1. IP Telephony: Challenges and Perspectives for Emerging Countries
ITU/BDT Arab Regional Workshop
on« IP Applications and Digital Divide »
Tunis: June 17-19, 2003
Jean-Marie Blanchard
Business Development Director
Souheil Marine
Business Development Manager

2. Presentation Plan “IP telephony” positioning…. in emerging countries
Key challenges and strategic issues
What is “IP Telephony” ?
Comparing the Telephony and Internet models
When can we speak about IP Telephony ?
Main “IP Telephony” usage patterns
LD inbound voice traffic
Local outbound voice traffic
NGN evolution of PSTN/PLMN networks
Conclusion

3. Today’s Challenges for Telecom Operators
Market growth
New value added services on voice lines and Mobile explosion
Broadband access and Internet/data services
Network evolution and voice-data convergence
High growth of data and Internet traffic
Maturing packet technology (with QoS)
(Unregulated) competition from Internet telephony
Cost reduction and new revenues
CAPEX and OPEX optimisation
Introduction of new services and applications
New business models (VNO, retail, hosting, etc.)
Unlike in the late nineties, the telecommunications sector is no longer driven by the prospects of unlimited growth. In order to create value for their shareholders, Telecom Operators are looking for market growth, cost improvements, increased productivity and new revenues.
A majority of Service Providers (mainly in saturated markets) see their income from traditional voice services –especially residential ones– declining. They are counting on NGN technology to optimise network operations, and to offer a wide range of new data and multimedia services, giving them access to new revenues and differentiating them from the competition.
To maintain a leading position in the public telecom market, network operators need to move up the value chain from offering commodity services to high value customised services, mixing communication with electronic business and commerce services.

4. Traditional Voice Revenue are strongly threatened !
International Voice Revenues
are sharply decreasing
Accounting rate,
Calling Card services,
Inbound Voice over Internet
National and Local Revenues
are disturbed
«Churn» to mobile,
Lack of profitable Internet services,
Outbound Voice over Internet
Network modernization
Service offer evolution
Is IP Telephony a threat or an opportunity?

5. Winners and Losers International Voice Revenue Evolution
PSTN
Foreign
Telco DC
Telco
Internet
-82c DC
ISP
+44c
+38c
135c.
40c.
2c.
Call from Abroad to Developing Country (cents per minute)
Accounting rate system
Telephone over Internet
Source ITU

6. What is “IP Telephony”?
Voice over IP: sending voice streams over Internet … using IP protocol
IP : Internetworking Protocol
Introduced more than 30 years ago to interconnect data networks irrespective of any kind of application
Is a packet-based connectionless protocol
Best Effort is the a priori routing method
Not suitable for real-time applications
Voice is real-time
Ad-hoc protocols added on top of IP to ensure real-time properties: DiffServ, IntServ, MPLS,….
Is IP Telephony just a streaming of voice over IP or real Telephony service?

7. Merged application control and transport planes
Telephony Model
Merged application control and transport planes
Operator 1 Domain
Operator 2 Domain
Three-Party model : call is a network service
Distinct user/network and network/network protocols
Quality of Service (QoS) guaranteed by resource reservation, state maintenance, and network design
Universal reach : interconnection agreements at service level and a universal naming for the telephony service
Charging related to the amount of used service and distance

8. Separate application control and transport planes
Internet Model
Separate application control and transport planes
Operator 2
Domain
Operator 1
Two-Party model: applications hosted by end-users
Protocol per application: identical between UE and AS
QoS ensured upon explicit user requests
Interconnection at transport level: universal reach per application by proper naming and Server Interconnection
Charging related to amount of transported data
Application
Server (AS)
User
Equipment (UE)

9. When can we speak of IP Telephony?
PC to PC
VoIP is yet another Internet Application, “free” after…
Connecting through a phone line to the ISP premises
Not a Telephony service
PC-to-Phone
Implies a party that handles the interconnection with the PSTN/PLMN through a Gateway device
Is a service at least for the Telephony termination part
Voice quality depends on the traversed IP networks
Phone-to-Phone
IP as a replacement of legacy TDM circuit for costs savings but mainly for new services and revenues
Long-distance bypass or part of the PLMN/PSTN operator NGN migration story

10. Presentation Plan “IP telephony” positioning in emerging countries
Key challenges and strategic issues
What is “IP Telephony” ?
Comparing the Telephony and Internet models
When can we speak about IP Telephony ?
Main “IP Telephony” usage patterns
LD inbound voice traffic
Local outbound voice traffic
NGN evolution of PSTN/PLMN networks
Conclusion

11. Winners and Losers International Voice Revenue Evolution
PSTN
Foreign
Telco DC
Telco
Internet
-82c DC
ISP
+44c
+38c
135c.
40c.
2c.
Call from Abroad to Developing Country (cents per minute)
Accounting rate system
Telephone over Internet
Source ITU

12. 3 2 1 Expatriates calling their familly in originating country (1)
E-banking 3
Prepaid
Application
Server 2
Portal
Call Control
(Softswitch) 1
Emerging
Country
Cybercafé
or Home PC
PSTN
VoIP GW
Industrialised
Country

13. 4 5 7 Expatriates calling their familly in originating country (2)
E-banking
Prepaid
Application
Server
Portal
Call Control
(Softswitch) 4 5
Emerging
Country
Cybercafé
or Home PC 7
Industrialised
Country
VoIP GW
PSTN

14. Presentation Plan “IP telephony” positioning in emerging countries
Key challenges and strategic issues
What is “IP Telephony” ?
Comparing the Telephony and Internet models
When can we speak about IP Telephony ?
Main “IP Telephony” usage patterns
LD inbound voice traffic
Local outbound voice traffic
NGN evolution of PSTN/PLMN networks
Conclusion

15. VoIP: the “Killer” IP application ?
Typical application:Telephone call from Cyber cafés
Lower cost for end-users
No guarantee for QoS
Physical access line is still needed (70% on Network cost)
Unauthorized access ?
Loss of revenue when outbound LD traffic leaves country from “unregulated” Internet outlets instead of regulated Telephone connection
Still an opportunity exist for operators to counter-attack
Lower cost alternative long distance IP Telephony service to some destinations (ex: SingTel)
Interest for general public and SME

16. SingTel’s International Long Distance Service

17. Presentation Plan “IP telephony” positioning in emerging countries
Key challenges and strategic issues
What is “IP Telephony” ?
Comparing the Telephony and Internet models
When can we speak about IP Telephony ?
Main “IP Telephony” usage patterns
LD inbound voice traffic
Local outbound voice traffic
NGN evolution of PSTN/PLMN networks
Conclusion

18. Main Drivers for Network Evolution
PSTN
(TDM-based)
Data
(IP or ATM)
SS7
NB access
BB access
POTS/ISDN
H.323/SIP
xDSL
Dial-up
CAPEX/OPEX
optimisation
New revenue
generation
Inter-
working
Migration to Next Generation networks is driven by:
Cost optimisation: network operators want to reduce their capital investments (CAPEX) and operational expenses (OPEX). By combining voice and data into one NGN, some cost savings and important efficiency improvements can be realised. In addition the use of fewer intelligent nodes (softswitches and application servers) will simplify network management and service provisioning, which in turn will lead to lower operating expenses for the operator.
New revenue generation: The introduction of data networks and broadband access enables a wide range of new data and multimedia services to be deployed. These services will allow carriers to tap new revenue sources, and to differentiate themselves from and compete with traditional stakeholders and new entrants.

19. Next Generation Network
Network Convergence
PSTN
(TDM-based)
Data
(IP or ATM)
SS7
NB access
BB access
POTS/ISDN
H.323/SIP
xDSL
Dial-up
CAPEX/OPEX
optimisation
New revenue
generation
Inter-
working
Next Generation Network
Migration to Next Generation networks is driven by:
Cost optimisation: network operators want to reduce their capital investments (CAPEX) and operational expenses (OPEX). By combining voice and data into one NGN, some cost savings and important efficiency improvements can be realised. In addition the use of fewer intelligent nodes (softswitches and application servers) will simplify network management and service provisioning, which in turn will lead to lower operating expenses for the operator.
New revenue generation: The introduction of data networks and broadband access enables a wide range of new data and multimedia services to be deployed. These services will allow carriers to tap new revenue sources, and to differentiate themselves from and compete with traditional stakeholders and new entrants.

20. NGN Architecture Principles (1) Distributed Architecture
Traditional
Circuit Switch
Line
Cards
Trunk
Switching
Matrix
Connection
Control
IP or ATM
Access
Gateways
Trunking
Softswitch
+ IP Terminals
NGN
One of the basic principles of Next Generation Voice Networks is distribution.
In traditional circuit switches, all functions are implemented on a centralised hardware platform:
The switching matrix, routing the calls inside the switch;
Line cards, terminating the subscriber lines;
Trunk cards, terminating the trunk lines;
Connection control software, extended with supplementary services and IN service switching function (SSF).
In a distributed NGN architecture, however:
the call routing function is provided by the packet network;
Line side termination is offered through Access Gateways;
Trunk side termination is offered through Trunking Gateways;
Connection control, supplementary services and SSF are offered as software modules on a Softswitch server platform.
New service capabilities will be enabled through IP terminals

21. NGN Architecture Principles (2) Layered Model
Enterprise customers
Remote office / SOHO
Residential users
Access and Transport Layer
Media Layer
Control Layer
PSTN/ PLMN
IMS UMTS
Access
Fixed BB Access
LAN
3G mobile users
Service Layer
The NGN concept is based a layered model:
the Access Layer, integrating different access (POTS, ISDN, GSM, GPRS, UMTS, ADSL, Cable, LAN, ...) and transport (ATM, IP, TDM, ...) technologies;
the Media Layer, providing conversion services between the different voice and data streams and assuring interoperability with existing networks at the bearer level (e.g. TDM and PLMN);
the Control Layer, controlling end-to-end resources (calls, sessions, streams) over the network, providing an interface to charging and billing systems, and assuring interoperability with existing networks at the signalling layer (e.g. SS7);
the Service Layer, offering a wide variety of Value Added Services, that are using the network’s control and transport capabilities.

22. NGN Migration Rationale
Migration of current telephony networks (2 billion users worldwide) should preserve the existing investments
Key investments are in provisioning access for end-users to the network services (80% of the costs)
Technological changes become costlier when they get closer to end-users
Migration must be driven by basic principles
Continuity of services offered to end-users
Inter-working between new and old technologies
Cost control of the migration process
Migration must be driven by Economy not by Technology first
Network consolidation and optimization and/or
New revenues driven from new services

23. Key Drivers for stepwise Migration to NGN
Terminal interface Packetisation
Offload Trunk Voice traffic
Multiservices Multi-access
Internet & Data Services
Multimedia Services
DISTRIBUTED
MULTISERVICES
Migration to Next Generation networks is driven by:
Cost optimisation: network operators want to reduce their capital investments (CAPEX) and operational expenses (OPEX). By combining voice and data into one NGN, some cost savings and important efficiency improvements can be realised. In addition the use of fewer intelligent nodes (softswitches and application servers) will simplify network management and service provisioning, which in turn will lead to lower operating expenses for the operator.
New revenue generation: The introduction of data networks and broadband access enables a wide range of new data and multimedia services to be deployed. These services will allow carriers to tap new revenue sources, and to differentiate themselves from and compete with traditional stakeholders and new entrants.
CENTRALIZED
PSTN
VOICE

24. Converged Internet/Telephony services
POTS,
ISDN
Local
Voice
Data
Signaling
Internet
Packet
Network
Dial-up
Modem
DSLAM
BAS
DSL Modem
‘PINT’, ‘SPIRITS’
Parlay, JAIN, SIP
Application
Servers
WWW
SS7
Transit
TDM
STP
INAP
ISUP
Access Node
SCP
NAS
ISDN/PRA
ApGW

25. Replacing TDM trunks with Voice over Packet
Packet Network
SS7
Local or Transit
SCP
STP
TDM
INAP
BICC
Voice
Data
Voice/Packet
Signaling
Internet
Integrated Gateway
ISUP
Transit
H.248
ISUP, BICC, SIP-T
Softswitch or Switch with MGC function
This example illustrates how convergence between voice and data services can happen; that is voice and data are transported over the same packet network. The operator begins to gradually offload the voice traffic at trunking level towards a packet transport network.
This step can be motivated by the development of such a packet network for the purposes of supporting increased data traffic and its proximity with the consolidated exchanges.
It should be pointed out that this step brings further network consolidation by allowing to remove an upper transit level or optimizing a given transit level (end-to-end connections between network elements)
This step is based on the introduction of switches with integrated gateways or alternatively by using external trunking gateways controlled by a Switch with Media Gateway Control (MGC) function or a Softswitch
Here the signaling used between switches and/or softswitches is still drawn from the signaling system number 7. It is the so-called the Bearer Independent Call Control (or BICC signaling) that relays a call information independently from the technology of the bearer that support it (contrary to ISUP that assumes that the bearer is a circuit within a TDM trunk). Use of BICC ensures a complete interoperability with the legacy telephony services
We should point out here that we have a complete reuse of existing IN services towards end-users and complete service transparency of the use of voice over Packet at the core of the network. The user is completely unaware of the technology change
Most important the same level of Quality of Service is ensured as over legacy TDM transport and this step represents to the operator teams a first mastering of voice over packet technology at aggregate level where we have simpler Quality of Service issues as if we would like to offer quality for each individual call.

26. Voice over Packet down to user’s access
Switch with MGC function or Softswitch
SCP
Internet
INAP
STP
ISUP
SS7
ISUP
H.248
Packet Network
Transit
TDM
Voice/Packet Gateway
Local
Access Node AN
DSLAM
In this step we extend the use of packet transport for voice services down to the access network. This could only be motivated following the generalization of new access technologies where users are already in packet mode at the access and the operator would like to deliver voice services to such users without having to resort to a transformation to a TDM transport (loop emulation service) especially if the core network technology moved to packet as shown during the previous step (avoid having to do packet-TDM-packet transformation just for the sake of switching)
This step can be realized through the introduction of Access Gateways (here the term gateway should be understood not with the strict meaning of bearer transformation but more generally as an access equipment to the network). Those gateways can be either Integrated within next generation multi-service access nodes or Standalone centralized access gateways that connect legacy subscribers.
Access gateways are controlled by a switch with MGC function or a softswitch through the open H.248 interface and users will be offered the same portfolio of services as those offered to legacy PSTN/ISDN subscribers.
This step allows yet another network consolidation by centralizing the voice service control from fewer high-capacity Switches with media gateway control functionality or Softswitches and by gradually moving the control from the old generation switching equipment to the benefit of those centralized and upgraded MGC switches or Softswitches (show how an MGC can control the traffic coming from a legacy access node at the expense of its previous switch)
Multi-service Access Node with Integrated Access Gateway
Voice
Data
Voice/ Packet
Signaling

27. Presentation Plan “IP telephony” positioning in emerging countries
Key challenges and strategic issues
What is “IP Telephony” ?
Comparing the Telephony and Internet models
When can we speak about IP Telephony ?
Main “IP Telephony” usage patterns
LD inbound voice traffic
Local outbound voice traffic
NGN evolution of PSTN/PLMN networks
Conclusion

28. Conclusion “IP Telephony” is more than technology replacement
It might reduce costs but quality has always a price
Moving to IP should above all be driven by new services
IP transport is the long term trend of networks evolution but…
It will take time to materialize at a large scale
Operators will sell services irrespective of technologies
IP Telephony services can be offered today by operators
LD voice service (inbound and outbound)
New lines for Broadband subscribers
NGN migration will gradually take place
Use of future-proof technologies is key to preserve investments

29. Thank you for your attention !
Questions ?
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This slide may be used as the final slide of a presentation and can be displayed during a Question-and-Answer portion of a talk