VoIP and the Telcos - Is there a life after death?
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VoIP and the Telcos - Is there a life after death?

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  • The important business decision wasn't when to pay for individual faxes, as the ZapMail model assumed, but rather when to buy a fax machine.
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VoIP and the Telcos - Is there a life after death? VoIP and the Telcos - Is there a life after death? Presentation Transcript

  • VoIP and the Telcos Is there a life after death? VON Europe 2003 Industry Perspective 10. June 2003 Richard STASTNY ÖFEG/TELEKOM AUSTRIA, Postbox 147, 1103-Vienna enum:+43 664 420 4100 E-Mail: richard.stastny@oefeg.at [email_address]
  • Content
    • Apocalypse now for telcos? – Problem statement
    • User expectations of IP based telecommunications
    • What a VoIP user needs and what not
      • Where does he get this from
      • What else he may need
    • VoIP is a product – not a service
    • And where is the beef?
    • There is life after death!
  • The Problem
    • In telephony networks
      • the telephony service is the core business
      • telephony networks are vertically integrated
      • and specialized for 64kb/sec voice and related services
      • the intelligence is in the network
    • the Internet
      • is multi-purpose and multi-media
      • VoIP is just another application
      • it is a “simple” transport network, the intelligence is on the edge
      • horizontal layering
    • for telcos VoIP is a disruptive technology
      • changing the value-chain
      • breaking up the vertically integrated networks horizontally
    • To survive a telco MUST change it's business model
    • "First it can't possibly work, and if it did, damned if we are going to ALLOW the creation of a competitor to ourselves." (AT&T's Jack Ostermann to Paul Baran about the Internet, quoted by Lawrence Lessig)
    • "If there is one thing certain about governments and innovation, it is that those who are threatened by new a innovation will turn first to the government for help. Every new idea is a threat to those who depend upon old ways of doing business." (Lawrence Lessig)
    • “ The milk of disruptive innovations doesn't flow from cash-cows.”
    • (David Isenberg to Lawrence Lessig)
    How do telcos deal with these issues?
  • This is not really new “ Innovations make enemies of all those who prospered under the old regime, and only lukewarm support is forthcoming from those who would prosper under the new. Their support is indifferent partly from fear and partly because they are generally incredulous, never really trusting new things unless they have tested them by experience.” (Machiavelli - The Prince)
  • Vertical Structure Access Transport Services T E L C O T E L C O T E L C O T E L C O NGN? NGN?
  • Horizontal Layer Unbundling Access Transport Services Internet PSTN ISDN GSM UMTS ADSL W-LAN SIP MAIL IM WEB ... ...
  • The Future of the Telcos? FUTURE TODAY
  • Where the action is … Enterprise Toll Call ENUM may solve the problem of cross domain or “Inter-Enterprise” call capture. So 80% or more of Enterprise calls can go all IP, leaving only 20% to the Telco. Toll Calls are a $110 Billion revenue stream. $987 per Business line per year in toll charges (source FCC) Intra-Enterprise Calling (40 %) Employees at different locations Inter-Enterprise Calling (40 %) Typically Customers and Suppliers Other (20%)
  • Have we reached a tipping point? Switched minutes are down … … the first time since the Great Depression in the 30’s. (Source FCC)
  • User expectations of IP based Telecommunication Services
    • Reduce CAPEX and OPEX
      • Re-use existing IT-Infrastructure and Internet access
    • Reach everybody else also on IP via IP directly
    • Keep "already used" features and capabilities
      • Dial phone numbers as usual (internal and external)
      • Reach everybody on the PSTN
      • Keep the existing phone number (E.164)
    • Get new features and capabilities
      • Instant Messaging, buddy lists, video, ...
      • Integration in IT-Infrastructure, mobility, ...
  • What does a VoIP user need ...
    • ... to make and receive voice calls?
    • No phone network
    • No telephony service
    • No billing system
    Therefore he does not need a Telco .
  • What a VoIP user needs ...
    • ... to make and receive voice calls is:
    • a broadband access to the Internet
    • a terminal (a SIP phone, a PC or a PDA)
    • a SIP Server (Proxy)
    • a SIP Address (URI)
    • phone numbers (ENUM)
    In addition, he may also use these products for instant messaging, presence, video, conferencing, ....
  • Where does he get this from?
    • the broadband access from an ISP
    • the terminal in a shop
    • the VoIP service via subscription on the Internet
    • the VoIP address from his domain name provider or VoIP service provider
    • an ENUM domain from a registrar
  • What else he may need?
    • To make calls to the PSTN?
      • a gateway provider
      • an account from a VoIP service provider or
      • a credit card assertion (e.g. from Liberty Alliance)
    • To receive calls from the PSTN?
      • an E.164 number (new or existing) from a Registrar
      • routing of this number on the PSTN to a gateway
      • routing of this number on the Internet (ENUM)
  • ... and as an enterprise?
    • All of the previous mentioned items plus:
    • a VoIP Server HW by re-using an existing PC
    • a VoIP server SW on a CD-ROM or via download
    • More terminals and PBX features?
      • install a switched LAN (if you have not already)
      • go buy more terminals in the shop
      • ... this is called IP PBX!
    • Possibility to outsource?
      • outsource the VoIP Server
      • ... this is called IP Centrex!
    • Use ENUM
      • ... this obsoletes IP Centrex
  • e.g. a Pingtel phone is a product VoIP is a Product – not a Service
  • The ZapMail Example
    • The story of ZAPMail:
      • In 1984 Federal Express announced a new service called ZapMail, which guaranteed document delivery in 2 hours. They built this service not by replacing their planes with rockets, but with fax machines.
      • Two years and hundreds of millions of dollars later, FedEx pulled the plug on ZapMail.
    • The story of ZapMail's collapse holds a crucial lesson for the telephone companies today:
      • Federal Express didn't get that faxing was a product, not a service .
      • Because of this, it failed to understand how the fax network would be built - by individual customers buying one fax machine at a time.
      • Finally it misunderstood who its competition was : its customers.
  • ZapPhone and VoIP
    • As FedEx was about faxes, the telephone companies are in deep denial about the change from circuit switching to IP-based voice.
    • Telcos developed the following strategy:
      • Step #1 : Scrap the existing network
      • Step #2 : Replace it with an inexpensive IP network
      • Step #3 : "Preserve the revenue stream" by continuing to charge the same prices
    • This will not work, because the customers don't need to wait for the telephone companies to offer services based on IP. They already have access to an IP network -- it's called the Internet !!
    • Two cheap consumer devices that create enormous value for the owners while generating little revenue for the phone companies exist already:
      • WiFi access points , which allow the effortless sharing of broadband connections,
      • and VoIP Phones and VoIP converters (e.g. the Cisco ATA).
  • So what can a Telco/ISP provide?
    • The broadband access to the Internet
    • Part of the backbone
    • The gateway to the PSTN
    • Routing of the E.164 number to this gateway
    • ENUM Registrar and ENUM Nameserver service
    • VoIP server hosting (residential and IP centrex)
    • Domain Name hosting
    • Circle of Trust for accounting and billing
    • Intelligent packaging for Joe Doe users
  • And where is the beef?
    • VoIP and video users need broadband
      • Boosts DSL rollout - $$/month
    • SIP Server hosting - $/month
    • ENUM hosting - $/month
    • Gateway operation
      • Incoming calls - $/call on PSTN
      • Outgoing calls - $/call on Internet (via assertions)
    • Participation in trust circles
      • % on each transaction
      • Certificates $/month
    • Sell books, info, sex and flowers (transfer premium rate services to assertions)
    • Move up the value chain to services and consulting
  • Best Bets
    • % shares of the IT industry's profit, by sector
    Source: IBM  24 29 29 Technology  6 9 13  12 20 18 – Server/Storage Hardware – Clients  41 29 30 Services & Software  17 13 10 Business consultancy Trend 2005 2000 1995
  • So there is life after death!
    • Maybe it is not as much $$ as now
      • But not "yet" the Apocalypse
    • The bad news is
      • Everbody can do this
    • The good news is
      • Everbody can do this
      • so also a telco can do it
    • So this may "only" be The Perfect Storm
  • Live Demo of VoIP + ENUM
    • The following demos are shown in the Expo at the VON Europe 2003:
      • ENUM Webpage http:// enum.nic.at
      • ENUM Administration via Web-Interface
        • Registration of ENUM Domain Names
        • ENUM Subscriber Provisioning
      • ENUM query via Webpage, ENUM Clients, ENUM-enabled SIP-Server
      • ENUM at work in the different VoIP scenarios
  • ENUM Application and Provisioning ENUM TIER 2 NS ENUM TIER 1 NS ENUM TIER 0 NS ENUM TIER 1 Registry ENUM TIER 2 Register ENUM Registrar ENUM SUBSCRIBER ENUM USER ENUM DNS QUERY ENUM Application email VoIP etc. Communication REGISTRATION ENUM NAPTR MODIFICATION ITU TSB RIPE NCC 3.4.e164.arpa x.x.x.x.3.4.e164.arpa Web SERVICES Registry nic.at ENUM SP Telekom Austria Web portal ENUM DELEGATION RTR policy framework VALIDATION WHOIS Internet
  • VoIP and ENUM PSTN/ISDN/Mobile Telekom Austria at43 iptel.org FWD Siemens Kapsch Internet e164.arpa dns ENUM tree
  • The End Thank you for your attention