1

Policy and Regulatory Challenges Facing the NGN

Workshop on Interconnection and Next Generation NetworksAddressing the Regulatory ChallengesBuenos Aires, ArgentinaSeptember 11, 2006

Bill McCrumDeputy Director General Spectrum Engineering

Industry Canada

mccrum.william@ic.gc.ca IX PCC.I 11.09.06 - 2

We are in the Network EconomyWe are in the Network Economy

Information and Communications Technologies (ICTs)• are pervasive in our society• are critical to business success• boost SME productivity and revenue

growth• are critical to Canada’s competitiveness

The communications infrastructure is the foundation of Canada’s network economy

IX PCC.I 11.09.06 - 3

Modern society is dependent on communications infrastructureModern society is dependent on communications infrastructure

Communications InfrastructureCommunications Infrastructure

PublicPublicSafetySafetyFinance Finance EnergyEnergyMfg.Mfg.RetailRetail TransportTransport

IX PCC.I 11.09.06 - 4

The network infrastructure powers the network economyThe network infrastructure powers the network economy

e-healthe-health

e-governmente-government

e-businesse-business

e-contente-content

e-learninge-learning

Network EconomyNetwork

Economye-researche-research

e-meetingse-meetings

Sizing the Network Infrastructure • 972 million users on the internet today (Nov 2005)• 360 million internet hosts (July 2005)• Internet usage (July 2005):

Canada 63%; UK 63%; USA 68%; Australia 68% ; Korea 65%

• 2 billion mobiles in the world today and counting

IX PCC.I 11.09.06 - 5

In Canada, are moving online and are demanding high-speedIn Canada, are moving online and are demanding high-speed

Canadian Residential Broadband Subscribers, 2002-2009

2.0 2.4 2.8 2.9 3.1 3.3 3.4 3.5

1.4

1.8

2.22.5

2.93.2 3.4 3.5

51%50%

27%29%

37%47%

43%

50%

7.06.86.5

6.0

5.35.0

4.2

3.3

0

1

2

3

4

5

6

7

8

2002 2003 2004 2005 2006E 2007E 2008E 2009E

Number ofSubscribers

(millions)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of Canadian Households

DSL Subscribers

Cable Modem Subscribers

Source: Yankee Group, North America Consumer Fixed-Line & Media Forecast (December 2005)

Broadband Penetration

IX PCC.I 11.09.06 - 6

Drivers Affecting Network ChangeDrivers Affecting Network Change

Network Convergence;Distributed Intelligence;

New Competitive Landscape

End User

Service Provider

Vendors

The communications network is undergoing extensive changes to meet new market and service demands

• Policies • Regulation• Strategies to stimulate

competitionGovernment

• Network simplification• Lower start-up and operating

costs• Leap frog competition• Fast service introduction and

customization

• New service revenue

• New products• New markets• New revenues

• Lower service charges• Multimedia services• Increasing data traffic• Mobility

2

IX PCC.I 11.09.06 - 7

Network EvolutionNetwork Evolution

Lower cost and innovative services drives network convergence

Corporate

Video

PSTN

Services

Wireless

Voice

WWW

IP Core Broadcast

Academic

Corporate

WWW

IP

Broadband

1G-2G

GSM

CDMA

IP

CATV

MPEG

IP

IX PCC.I 11.09.06 - 8

Implications of ConvergenceImplications of Convergence

• New and innovative applications and services– New revenues available to application and

service providers• Same services are being offered using different

means of access– Service providers can compete with other service

providers without competing against other forms of providers (network or access providers)

• A converged network with IP core and access simplifies network operations– Costs of operating a converged network are lower

• New policy and regulatory frameworks– Need coherent regulation of communications infrastructure

to deal with the fact that content can be delivered over all networks, network-dependent rules are being overtaken by technology, and markets are merging

– Promote competition, protect consumers, and encourage efficient investment

Corporate

Video

PSTN

Services

Wireless

Voice

WWW

IP Core Broadcast

IX PCC.I 11.09.06 - 9

Next Generation Network (NGN)Next Generation Network (NGN)

• The ITU-T has defined a a framework for network evolution, called the Next Generation Network (NGN)

• Key Characteristics (Recommendation Y.2001)– Packet-based network– Independence of service-related functions from underlying

transport technologies– Interworking with legacy networks via open interfaces– Generalized mobility– Unrestricted access by users to different services and/or

service providers

[http://www.itu.int/ITU-T/ngn/]

NGN is not only a network evolutionary transformation, but

also a radical overhaul of the telecommunications environmentIX PCC.I 11.09.06 - 10

Government in actionGovernment in action

Many challenges lie ahead…• VoIP

• Telecom Review Panel

• Spectrum Management

• Accessible Technology

• Timely Standards

• Emergency Preparedness• Cyber Security

• Spam

IX PCC.I 11.09.06 - 11

A changing industrial structureA changing industrial structure

*Graphic depicts only selected industry segments and does not constitute the entire telecommunications industry.**Includes retail DSL, cable modem, corporate data and wireless data. Numbers may not add up due to rounding.Source: Yankee Group, North America Consumer Fixed-Line & Media, Business Fixed-Line, and Wireless/Mobile Forecasts (June 2005).

Communications Service Revenues by Segment*, 2002-2009

$4.4$5.0

$7.8$8.7

$6.6

$4.5

$10.1

$5.0

$33.2$34.7

$36.2

$31.3$29.6

$37.6$40.0

Data/Broadband**

Broadcast Distribution

Wireless Voice

Wired Local Voice

Wired Long Distance

$38.9

$6.3 $11.1

2002-09CAGR

4.4%

10%

5.4%

8.3%

-1.5%

-1.8%

2002 2003 2004 2006E 2007E 2008E 2009E$0

$5

$10

$15

$20

$25

$30

$35

$40

Revenues ($ billions)

2005

IX PCC.I 11.09.06 - 12

VoIP ChallengeVoIP Challenge

• Voice over Internet Protocol (VoIP)separates access from service

• No longer need to own telephone network to offer phone service

• Surge of new competition coming:• Skype (eBay)• Vonage• Cable Companies• Microsoft, Yahoo, AOL, Google, IBM,

EDS?

3

IX PCC.I 11.09.06 - 13

Market Share of Residential Telephone Lines for Competitors, 2000-2010

29%

25%

21%

17%

12%

6.6%

3.2%2.0%1.4%0.6%0.3%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

% Residential Telephone Lines

VoIP is beginning to make a differenceVoIP is beginning to make a difference

Source: CRTC Monitoring Report, November, 2005, and Merrill Lynch, 2006: The Year Ahead, January 11, 2006

Actual Estimated

Pre VoIP Post VoIP

IX PCC.I 11.09.06 - 14

VoIP Standards & Technical IssuesVoIP Standards & Technical Issues

• CRTC decision on VoIP• Difficult to achieve interoperability

between VoIP service providers.• Standards can help achieve this goal.• Development ongoing in ITU-T, IETF

and others.• Quality of Service is important • Electronic Numbering / Telephone Number Mapping

• Discussions in Canada to implement ENUM services• Canada has indicated its support for ENUM trials in North

America – country code 1 • US trial to be launched shortly

• Emergency Services • Consumer emergency call with caller location E9-1-1• Priority access during or after disasters

IX PCC.I 11.09.06 - 15

Telecom Policy Review PanelTelecom Policy Review Panel

www.telecomreview.ca

• Independent panel of experts appointed by Minister of Industry April 2005

• Report issued on March 22, 2006 provides 127 recommendations for ensuring Canada’s competitiveness in the Network Economy

• Panel’s mandate had three central themes:– setting the appropriate regulatory framework– encouraging adoption of ICTs– access to advanced telecommunication

networks and services

IX PCC.I 11.09.06 - 16

Spectrum Management ChallengesSpectrum Management Challenges

• Modernizing Spectrum Policy and Management

• Global and Regional Harmonization

• Opening new bands, accommodating new services• RFID

• Ultra Wide Band (UWB)

• Software Defined Radio (SDR)

• Broadband over Power Lines (BPL)

• Unlicensed Bands

IX PCC.I 11.09.06 - 17

Challenges for Persons with DisabilitiesChallenges for Persons with Disabilities

• 15% of Canadians have disabilities (Statistics Canada)

• 32% of Canadians between age 64 and 75 have disabilities

• 31% of Aboriginal Peoples have disabilities

...the Government of Canada is helping through accessible technology

IX PCC.I 11.09.06 - 18

Content challengeContent challenge

Emerging digital copyright issues:• P2P networks

• 5.7 million Canadians have downloaded music files (Ipsos-Reid, May 2004)

• More than 44 million full-length movie files and 1.3 billion songs available (BigChampagne LLC, Reported In Kansas City Star, October 2004)

• ISP liability• Fair usage

Advancing technology is threatening cultural policy:• Satellite TV

• Black Market/Grey Market• Access to foreign and ethnic programming

• Satellite Radio• Internet - movies, music, videos on demand• IPTV (content-based or usage-based charging)

4

IX PCC.I 11.09.06 - 19

Illegal and Offensive ContentIllegal and Offensive Content

Child pornography, online luring, child prostitution, child sex tourism and other activities are of growing concern

• Cyberwise Strategy• Agenda for confronting illegal

and offensive content• Multi-stakeholder partnership

• Cybertip.ca• Initiated by Child Find Manitoba

and Industry Canada• Canada's national tipline• Analyzing tips from public• Referrals to law enforcement

IX PCC.I 11.09.06 - 20

Maintaining the trust and confidence in our networks is criticalMaintaining the trust and confidence in our networks is critical

• Growing socio-economic dependence on communications technology infrastructure

• As with previous networks (electricity, telephone, railways, airlines), users must have confidence that the networks are reliable and can be trusted

• Confidence will be lost if:• Networks cannot be protected from attacks • Services cannot be protected from abuses • Quality of communications services cannot

be assured• Communication sessions are insecure and

private information is compromised

IX PCC.I 11.09.06 - 21

Ongoing concerns about privacy and securityOngoing concerns about privacy and security

21%26%

32%38%

43%

79%74%

68%62%

58%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

PersonalInformation

Identity theft Unsolicitedemail/spam

credit cardfraud

Computervirus

% o

f tot

al re

spon

dent

s (4

cty

s)

Confident

Not confident

Q: How confident are you in your ability to protect yourself from the following threats online?

Source: Understanding Consumer’s Needs for Internet Security, Forrester Custom Consumer Research and Business Software Alliance, November 2005

*Survey of respondents in Canada, USA, UK and Germany

Crumbling Confidence*

IX PCC.I 11.09.06 - 22

Malicious attacks continue to menaceMalicious attacks continue to menace

0

10000

20000

30000

40000

50000

60000

70000

80000

Jan-02

Mar-0

2

May

-02

Jul-0

2

Sep-0

2

Nov-0

2

Jan-03

Mar-0

3

May

-03

Jul-0

3

Sep-0

3

Nov-0

3

Jan-04

Mar-0

4

May

-04

Jul-0

4

Sep-0

4

Nov-0

4

Jan-05

Mar-0

5

May

-05

Jul-0

5

Sep-0

5

Nov-0

5

Jan-06

Attacks Against CanCERT™ NetworksJanuary 1999 - February 2006

Blaster/Nachi

Slammer

Windows Pop-up Spam

Agobot/Gaobot/Phatbot

CanCERT™ is Canada’s first national Computer Emergency Response Team (CERT) operated 24/7 by EWA-Canada since 1998. The above graph depicts the number of attacks per month against CanCERT™ networks during the period January 1999 to February 2006.

IX PCC.I 11.09.06 - 23

More alarmingly, cybercrime is growingMore alarmingly, cybercrime is growing

Online identity theft growing• Phishing attacks aimed at identity theft now affect roughly 1 in

4 Americans (23%) each month emails (AOL/National Cyber Security Alliance (NCSA) Online Safety Study – December 2005)

• Cost in the last 5 years in the U.S. was $60 billion (FTC)

• In Canada, 13,000 cases reported (ComputerWorld Canada)

E-mail fraud• High profile attacks include Visa, Bank of America, Bank of Montreal,

eBay, Best Buy, Yahoo, MSNTV... (Symantec)

• 1.78 million have fallen victim to online fraud (Symantec)

• U.S. banks and credit card companies have paid almost $1.2 billion in damages (Symantec)

E-commerce attacks & extortion• Almost 16% of attackers targeted e-commerce organizations,

compared to 4% during the last six months of 2003 (Symantec)

IX PCC.I 11.09.06 - 24

Driven by internet threats…Driven by internet threats…

Privacy fears discouraging e-commerce in Canada• 40% of Canadians avoid online shopping over security concerns, compared

to 24% of Americans (Canadian Alliance Against Software Theft (CAAST) -November 2005)

Users changing their online behaviour due to security concerns• Majority (91%) of Internet users in the US have altered online behaviour

(Pew Internet and American Life Project – June 2005)

• 40% of Canadians said they would not do any shopping online due to concerns about internet security (Forrester and Business Software Alliance -November 2005)

Consumers losing trust in online banking• 74% of Canadian online consumers have concerns about email fraud which

are affecting their online financial behavior (Forrester – April 2005)

• 80% of consumers in the USA, Canada, Germany & U.K are concerned about someone stealing their on-line identity and using it to access their on-line bank accounts (2004 Entrust Internet Security Survey)

… contributing to a loss of trust

5

IX PCC.I 11.09.06 - 25

Report of the Task Force on SpamReport of the Task Force on Spam

Task Force made 22 recommendations to address spam, spyware and emerging online threats, including:• New legislation• Effective enforcement• Policy leadership and coordination• Public education and awareness• Strengthened international cooperation

Task Force reported on action to date:• Analysis of gaps in legal ground rules and enforcement;• Developed network management practices to combat spam;• Developed electronic marketing guidelines;• Established public awareness “Stop Spam Here” campaign

(Icon, website and messages to consumers);• Active participation in international efforts – OECD etc.

IX PCC.I 11.09.06 - 26

What are the NGN Challenges ahead?What are the NGN Challenges ahead?

• Timeliness to meet new technology needs • Solving the Interoperability issues • Robustness of standards and immunity

to attack • IPR policies for SDOs that inhibit IPR ambushing • Cross pollination of standards activities e.g.

• between IETF & ITU on Internet standards• between ISO & ITU on Security standards• between ISO & GS-1 on Bar Code standards• between SDOs and CITEL PCC.I on NGN standards

• Inclusion of the User and needs of the Disabled• Security, protection and privacy

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Contact

Bill McCrumDeputy Director General Spectrum Engineering Industry Canada(v) +1 (613) 990-4493mccrum.william@ic.gc.ca