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VoIP: Current Trends and Future Evolution · PDF file 2. Defining VoIP ITU Internet Report...

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  • TeleEvo 2006, Moscow, 25 October 2006 1

    Phillippa Biggs, Economist, ITU TeleEvo 2006

    Radisson SAS Slavyanskaya Hotel Moscow, 25 October 2006

    VoIP: Current Trends and

    Future Evolution

  • TeleEvo 2006, Moscow, 25 October 2006 2

    Agenda 1. Market drivers 2. Defining VoIP regulatory treatment 3. VoIP market 4. Future Evolution 5. Conclusions

  • TeleEvo 2006, Moscow, 25 October 2006 3

    Agenda 1. Market drivers:

    - IP as a key enabler NGN - Development of the broadband market - Price reductions (operators & consumers)

    2. Defining VoIP regulatory treatment 3. VoIP market 4. Future Evolution 5. Conclusions

  • TeleEvo 2006, Moscow, 25 October 2006 4

    1. Market drivers: IP as a key enabler

    Evolution from multiple separate networks (each optimized for one service) to a

    unified IP-based multi-service network

    Telephony

    Internet

    Television

    Multimedia Services

    Telephony

    Internet

    Television

    IP-based network

    Control layer

  • TeleEvo 2006, Moscow, 25 October 2006 5

    IP-enabled Next Generation Networks (NGN)

    ITU Workshop “What Rules for IP-enabled NGN?” 23-24 March 2006 - Policy and regulatory implications - Market developments - Issues surrounding interconnection and universal service

    http://http://www.itu.int/osg/spu/ngnwww.itu.int/osg/spu/ngn//

  • TeleEvo 2006, Moscow, 25 October 2006 6

    The transition towards NGN Old World

    (PSTN telecom) New World

    (IP-based Internet)

    Circuit-switched Packet-based, based on IP

    Interconnection P2P peering arrangements

    Capacity-based – QoS guaranteed Quality of Service (QoS) class (best effort)

    Cost orientation, focus on marginal cost Bundled offers: marginal costs near zero

    Calling Party Pays (CPP) Unclear… Bill and Keep? (Scott Marcus’ background paper and WIK Institute’s workshop on this subject).

    Key issues – asymmetric regulation (numbering, universal & emergency service)

    Unlicensed bands, spectrum trading, competition policy, emergency service

    Network-centric control & intelligence Edge-centric - intelligent nodes at edge

  • TeleEvo 2006, Moscow, 25 October 2006 7

    Forces driving VoIP (cont’d) • Consumers – cheaper, single provider,

    simplicity of flat-rate billing. • Operators: - Reduced costs of new & legacy networks - Tapping into growth in new markets; - Alliances with service and content providers, in

    new, converged business models - Growth in broadband networks.

  • TeleEvo 2006, Moscow, 25 October 2006 8

    Increasing availability of broadband… Number of countries with broadband

    commercially available

    81

    113 133

    145

    166

    0 20 40 60 80

    100 120 140 160 180

    2002 2003 2004 2005 2006 Source: ITU World Information Society Report.

    Source: ITU

  • TeleEvo 2006, Moscow, 25 October 2006 9

    …At faster speeds Growth in max. broadband speed available

    0

    5

    10

    15

    20

    25

    30

    35

    40

    25 6

    51 2

    76 8

    10 24

    12 80

    15 36

    17 92

    20 48

    23 04

    25 60

    28 16

    30 72

    33 28

    35 84

    M or

    e

    Speed (kbps)

    N um

    be r o

    f c ou

    nt rie

    s

    2003 2005 2006

    2005

    2003

    2006

    Source: ITU.

  • TeleEvo 2006, Moscow, 25 October 2006 10

    Growth in broadband in subscribers & share

    0

    100

    200

    300

    400

    500

    1995 1997 1999 2001 2003 2005

    Internet subscribers worldwide, in millions

    Fixed-line narrowband

    Fixed-line broadband

    Mobile broadband

    Source: ITU

  • TeleEvo 2006, Moscow, 25 October 2006 11

    International voice traffic (bn mins)

    15.5% 13.1%

    11.8% 7.4%

    4.8% 1.6%0.2%

    0

    25

    50

    75

    100

    125

    150

    175

    200

    1998 1999 2000 2001 2002 2003 2004

    VoIP

    PSTN As % of total

    Source: ITU.

  • TeleEvo 2006, Moscow, 25 October 2006 12

    Falling price (& revenue?) in int’l voice traffic

    3235 39

    44 51

    5863

    35

    40

    45

    50

    55

    60

    1998 1999 2000 2001 2002 2003 2004

    Revenue (US$bn) Price per minute (US cents)

    Source: ITU World Telecom. Indicators Database

  • TeleEvo 2006, Moscow, 25 October 2006 13

    Transition to VoIP: incentives for operators

    0%

    20%

    40%

    60%

    80%

    100%

    1995 1997 1999 2001 2003 2005

    Costs

    Competitors

    Profits

    Incentives in the Development of the Market (figurative)

    Time

    ??

  • TeleEvo 2006, Moscow, 25 October 2006 14

    But beware: price reductions for consumers!

    $16.81

    $37.44

    $60.74

    $34.28

    $28.20

    $12.94

    0

    10

    20

    30

    40

    50

    60

    70

    C os

    t ( U

    SD )

    2003 2005

    mobile basket -12% p.a.

    20 hours' Internet access -12.5% p.a.

    broadband ($/100 kbps) -20% p.a.

    Average cost of ICTs worldwide 2003-2005

  • TeleEvo 2006, Moscow, 25 October 2006 15

    Incentives with price reductions

    0%

    20%

    40%

    60%

    80%

    100%

    1 2 3 4 5 6 7 8 9 10 11 Costs

    Profits

    Incentives II (Taking into account declining costs)

    Time

    Costs

    Competitors

  • TeleEvo 2006, Moscow, 25 October 2006 16

    Agenda 1. Market drivers 2. Defining VoIP

    - ITU work and “working terminology” - Country definitions - Regulatory treatment

    3. VoIP market 4. Future Evolution 5. Conclusions

  • TeleEvo 2006, Moscow, 25 October 2006 17

    2. Defining VoIP ITU Internet Report 2001 IP Telephony IP Telephony – carriage of voice over IP-based networks irrespective of ownership Voice over Internet Protocol (VoIP) – voice traffic carried wholly or partly using IP over broadband networks competing with incumbent operators

  • TeleEvo 2006, Moscow, 25 October 2006 18

    2. Defining VoIP: Country definitions Definition Selected countries

    QoS, now replaced by Functionality

    India, Japan Hong Kong

    Numbering system Japan, Taiwan-China

    Netwk. Architecture Israel, Saudi Arabia

    Degree over PSTN & terminals used

    Israel, Jordan India, Japan, Malaysia, Spain

    Service Egypt, Barbados, Indonesia, Italy, Jordan, UK, United States.

    Users Australia, Chile, Tunisia

  • TeleEvo 2006, Moscow, 25 October 2006 19

    Regulatory status of IP Telephony, 2005

    2

    7 8

    33

    10

    5

    3

    2

    2

    5

    7

    2

    12 4 6

    4

    1 13

    3 3 3

    1 1

    3

    9

    0%

    20%

    40%

    60%

    80%

    100%

    Africa Americas Arab States Asia-Pacific Europe/CIS

    No policy for IP Telephony

    Prohibited

    Restricted

    Partial Competition

    Full Competition

    Note: Based on responses from 149 economies. “Prohibited” = no service is possible. “Restricted” = only licensed PTOs can offer service. “Partial competition” = non-licensed PTOs may use either IP networks or public Internet. “Full competition” = anyone can use or offer service. Source: ITU World Telecommunication Regulatory Database (2005 questionnaire).

  • TeleEvo 2006, Moscow, 25 October 2006 20

    The spectrum of regulatory treatment of VoIP, 2006

    Explicitly legal (57 countries +)

    Explicitly banned (at least 23 countries) Yet to be

    made legal- “Twilight Zone of regulatory ambiguity”

    “If in doubt, hold a Public Consultation” (22 countries

    +)

    “Under consideration” by gov’t/regulator (30+).

    Explicitly deregulated and/or light regulatory touch (19 countries+)

    License required (26 countries+)

  • TeleEvo 2006, Moscow, 25 October 2006 21

    & Russia? “Directive on Telematic Service”

    Source: http://www.minsvyaz.ru/site.shtml?id=3075

  • TeleEvo 2006, Moscow, 25 October 2006 22

    Agenda 1. Market drivers 2. Defining VoIP regulatory treatment 3. VoIP market

    - Subscribers & distribution - The problem of the missing millions - Revenues

    4. Future Evolution 5. Conclusions

  • TeleEvo 2006, Moscow, 25 October 2006 23

    3. VoIP market - strong growth Worldwide VoIP Subscribers

    0

    50

    100

    150

    200

    250

    300

    2005 2006 2007 2008 2009 2010 2011

    M ill

    io ns

    0

    2

    4

    6

    8

    10

    12

    14

    16

    18VoIP subscribers (millions) VoIP share of total mainline subscribers

    Source: IDATE.

  • TeleEvo 2006, Moscow, 25 October 2006 24

    Distribution of VoIP subscribers Distribution of VoIP sub

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