Connect-World
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Preparing the World for IP Telephony:
The 2001 World Telecommunications Policy Forum
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Roberto BLOIS
Deputy Secretary-General
International Telecommunication Union
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No 002 - es
Internet Protocol (IP) Telephony is rapidly
reaching the top of the agenda for the telecommunications industry
worldwide. The possibility of transmitting voice over IP-based
networks, with all its challenges and associated opportunities, such
as voice and data integration, constitutes a milestone in the
convergence of the communications sector.
But, what is IP Telephony?
Internet Protocol (IP) Telephony is broadly defined
as the transmission of voice, fax and related services over
packet-switched IP-based networks. Internet Telephony and VoIP are
specific sub-sets of IP Telephony:
- Internet Telephony:
IP Telephony in which the principal transmission network is the
public Internet. (Internet Telephony is also commonly referred to as
"Voice-over-the-Net" (VON), "Internet Phone,"
and "Net Telephony" – with appropriate modifications to
refer to fax as well, such as "Internet Fax").
- Voice-over-IP (VoIP):
IP Telephony, in which the principal transmission network or
networks are private, managed IP-based networks (of any type).
(Depending on the type of network, you can have
"Voice-over-frame relay," "Voice-over-cable,"
and "Voice-over-DSL" or "VoDSL," as examples).
- The Public Internet (also referred to as the Internet): The global, public,
IP-based meta-network created by the interconnection of many public
and private IP-based networks.
IP Telephony began life as a curiosity among
computer hobbyists. Starting in around 1994, it first became possible
to send voice messages from one PC user to another, providing they
both had multimedia PCs and the same software. Crucially, both users
had to be logged on at the same time (see Table 1).
For many people, this first incarnation of IP
Telephony is still the one that comes to mind when the term is used.
But the industry has moved on. Nevertheless, PC-to-PC use is still
very popular, and has been given a recent boost by the popularity of
instant messaging combined with chat such as the Yahoo Messenger
service that offers free calls to anyone in the United States from
this popular portal site.
Starting around 1996, it became possible to convert
voice messages originating on the public Internet to telephone
subscribers on the public switched telephone network (PSTN). For a
while, PC-to-Phone became the dominant form of IP Telephony. The next
logical stage in market evolution occurred around 1997. By this stage,
IP Telephony was becoming "respectable" and attracting the
attention of the large established telecommunication manufacturers and
vendors.
At present, Phone-to-Phone is probably the biggest
segment of the market in terms of revenue, and it may also be the
largest in terms of minutes of international traffic too. There are
multiple operators, many of whom sell service via calling cards. As
more and more of the traditional PTOs (Public Telecommunication
Operator) enter the market, it is becoming harder to distinguish
between "pure" IP Telephony traffic and other traffic which
perhaps traverses an IP-based network at some stage of its journey but
which would otherwise be classified as normal PSTN telephony.
However, the initial gloss concerning "free
long distance over the Web" has begun to wear off as PTOs have
found technical difficulties in providing the equivalent functionality
over IP-based networks that customers expect over circuit-switched
networks. Also, the motivation for carriers (as wholesalers) to use
the Web, rather than the PSTN, has diminished as accounting rates have
come down towards cost and as many new least-cost routes have become
available on conventional networks.
Table 1: Examples of different "flavours"
of IP Telephony
1. PC-to-PC over IP
Needs similarly-equipped Internet users (e.g., with same IP
Telephony software, multimedia PC, etc), both logged-on
simultaneously.
Main applications: avoidance of usage-based telephone
charges, chat-rooms, company LANs etc.
Application providers include Firetalk, Phonefree.
Potential Market: probably less
than 100 million users? |
2. PC-to-Phone (or fax) over IP
Internet users with multimedia PC, able to call any phone or
fax user (not, at present, vice versa)
Main motivation: Reduced telephone charges,
"free" calls to US, Korea (Rep. of), Hongkong SAR etc.
Service providers include IDT, Net2Phone, DialPad
etc
Market potential: Sending, >350
million Web users; receiving >1.5 billion telephone/mobile
users |
3. Phone to Phone, (or fax to fax) over IP
Communication between any phone/fax/mobilephone user and any
other
Main motivation: reduced call charges, accounting rate
bypass, market entry for non-facilities-based carriers (e.g.,
via pre-paid cards)
Service providers include speak4free, I-link etc
Market potential: >1.5 billion phone/fax/mobilephones |
4. Phone / Web integration, over IP
Internet users with multimedia PC browse Website and choose
voice/video connection option
Phone users browse voice-activated websites, pick up email.
Main motivation: service provider can interact directly
with potential clients, via voice or video, for instance for
telemarketing, freephone access, computer/telephony integration,
m-commerce; user can access email from phone.
Service providers include NetCall, ITXC, Yac.com.
T2mail.com etc.
Market potential: >350 million Internet users and >
1.5 billion telephone / Mobilephone users |
Source: ITU
The motivation of price arbitrage is still the
driving force for Phone-to-Phone IP Telephony. However, the number of
markets where it is still a viable commercial proposition is
diminishing as competition spreads through the world.
In low-price, developed country markets, we are now
seeing a fourth stage of IP Telephony evolution that is characterised
by convergence. The main driver for IP technology in these markets is
the desire of service providers to offer value added services that
combine the functionality of the Web with the ease of use and ubiquity
of the telephone or mobilephone. Examples of this type of service
include unified messaging (e.g., access to voice-mail or fax messages
by telephone or mobilephone), number portability, and
"click-to-talk" functions on websites. ITXC’s "webtalkNOW!"
service demonstrates the possibilities for integrating voice into
e-commerce Websites.
Phone-to-Phone services most closely approximate
the traditional telephone experience and can display very good or very
poor quality, depending on the nature of the network or networks over
which packets are carried. While the Internet can be used as the
underlying means of transmission for Phone-to-Phone calls, it is much
more likely for these services to rely on closed, managed IP networks
and formal billing relationships among gateways and carriers. In that
respect, Phone-to-Phone VoIP services actually have very little to do
with the Internet, but rather operate nearly in parallel to the global
PSTN and its settlement rate system.
To the user, the fact that a particular call
travels for part of its journey via the Internet or another IP network
is irrelevant, as long as the price is low and the quality is
acceptable. For IP Telephony service providers (IPTSPs), the main
motivation is to reduce costs, particularly on the international leg
of a call.
There is scope for service providers to develop
commercial opportunities (Table 2). But, the boundaries that define
telephony from other services (such as radio, broadcasting, messaging)
are diminishing and with it the chances for voice only services.
Table 2: IP Tel wide range of commercial opportunities
Retail Phone-to-Phone Voice Services |
Wholesale Phone-to-Phone Voice Services |
Enhanced IP Telephony Applications |
Discount International Services via Access Numbers |
Least-cost-routing |
Enterprise Internal |
Pre-selected Long Distance and International - Mobile |
Call Termination |
Integrated voice/data
(real-time) |
Calling Cards |
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Integrated voice/data (messaging) |
Freephone Access |
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Integrated voice/video |
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Telemetry |
Source: ITU
IP Telephony technology now represents a
fully-fledged alternative to traditional circuit-switched
telecommunication equipment and services. The flexibility of IP
Telephony can be summed up in the term "XoIP," the
optimistic industry acronym for "anything over IP." The
basic IP Telephony technology can be extended to create limitless
possibilities for the transmission of voice alone, or in combination
with any other information that can be digitised.
While IP-based networks are optimised for the
carriage of data rather than voice, they can nevertheless carry voice
very competently and cheaply. Voice currently occupies less than half
the bandwidth available on international telecommunication networks,
and by the end of the coming decade, that percentage may well be below
1 per cent, by volume.
As of late 2000, more than three-quarters of
international traffic originated in countries in which the provision
of IP Telephony was liberalised. Furthermore, the majority of IP
Telephony now travels over managed, private IP networks as opposed to
the public Internet. It is estimated that the total volume of Voice
over Internet Protocol (VoIP) traffic carried over international
networks in 2001 will be around 6 billion minutes, or some 5.5 per
cent of the global total (see Figure 1). What is more significant,
however, is not so much the total volume of traffic as the rate of
growth, which continues to be exponential at a time when overall
international traffic growth appears to be slowing. It is also clear
that the market is still far from mature. One sign of this is that,
a new entrant, like DialPad.com, can enter the market, as it did
in October 1999, and steal a significant chunk of the market. It
claims to have carried some 1 billion calls, both domestic and
international, in its first year of operation from its 10 million
registered users.
Figure 1: Taking off
Voice over IP market growth, 1997-2001 and carrier
market shares, 2000
Source: ITU, adapted from TeleGeography Inc and company annual
reports.
But it is not only start-ups that are generating
excitement about IP Telephony. Major international PTOs have announced
that they will migrate all their international traffic onto IP
platforms. For instance, Cable & Wireless is spending more than
US$2 billion on a global IP network. It plans to use voice over
IP (VoIP) to deliver some 900 billion minutes of calls in
the year 2006 compared with just 675 million in 1999. It estimates
that VoIP technology will allow it to carry calls at a quarter of the
cost of doing so over a conventional, circuit-switched network.
The issue has become so important for the
telecommunications industry, that in July 2000 the ITU Council
selected IP Telephony as the topic of the third World
Telecommunication Policy Forum, to be held in Geneva, 7-9 March 2001.
While the Counsellors were united in recognising the importance of IP
Telephony, they did so for very different reasons. Some Counsellors
expressed the view that IP Telephony would become a key technology in
the coming convergence between circuit-switched and packet-switched
networks. Others saw the danger it posed to the revenue stream and
monopoly status of their incumbent public telecommunication operator
(PTO).
This reflects the fact that from a regulatory point
of view, IP Telephony is treated in widely divergent ways within ITU
Member States. In some countries governments have used the
definitional tools to allow the delivery of IP Telephony services to
the public in general in spite of the existence of market exclusivity
of the incumbent over basic voice telephony. In some others the
service is being completely prohibited, in others is being licensed
and promoted, while in some they are treated as just another
technological platform which can be adopted by telecommunication
operators.
The rise of IP Telephony across the globe—regardless
of the way it is delivered and the regulatory regime it bears—has,
nevertheless, profound implications for consumers, industry, and
national administrations. To address some of these implications the
third World Telecommunication Policy Forum will discuss and exchange
views on the theme of Internet Protocol (IP) Telephony, with the
following agenda:
- the general implications
of IP Telephony for the ITU membership with respect to: (a) the
telecommunications policies and regulations of ITU Member States;
(b) the implications of IP Telephony for developing countries,
particularly with respect to policies and regulatory frameworks, as
well as technical and economic aspects; (c) the impact of IP
Telephony on the operations of Sector Members, notably in terms of
the financial challenges and commercial opportunities it presents;
- actions to assist Member
States and Sector Members in adapting to the changes in the
telecommunication environment due to the emergence of IP Telephony,
including analysing the current situation (e.g. by case studies) and
formulating possible cooperative actions involving ITU Member States
and Sector Members to facilitate adaptation to the new environment;
- actions to assist Member
States and Sector Members in meeting the human resource development
challenges presented by new telecommunication technologies such as
IP Telephony, in particular, skills shortages and the need for
education, and technology transfer.
By hosting the 3rd World Telecommunication Policy
Forum on IP Telephony, the ITU and its membership (189 Member States
and more than 600 Sector Members - operators, manufacturers, financing
institutions, development agencies, etc.) are seeking to deepen
industry understanding of this new technology and its socioeconomic
and regulatory implications. The Forum also seeks to find areas of
common understanding among the currently divergent views of the best
ways of preparing the world for the arrival of IP Telephony.
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