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  • Topics > Internet & Networking > Web Telephony & Conferencing > Is That Microsoft Calling? Software giant could change the way we communicate by telephone. Stephen Lawson, IDG News Service Friday, November 28, 2003 Microsoft is bound to play a growing role in enterprise telephony systems over the next few years, helping them to evolve beyond the simple features such as speed dial, conference call, and voice mail most companies know today. What's less clear is what that role will be. Advertisement The Redmond, Washington, software giant is likely to muscle in on the territory of traditional vendors of private branch exchanges (PBXs) and even threaten the desktop handset, through PC-based "soft phones," according to some industry analysts. However, Microsoft and some major vendors in that market say they don't see themselves on a collision course. Microsoft may increasingly provide the platform software for telephony, but more specialized vendors will write the applications on top, they said. It may be a tempting target: Counting both the servers and clients in this category--IP PBXs and handsets or soft phones--IP-based telephony products worldwide should bring in $6 billion per year by 2008, according to IDC analyst Tom Valovic, who earlier this year wrote a report on Microsoft's possible future in this market. Between 10 and 30 percent of that spending will go toward applications, IDC estimates. Cisco Systems' acquisition of Latitude Communications, announced earlier this month, may be a step up the software stack toward what has been Microsoft's territory in the data world, some analysts said. Latitude makes audioconferencing, videoconferencing, and Web-based collaboration tools. Making Things Simpler? A Microsoft move deeper into telephony and communications software could place complex decisions in the laps of IT executives who are used to dealing with one vendor for telephony systems and others for data applications, Valovic said. Microsoft could be part of a coming shakeout. "Life will probably be initially more complicated but eventually more simple," he said. "There's going to be a transition of vendors. We don't know which vendors are going to be the winners and who will be the losers." At the same time, telecommunications departments and IT groups will need to work out where the new telephony infrastructure should go, said analyst Zeus Kerravala of The Yankee Group. The same functions may be available on traditional computing platforms and on network platforms such as routers, he said. A company shouldn't do it two different ways. A New Voice What's most disrupting to the once staid business of enterprise phone systems is voice over IP, which makes phone calls into data packets. The special requirements of transmitting the spoken word finally are being met by prioritisation systems that can set voice apart as it flows over the same network as other packets. Basic IP networks send data packets without regard to exactly when or in what order they arrive. Thus, the decades of organizations' having two totally different networks are slowly coming to an end, vendors and industry observers have said. Companies' traditional phone systems have been built around the traditional PBX, a proprietary switching platform with its own specialized software. This type of box typically handles internal extensions, voice mail, call forwarding, conference calling, and other features. IP PBXs are gradually changing that proprietary platform business into an industry in which vendors are distinguished by the capabilities of software that runs on standard platforms. In addition, VOIP holds out the promise of new kinds of communications systems that combine voice calling with other applications, such as videoconferencing, text messaging, and Web-based collaboration. That makes it the kind of business at which Microsoft has excelled, Valovic wrote in his report earlier this year. Valovic believes Microsoft could become a major vendor of the software that enterprises use for communication of all kinds. In some areas a clash with current leading vendors is probably on the way, Valovic said in an interview. "We think that cooperation will morph into a more competitive model as these IP PBX vendors kind of move up the food chain and develop more high-end enhanced services and applications," Valovic said. Advantage, Microsoft? Yankee's Kerravala was more blunt. "Microsoft is in this business to stay, and I think they'll certainly be a strong threat to most of the phone system vendors, probably in two years," Kerravala said. "In some ways it's advantage Microsoft, because they understand how to be a software company," whereas competitors such as Cisco Systems and Nortel Networks have their roots in hardware, he said. For one thing, Microsoft can take advantage of an army of Windows application developers, Kerravala said. If the company follows the pattern of its moves into other areas of technology, it may have a strong edge, he said. "If Microsoft does offer it at a cheaper price than the competition, maybe even free, it'll be difficult to get people to not at least try it," he said. Corrugated Supplies, in Bedford Park, Illinois, uses Cisco VOIP phones, and for call control runs Cisco CallManager software on Windows 2000 Server; it uses a Microsoft SQL Server database for call history, phone configurations, and other information. For voice mail, the company uses Cisco's Unity software and hooks it into Microsoft Exchange. Calvin Rice, network systems manager at the corrugated-paper manufacturer, said he is happy with those systems. Though he has no plans to change now, Rice said the Microsoft brand wouldn't put him off if he were looking for a telephony application. To the contrary, Microsoft would be more attractive than some other vendors because Corrugated already uses so many Microsoft products, he said. There is a high bar to meet: Such an application would have to be cost-effective, fit into the IT architecture, and match staff skills, Rice said. It would have to be stable, too, added Jack Hsia, a Corrugated software engineer. But being able to streamline operations and training by standardizing on a few vendors is a key goal in any purchase, because Corrugated has a small IT staff handling several facilities, Rice said. "I don't have a dedicated telco guy anymore," Rice said. Playing a Broader Role There are two major indications Microsoft may have its eyes on a broader enterprise communications role, according to IDC's Valovic: Office Live Communications Server, a platform for instant messaging and presence (indicating whether a user is available), and Microsoft's inclusion of Session Initiation Protocol client software in Windows XP. SIP is intended as a universal signaling protocol for all kinds of real-time sessions over IP networks. As a platform for presence, Office Live Communications Server could play a role in unified communications at the desktop, Valovic said. Whether someone is available and for what form of conversation is a key part of the communication platform of the future, which should eliminate the game of tag that forces contacts to call different places and leave messages, he said. A communications server, like an IP PBX, can be a converged platform for many kinds of communication, he said. For its part, Microsoft sees itself mostly as an infrastructure vendor, providing software platforms for the new generation of specialized applications, said Ed Simnett, lead product manager for Office Live Communications Server. Microsoft hopes the vendors of software that is replacing PBXs write that software for Windows Server 2003 and Office Live Communications Server. Microsoft won't be competing with them anytime soon, in his view. Because Windows MSN Messenger includes a SIP software stack, a voice call can be set up between two MSN Messenger clients, but that doesn't mean the PC can replace a business phone, he said. The capabilities users expect from an office phone, even as simple as a light that shows if there is voice mail waiting, aren't there. Other vendors can provide that software, he said. "PBXs have developed to have a pretty interesting feature set, and replacing that feature set isn't something you can do overnight," Simnett said. What About the PC? Valovic isn't sure Microsoft will stay back when it comes to PCs as voice clients. "This is a clue to their longer-term strategy, because SIP is essentially a VOIP standard," he said. "My feeling is that they are to a certain extent maintaining a stealth position about some of this development," Valovic said. Today Microsoft is working with partners such as Siemens Information and Communications Networks, the communications equipment arm of Munich-based Siemens, to make phone calls part of a broader menu of user options. Siemens ICN's OpenScape is an application that will run on Office Live Communications Server. The software will bring together voice and data communications with presence and reachability anywhere, said Mark Straton, vice president of global marketing at Siemens ICN. An OpenScape buddy list can show whether a contact is available by phone, let the user make the call just by clicking on the phone icon, and direct the call to whatever phone number the contact is using. OpenScape also offers a personal communications portal that can be used through a Web browser, a voice interface, or an interface embedded in a frequently used application. With text-to-speech technology, users can retrieve e-mail as voice messages. Though Straton sees Microsoft continuing to play a role in this sector, it is through Windows as a platform for applications such as OpenScape. A vendor of converged enterprise communications platforms needs to do many things: Make desktop devices and gateways, write enterprise-class applications, and support systems that stay up all the time, without interruption, he said. Microsoft sells little hardware, isn't dominant in enterprise-class applications such as databases, and is unlikely to invest in systems integration and service of the kind Siemens provides around the world, Straton said. Working Together? Cisco Systems, which aims to provide the infrastructure for convergence with its IP Communications product portfolio, doesn't see Microsoft on its heels either, according to Craig Cotton, manager of product marketing at the IP Communications business unit. And Charlie Giancarlo, senior vice president and general manager of switching, voice, and storage at Cisco, said Cisco expects to see Microsoft as a partner rather than as a competitor. The two companies already are cooperating with each other in this area. Microsoft and Cisco products don't overlap now, Cotton said. In addition to hardware for convergence, Cisco makes some software, including a soft-phone application for Windows PCs. It doesn't make instant messaging software and doesn't know of any product plans from Microsoft that would compete with Cisco here, Cotton said. However, in the future, he sees enterprises using a rich variety of communications applications running over a Cisco IP Communications infrastructure. "Microsoft will provide some of those, Cisco will provide some of those, and other vendors will provide others," Cotton said. One thing is clear: If Microsoft does move up the telephony software stack to take on the current players, it won't happen overnight. In the short term, expect to see more cooperation and partnership, IDC's Valovic said. And don't expect "a huge changing of the guard" but rather competition in certain segments of middleware, he said. Even if Microsoft starts competing with Cisco, the two companies will probably keep cooperating at the same time, Yankee's Kerravala believes. Additionally, phones won't be disappearing anytime soon, vendors and analysts said. Operators in some call centers already make all their calls via a PC with a headset, but the average desk worker will keep the phone. Handsets are a familiar device that can be complementary with a PC, they said. "You may have a PC with voice capability, but you'll also have a phone with other capabilities," Kerravala said. In some places, such as an office lobby, an IP phone with extended capabilities may be enough, he added. Either way, technologies are coming together, and that makes some changes inevitable, IDC's Valovic said. "Converged technology creates converged markets, and market convergence means IT vendors competing with telecom vendors," he said. Related Topics: Windows XP, Software, MSN, Instant Messaging
  • 0030-analysys_presentation_on_voip.ppt

    1. 1. IP Voice and Associated Convergent Services 15 March 2004
    2. 2. Agenda <ul><li>2.30 Opening </li></ul><ul><li>2.35 David Cleevely: introduction </li></ul><ul><li>2.50 James Allen: the New Regulatory Framework and voice over IP </li></ul><ul><li>3.25 Michael Kende: the NRF and associated convergent services </li></ul><ul><li>3.45 James Allen: summary of issues arising from the study </li></ul><ul><li>4.10 Short commission presentation </li></ul><ul><li>4.25 Question and answer session </li></ul><ul><li>5.30 Close </li></ul>
    3. 3. Introduction David Cleevely
    4. 4. Aims of the study <ul><li>The study aims to identify and explain the important issues associated with the transition from the existing circuit switched PSTN to IP-packet switched networks in providing voice and associated convergent services: </li></ul><ul><ul><li>these issues encompass: regulation, technology, economics, and the structure of the telecoms market </li></ul></ul><ul><li>The target audience is staff within National Regulatory Authorities (NRAs) and governments </li></ul>Introduction
    5. 5. Context <ul><li>We are raising issues </li></ul><ul><li>We are working from the current legal position in each Member State (i.e. the NRF as transposed into national law is a given): </li></ul><ul><ul><li>in keeping with the NRF, we are deregulatory in stance </li></ul></ul><ul><li>The opinions expressed in this study are those of the authors and do not necessarily reflect the views of the European Commission </li></ul>Introduction
    6. 6. <ul><li>“ It's probably the most significant paradigm shift in the entire history of modern communications, since the invention of the telephone.” </li></ul><ul><li>FCC Chairman Michael Powell </li></ul><ul><li>World Economic Forum in Davos, Switzerland 2004 </li></ul>Introduction
    7. 7. The transition to VoIP will take time <ul><li>Equipment replacement cycles </li></ul><ul><li>Broadband access network deployment </li></ul><ul><li>Take-up of broadband Internet access by end-users </li></ul><ul><li>Attractiveness of the new VoIP service offers (strongly affected by existing competition within the voice calls market) </li></ul><ul><li>The impact of these factors will vary by country and region </li></ul>Introduction
    8. 8. In January 1994, we asked ‘How long will it be before you can download a PBX from the Internet?’ Source: VoiSpeed, 2004 Introduction
    9. 9. “Nothing less than the demolition of Japan’s telecom industry” – Wired Magazine, August 2003 Source: http://bbpromo.yahoo.co.jp Introduction
    10. 10. The New Regulatory Framework and Voice over IP James Allen
    11. 11. <ul><li>Definitions </li></ul><ul><li>New Regulatory Framework </li></ul><ul><li>VoIP business models </li></ul><ul><li>Issues that arise from VoIP services under the NRF </li></ul><ul><li>Views of other regulators </li></ul>Agenda The New Regulatory Framework and VoIP
    12. 12. Internet protocol (IP) <ul><li>The protocol standards used by the Internet (strictly, only the Internet networking protocol, but commonly used to include a whole related set of protocols) </li></ul>The New Regulatory Framework and VoIP Definitions
    13. 13. Voice over Internet Protocol (VoIP) <ul><li>Used here as a generic term for the conveyance of voice, fax and related services, partially or wholly over packet-switched, IP-based networks </li></ul>The New Regulatory Framework and VoIP Definitions
    14. 14. Public switched telephone network (PSTN) <ul><li>A synonym for traditional circuit-switched telephone networks offered by public telecommunication operators (PTOs), as well as integrated services digital networks (ISDN), and public land mobile networks (PLMN) </li></ul><ul><li>Source: ITU World Telecommunication Policy Forum report </li></ul>The New Regulatory Framework and VoIP Definitions
    15. 15. Electronic communications service (ECS) <ul><li>A service normally provided for remuneration which consists wholly or mainly in the conveyance of signals on electronic communications networks, including telecommunications services and transmission services in networks used for broadcasting, but exclude services providing, or exercising editorial control over, content transmitted using electronic communications networks and services; it does not include information society services, as defined in Article 1 of Directive 98/34/EC, which do not consist wholly or mainly in the conveyance of signals on electronic communications networks </li></ul>The New Regulatory Framework and VoIP Definitions
    16. 16. Publicly available telephone service (PATS) <ul><li>A service available to the public for originating and receiving national and international calls and access to emergency services through a number or numbers in a national or international telephone numbering plan, and in addition may, where relevant, include one or more of the following services: the provision of operator assistance, directory enquiry services, directories, provision of public pay phones, provision of service under special terms, provision of special facilities for customers with disabilities or with special social needs and/or the provision of non-geographic services </li></ul>The New Regulatory Framework and VoIP Definitions
    17. 17. Public telephone network <ul><li>An electronic communications network which is used to provide publicly available telephone services; it supports the transfer between network termination points of speech communications, and also other forms of communication, such as facsimile and data </li></ul>The New Regulatory Framework and VoIP Definitions
    18. 18. <ul><li>Definitions </li></ul><ul><li>New Regulatory Framework </li></ul><ul><li>VoIP business models </li></ul><ul><li>Issues that arise from VoIP services under the NRF </li></ul><ul><li>Views of other regulators </li></ul>The New Regulatory Framework and VoIP
    19. 19. What is the regulatory framework? <ul><li>The new (2003) directives governing the regulation of electronic communications in Europe: </li></ul><ul><ul><li>Framework </li></ul></ul><ul><ul><li>Authorisation </li></ul></ul><ul><ul><li>Access and Interconnection </li></ul></ul><ul><ul><li>Universal Service </li></ul></ul><ul><ul><li>Data Protection </li></ul></ul>The New Regulatory Framework and VoIP New Regulatory Framework
    20. 20. Under the NRF how a service is classified determines its regulation PSTN-equivalent voice Data services e.g. IM and PM Regulated as public electronic communications services Regulated as Publicly Available Telephone Services Convergent services Looks like data Looks like voice Unregulated (not electronic communications services) Public Private Regulated as private electronic communications services The New Regulatory Framework and VoIP New Regulatory Framework
    21. 21. Summary of the powers of NRAs <ul><li>General conditions of authorisation for providers of: </li></ul><ul><ul><li>Private ECS </li></ul></ul><ul><ul><li>Public ECS </li></ul></ul><ul><ul><li>PATS: </li></ul></ul><ul><ul><ul><li>PATS at a fixed location </li></ul></ul></ul><ul><ul><ul><li>PATS providers which are USO providers </li></ul></ul></ul>The New Regulatory Framework and VoIP New Regulatory Framework
    22. 22. Summary of powers of NRAs beyond general conditions of authorisation <ul><li>Certain ex-ante powers (e.g. under Article 5 of the Access directive) can be applied to a wide set of operators </li></ul><ul><li>A range of proportionate, ex-ante remedies can be applied to SMP operators in relevant markets: </li></ul><ul><ul><li>the EC has a role in ensuring relevant markets and market definitions are appropriate </li></ul></ul><ul><li>Ex-post competition law can be applied </li></ul>The New Regulatory Framework and VoIP New Regulatory Framework
    23. 23. <ul><li>Definitions </li></ul><ul><li>New Regulatory Framework </li></ul><ul><li>VoIP business models </li></ul><ul><li>Issues that arise from VoIP services under the NRF </li></ul><ul><li>Views of other regulators </li></ul>The New Regulatory Framework and VoIP
    24. 24. We divided VoIP into five business models <ul><li>Self-provided ‘DIY’ </li></ul><ul><li>Voice service independent of ISP – ‘Vonage’ </li></ul><ul><li>Voice service sold by ISP – ‘Yahoo!BB’ </li></ul><ul><li>Corporate internal use </li></ul><ul><li>Carrier internal use </li></ul>The New Regulatory Framework and VoIP VoIP business models
    25. 25. Self-provided VoIP: DIY <ul><li>Software available to download from the Web: </li></ul><ul><ul><li>might be ‘goods’ not services </li></ul></ul><ul><li>Use a broadband connection to chat online: </li></ul><ul><ul><li>Skype, ichatAV, etc. </li></ul></ul><ul><li>Not simple to use: mostly hobbyists </li></ul><ul><li>Not a cost saving on mobile networks </li></ul><ul><li>‘Free’, but no interface to the PSTN: </li></ul><ul><ul><li>however, 0800 numbers can now be called from Free World Dialup and others </li></ul></ul>The New Regulatory Framework and VoIP VoIP business models
    26. 26. Commercial model and implications <ul><li>I carry my own costs, you carry yours </li></ul><ul><li>Traffic relies on the Internet access you already have </li></ul><ul><li>Small amount of revenue may disappear from the telecoms market </li></ul>The New Regulatory Framework and VoIP VoIP business models
    27. 27. Voice service independent of ISP: Vonage <ul><li>Software download or an ATA </li></ul><ul><ul><li>needs broadband </li></ul></ul><ul><li>Can provide interface to PSTN </li></ul><ul><li>Can provide extra services: virtual numbers, “Blast me” </li></ul><ul><li>Can cause big changes in tariffing: </li></ul><ul><ul><li>flat-rate national calls </li></ul></ul><ul><li>Hard to guarantee quality due to large number of intermediate players </li></ul>The New Regulatory Framework and VoIP VoIP business models
    28. 28. Commercial model and implications <ul><li>Economics depends on margin between retail voice calls and termination costs </li></ul><ul><li>Small, but growing (~100k in US) </li></ul><ul><li>Low barrier to entry </li></ul><ul><li>Very similar to indirect access in many ways </li></ul>The New Regulatory Framework and VoIP VoIP business models
    29. 29. Voice service sold by ISP: Yahoo! BB <ul><li>Service provider controls access network </li></ul><ul><li>Can guarantee QoS </li></ul><ul><li>With high bandwidth codecs, quality can be better than the PSTN </li></ul><ul><li>Typically bundles calls with Internet access </li></ul><ul><li>ATA is integrated into DSL modem </li></ul><ul><li>Yahoo!BB and Fusion in Japan are the best known examples (5 million lines) </li></ul>The New Regulatory Framework and VoIP VoIP business models
    30. 30. Commercial model and implications <ul><li>Free on-net calls often offered </li></ul><ul><li>Cheap off-net calls (including to other VoIP users) </li></ul><ul><li>But why haven’t big European ISPs done it yet? </li></ul><ul><li>Not such a straightforward cost saving if there is vigorous PSTN competition </li></ul>The New Regulatory Framework and VoIP VoIP business models
    31. 31. Corporate internal use <ul><li>Could be self-provided or outsourced </li></ul><ul><li>Uses common IP network with data communications </li></ul><ul><li>Big opportunity through the PBX replacement cycle </li></ul>The New Regulatory Framework and VoIP VoIP business models
    32. 32. Commercial model and implications <ul><li>Can be ‘goods’ rather than ‘services’ </li></ul><ul><li>Now economic in greenfield sites </li></ul><ul><li>Early adopters are using it </li></ul><ul><li>Many users worried about resilience </li></ul><ul><li>Opportunity for non-traditional vendors: </li></ul><ul><ul><li>IT services outsourcers </li></ul></ul><ul><ul><li>IP equipment manufacturers </li></ul></ul>The New Regulatory Framework and VoIP VoIP business models
    33. 33. Carrier internal use <ul><li>Services continue as now </li></ul><ul><li>End-user is unaware of change: </li></ul><ul><ul><li>does not necessarily use an IP device or get access to the Internet </li></ul></ul><ul><li>Last mile is unchanged </li></ul><ul><li>Local concentrator, switch are utterly transformed </li></ul><ul><li>In mobile networks, depends on adoption of 3GPP releases </li></ul>The New Regulatory Framework and VoIP VoIP business models
    34. 34. Commercial model and implications <ul><li>Motivation is cost savings: </li></ul><ul><ul><li>one network rather than N networks </li></ul></ul><ul><li>Capex required is very significant </li></ul><ul><li>May take ten years to complete </li></ul><ul><li>May take ten years before it starts! </li></ul><ul><li>Regulatory costing will change </li></ul><ul><li>Interconnection will be a major cause of disputes between operators </li></ul>The New Regulatory Framework and VoIP VoIP business models
    35. 35. <ul><li>Definitions </li></ul><ul><li>New Regulatory Framework </li></ul><ul><li>VoIP business models </li></ul><ul><li>Issues that arise from VoIP services under the NRF </li></ul><ul><li>Views of other regulators </li></ul>The New Regulatory Framework and VoIP
    36. 36. The business models and how they are classified under the NRF [1] <ul><li>‘DIY’ Maybe not a service, maybe private or public ECS </li></ul><ul><li>‘Vonage’ Public ECS, maybe PATS </li></ul><ul><li>‘Yahoo!BB’ Public ECS, maybe PATS </li></ul><ul><li>Corp. int. use Maybe not a service, maybe a private ECS </li></ul><ul><li>Carrier int. use Public ECS, likely to be PATS, possibly with SMP </li></ul>The New Regulatory Framework and VoIP VoIP business models
    37. 37. The business models and how they are classified under the NRF [2] Carrier internal use Regulated as public ECS Regulated as PATS Vonage Looks like data Unregulated (not electronic communications services) Public Private Regulated as private ECS Yahoo!BB Corporate internal use DIY The New Regulatory Framework and VoIP VoIP business models Looks like voice
    38. 38. Two key questions <ul><li>Which regulatory obligations will apply to VoIP service providers? </li></ul><ul><ul><li>None / private ECS / public ECS / PATS / PATS at a fixed location /SMP in relevant markets </li></ul></ul><ul><li>Specifically, when would service providers be providing PATS? </li></ul>The New Regulatory Framework and VoIP VoIP business models
    39. 39. <ul><li>Definitions </li></ul><ul><li>New Regulatory Framework </li></ul><ul><li>VoIP business models </li></ul><ul><li>Issues that arise from VoIP services under the NRF </li></ul><ul><li>Views of other regulators </li></ul>The New Regulatory Framework and VoIP
    40. 40. Issues arising from VoIP <ul><li>Definition of PATS and its interpretation </li></ul><ul><li>Why this matters: </li></ul><ul><ul><li>Obligations of providers of PATS: </li></ul></ul><ul><ul><ul><li>Emergency service access </li></ul></ul></ul><ul><ul><ul><li>Network and service resilience </li></ul></ul></ul><ul><ul><li>Obligations of providers of PTNs </li></ul></ul>The New Regulatory Framework and VoIP Issues that arise from VoIP services under the NRF
    41. 41. Definition of PATS and its interpretation <ul><li>Narrow view : any VoIP provider which does not offer access to the emergency services is not PATS, and any that does is PATS (which is clear and simple, but will lead to a disincentive to provide access to the emergency services) </li></ul><ul><li>Broad view : any VoIP provider that provides a service in direct competition with (and as a substitute for) the PSTN is PATS </li></ul>The New Regulatory Framework and VoIP Issues that arise from VoIP services under the NRF
    42. 42. Obligations of providers of PATS <ul><li>Providers of PATS are subject to additional duties over and above providers of public ECS under the Universal Service Directive </li></ul><ul><li>These conditions include: </li></ul><ul><ul><li>Article 23: All necessary steps to maintain proper and effective functioning of network and access to services (provided “at fixed locations” only) </li></ul></ul><ul><ul><li>Articles 26+27: National and single European emergency number access </li></ul></ul>The New Regulatory Framework and VoIP Issues that arise from VoIP services under the NRF
    43. 43. There is a balance between users’ needs and disincentives to provide 112 <ul><li>In order to avoid becoming PATS, operators may exclude access to emergency services: </li></ul><ul><ul><li>loss to end users: it may cause lives to be lost if a user has a “telephone” that cannot call 112 </li></ul></ul><ul><ul><li>work-arounds like plugging into a PATS telephone line rather than a DSL ATA are not perfect </li></ul></ul><ul><li>It is undesirable to remove the requirement within the definition of PATS for “access to emergency services”, because it would widen the PATS category too far </li></ul>The New Regulatory Framework and VoIP Issues that arise from VoIP services under the NRF
    44. 44. Location independence and quality of emergency service access [1] <ul><li>IP access services break the link between network address and physical location: </li></ul><ul><ul><li>mobile telephony services suffer in a similar way </li></ul></ul><ul><li>End users will need to be educated that the quality of access to emergency services provided on a VoIP connection will be lower in some circumstances </li></ul>The New Regulatory Framework and VoIP Issues that arise from VoIP services under the NRF
    45. 45. Location independence and quality of emergency service access [2] <ul><li>It seems feasible for VoIP service providers to provide a form of access to the emergency services that is at least as good at that provided by existing mobile networks </li></ul><ul><li>This ought to be acceptable as long as the reduced quality is made very clear to end users </li></ul>The New Regulatory Framework and VoIP Issues that arise from VoIP services under the NRF
    46. 46. Network resilience [1] <ul><li>Providers of PATS at fixed locations are required to take measures to ensure the availability of services in the case of force majeure and catastrophic network breakdown </li></ul>The New Regulatory Framework and VoIP Issues that arise from VoIP services under the NRF
    47. 47. Network resilience [2] <ul><li>VoIP service providers, particularly those using the public Internet (Vonage) or reliant on other operators access networks (a subset of the Yahoo!BB model), may not be able to do this: </li></ul><ul><ul><li>a broad definition of PATS could place these operators in an impossible position </li></ul></ul><ul><li>Seeking to claim IP voice is not provided “at fixed locations” as a get-out will have undesired consequences </li></ul>The New Regulatory Framework and VoIP Issues that arise from VoIP services under the NRF
    48. 48. Public telephone networks <ul><li>Providers of public telephone networks are subject to similar, additional obligations over and above the obligations of providers of public electronic communications networks </li></ul><ul><li>The Universal Service Directive defines a public telephone network as “an electronic communications network which is used to provide publicly available telephone services” </li></ul><ul><li>Thus, it matters to the underlying network providers whether the service provider is considered to be offering PATS </li></ul>The New Regulatory Framework and VoIP Issues that arise from VoIP services under the NRF
    49. 49. <ul><li>Definitions </li></ul><ul><li>New Regulatory Framework </li></ul><ul><li>VoIP business models </li></ul><ul><li>Issues that arise from VoIP services under the NRF </li></ul><ul><li>Views of other regulators </li></ul>The New Regulatory Framework and VoIP
    50. 50. Historic position of the Commission <ul><li>VoIP was not public voice telephony if it failed to simultaneously meet each of the four elements of the Services Directive’s voice telephony definition: </li></ul><ul><ul><li>voice telephony is offered commercially </li></ul></ul><ul><ul><li>it is provided for the public </li></ul></ul><ul><ul><li>it is provided to and from public switched network termination points </li></ul></ul><ul><ul><li>it involves direct speech transport and switching of speech in real time, in particular the same level of reliability and speech quality as produced by the PSTN </li></ul></ul>The New Regulatory Framework and VoIP Views of other regulators
    51. 51. Views of other regulators – Ofcom <ul><li>The UK regulator’s historic position is a VoIP service should be regulated as PATS if any of the following apply. The service: </li></ul><ul><ul><li>is marketed as a substitute for the traditional public telephone service, or </li></ul></ul><ul><ul><li>appears to the customer to be a substitute for the traditional public telephone service, or </li></ul></ul><ul><ul><li>provides the customer’s sole means of access to the traditional circuit switched public telephone network </li></ul></ul><ul><li>This is a “broad” view of the definition </li></ul>The New Regulatory Framework and VoIP Views of other regulators
    52. 52. Views of other regulators – FCC [1] <ul><li>Telecommunications Act of 1996 classifies two services: </li></ul><ul><ul><li>Telecommunications :“[T]he transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.” (regulated) </li></ul></ul><ul><ul><li>Information services : “[T]he offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.” (not regulated) </li></ul></ul><ul><li>The FCC has not yet classified all types of VoIP services </li></ul>The New Regulatory Framework and VoIP Views of other regulators
    53. 53. Views of other regulators – FCC [2] <ul><li>The FCC recently decided that Free World Dialup is an unregulated information service </li></ul><ul><li>AT&T has asked the FCC to rule that phone-to-phone VoIP is not subject to long distance access charges </li></ul><ul><li>Vonage has asked the FCC to rule that its service is an information service </li></ul><ul><li>The FCC has announced a Notice of Proposed Rulemaking regarding regulatory issues surrounding VoIP </li></ul>The New Regulatory Framework and VoIP Views of other regulators
    54. 54. The NRF and Associated Convergent Services Michael Kende
    55. 55. Associated convergent services <ul><li>Definitions </li></ul><ul><li>Examples </li></ul><ul><li>Regulatory jurisdiction </li></ul><ul><li>Issues </li></ul>The NRF and Associated Convergent Services
    56. 56. What is an associated convergent service? <ul><li>A data service that is convergent with voice services because it: </li></ul><ul><ul><li>uses common technologies and protocols (e.g. SIP, IP), and/or </li></ul></ul><ul><ul><li>has some of the elements of a voice call (transmits sound/speech, uses telephone numbers, etc) </li></ul></ul><ul><li>Instant messaging is just one example </li></ul>The NRF and Associated Convergent Services
    57. 57. What is an associated facility? <ul><li>Associated facilities means those facilities associated with an electronic communications network and/or an electronic communications service which enable and/or support the provision of services via that network and/or service. It includes conditional access systems and electronic programme guides </li></ul>The NRF and Associated Convergent Services
    58. 58. IM and PM as an example of an associated convergent service <ul><li>Instant messaging (IM) is a service that can be used to exchange small, text-based messages not unlike email, but in near-real-time, allowing users to chat informally </li></ul><ul><li>Both fixed and mobile versions of this service are available </li></ul><ul><li>Presence management underlies IM. It is a service for finding, retrieving, and subscribing to changes in the current status of other users </li></ul>The NRF and Associated Convergent Services
    59. 59. IM and PM within the NRF <ul><li>It is not clear, but certainly arguable, that IM is a public ECS: </li></ul><ul><ul><li>if there were a gateway between voice enabled IM and the PSTN, and access to emergency service, then it could be PATS </li></ul></ul><ul><li>It is also arguable that PM, specifically access to the PM database, is an associated facility </li></ul><ul><li>The Commission has not defined a relevant market for IM and PM </li></ul><ul><li>Regulators have limited powers under the NRF </li></ul>The NRF and Associated Convergent Services
    60. 60. Powers regulators have (if they were to need them) <ul><li>General conditions on providers of electronic communications networks, associated facilities, public ECS, or PATS </li></ul><ul><li>Using Article 5 of the Access Directive </li></ul><ul><li>Ex-ante regulation of players with SMP in a relevant market (e.g. via Article 12 of the Access Directive) </li></ul><ul><ul><li>If there were a relevant market defined </li></ul></ul><ul><li>Other measures, including standardisation </li></ul><ul><li>Ex-post competition law </li></ul>The NRF and Associated Convergent Services
    61. 61. Issues arising particularly from associated convergent services <ul><li>What kinds of facilities are associated facilities? </li></ul><ul><li>Clarifying “control of access to end users” </li></ul>The NRF and Associated Convergent Services
    62. 62. What kinds of facilities are associated facilities? <ul><li>Various regulators believe the DNS may be an associated facility </li></ul><ul><li>We have already argued that a PM database might be an associated facility </li></ul><ul><li>It would help if there were well understood procedures for designation of associated facilities </li></ul>The NRF and Associated Convergent Services
    63. 63. Clarifying “control of access to end users” <ul><li>Article 5.1 of the Access Directive could be used to impose obligations on certain players even if they are not dominant (i.e. potentially all players), if they control access to end users </li></ul><ul><li>The question is whether associated convergent service providers (or operators of associated facilities) are undertakings that control access to end-users </li></ul>The NRF and Associated Convergent Services
    64. 64. Summary and Conclusions James Allen
    65. 65. Summary of issues arising from the study [1] <ul><li>Impact on national numbering plans </li></ul><ul><li>Impact of extraterritorial service providers </li></ul><ul><li>Impact on the relevant markets defined by the EC </li></ul><ul><li>Whether VoIP services on fixed networks are provided “at a fixed location” </li></ul><ul><li>Treatment of free services </li></ul><ul><li>Treatment of self-provided services </li></ul><ul><li>Impact on lawful intercept </li></ul>Summary and Conclusions
    66. 66. Summary of issues arising from the study [2] <ul><li>Interconnect to the PSTN </li></ul><ul><li>Interconnect to other VoIP service providers’ networks </li></ul><ul><li>The possibility of commercial barriers erected by access operators </li></ul><ul><li>Security issues </li></ul><ul><li>Effects on USO funding </li></ul><ul><li>Changes to regulatory costing </li></ul>Summary and Conclusions
    67. 67. Impact on national numbering plans <ul><li>The existing national numbering plans could prove wholly inadequate if VoIP users (and hence service providers) require significant additional volumes of geographic and other types of numbers </li></ul><ul><li>NRAs should consider the implications of such a development now </li></ul>Summary and Conclusions
    68. 68. Extraterritoriality of service providers <ul><li>VoIP makes it possible to provide domestic or EU-wide voice services (or components of those services) from other countries </li></ul><ul><ul><li>this may make it hard for NRAs to take action as their jurisdiction may not apply </li></ul></ul><ul><li>We recommend that the Member States and the NRAs consider whether this merits any change to current policy </li></ul>Summary and Conclusions
    69. 69. Impact on the relevant markets defined by the EC <ul><li>Presence management in combination with voice services could, in certain circumstances, create a link between the fixed and mobile wholesale markets for voice termination, or indeed between different networks (Markets 9 and 16 of the EC Recommendation): </li></ul><ul><ul><li>the fixed and mobile termination markets would still be distinct in some circumstances (e.g. when the user is away from their desk or home) </li></ul></ul><ul><li>This potential linkage will complicate the regulation of these relevant markets, because it means that the “monopoly of termination to customers on a network” may no longer exist </li></ul>Summary and Conclusions
    70. 70. Whether fixed network VoIP services are provided “at a fixed location” [1] <ul><li>Providers of PATS at a fixed location are subject to additional obligations </li></ul><ul><li>VoIP service providers could argue that the services are not provided “at a fixed location” because they are substantially location independent </li></ul>Summary and Conclusions
    71. 71. Whether fixed network VoIP services are provided “at a fixed location” [2] <ul><li>Regulators might seek to consider only some VoIP network architectures as “provided at a fixed location”. Such an approach is dangerous, as it will be very difficult to draw this distinction without causing distortions in the market </li></ul><ul><li>Consequently, all types of VoIP provided over fixed networks should probably be considered as provided “at a fixed location” </li></ul>Summary and Conclusions
    72. 72. Treatment of free services [1] <ul><li>It is unclear whether a ‘free’ service, such as AOL IM or Skype, is included in the definition of an ECS </li></ul><ul><li>Case law shows: </li></ul><ul><ul><li>a bundle of services can be considered as provided for remuneration even if some of the services are ‘free’ </li></ul></ul><ul><ul><li>the remuneration does not have to be paid by the end user of the service </li></ul></ul>Summary and Conclusions
    73. 73. Treatment of free services [2] <ul><li>As a result, </li></ul><ul><ul><li>AIM would probably be considered a service provided for remuneration, because it is provided to some users as part of a bundle of paid-for services </li></ul></ul><ul><ul><li>whereas it remains unclear whether a peer-to-peer application, which is truly ‘free’, is currently a ‘service’ at all </li></ul></ul>Summary and Conclusions
    74. 74. Treatment of self-provided services (DIY and Corporate internal use) <ul><li>Though unclear, it seems very likely that a self-provided service is not a “service normally provided for remuneration” at all </li></ul><ul><li>If it is not a “service normally provided for remuneration”, then it is not subject to the NRF. For example, it would not be subject to general conditions of authorisation </li></ul><ul><li>The fact that paid-for equipment and software are used may be irrelevant as these are goods, not services </li></ul>Summary and Conclusions
    75. 75. Impact on lawful intercept <ul><li>Lawful intercept of voice telephony using IP could take place at a variety of locations within the network </li></ul><ul><li>We recommend that some form of common approach between legal interception agencies (e.g. location of intercept, format of intercept) would help minimise the cost to service providers, in particular, pan-national service providers). This would help reduce barriers to entry in providing voice services </li></ul><ul><li>We note that the usefulness of lawful intercept may be decreased once VoIP calls use strong end-to-end encryption </li></ul>Summary and Conclusions
    76. 76. Interconnect to the PSTN <ul><li>We expect NRAs will be drawn into difficult arguments about: </li></ul><ul><ul><li>interconnect SLAs and pricing </li></ul></ul><ul><ul><li>costing for operators who are dominant and are undertaking major network transformations </li></ul></ul><ul><li>These are just part of the normal operation of telecoms regulation </li></ul><ul><li>VoIP affects these arguments because it is the cause of the major network transformations, and can cause increased competition </li></ul>Summary and Conclusions
    77. 77. Interconnect to other VoIP service providers’ networks <ul><li>Analysys expects three models for interconnect: </li></ul><ul><ul><li>via the PSTN </li></ul></ul><ul><ul><li>VoIP peering (free of payment, with conditions) </li></ul></ul><ul><ul><li>VoIP termination (paid-for) </li></ul></ul><ul><li>At this stage, we recommend that regulators need only monitor the emergence of the new forms of interconnect, bearing in mind that interconnect disputes are almost certain to arise </li></ul>Summary and Conclusions
    78. 78. The possibility of commercial barriers erected by fixed access operators <ul><li>Operators who have a vested commercial interest can make VoIP commercially unattractive </li></ul><ul><li>Fixed broadband access providers cannot do this given the very low incremental price per bit on almost all wholesale broadband tariffs, and the nature of the relevant market (which means it is very likely to be ex-ante regulated) </li></ul>Summary and Conclusions
    79. 79. The possibility of commercial barriers erected by mobile access operators <ul><li>Mobile operators do not generally offer flat-rate pricing for data services with access to the Internet. Consequently VoIP over mobile networks rarely offers a substantial cost saving for end users (which suits the mobile operators) </li></ul><ul><li>Competition should ensure a wide range of competitive mobile data tariffs and services, although we do not expect these to lead to widespread take-up of VoIP on mobile networks except for carrier internal use </li></ul>Summary and Conclusions
    80. 80. Security issues <ul><li>End users expect their calls to be secure and their bills accurate </li></ul><ul><li>This is not just a matter for those operators providing PATS; providers of ECS are also obliged to have accurate bills, end-user data privacy is protected by national data protection laws, and, in particular, the Directive on Privacy and Electronic Communications (2002/58/EC) </li></ul><ul><li>Regulators will need to support efforts to build a service that meets users’ needs and expectations for privacy, and may also have a role in educating the public about the security of the system </li></ul>Summary and Conclusions
    81. 81. Effects on USO funding [1] <ul><li>Changes to the telecoms market arising from VoIP will change the net cost of providing universal service. Three effects contribute to this: </li></ul><ul><ul><li>long-distance and international voice call profits will be reduced </li></ul></ul><ul><ul><li>access network costs will be spread over fewer lines </li></ul></ul><ul><ul><li>there will be a loss of revenue as a result of ‘free’ services </li></ul></ul>Summary and Conclusions
    82. 82. Effects on USO funding [2] <ul><li>Regulators will need to monitor these effects, all three of which are relatively small in Europe. In the medium term, these effects will gradually increase pressure on the funding of USO </li></ul>Summary and Conclusions
    83. 83. Changes to regulatory costing <ul><li>IP-based voice technologies may change the underlying costs of providing certain regulated telecoms services (e.g. voice termination): </li></ul><ul><ul><li>this implies that in cases where the costs are used to set regulated prices (e.g. as a result of long-run incremental cost (LRIC) models), a forward-looking costing based on modern equivalent assets could, in some cases, use IP technologies </li></ul></ul><ul><li>In Analysys’s view this is not a new issue, although it may create considerable work for the regulators’ economists </li></ul>Summary and Conclusions
    84. 84. Overall conclusions [1] <ul><li>A transition to IP voice and associated convergent services is taking place </li></ul><ul><li>The NRF is suitable for handling this transition, but it would be best to address a number of issues before they become significant blocks to future market development </li></ul>Summary and Conclusions
    85. 85. Overall conclusions [2] <ul><li>The most significant issue is whether – and under what circumstances – VoIP is classified as PATS (with all the attendant obligations, of which the most important are access to emergency services and network integrity): </li></ul><ul><ul><li>early clarification of the policy in this area would be useful </li></ul></ul>Summary and Conclusions
    86. 86. Matters that merit further consideration [1] <ul><li>It may not be possible to provide the location of a caller making an emergency call using VoIP: </li></ul><ul><ul><li>Is this acceptable? </li></ul></ul><ul><ul><li>How should users be made aware of this? </li></ul></ul><ul><ul><li>What other steps are needed to provide such location information? </li></ul></ul><ul><li>VoIP services may not be as robust as the existing PSTN voice service: </li></ul><ul><ul><li>To what degree is a VoIP network carrying voice calls expected to be available? </li></ul></ul>Summary and Conclusions
    87. 87. Matters that merit further consideration [2] <ul><li>The existing national numbering plans could prove wholly inadequate if VoIP users (and hence service providers) require significant additional volumes of geographic and other types of numbers: </li></ul><ul><ul><li>NRAs should consider the implications of such a development now </li></ul></ul>Summary and Conclusions
    88. 88. Matters that merit further consideration [3] <ul><li>VoIP makes it possible to provide domestic or EU-wide voice services (or components of those services) from other countries: </li></ul><ul><ul><li>we recommend that the Member States and the NRAs consider whether this merits any change to current policy </li></ul></ul>Summary and Conclusions
    89. 89. Commission Presentation
    90. 90. Question and Answer Session
    91. 91. James Allen, Michael Kende, David Cleevely, Margaret Hopkins Analysys Consulting Limited 24 Castle St Cambridge CB3 0AJ www.analysys.com [email_address] [email_address] [email_address] [email_address]

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