Biggs VoIP Trends Evolution 26 Oct 06

8/3/2019 Biggs VoIP Trends Evolution 26 Oct 06

1/31

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


2/31


Agenda

1. Market drivers

2. Defining VoIP regulatory treatment

3. VoIP market

4. Future Evolution

5. Conclusions


3/31


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 market4. Future Evolution

5. Conclusions


4/31TeleEvo 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

Telep

hony

Internet

Telev

ision

IP-based network

Control layer


5/31TeleEvo 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 servicehttp:/ /http:/ / www.itu.int/ osg/ spu/ ngnwww.itu.int/ osg/ spu/ ngn//


6/31


The transition towards NGNOld 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 Marcusbackground paper and WIK Institutesworkshop on this subject).

Key issues asymmetric regulation

(numbering, universal & emergencyservice)

Unlicensed bands, spectrum trading,

competition policy, emergency service

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


7/31


Forces driving VoIP (contd)

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, innew, converged business models

- Growth in broadband networks.


8/31


Increasing availability of broadbandNumber of countries with broadband

commercially available

81

113

133145

166

0

2040

60

80

100

120

140

160180

2002 2003 2004 2005 2006

Source: ITU World Information Society Report.

Source:

ITU


9/31


At faster speedsGrowth in max. broadband speed available

0

5

10

15

20

25

30

35

40

256

512

768

1024

1280

1536

1792

2048

2304

2560

2816

3072

3328

3584

More

Speed (kbps)

Num

berofcoun

tries

2003 2005 2006

2005

2003

2006

Source:

ITU.


10/31


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


11/31


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

VoIPPSTN

As % of total

Source:

ITU.


12/31


Falling price (& revenue?) in intl voice traffic

3235

3944

5158

63

35

40

45

50

55

60

1998 1999 2000 2001 2002 2003 2004

Revenue (US$bn)

Price per minute (US cents)

Source:ITU WorldTelecom.

IndicatorsDatabase


13/31


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

??


14/31


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

Cos

t(USD)

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 worldwide2003-2005


15/31


Incentives with price reductions

0%

20%

40%

60%

80%

100%

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

Profits

Incentives II (Taking into account declining costs)

Time

Costs

Competitors


16/31


Agenda

1. Market drivers2. Defining VoIP

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

3. VoIP market4. Future Evolution

5. Conclusions


17/31


2. Defining VoIP

ITU Internet Report 2001IP Telephony

IP Telephony carriage of voice over IP-basednetworks irrespective of ownership

Voice over Internet Protocol (VoIP) voice

traffic carried wholly or partly using IP overbroadband networks competing with incumbent

operators


18/31


2. Defining VoIP: Country definitionsDefinition Selected countries

QoS, now replacedby Functionality

India, JapanHong Kong

Numbering system Japan, Taiwan-China

Netwk. Architecture Israel, Saudi Arabia

Degree over PSTN& terminals used Israel, JordanIndia, Japan, Malaysia, Spain

Service Egypt, Barbados, Indonesia, Italy,

Jordan, UK, United States.Users Australia, Chile, Tunisia


19/31


Regulatory status of IP Telephony, 2005

2

7 8

33

10

5

3

2

2

5

7

2

12

46

4

1

13

33 3

11

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 licensedPTOs 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).


20/31


The spectrum of regulatory treatment of VoIP, 2006

Explicitly legal

(57 countries +)

Explicitlybanned (atleast 23countries) Yet to be

madelegal-TwilightZone ofregulatoryambiguity

If in doubt,

hold a PublicConsultation(22 countries

+)

Underconsideration bygovt/regulator(30+).

Explicitly deregulatedand/or light regulatory

touch (19 countries+)

License required(26 countries+)


21/31


& Russia? Directive on Telematic Service

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


22/31


Agenda

1. Market drivers2. Defining VoIP regulatory treatment

3. VoIP market- Subscribers & distribution- The problem of the missing millions

- Revenues4. Future Evolution

5. Conclusions


23/31


3. VoIP market - strong growthWorldwide VoIP Subscribers

0

50

100

150

200

250

300

2005 2006 2007 2008 2009 2010 2011

Millions

0

2

4

6

8

10

12

14

16

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

Source:

IDATE.


24/31


Distribution of VoIP subscribers

Distribution of VoIP subscribers, mid-2005

Japan62%

NorthAmerica

16%

France11%

Germany2%

Norway0%

Neth.1%

Sweden1%Italy

5%

Korea2%

Source:

PointTopic.


25/31


But how to measure the missing millions?Household VoIP in the UK

(1.8 million)

150,000

8%

1.35m

75%

300,000

17%

Skype/

Vonage

BT

Wanadoo

Orange

Source: OFCOM

Difficult to estimate!


26/31


Agenda

1. Market drivers2. Defining VoIP regulatory treatment

3. VoIP market4. Future Evolution- Market projections

- Voice in bundles- The transition to flat-rate pricing

5. Conclusions


27/31


4. Future Evolution: Market projectionsEstimates of international VoIP traffic

0

5

1015

20

25

30

35

40

45

50

1996 1999 2002 2005 2008

%o

ftotalint'alm

inutes

Yankee

Gp.

Telegeography

/PriMetrica

Tarifica

DeltaThree WP

Delta Three

White Paper

Analysys

Yankee Gp.

ITU

Source:ITU et al.(ITUestimate

refers to IPTelephony)

Pink lineTelegeograhy


28/31


Voice included in bundles (UK)


29/31


Shift towards flat-rate pricingEvolution in Pricing Strategy

133145

166

0

20

40

60

80

100120

140

160

180

2004 2005 2006

Nu

mberofcountries

Data Time

Both Flat-rate

75%68%

81%

Data: billed by data downloaded or time spent online or combination both.

Source:

ITU


30/31


VoIP is a growing reality for operators, consumersand regulators, with strong growth by all metrics.

Opportunity or threat?

A bit of both!

Despite regulatory uncertainty in many countries, itmay still be best to engage:

Operators early mover advantage;Consumers benefits in cost reductions;Governments help shape/develop a stable market,

instead of holding it back.

5. Conclusions


31/31


Thank you very

[email protected]

www.itu.int

Documents

Biggs VoIP Trends Evolution 26 Oct 06