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The Changing Landscape

Telecoms Academy i

DIPLOMA IN 21ST

CENTURYTELECOMMUNICATIONS


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ii Telecoms Academy

21st Century Communications


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Telecoms Academy 3

MODULE 1

THE CHANGING LANDSCAPE


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Index

Telecoms Academy iii

21ST CENTURY COMMUNICATIONS INDEX

Section 1 Telecommunication Networks 1

Module 1 The Changing Landscape 3

Lesson 1 Introduction 5

Legacy Networks 5

Structure and Requirements 5

Network Basics 6

Circuit switching 6

Packet switching 8

Standard Architecture 10

What is the Internet? 12

Self Assessment Multiple Choice 15

Self Assessment Multiple Choice Answer Grid 17

Lesson 2 Industry Trends 19

The Broadband Market 22



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Convergence and Multi-play Services 30

The Customers View 31

Convergence the Players 33



Section 1 End of Section Practice Paper 41


Section 2 &RQYHUJHQFH,VVXHV 47

Lesson 1 The Impact of the Internet and the Web 49

Legacy Service Delivery 49

Services Supported By The Internet 50

The Impact of Web 2.0 52What is Web 2.0? 52


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FMC evolution 60

FMC Players 62

Example FMC service (BT Fusion Service) 63

Background 63

The Unlicensed Mobile Access (UMA) Project 64

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Generic Radio Access 66

Roving 66

Handover 67



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How Advanced is the Market? 73

The NTL Telewest & Virgin Mobile 4 for 40 plan 74

Neuf Cegetels TWIN phone 76

Telecom Italia 77

Why are operators bothering with triple and quadruple play? 78

What are the potential risks? 79



Lesson 4 The Changing Role Of The Regulator 8

Protect Consumers against Monopoly Power 85

A key challenge for future licensing Convergence 86

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Regulatory approaches to implementing FMC 87

Common Carrier Approach 88

Horizontal Licensing Approach 88

Common Carrier Approach 89

Horizontal Licensing Approach 89


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Index

Telecoms Academy v



Section 2 Practice Paper 95

End of Section Practice Paper 97


Section 3 Operator Case Studies 103

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Company Positioning 109

Lesson 1 Questions 111

Lesson 1 Operator Case Studies 113

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Neuf Cegetel (France) 115

Country Background 115

Neuf Cegetel 117

Neuf Cegetel Strategy 117

Lesson 2 Question 121

Lesson 3 &DVH6WXG\7KH0RELOH1HWZRUN2SHUDWRU 3

Telecom Italia (Italy) 123


Telecom Italia 125

Telecom Italia - Strategy 125


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Virgin Media (UK) [Formerly NTL Telewest] 131


Virgin Media 133

Virgin Media Strategy 133


Section 3 Practice Paper 139

End of Section Practice Paper 141


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Telecoms Academy vii

21ST CENTURY COMMUNICATIONS OBJECTIVES

At the end of this module you should be able to:

Describe the architecture and capabilities of legacy telecommunication

networks

Explain the structure of the Internet and explain how it differs from telecoms

networks

Identify the main trends in the telecoms industry, including subscriber

numbers, revenues, services and technologies

Identify the various interpretations of convergence and describe the impact of

convergence on operators and customers

Understand the strategies of network operators and service providers as they

evolve to triple-play and quad-play service packages

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development

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operators can support FMC

Identify the main drivers for multiplay services and describe the possible

impacts on the operators business model

Understand how the role of the regulator will change with the advent of multi-

play services and convergence


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Telecoms Academy 1

SECTION 1

TELECOMMUNICATION NETWORKS


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Telecoms Academy 5

LESSON 1 INTRODUCTION

This module commences by reviewing the network architectures of legacy networks and

the technology deployed in these networks. This is supported by a snapshot of industry

trends in terms of subscriber numbers, revenues which provide a commercial start point

for the remainder of the module.

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services and analysing the motivation for various network operators to offer multi-play.

Also considered is the impact of the Internet and the Web on telecoms and broadcasting

so that the changing landscape can be explored the blurring of lines between telcos,

broadcasters and Internet Service Providers is examined as each of these cross the

traditional boundaries between market segments.

Finally the module contains some case studies of diverse organisations that have

commenced their multi-play service offerings in various markets, these are used to

illustrate how the whole market is changing and will be engaged by a range of different

organisations.

Legacy Networks

An operational telecommunications network is that which provides services, features, and

access to applications for telecommunications customers. In most networks, the range

and complexity of services and features is growing rapidly, and any infrastructure put

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effective.

Structure and Requirements

It is extremely important to the overall business plan to get the structure of the operational

network right. This means choosing the right vendors, implementing the right service

solutions, and ensuring the equipment is updated regularly as new software revisions are

provided.

However, these considerations only deal with the services offered to the user, andalthough it is essential to get this mix right, it only forms part of the overall requirement.


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Other factors such as a high degree of reliability and redundancy, rapid service

implementation and provisioning, and integration with an effective Operational Support

System is equally important to ensure that overall customer satisfaction is as high as

possible.

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that allows the advanced features and services (which are now a part of most modern

networks) to be offered reliably and at a cost that matches the needs of the customer and

business case, whilst keeping costs to a minimum, but allowing for rapid provisioning and

for any future capacity requirements.

Operational Network

Effective and Flexible infrastructure

- calable

tandard interfaces

ost e ective

High degree o reliability and redundancy

apable of supporting advanced services and products

ac tate rap prov s on ng Be fully integrated with systems such as billing and OSS

etwor asics

Circuit switching

In circuit switched networks a dedicated path is setup between the two parties. This path

remains for the exclusive use of both parties for the duration of the call, and is therefore

not available to any other users.

There is a delay involved in setting up circuit switched calls as each of the switching

nodes has to route the call. However the actual delays encountered once the connection

has been established are minimal. This makes circuit switching ideal for voice and other

real time applications.


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Telecoms Academy 7

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conversation there are periods when neither party is talking, but the connection is still tied

up and unavailable for other users. Similarly bursty data, which has gaps between the

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Charging for circuit switched services is generally based on the duration of the call.

The Public Switched Telephone Network (PSTN) and the Integrated Services Digital

Network (ISDN) are examples where circuit switching is employed.


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Figure 1 Circuit Switching in Telecommunications Networks

Packet switching

Packet switching involves dividing the data to be transmitted into packets (or cells or

frames) prior to transmission. The length of the packets varies enormously depending on

the technology employed.

Added to each packet is the destination address together with other control information.

The packets are then transmitted across the network, due to this addressing there a no

requirement to use a pre-established link. To some extent each individual packet can be

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Telecoms Academy 9

In a packet switched network the resources are shared between many users. This leads

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However with packet switching there is a danger of congestion occurring. The subsequent

delays are both variable and unpredictable. Much effort has been put into reducing these

delays for applications that require near real-time transmission such as voice telephony.

When data is divided into packets it does not follow that all the packets which contain

the original data will follow the same route to the destination. This can mean that packets

arrive out of sequence and have to be re-assembled in the correct order before delivery to

the recipient.

Examples of packet switching technologies include X25, Frame Relay, ATM and the

Internet. As it is possible to charge for throughput rather than duration within a packet

switched network, it is more feasible to have permanent online connections than can be

provided for by traditional circuit switched networks.

Most commentators see packet switching as the future backbone of new high-bandwidth

telecommunications services.


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Figure 2 Packet Switching in Telecommunications Networks

Standard Architecture

A generic telecommunications network architecture consists of multiple access networks

and a core network. The core network is split into a Circuit-Switched (CS) Domain and a

Packet-Switched (PS) Domain.

These domains could represent either the PSTN (CS) and IP Core Network used for

Asymmetric Digital Subscriber Line (ADSL) access (PS), or maybe the GSM Circuit

Switched network and GPRS. In either case, standard interfaces are provided between

the relevant network elements.


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Telecoms Academy 11

In addition, the networks support standard interfaces to act as gateways into the

wider world of telecommunications (either the Internet, corporate intranets, or other

CS networks. Services are supported by functionality within the switching elements

themselves, or (increasingly) within standalone servers, or families of servers.

Third party service providers are being provided with standard interfaces in the form

of APIs (Application Programming Interfaces), through which they can gain access to

network information for the purposes of service provision. They are becoming more

widespread, and examples include interfaces known as Parlay, JAIN, and OSA (for the

mobile environment).

Billing and other real time support functions also have connections to relevant operational

network elements.

Figure 3 Generic Telecommunications Network Architecture


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What is the Internet?

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within any of the interconnected networks easily. Standard communication protocols have

been established so that even computers running different operating systems may work

together on the Internet.

The Internet is designed so that should a particular segment fail, the rest of the network

will continue to function. It was the desire to produce a fault-tolerant network that was one

of the US Department of Defenses aims in commissioning the work on the pre-Internet

Arpanet.

The Internet is not owned by any single government, company or individual. It is not

controlled at any one location and so is a decentralised network.

There are a number of organisations that control certain aspects of the Internet such as

the allocation of domain names. However there is no dedicated police force that controls

the content of the Internet. Some of the bodies involved in the setting of standards on the

Internet are listed below:

the World Wide Web Consortium (W3C) sets the standards for HTML and the

development of the WWW

the Internet Engineering Task Force (IETF) focuses on the evolution of the

Internet

the Internet Assigned Numbers Authority (IANA) leads the organisations

responsible for assigning IP addresses

and the internet Network Information Centre (InterNIC) is responsible for

assigning domain names.


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Telecoms Academy 13

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Figure 4 The Internet

The Internet InfrastructureInfrastructure

Internet Service Providers (ISPs) provide access points into the Internet for dial up,

corporate and mobile users. ISPs vary in size enormously, with anything between 100s

and 10s of millions of customers. Almost anyone can setup business as an ISP all

that is required is the basic infrastructure equipment and a connection to a larger ISP. It

remains to be seen whether the smaller ISPs will ultimately survive or whether eventuallythere will be only the large players left in the market.


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The largest ISPs with their own backbone networks are often referred to as Network

Service Providers. Some of these have invested in global networks that provide national

and international connections with very high bandwidths.

Obviously there is a need for the larger Internet backbone networks to be connected

together. This happens at Network Access Points (NAPs) and Metropolitan Area

Exchanges (MAEs). NAPs and MAEs perform the same function, but in general MAEs are

privately owned and operated.

An example of a NAP is Telehouse situated in Docklands, London, UK. Within the

centre, a number of NSPs house terminal equipment so that their networks may be

interconnected.

In the early days of the Internet it was possible to map out all of its connections on a

single piece of paper. This is now an impossibility as the Internet now comprises huge

amounts of interconnections and multitudes of nodes. Most ISPs and NSPs do however

have detailed maps on their web pages of their own networks.

Figure 5 Internet Architecture


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Telecoms Academy 15

Self Assessment Multiple Choice

Legacy Networks

Q1.

Which of the following networks typically employs circuit-switching?

a) The Public Switched Telephone Network (PSTN)

b) The Internet

c) X.25-based networks

d) GPRS mobile networks

Q2.

Which of the following is not a packet-based technology?

a) Asynchronous Transfer Mode (ATM)

b) Synchronous Digital Hierarchy (SDH)

c) Internet Protocol (IP)

d) ITU X.25

Q3.

A third-party application developer may deliver services in to a telecommunications

network by means of:

a) The Access Network (AN)

b) The Packet Switched (PS) Core

c) An Application Programming Interface (API)

d) The Operational Support Subsystem (OSS)

Q4.

Which body is responsible for setting Internet standards?

a) World Wide Web Consortium (W3C)

b) The Internet Engineering Task Force (IETF)

c) The Internet Assigned Numbers Authority (IANA)

d) Internet Network Information Centre (InterNIC)


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Q5.

The role of an Internet Service Provider (ISP) is:

a) Provide high-capacity backbone Internet connections

b) Deliver services such as Voice over IP (VoIP)

c) Provide billing services for Internet application developers

d) Provide Internet access for individual and corporate users


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Self Assessment Multiple Choice Answer Grid

Transfer your answers onto the grid for easy assessment and future reference

Name...

Question set

Question a b c d

1

2

3

4

5


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LESSON 2 INDUSTRY TRENDS

Although there is what could be described as a set of general trends within the telecoms

segment, each region, country and even operator occupies their particular point within

those trend curves. For example many western European markets are saturated or close

to saturation whereas the same can not be said of many African or Far Eastern markets.

However, the general trends are:

% subscriber number growth slowing (some exceptions)

% Average Revenue Per Subscriber (ARPU), static or falling

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% rapid growth in broadband access

% xDSL (Digital Subscriber Line) being the most common broadband access

% operator growth will come from new services (rather than increased revenue or

greater subscriber numbers)

Figure 6 Broadband v PSTN Revenues


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Figure 7 Share of Broadband Market

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region. Elsewhere the market is nearing, or has reached, saturation and with subscriber

(subscription) levels are over 100% there is little growth in these markets. In addition

revenues (ARPU) are decreasing and therefore operators can only increase revenues

by taking market share from competitors and generating new revenue streams from new

services.


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Figure 8 Service Revenue Trends

Figure 9 Mobile Subscriber Numbers


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Figure 10 Mobile Subscriber Penetration Forecasts

The Broadband Market

One result of price competition across all broadband industry segments is an important

shift in revenues between sub sectors of the industry. The coming years will see a decline

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at least in developed markets. Mobile data, it is hoped, will in time replace lost revenues

from voice and straightforward broadband connections. Separately, revenues will also be

derived from offering a bundle of services together.

Convergence meanwhile will intensify competition, both due to the lower-cost technology

and a speedier time to market, as well as the ability for both types of operators to play in

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more and more operators launch triple plays which bundle not only services but also

revenues. For example, the Total Broadband package offered by the UK incumbent


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Telecoms Academy 23

BT will, when its IPTV service is ready, comprise voice calls, including access to its

converged offering Fusion (via Wi-Fi), access to broadband Internet and access to its

IPTV service BT Vision (available in autumn 2006). Similarly, in France Neuf Cegetel is

offering a triple-play package for E29.90 (US$38) to new subscribers. The subscription

comprises the Wi-Fi enabled Neuf Box, capable of 20Mbps Internet access, unlimited

telephone calls and a 60-channel Neuf TV service.

Other triple play launches, such as China Network Systems VoIP, cable TV and

broadband triple play in Taiwan and Deutsche Telekoms plans with Alcatel to deploy triple

play services in 10 German cities, will share the common characteristic that the revenue is

for the bundle, not split out for the services that comprise it.

And a fourth element is being added to the triple play. If NTLs quad-play model, a product

of the merger between NTL and Virgin Mobile, is replicated elsewhere as expected, the

blurring of revenue origination will go further.

Figure 11 The Global Broadband Market


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Figure 12 - Regional Broadband Market Breakdown


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Telecoms Academy 25


Industry Trends

Q1.

In a mature telecommunications market, how is a network operator most likely to

successfully increase revenues?

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b) Raising prices for all services

c) Introducing new, and innovative services

d) Locking customers into long-term service contracts

Q2.

On a global basis over the period to 2011 the dominant form of broadband access is

predicted to be:

a) Mobile networks such as UMTS or CDMA2000

b) Digital Subscriber Line (DSL)

c) Cable networks

d) Satellite-based networks

Q3.

Many network operators are trying to secure revenues by:

a) Offering multiplay services

b) Focusing on one main service, e.g. voice

c) Developing their own television content

d) Deploying multiple parallel network architectures

Q4.

Classical triple-play is combination of which services?

a) Telephony, Internet and Television

b) Telephony, Mobile and Internet

c) Mobile, Internet and Television

d) Telephony, Mobile and Internet


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LESSON 3 DEFINING CONVERGENCE AND

CONVERGENCE MODELS

The term convergence means different things to different people in different contexts.

In the telecom billing arena the term is generally used to refer issuing a customer with

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telephony, telephony and utilities such as gas and water. At the end of the last century this

was the general usage of the word.

More recently convergence has increasingly been used in relation to the bringing together

of the billing of postpaid and prepaid mobile services. Prepaid mobile has been a huge

success worldwide. Initially it was seen more as a service for users generating a low

ARPU (average revenue per user) and the more credit-challenged, but it quickly became

a payment method of choice for many.

The introduction of data services via GPRS and now 3G has introduced another element

into the equation. On the one hand some prepaid service users may be deterred from

using high-cost services by the need to prepay. On the other hand, postpaid users may

wish to limit their risk by having pre-set limits attached to their use of data services.

Both of these scenarios ideally require the ability to provide and charge for prepaid and

postpaid services on a single SIM card.

Operators recognise the value of offering bundles or plans to both business and family

users. A number of handsets, which may be a combination of prepaid and postpaid,

are supplied to a company or family, but they are billed to a single point. There are also

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customers and apply certain tariffs regardless of the customers payment method.

Outside of billing considerations, convergence is also used to represent the any

content anywhere requirements of todays customers. Convergence may be a technical

convergence within a telecoms network, such as that being undertaken by British Telecom

(BT) in the UK, or it may be the use of converged devices by end users.


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ubstitution vs convergence?

ingle bill?

low-cost bundle?

ingle device

ingle network

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Many countries are reaching a pivotal point in the evolution of their telecoms and media

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after many years of talk, actually starting to converge. Individual companies are offering

a full range of services and content and some are not too far (perhaps a couple of years)

from being able to offer them all in a seamless fashion across a range of devices.

Leading markets are characterised by a clash between heavyweight players from the

telecoms and pay-TV industries and jockeying for position is intense. Media noise and

media manipulation is at a high, as investments are running into many billions of dollars

and players are keen to ensure their new triple and quadruple play service offerings do not

enter the market with a whimper.

Operators that can exploit quadruple play packaging as well as (or better than) the

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telephony, potentially have a lot to gain. New entrants hope to use quadruple play to win

new customers and expand market share. Market leaders hope to use the quadruple play

to retain share and reduce churn.

But there is also a lot to lose. If the world evolves in the way many operators would like

it to (i.e. people using a range of device and network-agnostic applications, services

and content), the industry is going to go through a pretty major transformation and many

providers will get it wrong, and disappear.


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Telecoms Academy 31

Facing a slowing market but increasing competition in many countries, mobile operators

have a dilemma. They need to replace falling voice revenues with data. To do that they

need to decide whether future customers will be happy to buy everything over mobile,

or whether a mobile-only play will look unattractive in comparison with fully converged

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accompaniment to their mobile services they must divide their attentions and their

investments. They must also choose whether to build or whether to buy wholesale in order

to enter adjacent markets. If they choose to invest in their own networks, they could spend

millions of dollars without gaining much in terms of revenue or market share. Worse still,

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rivals innovations.

The Customers View

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result from taking multiple services from the same operator. The customer should get a

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to add extra services, or changes to existing services, should make the customer feel in

control.

However, there are potential issues, particularly for network operators, as a problem with

one service may result in a customer churning and the loss of revenue for a whole bundle

of services. This is where the importance and strength of a brand has a key role to play.


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+ cheaper?

more predictable?

more convenient?

extra services?

respected brand?

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less choice?

more expensive?

poorer quality?disrespected brand?

The key driver for network operators, when considering convergence, is the generation

of new or extra streams of revenue. This is particularly relevant in the many markets

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subscriber revenues.

The potential of convergence or multi-play can be illustrated by analysing the Average

Revenue Per User (ARPU) for a range of bundled service options.


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Telecoms Academy 33

Figure 13 The Financial Impact of Convergence

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A wide range of organisations are positioned, or are positioning themselves, to offer

converged services. They include the traditional telecoms network operators (telcos) and

Virtual Network Operators (VNOs), mobile operators and MVNOs, broadcasters and even

Internet Service Providers (ISPs), who on the back of broadband delivery can offer other

bundled services.

It is also evident that other new players from outside of these sectors are entering the

converged services market due to the liberalisation of telecoms and their ability to accessconnections to customers (for example through local loop unbundling [LLU]).


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Figure 14 Multi-play/Converged Services The Players


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Q1.

Which of the following is not an example of convergence?

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b) Multiple services delivered over a single network

c) Multiple services delivered to a single device

d) A single bill for multiple services

Q2.

A market leader is most likely to deploy quadruple play services to:

a) Retain market share and minimise churn

b) Attract new customers and increase market share

c) Prevent other market players from offering quadruple play

d) Increase the revenues from core services such as telephony

Q3.

What type of network operator or service provider is likely to start by providing broadband

connectivity and adding telephony followed by television to this service?

a) Broadcaster

b) Mobile Virtual Network Operator

c) Fixed line operator

d) Internet Service Provider


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SECTION 1

PRACTICE PAPER


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End of Section Practice Paper

Describe the difference between circuit switching and packet switching and explain why

packet switching will be the basis of next generation telecoms networks.

What is the role of an Internet Service Provider (ISP) and where is an ISP positioned in

terms of the architecture of the Internet?

In many countries the revenue generated from PSTN services is in decline, explain the

factors that are producing this trend.

List the technologies that can be used to provide subscribers with broadband access to

telecoms services.

Give three different interpretations of the term convergence and describe how

convergence is most visible to the end-user.


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Q1.

Which of the following networks typically employs circuit-switching?

a) The Public Switched Telephone Network (PSTN)

b) The Internet

c) X.25-based networks

d) GPRS mobile networks

Q2.

A third-party application developer may deliver services in to a telecommunications

network by means of:

a) The Access Network (AN)

b) The Packet Switched (PS) Core

c) An Application Programming Interface (API)

d) The Operational Support Subsystem (OSS)

Q3.

Which body is responsible for assigning IP addresses?

a) World Wide Web Consortium (W3C)

b) The Internet Engineering Task Force (IETF)

c) The Internet Assigned Numbers Authority (IANA)

d) Internet Network Information Centre (InterNIC)

Q4.

The role of an Internet Service Provider (ISP) is:

a) Provide high-capacity backbone Internet connections

b) Deliver services such as Voice over IP (VoIP)

c) Provide billing services for Internet application developers

d) Provide Internet access for individual and corporate users


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Telecoms Academy 43

Q5.

On a global basis over the period to 2011 the dominant form of broadband access is

predicted to be:

a) Mobile networks such as UMTS or CDMA2000

b) Digital Subscriber Line (DSL)

c) Cable networks

d) Satellite-based networks

Q6. Classical triple-play is combination of which services?

a) Telephony, Internet and Television

b) Telephony, Mobile and Internet

c) Mobile, Internet and Television

d) Telephony, Mobile and Internet

Q7. A new market entrant is most likely to deploy quadruple play services to:

a) Retain market share and minimise churn

b) Attract new customers and increase market share

c) Prevent other market players from offering quadruple play

d) Increase the revenues from core services such as telephony


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