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: email@example.com [email_address]
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!
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
is multi-purpose and multi-media
VoIP is just another application
it is a “simple” transport network, the intelligence is on the edge
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!
... 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
Incoming calls - $/call on PSTN
Outgoing calls - $/call on Internet (via assertions)
Participation in trust circles
% on each transaction
Sell books, info, sex and flowers (transfer premium rate services to assertions)
Move up the value chain to services and consulting