Regulating VOIP interconnection singapore IIR

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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.

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Regulating VOIP interconnection singapore IIR

  1. 1. Regulating VoIP Interconnection In Asia IIR’s VoIP Asia Congress 2006 Singapore July 11 – 13, 2006 Ahmad Nadeem Syed Director Interconnect Mobilink Pakistan Ahmad.n@mobilink.net
  2. 2. 2 VOIP - A Reality with Challenges VOIP is a reality And Interconnection on IP So is
  3. 3. 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. 4. 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. 5. 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 2000 2001 2002 2003 2004 2005 April-06 2006 CellularcustomersinPakistan(Million) Pakistan Market CPP Introduced Mobilink (an Orascom Company) Shares 56%
  6. 6. 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. 7. 7 NGN According to ITU ● A Next Generation Network in general is a o 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 characteristics o 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. 8. 8 IP Avenue NGNs On The Go! Services Telephone Services Data Services (WWW, e-mail, etc) Video Services (MMS, Movie, IPTVetc) NGN
  9. 9. 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 Saturated Closin g In On the Run Market Saturation
  10. 10. 10 Regulating VoIP Interconnection
  11. 11. 11 Widely Accepted Regulatory Objectives ● Protecting consumer rights and interest ● Ensuring fair competition to promote o efficient supply of telecom services o good quality of service o efficient prices ● Optimize use of scarce resource such radio spectrum
  12. 12. 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 account o Determination of call termination charge o Service Level Agreement (SLA) ● Ensuring QoS ● Minimizing cost of termination (Establishment of Interconnect Exchange or Peering House)
  13. 13. 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. 14. 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. 15. 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. 16. 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. 17. 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. 18. 18 Thank You ! Open for Discussion

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