tandem bypass remains a key cost driver

Incumbent local carriers, interexchange carriers and wireless carriers alike Competitive providers utilize the Internet to provide Voice service Enterprises are continue migrating towards IP PBX

NGN for interworking and IP Centrex as the network service End users begin to actually use native VoIP services

Why will end-users move to VoIP? Because they can…(and cost) VoIP client bundled with most Instant Messenger clients Broadband Access breaks major quality hurdles

Greater deployment of broadband access in all forms will lead to a greater use of VoIP services.


Regulatory Issues

1998 Report to Congress - Impact on Universal Service (USF)

Intercarrier Compensation - Access and International Settlements Access and Settlement Chagres

Law Enforcement - CALEA and Encryption

Jurisdiction - Borderless Nature of IP versus Traditional State Regulation of Intrastate Services

Pending AT&T and Pulver Petitions

E-911

Network Separation Requirements on ILECs

Numbering Issues - The Role of ENUM and LNP and the NANPRegulation impacts demand for, and development

of, VoIP products, services and networks.


Outlook: VoIP is a Reality

Technology Reality The technology exists

Commercial Reality In the Enterprise Markets IP PBX VoIP Call Center

Commercial Potential - Carrier Markets Maturing IP Centrex, serious RFP activity

Over 1.2 M VoIP Business Users, About 12% of Business Lines (WSJ 10/10/03)

VoIP Carriers: Vonage, FWD, Net2Phone, Voicepulse, Skype, and a Few Others, in Addition to AT&T, MCI and Others

Successful Broadband Deployment Policy Will Accelerate VoIP

Industry Needs Clarity on VoIP !!

Fixed & Mobile Services: Challenges and Opportunities

Telecom 03


Communications Networks: The Three Planes

Applications & Services

Security

Enablement & Management

Policy Mgmt.Call Control

Session Mgmt.AAA

Generate Revenue & Value

Generate Revenue & Value

Reduce Opex Increase Capex Efficiency



Reduce Opex Increase Capex EfficiencyNetworking &

Connectivity Metro & EdgeMetro & Edge

AccessAccessPremisePremiseCoreCore

Video Video PresencePresence

MessagingMessaging

VoiceVoice Interactive VideoInteractive Video

Storage NetworksStorage Networks

MobileMobile


The Three Planes: Defined

The infrastructure can be abstracted into three planes • Application & Services Plane

– Core of value proposition of service providers to end-users (OSI>L4)

• Enablement & Management Plane (“the invisible work force”)

– Provide various back-end services, common to various end-user services (e.g. payment, content security, content delivery, SIP connectivity, charging, E2E QoS assurance …)

– This function is provided by network service provider & access provider

• Networking & Connectivity Plane: telecommunications infrastructure networks

– Network infrastructure provided by network service provider and network access provider (L0 to L3 of the OSI stack)

– Includes end-user premise network in the enterprise and in the home

App.

Serv

ice

pro

vid

ers

Netw

ork

A

ccess

pro

vid

ers

Netw

ork

Serv

ice

pro

vid

ers

Bro

ad

band

end-u

ser


Applications - One Network View

Video Mgmt

.

Video Conferencin

g

Unified Messagin

g

Multi-Media Conferencin

g

Instant Messaging

IP-Centrex

Text-to-speech, speech

recognition

Network based

contact-centers

Application Server


Same Set of Services Across Fixed & Mobile,Home & Business: Voice, IM, Rich Presence……….

Mobile/Wireless Worker

Enterprise

SOHO/Remote Worker

ICE

Sean@ Application - Sean

JohnJohn@

Application - John

John@

Sean@

James@

James

James@

John: Chance to look at the doc?Sean: Yes.

John: Chance to look at the doc?Sean: Yes.

Sean

Location info

Voice

QOS

Bandwidth

Capability

Security

Interactive Presence

Interactive Communication Environment

Enablers: SIP, Web Services, SOAP, J2EE, .net, VXML

Fixed Wireline/WiFi

Fixed Wireline/WiFi

Cellular or PCS WAN /WiFi

VoIP: Challenges and Opportunities

BackupTelecom 03


Regulatory Issues: Vonage Ruling, 10/07/03: 1

In ruling from the bench late Tuesday,October 7, 2003, Minneapolis, Minnesota, Federal Judge Michael J. Davis permanently barred Minnesota from applying traditional telephone rules to Vonage, a pioneer in technology that lets consumers bypass the traditional phone network by making voice calls over a broadband connection.

Tuesday's ruling for now frees Vonage to sell its Internet phone service in Minnesota without obtaining a telephone operator's license or paying fees to support 911 services. More importantly, the order is the first to address the authority of a state to oversee so-called voice over Internet Protocol (VoIP) providers, and could thus impact efforts by other states to regulate VoIP providers.



State regulators had threatened to stall VoIP's growth by forcing providers to follow the same rules as do traditional phone companies. As a result, the Minnesota suit was being closely watched by VoIP industry executives, consumers and traditional phone companies.

Vonage filed suit against Minnesota's Public Utilities Commission (PUC) after the agency in August became the first in the United States to claim authority over VoIP. Since Minnesota's order, Wisconsin and California have asserted authority over VoIP providers, and other states say they are reviewing their policies.

Six VoIP companies have until Oct. 22nd to get a California telephone license or face disciplinary action. "This ruling is a significant victory for Vonage and (VoIP) technology," Vonage said in a statement. ” The ruling could also have a significant impact on other states across the country, including California."



A California PUC representative indicated on Tuesday that the state would continue its own efforts to regulate VoIP providers. "While the Minnesota (PUC's) decision was something we took notice of, our decision was based on California law," the representative said. A Minnesota PUC representative did not return calls seeking comment late Tuesday.

In addition to the state suit, at least two petitions have been filed with the Federal Communications Commission seeking to exempt VoIP and related services from traditional phone regulations, although the agency has yet to rule on those filings.



Among other things, the state rules reflect a time when all voice calls created a dedicated, end-to-end channel between two speakers and relied on geographic hints such as a telephone number area code, to do so. As a result, geography now plays a central role in current telephone regulations. But on the Internet, geography doesn't exist. The only address that matters is the Internet Protocol (IP) address that devices needs to go online using any broadband connection anywhere in the world.

"On the Net, you are dialing a person, not a location," VoIP service Free World Dialup founder Jeff Pulver said. That creates a quandary for states trying to make even the most basic decisions about a VoIP service, for example, what constitutes a long-distance call. Under the current telephone rules, regulators could just track what telephone network switches the calls bounced between. But using VoIP, calls travel in anonymous data packets, leaving regulators in the dark about which of the trillions of bits on the Internet at any time are actually voice calls.



Voice over IP (VoIP) is a rapidly growing and, at present, largely unregulated part of the telecom services market. However, VoIP occupies a prominent place on the 2004 FCC agenda. After its start as a low-quality, niche technology, it appears that VoIP is becoming ready for prime time. While there are only about 100,000 VoIP subscribers on services such as Vonage and Free World Dialup, it has been estimated that between 1% and 5% of interstate voice traffic is carried as VoIP. Further, MCI announced at Supercomm 2003 that it would move 100% of its voice traffic to a core IP network by 2005.

AT&T also believes that it's time for a new rulebook for VoIP, a company representative said before Tuesday's ruling. Among the biggest users of Internet telephony in its network, the carrier is now asking the FCC to exempt these calls from its rules. "We're making investments in VoIP technology to allow phone-to-phone communications," the representative said. "Before we spend the money it takes to get the technology up and running, we want to understand what the rules are."

www.alcatel.com

voip_telecom 03_shah.ppt

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