Source: www.blondie.com

Voice over IP Voice over IP (VoIP) (VoIP)

Effects on Effects on Telecom IndustryTelecom Industry

Zahid Irfan Zahid Irfan 2001-03-00372001-03-0037

What I am going to talk What I am going to talk aboutabout

Communication NetworksCommunication Networks InternetInternet Birth & Development of VoIPBirth & Development of VoIP Effects of VoIP on Telecom IndustryEffects of VoIP on Telecom Industry Telecom Industry’s ResponseTelecom Industry’s Response Conclusions and Conclusions and

RecommendationsRecommendations

Internet’s Birth.. 1971Internet’s Birth.. 1971

Source :http://www.cybergeography.org/atlas/historical.html

Internet’s Explosion … Internet’s Explosion … 19991999

Source :http://mappa.mundi.net/maps/maps_007/

What drives the InternetWhat drives the Internet

The Internet’s backbone.. The The Internet’s backbone.. The protocolsprotocols– Token Ring Token Ring – User Datagram Protocol (UDP)User Datagram Protocol (UDP)– Internet Control Message Protocol Internet Control Message Protocol

(ICMP)(ICMP)– Transmission Control Protocol/ Transmission Control Protocol/

Internet Protocol (TCP/IP)Internet Protocol (TCP/IP)

http://oac3.hsc.uth.tmc.edu/staff/snewton/tcp-tutorial/

Why not USE the NET… Why not USE the NET…

The motivationThe motivation– The high rates of telephone calls from The high rates of telephone calls from

Israel to USA. ($2.5/min)Israel to USA. ($2.5/min) The solutionThe solution

– Transmission of Voice signals over the Transmission of Voice signals over the netnet

Emergence of Voice over IP Emergence of Voice over IP

Voice over IPVoice over IP

Voice over IP (VoIP)– Conversion of voice signal to stream

of packets and using the Network line to transmit to destination and then reconvert it to voice signals

Data and Telephone Data and Telephone NetworkNetwork

Source : www.howstuffworks.com

VoIP NetworkVoIP Network

Source: www.technet.com

IP Network

PSTNMedia GW

Call Agent Application Servers

Source ofValue Added

Services

Signaling GW Address Re-solver

ENUM

Clients• • •

Applications of VoIPApplications of VoIP

Internet aware devicesInternet aware devices VoIP/PSTN hybrid gatewaysVoIP/PSTN hybrid gateways Interoffice trunking over corporate Interoffice trunking over corporate

intranetintranet Remote accessRemote access Voice calls from Mobile PCs and Voice calls from Mobile PCs and

mobile phonesmobile phones

BenefitsBenefits

Cost ReductionCost Reduction Simplification Simplification

– same network (easy maintenance)same network (easy maintenance)– optimization of bandwidthoptimization of bandwidth– Fault toleranceFault tolerance

Advanced ApplicationsAdvanced Applications– video conferencingvideo conferencing– white-boarding and shared screenswhite-boarding and shared screens

Quality of Service (QoS)Quality of Service (QoS)

Sharing of available capacity Sharing of available capacity Latency of transmissionLatency of transmission Authentication and Authentication and

Encryption(Secure TelephonyEncryption(Secure Telephony Reliability of TransportReliability of Transport

Growth of VoIPGrowth of VoIP

Estimates of various sourcesEstimates of various sources $500 m to $18.7b in 1999-2004 (106%

growth) -IDC $270 m to $12.6 b in 1999-2004 - Ovum 30% of international phone traffic will be

carried over data lines in 2002 against 0.2% in 2001 - Probe

$4b to $23b in 2001-2004. - Kagoor

Souce: www.fortune.com

Telecom Industry LossesTelecom Industry LossesCompany Losses

($m)%

AT&T ~350 3.6%

(KDD Co. Ltd.(Japan)

~307 10.4%

Deutsche Telekom ~175 4.2%

Telstra Corp.(Australia)

~168 9%

Embratel (Brazil) ~28 11.5%

Bezeq (Israel) ~30 10.7%

Source:http://www.it.kth.se/voip.html

Telecom Strikes BackTelecom Strikes Back

PTCL signs contract with M/s ABS PTCL signs contract with M/s ABS Corporation (min. profit $36 Corporation (min. profit $36 annually)annually)

AT&T-Yahoo consortium acquires AT&T-Yahoo consortium acquires 37% of Net2Phone shares37% of Net2Phone shares

Indian Government to lift ban on Indian Government to lift ban on VoIP in 2002VoIP in 2002

VoIP without Enhanced VoIP without Enhanced Service Provider StatusService Provider Status

Cost per minute (in

$)

Percentage of

Revenues

Percentage of

Cost

Average Rate 0.140 100% -

Access Charges (0.050) (35.75%) 45.5%

Network Operations (0.015) (10.7%) 13.6%

Depreciation (0.010) (7.1%) 9.1%

Sales, General &

Administrative(0.035) (25.0%) 31.8%

Total Cost (0.0110) (78.6%) 100.0%

Net Profit (0.030) 21.45% -

Source : Merrill Lynch Corporation

Future DevelopmentsFuture Developments

Text to voice conversionText to voice conversion Voice to text conversionVoice to text conversion Voice response systemsVoice response systems Replacement of Mobile system Replacement of Mobile system

with IP-based systemswith IP-based systems

Questions & AnswersQuestions & Answers