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VoIP: Challenges and Opportunities
Dr. Rajiv R. ShahVice President
Research & Network Strategy
Plano, Texas
Telecom 03
October 2003 - 2 All rights reserved © 2003, Alcatel
Agenda
VoIP What is VoIP
Network and Service Models for VoIP Standards Issues with regard to VoIP
Market Drivers for VoIP VoIP and NGN
Regulatory Issues with regard to VoIP Vonage Ruling
Outlook
October 2003 - 3 All rights reserved © 2003, Alcatel
What is VoIP?
Technical Answer: “The ability to make phone calls
over IP-based data network”
Commercial Answer: ”The multi-billion revenue opportunity
for the 21st century”
VoIP > IP Telephony Typically “IP Telephony” indicates using IP terminals Most VoIP is between normal telephones
VoIP < “Voice over Packet” Includes Voice over Frame Relay, ATM
October 2003 - 4 All rights reserved © 2003, Alcatel
What is VoIP, Specifically?
Is It. . .
A Technology or Set of Technologies? E.g., G.723, RTP, SIP, VXML
An Application? Transmission of voice as applied over IP technology
A Service? Internet telephony, international bypass
A Network? Next generation signaling and multimedia
connectivity“VoIP” is a buzz-word and acronym that
has all these meanings depending on the context.
“VoIP” is a buzz-word and acronym that has all these meanings
depending on the context.
October 2003 - 5 All rights reserved © 2003, Alcatel
Circuit Switching Served Voice WellFor 100 Years!
Transmission circuits and switch path assigned during call setup for the duration of the call
Call is blocked if not enough network resources available
Essentially one class of service: 3.5 kHz, 64 kb/s
Poorly matched for bursty data transmission
User - A User - B
LoopTrunkGroup
CentralOffice - A
CentralOffice - B
Signal System 7Data link
Signal TransferPoint
TransitOfficeClass 5
Switching System Connection ThroughSwitching Fabric
Class 4Switching System
October 2003 - 6 All rights reserved © 2003, Alcatel
Packet SwitchingWell-Matched for Data Transmission
Great fit for bursty data transmission Packets sent at full rate of transmission
facility Supports variable information transfer rates Resources not consumed when nothing to
send Potential to eliminate call setup phase
HeaderPacketPayload
Input BufferOutput Buffer
Hdr. Trans
Hdr. Trans
RoutingFabric
But … Transmission capacity used for
header Buffering introduces varying
delays
October 2003 - 7 All rights reserved © 2003, Alcatel
VoIP - Basics
AnalogVoice
AnalogVoice
Signaling Path Peer-to-peer Or client/server SIP, H.323, or H.248 …/UDP/IP or TCP/IP
Bearer Path IP-end to IP-end Encoded voice Packetized Real Time Protocol (RTP) RTP/UDP/IP
Control Path Statistics on performance
of bearer “channel” RTP Control Protocol (RTCP) RTCP/UDP/IP
Call Server
ApplicationServer
VoIP Endpoint(terminal or gateway)
IP
October 2003 - 8 All rights reserved © 2003, Alcatel
Packet Voice Over IP
Migration from VoFR and VoATM to the Use of VoIP by Multi-Site Enterprises
IP PBX Emergence of IP PBX based on a softswitch model
Use of H.323 initially and more recently SIP Use of a converged LAN Ethernet infrastructure to deploy
telephony and data services Single wiring infrastructure based on fast Ethernet Common data infrastructure and single operational group
Intrasite and Intersite
Voice Over the Internet VoIP clients (NetMeeting and Messenger on PCs) and VoIP
Gateways enabled voice calls over the public Internet Kazaa founders have recently launched a peer-to-peer service
(Skype)
October 2003 - 9 All rights reserved © 2003, Alcatel
PSTN versus VoIP Network Costs
Network costs (transmission and switching costs) contribute only 10-15% of overall cost of a voice call terminated by an ILEC or a PTT, and 20-30% of overall costs for calls not terminated by a ILEC or a PTT.
Of the network costs, switching costs range between 50% of network costs for domestic calls to 15% of network costs for international calls, transmission costs contributing the rest.
Negligible savings in transmission costs through the use of VoIP: lower bandwidth for VoIP offset by need for over-provisioning bandwidth to ensure quality.
TDM Switch costs in traditional PSTN replaced by cost of Router plus cost of Gateway [GW] plus cost of Gateway Controller [GWC] plus cost of new OSS/NMS/Billing /Provisioning.No network cost savings, and very likely a cost penalty, in
the initial years, in going from PSTN voice to VoIP for public networks.
October 2003 - 10 All rights reserved © 2003, Alcatel
PSTN versus VoIP
Redundant routes through network
Redundancy within each network element
How Reliability Achieved
In separate gateway controllers
Mostly integrated in switching system
Call Processing Intelligence
ATM, FR, native IP in access; ATM native IP
in core
TDM in access, edge, coreTransport
SIP, H.323DTMF, SS7Signaling
Variable 8 – 32 kb/s64 kb/sBandwidth per call
Gateways, gateway controllers, routers
Class 4, Class 5 switching systems Network Elements
NoYesNetwork Resource Reserved at Call Setup
NoYesQoS Guarantees
Packet switchingTDM circuit switchingUnderlying Technology
VoIPToday’s PSTN
October 2003 - 11 All rights reserved © 2003, Alcatel
Circuit-Switched and Packet-Based Telephony Compared
Circuit-Switched Transport Limited M2E Delay
Propagation Switching
Practically NO Distortion
64 kbit/s are reserved for the duration of the call
Packet-Based Transport More M2E Delay
Packetization Serialization Queuing Propagation Dejittering …
More Distortion Codec compression Packet loss
Less Resources Needed Compression can be used Silence suppression can be
exploited Additional flexibility
October 2003 - 12 All rights reserved © 2003, Alcatel
VoIPNetwork #2
VoIPNetwork #2
VoIPNetwork #1
VoIPNetwork #1
VoIP Network and Service Model
PSTN/ISDN
TrunkGateway
Call ServerCall
Server
ApplicationServer
Business
IPPBX
AccessGateway
GWHome
HomeHomeHome
AccessBorder
Gateway
BorderGateway
Call ServerCall
Server
ApplicationServer
October 2003 - 13 All rights reserved © 2003, Alcatel
Some Example Service Models
CALEA
E911
Toll Bypass
Computer* to Computer* Over the Internet
Computer* to PSTN Phone
Computer* to POTS Phone Over IP
POTS Phone to POTS Phone Over IP
*IP End Terminal, either Computer with software client or IP Phone
October 2003 - 14 All rights reserved © 2003, Alcatel
Market Drivers - Cost and Revenue
Cost Avoidance of regulated fees
International and national Avoidance of carrier charges
International and national End of life issues for older circuit switch technologies
High cost of maintenance Lack of spares
Efficiencies Single network based on IP techniques Both operational and capital
Revenue Beyond simple voice services Bundling as a means to reduce churn Integrated services
Telephony, IM, email, integrated directories (“buddy lists”) Enhanced services
Videotelephony, unified messaging, presence, mobility, IP Centrex
October 2003 - 15 All rights reserved © 2003, Alcatel
VoIP and NGN - Why Not Yet?
There Have Been a Number of Hurdles in Both the Carriers Networks and Enterprises
Network Lack of capital Competitive environment
Reduction in number of lines of the ILECs (cable, CLECs, wireless) Less need for new infrastructure
Border gateways CALEA
Enterprise Existing TDM cheaper than new VoIP New build environments provide a more compelling business case than
complete replacement of existing infrastructure Hybrid models are more favoured
Future operational savings versus immediate capital expenditure
October 2003 - 16 All rights reserved © 2003, Alcatel
VoIP and NGN - What Next?
Why Will Carriers Move to NGN and VoIP Networks? Toll and tandem bypass remains a key cost driver
Incumbent local carriers, interexchange carriers and wireless carriers alike Competitive providers utilize the Internet to provide Voice service Enterprises are continue migrating towards IP PBX
NGN for interworking and IP Centrex as the network service End users begin to actually use native VoIP services
Why will end-users move to VoIP? Because they can…(and cost) VoIP client bundled with most Instant Messenger clients Broadband Access breaks major quality hurdles
Greater deployment of broadband access in all forms will lead to a greater use of VoIP services.
October 2003 - 17 All rights reserved © 2003, Alcatel
Regulatory Issues
1998 Report to Congress - Impact on Universal Service (USF)
Intercarrier Compensation - Access and International Settlements Access and Settlement Chagres
Law Enforcement - CALEA and Encryption
Jurisdiction - Borderless Nature of IP versus Traditional State Regulation of Intrastate Services
Pending AT&T and Pulver Petitions
E-911
Network Separation Requirements on ILECs
Numbering Issues - The Role of ENUM and LNP and the NANPRegulation impacts demand for, and development
of, VoIP products, services and networks.
October 2003 - 18 All rights reserved © 2003, Alcatel
Outlook: VoIP is a Reality
Technology Reality The technology exists
Commercial Reality In the Enterprise Markets IP PBX VoIP Call Center
Commercial Potential - Carrier Markets Maturing IP Centrex, serious RFP activity
Over 1.2 M VoIP Business Users, About 12% of Business Lines (WSJ 10/10/03)
VoIP Carriers: Vonage, FWD, Net2Phone, Voicepulse, Skype, and a Few Others, in Addition to AT&T, MCI and Others
Successful Broadband Deployment Policy Will Accelerate VoIP
Industry Needs Clarity on VoIP !!
Fixed & Mobile Services: Challenges and Opportunities
Telecom 03
October 2003 - 20 All rights reserved © 2003, Alcatel
Communications Networks: The Three Planes
Applications & Services
Security
Enablement & Management
Policy Mgmt.Call Control
Session Mgmt.AAA
Generate Revenue & Value
Generate Revenue & Value
Reduce Opex Increase Capex Efficiency
Reduce Opex Increase Capex Efficiency
Reduce Opex Increase Capex Efficiency
Reduce Opex Increase Capex EfficiencyNetworking &
Connectivity Metro & EdgeMetro & Edge
AccessAccessPremisePremiseCoreCore
Video Video PresencePresence
MessagingMessaging
VoiceVoice Interactive VideoInteractive Video
Storage NetworksStorage Networks
MobileMobile
October 2003 - 21 All rights reserved © 2003, Alcatel
The Three Planes: Defined
The infrastructure can be abstracted into three planes • Application & Services Plane
– Core of value proposition of service providers to end-users (OSI>L4)
• Enablement & Management Plane (“the invisible work force”)
– Provide various back-end services, common to various end-user services (e.g. payment, content security, content delivery, SIP connectivity, charging, E2E QoS assurance …)
– This function is provided by network service provider & access provider
• Networking & Connectivity Plane: telecommunications infrastructure networks
– Network infrastructure provided by network service provider and network access provider (L0 to L3 of the OSI stack)
– Includes end-user premise network in the enterprise and in the home
App.
Serv
ice
pro
vid
ers
Netw
ork
A
ccess
pro
vid
ers
Netw
ork
Serv
ice
pro
vid
ers
Bro
ad
band
end-u
ser
October 2003 - 22 All rights reserved © 2003, Alcatel
Applications - One Network View
Video Mgmt
.
Video Conferencin
g
Unified Messagin
g
Multi-Media Conferencin
g
Instant Messaging
IP-Centrex
Text-to-speech, speech
recognition
Network based
contact-centers
Application Server
October 2003 - 23 All rights reserved © 2003, Alcatel
Same Set of Services Across Fixed & Mobile,Home & Business: Voice, IM, Rich Presence……….
Mobile/Wireless Worker
Enterprise
SOHO/Remote Worker
ICE
Sean@ Application - Sean
JohnJohn@
Application - John
John@
Sean@
James@
James
James@
John: Chance to look at the doc?Sean: Yes.
John: Chance to look at the doc?Sean: Yes.
Sean
Location info
Voice
QOS
Bandwidth
Capability
Security
Interactive Presence
Interactive Communication Environment
Enablers: SIP, Web Services, SOAP, J2EE, .net, VXML
Fixed Wireline/WiFi
Fixed Wireline/WiFi
Cellular or PCS WAN /WiFi
VoIP: Challenges and Opportunities
BackupTelecom 03
October 2003 - 25 All rights reserved © 2003, Alcatel
Regulatory Issues: Vonage Ruling, 10/07/03: 1
In ruling from the bench late Tuesday,October 7, 2003, Minneapolis, Minnesota, Federal Judge Michael J. Davis permanently barred Minnesota from applying traditional telephone rules to Vonage, a pioneer in technology that lets consumers bypass the traditional phone network by making voice calls over a broadband connection.
Tuesday's ruling for now frees Vonage to sell its Internet phone service in Minnesota without obtaining a telephone operator's license or paying fees to support 911 services. More importantly, the order is the first to address the authority of a state to oversee so-called voice over Internet Protocol (VoIP) providers, and could thus impact efforts by other states to regulate VoIP providers.
October 2003 - 26 All rights reserved © 2003, Alcatel
Regulatory Issues: Vonage Ruling, 10/07/03: 2
State regulators had threatened to stall VoIP's growth by forcing providers to follow the same rules as do traditional phone companies. As a result, the Minnesota suit was being closely watched by VoIP industry executives, consumers and traditional phone companies.
Vonage filed suit against Minnesota's Public Utilities Commission (PUC) after the agency in August became the first in the United States to claim authority over VoIP. Since Minnesota's order, Wisconsin and California have asserted authority over VoIP providers, and other states say they are reviewing their policies.
Six VoIP companies have until Oct. 22nd to get a California telephone license or face disciplinary action. "This ruling is a significant victory for Vonage and (VoIP) technology," Vonage said in a statement. ” The ruling could also have a significant impact on other states across the country, including California."
October 2003 - 27 All rights reserved © 2003, Alcatel
Regulatory Issues: Vonage Ruling, 10/07/03: 3
A California PUC representative indicated on Tuesday that the state would continue its own efforts to regulate VoIP providers. "While the Minnesota (PUC's) decision was something we took notice of, our decision was based on California law," the representative said. A Minnesota PUC representative did not return calls seeking comment late Tuesday.
In addition to the state suit, at least two petitions have been filed with the Federal Communications Commission seeking to exempt VoIP and related services from traditional phone regulations, although the agency has yet to rule on those filings.
October 2003 - 28 All rights reserved © 2003, Alcatel
Regulatory Issues: Vonage Ruling, 10/07/03: 4
Among other things, the state rules reflect a time when all voice calls created a dedicated, end-to-end channel between two speakers and relied on geographic hints such as a telephone number area code, to do so. As a result, geography now plays a central role in current telephone regulations. But on the Internet, geography doesn't exist. The only address that matters is the Internet Protocol (IP) address that devices needs to go online using any broadband connection anywhere in the world.
"On the Net, you are dialing a person, not a location," VoIP service Free World Dialup founder Jeff Pulver said. That creates a quandary for states trying to make even the most basic decisions about a VoIP service, for example, what constitutes a long-distance call. Under the current telephone rules, regulators could just track what telephone network switches the calls bounced between. But using VoIP, calls travel in anonymous data packets, leaving regulators in the dark about which of the trillions of bits on the Internet at any time are actually voice calls.
October 2003 - 29 All rights reserved © 2003, Alcatel
Regulatory Issues: Vonage Ruling, 10/07/03: 5
Voice over IP (VoIP) is a rapidly growing and, at present, largely unregulated part of the telecom services market. However, VoIP occupies a prominent place on the 2004 FCC agenda. After its start as a low-quality, niche technology, it appears that VoIP is becoming ready for prime time. While there are only about 100,000 VoIP subscribers on services such as Vonage and Free World Dialup, it has been estimated that between 1% and 5% of interstate voice traffic is carried as VoIP. Further, MCI announced at Supercomm 2003 that it would move 100% of its voice traffic to a core IP network by 2005.
AT&T also believes that it's time for a new rulebook for VoIP, a company representative said before Tuesday's ruling. Among the biggest users of Internet telephony in its network, the carrier is now asking the FCC to exempt these calls from its rules. "We're making investments in VoIP technology to allow phone-to-phone communications," the representative said. "Before we spend the money it takes to get the technology up and running, we want to understand what the rules are."
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